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3G/HSPA

Telstra CEO: Survival of the Bravest

Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) CEO Sol Trujillo is heading to Las Vegas with a message for the rest of the world's major carriers: "You've got to gamble!"

But the former CEO of US West and Orange isn't suggesting they take to the poker tables with next year's capex budgets (though that would generate one helluva reaction!).

Instead, he will use his keynote address at this year's NXTcomm event (June 16-19) to tell operators they can thrive in a Web services world alongside the likes of Google (Nasdaq: GOOG), but only if they're prepared to take some risks and bet big on their futures.

Essentially, that involves undertaking an across-the-board transformation process that includes a revamp of networks, IT, personnel, finance, culture, channels, and business models [ed. note: and breakroom snacks!].

The Australian incumbent is midway through its own five-year, AU$14 billion (US$13.4 billion) transformation program, a process the carrier is undertaking with a select bunch of key hardware and software vendor partners. (See Telstra, AlcaLu in R&D Pact, Telstra Trials 40-Gbit/s Optical, Telstra Picks ALU for Subsea, VPIsystems Wins Telstra Deal, Ericsson Wins Telstra Contract, Telstra Outlines Massive OSS Project, Telstra Unveils Switch to IP, and Telstra Names NGN Vendors.)

Talking to Light Reading Friday morning, Trujillo, who became Telstra's top dog three years ago, says the market has already experienced a great deal of change, and "the dynamics are now real-time. We have to be bold and decisive. I saw three years ago that high-speed wireless would change the game." (See Telstra CEO Outlines Strategy and Telstra Appoints New CEO.)

So Telstra invested AU$1.1 billion (US$1.06 billion) in a new HSPA mobile network and rolled it out as quickly as possible. The so-called "Next G" network was launched in October 2006, just 10 months after rollout began, and, by February this year, 3.5 million of the carrier's 9.3 million mobile customers were using its 3G services. (See Telstra Touts 3G Usage and Aussie HSDPA Launches.)

"We needed to make some big bets with our capital dollars," says the CEO. "We made a bet to build a national HSPA high-speed wireless network, which, in customer terms, means you become a near real-time player. That was a bet that the customer would benefit from."

Now Trujillo believes there's going to be a rejuvenation of carriers' fixed-line businesses, driven by the introduction of high-definition video services. He cites market projections that say 20 percent of the U.S. population, including cable and telco customers, will be watching HDTV by 2010, and that about 20 percent of new movies in the next few years will be made in 3D, a process that significantly increases the digital file size of a movie for distribution and download.

The CEO says that as people become "Webified" and used to seamless, real-time multimedia services, they will look for their service providers "to make it work together, with a one-touch, one-click environment. We are now proving that point, as are others. There is growth out there. I have hope, and I have the numbers that show we can compete and find growth."

But the faint-hearted won't make it, he warns. "You've got to be willing to make bets. If you hesitate, if you blink, then it won't be a bright future."

Trujillo adds: "Look at Google -- it can move in weeks to introduce new services. If you take months or even years to do the same thing then you're in trouble," and that's why transformation is a must, he says.

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