Optus extends 3G mobile to rural Australia

update Australia's second largest telco Optus plans to spend between AU$500 million and AU$800 million to extend its third generation (3G) mobile coverage outside of Australia's capital cities to rural areas.

Optus chief executive Paul O'Sullivan told journalists this morning that construction of a new rural 3G network would begin in April this year, with the first phase addressing areas such as Newcastle, Bendigo, Ballarat and Wollongong.

Optus claims its 3G network will reach 96 percent of the Australian population. Click to enlarge map.

Like Telstra's Next G network launched late last year, Optus' new network will initially provide speeds of up to 3.6Mbps using the High Speed Downlink Packet Access (HSDPA) standard, with an eventual upgrade to 14.4Mbps planned.

O'Sullivan claimed the new network will mean Optus has 3G coverage to 96 percent of the Australian population. The coverage area will replicate Optus' existing 2G rural network.

The CEO added the new services would commence in early 2008, with the new network build being complete by 2010.

Optus already offers 3G services in some capital cities through the network it will continue to share with Vodafone, however, Telstra's Next G network remains the only way to access higher speed mobile services in rural areas. The new network will be solely owned and operated by Optus.

However, in contrast to Next G, Optus will offer wholesale services to other carriers over the new network.

Asked whether Optus' network extension was a "me too" strategy to compete with Telstra's Next G, O'Sullivan said Optus saw Next G as a defensive strategy on Telstra's part to maintain the high market share it enjoyed in rural areas -- more than 54 percent, according to Optus.

Picking up a new frequency?
The new network will operate in the 2100MHz frequency range that Optus' city 3G network uses.

However, O'Sullivan also flagged the opportunity to follow Telstra's example and use a lower frequency range (900MHz in Optus case, vs 850MHz for Telstra's Next G Network) in some areas, due to the greater range the lower frequency offers.

The Optus chief said Optus had been trialling 3G at 900MHz for some months, with encouraging results.

O'Sullivan said Optus would reach a final decision on frequency choice for the second phase of the rollout later in 2007. "The cost of the network rollout is estimated at up to $800 million if it is built entirely at 2100MHz, and around $500 million if 900MHz proved feasible," he said.

He admitted there were no mobile phone handsets available yet that would work on a 900MHz network, although 2100MHz handsets were plentiful.

Optus has yet to appoint a hardware vendor of equipment for the network, and will put the work out in a formal tender process.

AAP contributed to this report.