Telstra in need of a big technological fix to stay in the game (Sydney Morning Herald / Rod Myer and Garry Barker)

From the article: “New chief executive Sol Trujillo will release his strategy to transform the telecom next month. The transformation could take three to five years to really pay off but timidity and slow movement are no longer an option as Telstra struggles to re-engineer itself to meet the realities of technological change.

These dictate that the future will be in internet phone and television, massive levels of data transfer, personalised information services and video on demand, all operating on broadband, cable and wireless networks.

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The old copper network yields Telstra a whopping 60 per cent profit margin but customers are deserting it. Ian Martin, telecom analyst with ABN Amro, expects land-line revenue, which fell from $8 billion in 2003-04 to $7.5 billion last year, will drop a further 7 per cent this year to $7 billion.”

The last mile copper network is Telstra’s biggest asset by a long shot. Virtually all DSL based connections sold in Australia rely on Telstra’s copper to reach into the household of office of the customers. The high wholesale cost charged to ISPs and other carriers for the use of the copper is driving them towards alternative technologies such as wireless. Some of the newer wireless providers such as iBurst and Unwired have no such dependencies on Telstra for reaching their customers enabling them to provide services at a lower cost. If Telstra does nothing to address this trend their largest asset will become irrelevant.