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What Does Optus Buying Vividwireless Mean For 4G? [Updated]

Subject to ACCC approval, Optus is going to lay down a hefty chunk of change for Vividwireless. So the topic for this week’s Mobile Monday became rather obvious: What does that do to Australia’s 4G landscape? Updated: Now with Optus’ clarifications on its announced 4G plans, including what the future holds for 700Mhz LTE.

Giz Au Editor’s Note: I’m writing this while I wait for Optus to get back to me to answer a number of questions relating to the Vividwireless acquisition. If Optus clarifies a few things, I’ll update accordingly

Vividwireless had the technical bragging rights in Australia to talk itself up as the first multi-state 4G network, long before Telstra ever did. Not that being first in Australia always equates to market success; if it did, we’d see a lot more ’3′ branding on phones, and significantly less Vodafone, for example. Optus announced this morning that it’s planning to buy Vividwireless outright from the Seven group for $230 million. It’s not doing so because it likes the name, or indeed because it wants the kudos of having the ‘first’ 4G network.

The acquisition does leave up in the air what happens to Vividwireless’ existing WiMax customers. My own tests suggested that Vividwireless’ WiMAX never really hit the kinds of speeds you might expect out of a ’4G’ service, although the first couple of times I tested Vividwireless and wrote that, I got a number of angry readers — usually from Perth — stating that speeds were excellent. Testing in Sydney, I couldn’t refute them — merely comment on my own experiences, which suggested that its speeds were often outpaced by everyone but Vodafone. Later tests saw those comments drop away, which suggests that Vividwireless’ performance didn’t exactly increase over time.

Vividwireless always had an ace up its sleeve, however, in the form of its unlimited downloads $79 offer; if the speeds aren’t up to scratch does it really matter when you can eliminate bill shock entirely? While there’s no official word on what Optus will do to Vividwireless’ existing customer base, beyond the fact that Optus will be picking them up, I wouldn’t exactly be confident that Optus will do anything except let existing contracts quietly expire while it shuffles any remaining customers up to LTE-TDD. It’s already got one subsidiary business — Virgin Mobile — that covers the budget end of the telephony and mobile data spectrum, so two would be overkill.

Update: Optus has responded to me with the following statement regarding Vividwireless customers:

‘Vividwireless will continue to provide services to its customers with Optus planning to migrate customers to the upgraded LTE network as rollout progresses.’

What’s really at stake here — and the real reason why Optus is plunking down $230 million of its own cold hard cash — isn’t customers or even really WiMAX at all. What’s at stake here are the spectrum licences that Vividwireless holds in the 2.3GHz band. That’s the value in buying Vividwireless before Telstra or Vodafone can, and it’s notable that the full release that Optus sent out notes that the sale is conditional not only on ACCC approval (which you’d expect) but also on Vividwireless’ 2.3GHz spectrum licences being renewed. In other words, if Vividwireless doesn’t get the renewals, the money is off the table.

The purchase also gives Optus bragging rights over Telstra, albeit at this stage only technical bragging rights; the release is happy to note that it can offer download speeds ‘ranging from 25Mbps to 87Mbps’. That figure’s based on a two month trial of LTE-TDD that Vividwireless conducted in early 2011. I attended the press demonstration of Vividwireless’ LTE-TDD implementation, and while it did hit the advertised speeds, that was under extremely controlled conditions and with few (if any) other users on the system. Quite what it’ll equate to in the real world once there’s a user base remains to be seen, but I’ve already noticed in my own ad-hoc testing that Telstra’s 4G speeds have dropped; when 4G’s available it’s slower than it used to be, which you’d expect with more users on the system.

One thing that the Vividwireless part of the new network won’t be is in any way rural or regional, at least going by the language of the media release, which talks up delivering ‘wireless broadband to households and businesses in metropolitan Australia’. There’s no way that’s not deliberate wording; while Optus’ 1800Mhz network will roll out in Newcastle and the Hunter region in April, that’s a different network, as is the 700Mhz LTE it’s been trialling in Bendigo.

Update: In regards to its separate 700Mhz 4G plans, Optus sent me through the following statements:

• Optus plans to use 700 MHz spectrum as part of its long term LTE plans and will be an active participant in the Digital Dividend auctions.
• As we have seen with 3G networks, dual frequencies are essential to ensure sufficient capacity for a consistent customer experience
• In a 4G world this will be no different, however currently all Australian carriers have limited resources of 1800Mhz spectrum until the digital dividend switch on in 2015.
• In addition the data growth in a 4G world will mean that spectrum across a range of frequencies will be essential for network capacity.

So where does this leave Telstra? It’s been aggressive in branding its 1800MHz LTE as ’4G’, and it seems as though that’s what Optus is going to do now as well — which means the dreaded spectre of 4G-meaning-all-sorts-of-different-speeds is sadly, upon us — and it does have something of a first mover advantage, in that it can sell its version of 4G across multiple sites right now, with the 4G USB dongle, the HTC Velocity 4G, and the coming-soon 4G WiFi Hotspot and possible 4G Galaxy S II.
Where too, is Vodafone in all this? Aside from a flurry of noise suggesting that it might have 4G by the end of 2011 — which didn’t happen — it’s all been rather quiet, although recent prodding by PC & Tech Authority editor Nic Healey did at first reveal a stunning quote (that Vodafone “wasn’t working on 4G at all”) and then a more quiet piece of commercialese, namely that

Vodafone will introduce 4G/LTE when the time is right, based on the commercial availability of handsets and mobile broadband devices at affordable prices. As part of our Huawei network upgrades, we have been rolling out 4G-ready equipment since the start of 2011.

So right now, we’ve got Telstra with 4G-that-isn’t-quite-4G, Optus with potentially up to three different LTE technologies on trial — and one set to launch in April with limited availabilty — and Vodafone seemingly waiting for the dust to settle, although it may be waiting behind a stack of perfectly useable gear. Vividwireless is probably a dead brand in the medium term, and 4G means even less than it did this morning.


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