CSL rolls out software-controlled upgrade from 2G to 3G services
Tarek Robbiati: all of CSL’s 2G and 3G services are
on a single integrated network
If you want to see the future of fixed and mobile telecoms, there’s a good argument for going to Hong Kong. Fixed operators such as City Telecom are delivering speeds up to one gigabit into apartments for remarkably low prices, while mobile networks are running some of the fastest HSPA+ networks in the world and already preparing for the next generation of mobile services, LTE.
Tarek Robbiati heads CSL, one of the most innovative mobile operators in what is the hugely competitive market of Hong Kong. Robbiati, a former deputy CFO of Telstra, the Australian incumbent, was given the additional role of running Telstra International just days after Global Telecoms Business interviewed him.
The relationship with Telstra is close: the trademark for Telstra’s 3G network is Next G, and CSL used exactly the same brand for its 3G network in Hong Kong. The main difference is that the Australian network is supplied by Ericsson, and the Hong Kong vendor is ZTE, which is based in Shenzhen, the southern Chinese city just across the border.
Telstra closed down a CDMA network so it could up its 3G network. In Hong Kong, CSL replaced its existing GSM network with a single network that runs both 2G and 3G services.
“We overlaid the existing network, and then we migrated all our customers seamlessly to the new network,” says Robbiati. “Then we shut down the old 2G network. Now all our 2G and 3G services are on a single integrated network.”
Though Hong Kong is relatively small the changeover involved 2,200 base station sites — in what is a hugely challenging environment, with most of the population concentrated in high-rise buildings around the harbour, and the rest scattered across mountainous countryside.
The first stage of the process was in February-March 2009, when the new network was launched. The single integrated network was fully operational by the end of September. “We then started the new leg of the network transformation,” says Robbiati. The company started to re-farm the 900 megahertz bands, originally restricted to exclusively 2G, for 3G services. “We were harnessing the power of SDR.”
SDR means software-defined radio, which means the radios in the base stations can be switched — under software control — from 2G to 3G. “It has been talked about for some time, but no one else was doing it until CSL,” says Robbiati. “Now we have 2.6 million customers using it.”
The beauty of using SDR mean that there was no construction involved at all in re-farming the 900 megahertz channels for 3G. “The engineers did some fine tuning, but it was all done with software,” says Robbiati.
The benefit of using some 900 megahertz capacity is that it has better indoor and outdoor coverage than the 2,100 megahertz bands that typically carry 3G.
“Hong Kong is probably one of the most difficult places to service,” he says. “We have 3,000 buildings that are more than 30 storeys high — but only 6% of the surface area of Hong Kong is built on.”
He waved out of the window of the Grand Hyatt Hotel in Wanchai, on the northern shore of the main island of Hong Kong. “There are customers behind those mountains: we provide them with 3G service.”
So does the SDR technology allow CSL to move to LTE? Yes, but there’s no need for it yet, says Robbiati. “HSPA+ has a lot of life yet. It’s not over at all,” he says. “It’s just beginning. It can be extended with software.”
Yes, it’s possible to move on to LTE, “but at the moment there are no devices”, he notes, adding that commercial quantities of chipsets for terminals are unlikely before “the end of 2010”.
That means CSL is unwilling to roll out an LTE network so soon after it’s transformed 2G into a combined 2G/3G network. “Why roll out the infrastructure if you don’t need it?” he asks.
In LTE terms, “the most progressive carrier in the world is Verizon Wireless”, he adds, but it is planning to use the 700 megahertz band, “which is highly suitable for a large country like the US”. Verizon Wireless is planning first services later in 2010, but Robbiati expects it will be 2012-13 before the technology takes off.
Devices and chips
“We are ready for a rollout of LTE. We can do it quickly — but why? Because at the moment there are no devices.”
LTE will need an all-IP backhaul network, “and a lot of spectrum and a new network, but for us these are all non-issues”, he adds. “The only issues for us are the availability of the chipset.”
CSL licensed the Next G brand for its 3G network from Telstra, and used a team of Telstra engineers to support its own team during the build-up in early 2009.
Robbiati admits that by using different vendors — Ericsson and ZTE — the Australian and Hong Kong operations of the group are able to compare the performance of the suppliers’ equipment, “but I won’t share that information with you”, he smiles.
“ZTE was a natural choice for us as we are in China and the research and development is 45 minutes across the border. If anything is needed we cam draw on the resources.”
And the results? “We are very pleased with the relationship. This is the first SDR in the world, and Hong Kong is a very competitive environment. Hong Kong consumers are sophisticated and highly brand-conscious — more than in my home town of Milan.”
Robbiati worked in Europe for more than 15 years, at Accenture, Lehman Brothers and then Orange UK, before heading to Australia to join Telstra to become deputy CFO in 2005.
Though he has a financial background, he has a keen sense that marketing and technology are important. “Quality of service is important, and very few players emphasise that. We know that customers don’t like dropped calls and slow speeds. We want to emphasise network quality and quality of service.”
CSL segments its customers and provides different brands for each segment — including a corporate and business brand called 1010, “which has an 85% share of the corporate sector”. There’s even a “no frills” brand, New World Mobility, “for those who just want a mobile”.
Meanwhile the transformation of the network gives CSL “a great opportunity to upsell 2G customers to 3G”, says Robbiati. “The customer base is already very data rich.” Already 35% of the data revenue comes from non-SMS traffic. “People are used to consuming services,” he adds.
The company has a range of services — some of its own design — that it offers to the market. “We want to make our offer unique. We package content, and we deliver proprietary applications and services, and we leverage third-party services.”
For example, the company offers a bandwidth-on-demand option. Customers can opt for HSPA speeds of 3.6 megabits a second, 7.2 megabits or 21 megabits. “All the bundles are unlimited, but you pay for speed.”
There’s a number of traditional content services, such as news, stock prices and betting. “But we’ve introduced a set of proprietary applications and services, such as a music subscription. There’s a flat rate to listen to as much music as you want on your handset. And you can also access the music on your PC in hifi quality.” And there are movies and mobi-series, TV productions designed for watching on a mobile phone.
CSL is “just mobile”, says Robbiati. “But innovation in wireless is just gigantic, and is overturning wireline,” he adds.
“The telecoms industry is complex and requires a lot of investment.” Mobile provides a better return on investment because there is a shorter time to market. “There are some things that are not easy to do with mobile on a massive scale — such as high-definition content,” he admits.
That’s partly because the notebooks that many customers use as terminals just not have a powerful enough processor for movies. “The CPU is not fast enough and people complain the video isn’t working.”
But that’s probably a temporary issue: network speeds and chip performance just improve with time. And before too long there will no doubt be enough terminals on the market to justify that investment in LTE. GTB
Group MD of Telstra International since late 2009 and CEO of CSL since July 2007
Master of science in nuclear physics and electronics engineering from École Nationale Supèrieure d’Ingènieurs, Caen, France
Master of science in business administration from Institut d’Administration des Enterprises, Caen, France
MBA from London Business School, UK
Senior manager at Accenture, UK
VP and senior equity research analyst with Lehman Brothers, UK
VP and head of corporate finance, Orange UK
Deputy CFO of Telstra, Australia
Appointed CEO of CSL, Telstra’s mobile operation in Hong Kong
Appointed group MD of Telstra International