Telus CTO: 2G GSM's a No-Go

Like a lot of big carriers, Telus Corp. (NYSE: TU; Toronto: T) won't be able to experience the iPhone's magic firsthand.

Instead, one of its cable competitors, Rogers Communications Inc. (NYSE: RG; Toronto: RCI), which runs a GSM network, is expected to begin selling iPhones to its customers sometime this year. But Telus says the iPhone buzz isn't going to make it reconsider switching from a CDMA network to a 2G (second generation) GSM network. "All I can say is that we will not do GSM," says Telus CTO Ibrahim Gedeon, in an interview with Light Reading.

[Ed. note: A clarification -- Gedeon says they're not going to take a legacy 2G GSM, but Telus didn't necessarily rule out a 3G HSPA overlay in the future. So stay tuned.]

Gedeon, who is speaking at NXTcomm next week, says Telus is evaluating LTE as its next-generation wireless network technology of choice, but he says there's no need to do an interim step involving a legacy 2G technology. While that could be viewed as more bad news for Qualcomm Inc. (Nasdaq: QCOM)'s 4G variant, Ultra Mobile Broadband, but something of interest to companies supplying Verizon Wireless and Vodafone UK , who are both in the LTE camp.

Indeed, Gedeon suggests Telus will watch Verizon's activities closely and will likely act once Verizon has essentially made a volume business for LTE equipment in North America. "Telus alone is too small to define a market," he says.

Waiting for WiMax
In addition to musing about the iPhone's influence, carriers at NXTcomm will be talking about how to deal with other forms of wireless competition heading their way.

When WiMax becomes prevalent in the U.S. and brings down data prices, carriers will have to figure out how to maintain their relevance once their rural market customers have been picked off. "The speed of wireline, that will never be replaced by wireless, but the risk for us is that you have to focus on urban areas where you have to focus on providing fantastic service," Gedeon says.

"A lot of those outlying markets will be lost, but where you're going to someone's house with 40- , 50- , or 100 Mbit/s -- those will always be places where you can deliver a higher quality of service and charge a premium for it," says the CTO.

The 'F' Word
Another competitive force Gedeon has his eye on is the word "free". Gedeon says free over-the-top content -- those free shows, streams, and podcasts on the Internet put out by sports leagues and network programmers -- can give carriers a headache. Such content goldmines do help sell broadband connections, but the sheer variety of programming can erode the value of a standard TV service that telcos the world over are pushing.

"My competition is not necessarily the cable company, it's me," Gedeon says. "You're not going to pay a hundred bucks [for IPTV service] to watch two channels," he says. "There's a clear cost to building broadband connections and the services that we're banking on beyond the pipe are getting marginalized."

"We're providing a pipe and we need to find out ways to monetize it," he adds. "Our challenge is: How do I make the pipe more intelligent? How do I provide services that make the user go: 'Thank God I'm with Telus.'"

— Phil Harvey, Editor, Light Reading