Telstra will redirect $250 million to fix network problems, but is it enough?

TELSTRA announced it would spend $250 million in shoring up its beleaguered mobile and fixed broadband network but experts say it’s not enough.

What’s the fix for repeated Telstra outages?

TELSTRA announced this week that it would spend $250 million in shoring up its beleaguered mobile and fixed broadband network but industry experts say it’s not going far enough.

Just days after Telstra CEO Andy Penn made the announcement, the telco that was once easily considered the country’s most reliable, again suffered a network outage. This time customers in Victoria endured a prolonged outage of their online services, which even affected Jetstar flights.

It’s become a common occurrence for Telstra customers in the past few months and industry experts have warned that problems will keep happening unless Telstra undertakes massive investment in its technology.

“It’s an overall network problem, it’s in relation to capacity, robustness, all of that, and that requires investment in the network,” telco expert Paul Budde told news.com.au.

“This has been creeping into the network over the past five, six, seven years. Now for whatever reason they haven’t done enough investment.”

Telstra’s “prioritised” $250 million investment announced this week is designed to improve its network’s resilience, chief executive Andy Penn said, and would include procedures and tools for monitoring network problems.

Over the next 12 months, $100 million will go upgrading its “core network”, $100 million to increase its ADSL capacity, and the $50 million upgrade to its mobile network.

However while some extra money has been redirected towards addressing the problems, the telco’s capital expenditure to sales ratio remains the same.

The extra $50 million on its mobile network amounts to less than .50 per cent of the company’s mobile revenue over the coming year while the $200 million to fix problems with broadband services is less than two per cent of company’s fixed broadband revenue over the period.

Mr Budde believes the sale of Telstra’s network to the NBN Co. could be a contributing factor for Telstra’s reluctance to spend big on its network.

“Perhaps not enough money has been invested in upgrading because in the back of Telstra’s mind is the fact that the whole network will go to the NBN Co,” he said.

Telstra said this week that there has not been an increase in incidents but they have simply been more widespread, due in part to the popularity of its network.

“Yes it is capacity but they haven’t properly allocated resources for that and I think partly because they said the network is going to be run by NBN Co. so we don’t have to do that,” Mr Budde said.

“Having said that, these are elements that are happening all over the world. You see every network is under stress and that comes back to the fact that most incumbents in the last 20 years have under invested. They keep on coming with their copper network, they’re upgrading from ADSL to VDSL to fibre to the node but basically maintaining the old copper network.

“There comes a time that there is an end to the old technology and you have to update it. And incumbent telcos around the world have had problems with that.”

Telstra denies that its recent run of problems are due to under investment in its network.

“We invest around $4 billion dollars a year and that goes across a broad spectrum of investments. What we are doing is increasing our level of investment in the core network to improve resiliency and provide additional capacity for ADSL,” a spokesperson told news.com.au.

But it’s clear an increase in users and the growing amount Australians are downloading is putting stress on the network.

Mr Budde sees the only real solution to avoiding such issues is building an all fibre network. Without that, “we can expect more problems going forward”, he said.