Introducing new technologies tough on telcos

Migrating customers from old networks to next generation networks is one of the hardest challenges a telco can face according to new research.

The research from analysts Ovum says that migrating to a new standard is a four-way strategy game between the operator, its rivals, its customers and its regulator, making a risky and unpredictable situation.

According to the research, there are three major issues dogging the rollout of next generation networks: the first is the diversity of customers' interests and needs, with some not wanting to abandon the old network.

The second issue is rival telcos, who can use the change to break customer-operator bonds of loyalty, especially if customers must absorb the costs of the new network.

The third, regulatory issues which can hamper the switch off of a network, is the easiest to address, David Kennedy, research director at Ovum, told ZDNet Australia. However, he added, that in Australia's current regulatory environment "the goal posts have had a tendency to move".

Kennedy said that one such example is the trouble Telstra has experienced migrating customers from CDMA to Next G, where the government has laid down requirements for the new network before the old one can be switched off.

This tendency puts "large uncertainties into the business case" for new technologies, Kennedy said.

According to Kennedy, this can mean that Australians receive new technologies late. "The fact that the transition process is so complex does delay investment in some cases," he said.

Kennedy said that the government should be more forward looking, saying that Australia needs "some sort of compact or agreement ... about investment in next generation networks". Without that, there will be a lot of disputes, he said.

On the election, Kennedy said: "It will be interesting to see how much the parties are prepared to take a new look."

With the election looming, both parties have considered the implications of regulation on next-generation fibre-to-the-node networks.

Labor said it will implement a tougher regulatory approach to the operational separation of Telstra if it wins the election, while the Coalition has only expressed the possibility of a split earlier this year.

Kennedy said that, although there are costs involved in such a separation, it will result in a lighter regulatory approach for the telco.