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Telstra launches high-speed wireless network in Australia (Khaleej Times, October 7, 2006)

Published by Current on 2006-10-07

With the flick of a switch and to the applause of his colleagues and peers in the telecommunications industry who had gathered in Sydney from around the world, the chief executive office of Telstra, Australia's largest Internet provider, yesterday launched a new national high-speed mobile broadband network.

"We are delivering on our promise -- in a record-breaking 10 months," the CEO, Solomon Trujillo, told Khaleej Times. He said that the US$900 million enterprise involved the deployment of a new IP core network capable of speeds 77 times faster than what was in current use. The 3G system also features a new switching technology with 2,000 percent more capacity than currently available, he said.

That means that people in virtually all regions of this geographically vast country -- which is almost the size of the continental United States -- will be able to receive broadband coverage through their mobile phones. But in order to receive such coverage -- which would involve movies, sports events and video telephony, among other things, customers would also need to buy a new handset, a costly proposition in view of the fact that the average monthly bill for Telstra new services is likely to exceed US$75.

Capitalizing on the opportunity to introduce such a handset in the market, electronics manufacturer LG said yesterday that it will sell a new mobile phone capable of incorporating Telstra's new high-speed system. The cost of such a handset? US$460.

But there were skeptics. Paul Budde, an independent and well-known telecommunications analyst, told reporters that while the new network would likely boost the coverage and speed of Telstra's existing 3G mobile phone services, "it offered no substitute for a national high-speed broadband network."
Mr. Budde told the Fairfax publications group that about 90 percent of mobile phone users used their phones for voice or SMS, compared with only 3 percent currently using mobile networks to send data. Telstra claims that its new network will reach 98 percent of the country's population of 20.4 million. Australia has cities on the coasts and a vast interior with very few people.

"This is probably a bit faster than the existing 3G network, but who is going to spend upwards of $75 per month so they can make video calls over a mobile network? What Australia really needs is a high speed broadband network," Mr. Budde was quoted as saying.

Still, Telstra seems confident that Australians will be receptive to its new network. Mr. Trujillo said that the company's "NEXT G" network -- as it is formally called -- is built on high-speed downlink packet access technology (HSDPA) that's up to 77 times faster than dial-up and up to five times faster than existing 3GSM networks.

To mark the launch, Mr. Trujillo -- an American of Mexican heritage -- invited hundreds of telecommunications leaders for a day of celebrations that included a banquet.

He was lauded by several guests -- some of them Telstra's partners -- not only for the launch of the new network but also for progress in streamlining Telstra, a US$18 billion company with global investments that has long been characterized by poor management, inefficiency, and falling share prices.

One such guest was the president and CEO of Ericsson, Carl-Henric Svanberg.

"We have built telecommunications infrastructure across the world for 130 years, but this project is a major achievement of unprecedented scale and scope," Mr. Svanberg said.

Another guest, the chairman and CEO of Accenture, William Green, said: "We have worked with many of the world's largest organisations and Telstra's leadership team is clearly focussed and committed to delivering on the transformation and the resulting benefits for customers and shareholders."

And still another guest at the launch, the chairman and CEO of Alcatel Serge Tchuruk, said: "The investments Telstra is making to transform its networks will ensure its customers have services as dynamic as those provided by the world's leading providers."

These sorts of remarks must have surely delighted Mr. Trujillo. Since his appointment in July last year as Telstra's CEO, he hasn't had a pleasant time in Australia. In previous roles as CEO of the French telecom giant, Orange, and before that CEO of US West (now Qwest), he won plaudits for innovation, leadership skills and management style - a style that, as he puts it, combines "drive, an aggressive and disciplined focus on goals, and a constant willingness to listen to colleagues and customers."

But the welcome in Australia was less than warm, notwithstanding Mr. Trujillo's corporate record in America and Europe.

His unruffled demeanor and high energy -- quite possibly the result of a strict regimen of daily 5 a.m. workouts, careful diet, and an especially close family life with his wife Corine and three daughters -- were most certainly tested as Mr. Trujillo was reviled in some of Australia's media, caricatured in racist tones, and subjected to apparently politically inspired questions about whether an Australian corporate icon truly needed an American - and a Latino at that - to run it.

The controversy surrounding him wasn't entirely created by Mr. Trujillo's local foes and rivals in the telecommunications business. His oft-stated contention that draconian regulations adversely affected Telstra's ability to grow, as well as its profits, dividends and share prices, drew the wrath of the government of Prime Minister John Howard. The government holds 51.8% of 12.4 billion of Telstra's total outstanding shares.

After delicate negotiations during which Mr. Trujillo agreed to restrain himself in public criticism of Mr. Howard and the government's powerful regulatory body, the Australian Competition and Consumer Commission, the prime minister announced that his administration would offload US$6.06 billion worth of shares that it held in the country's biggest telecommunications company. Mr. Howard's announcement meant that some 18.4% of the government's holdings would be sold to retail and institutional investors starting this month.

Now, Mr. Trujillo told Khaleej Times, "Telstra's transformation engine is humming on all cylinders, and the most critical ones are performing best of all. We are on or ahead of budget and delivery schedule, and we've been busy winning in the market with new high-speed networks, new products that are simple and integrated, and improved customer service that is more reliable and convenient."

He said that yesterday's launch was only one step, albeit a major one, in his five-year strategy to transform Telstra into a world-class company and a global telecommunications giant.

"Some 1.6 million mums and dads - our shareholders - had seen their share value fall from $5.60 in 1999 to $3.70 when I arrived in July 2005. The company was borrowing money to pay dividends. Our retail revenues were flat, and costs were rising by 10% annually. Our fixed-line business was declining sharply," Mr. Trujillo said. "So I announced a strategy to transform and energize Telstra from what I call a 20th century telephone company in decline to a 21st century media-communications powerhouse that provides truly integrated services on digital platforms.

"Telstra is turning the corner. Telstra is a now a company on the move with the nation's best networks, unmatched integrated content and applications, and better customer service than ever before," he said.

In addition to streamlining the corporate behemoth, the 54-year-old Mr. Trujillo said, he was expanding Telstra's role in Asia. That included merging its Hong Kong-based mobile operator, CSL, with New World to create the number one mobile provider in Hong Kong. The expansion also included purchasing a majority stake in Chinese online real estate site SouFun.com, one of the world's 100 most-visited Web sites.

In forthcoming weeks, Mr. Trujillo is expected to visit Dubai, possibly to participate in joint events with Khaleej Times. One subject that he expects to emphasize is the expectations of corporate leadership in this age of galloping globalization.

"Great leaders practice principled leadership to inspire others to do great things. They have integrity and affirm high standards of moral and professional behavior -- by word and deed. They seek out smart people, provide a sense of direction and keep in touch with what's going on," Mr. Trujillo told Khaleej Times. "They put good management systems in place and enable their teams to achieve. Great business leaders are people who have really good eyes and good ears - they are always looking for opportunities to make things better; they are good observers of their environment; and they always listen to their customers and their counselors. Great leaders not only do the right things; they do it the right way."

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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