Telstra threatens vividwireless speed claims

Within a month of the birth of Channel Seven's WiMax internet service provider, vividwireless, Telstra had welcomed it with "cease and desist" letters over its use of the term "4G" and "peak speeds".

"We got one letter a week after the press release, which is par for the course with Telstra," vividwireless' chief, Martin Mercer, told ZDNet.com.au.

Telstra took exception to vividwireless' use of 4G for its WiMax network as well as its claim that it offered "peak speeds" of up to 20 megabits per second (Mbps) — a measurement method that by 29 September was outlawed by the Australian Competition and Consumer Commission (ACCC).

At the announcement of the new company on 2 September, Mercer had inferred vividwireless' WiMax network would be 10 times faster than Telstra's prized Next G 3G network because its "peak speeds" would reach 20Mbps — 1Mbps less than Telstra had previously claimed Next G's "theoretical maximum" speed would be.

Mercer, a former executive director of marketing for Telstra's consumer business, said in a vividwireless statement in September: "Customers using our service on a laptop, for example, will enjoy average speeds of +4Mbps and peak speeds in excess of 20Mbps — which is up to 10 times faster than those delivered by the existing 3G networks."

"The principal issue was with the fact we had mentioned a peak speed," said Mercer today. "The primary concern was whether that was consistent with the ACCC's recommendations in relation to advertising wireless speeds."

A Telstra spokesperson told ZDNet.com.au it was concerned vividwireless' claim would confuse customers. "[Telstra was] concerned their claims made in a September news release could have caused confusion among consumers," the spokesperson said.

Mercer said Telstra's legal letters stopped after it reminded the telco that its press release was issued prior to the ACCC's guidance.

"Speak to any telco, including Optus — whenever you make a marketing claim Telstra will send off a legal letter," Mercer added.

At Telstra's launch of Next G last year, Michael Wright, Telstra's executive director of wireless said "real world" figures were not yet available but clarified that on a 7.2Mbps device, "a typical user is seeing 550Kbps to 3Mbps, with bursts of 6Mbps".

Mercer said it did not intend to use peak speed measurements in the future and that the industry as a whole had recognised it was not beneficial for consumers. "We will be complying with the ACCC's guidelines," he said.

Telstra had also objected to vividwireless' use of the term 4G for WiMax. While in the US WiMax is often referred to as a 4G technology, the term had only been applied to Long Term Evolution (LTE) and not WiMax. While LTE and WiMax share some common standards, the two data cannot be handed off from one network to another. Telstra has signalled previously that LTE is its preferred wireless technology.

The Federal Government, as part of its plan to structurally separate Telstra, has threatened to ban the telco from acquiring the spectrum, currently held by television broadcasters. At the announcement of vividwireless, Channel Seven boss Kerry Stokes bragged that the ISP had "access to the largest allocation of 4G spectrum in metropolitan Australia".

Mercer also said the ISP would have an operational network "within the next week or two", and that its gateway switching equipment had been installed. It hopes to complete the network by March 2010.

"We've got connectivity, backhaul to Sydney has been established and over 40 sites are under construction," he said. Construction company Abigroup has been selected for the base-station build, while Huawei has been selected as the main networking equipment supplier.