Optus testing fixed-wireless networks

Optus – owned by Singapore Telecommunications (ASX: SGT) – is testing a fixed-wireless service amongst its staff which, if successful, could set it free of Telstra’s (ASX: TLS) wholesale costs.

Telstra, which has control of the infrastructure needed for fixed line services like modems, home phones and internet, charges a wholesale rate to carriers. Over the years, this has provided Telstra with lucrative margins and allowed it to dominate the market.

Optus’s new plan, however, will enable it to use its 4G network to provide “comparable” ADSL2+ speeds to users who are unable to receive a fixed broadband connection, according to The Australian. This would save the company millions of dollars in operational costs because it would “bypass” Telstra’s wholesale services.

Australia’s number two telco is giving a number of its workers the device, which connects wirelessly to the internet, in order test its signal strength and reliability. Although a mobile signal can be patchy, having the device in a fixed location can allow the carrier to provide a better connection.

The NBN, which is responsible for providing not only the fixed fibre network to metropolitan and semi-rural cities but also a remote service to households further away, provides a similar service to Optus’ fixed-wireless.

Although this technology may be nothing new to many who use wireless dongles for laptops or portable WiFi hotspots, enabling a more reliable internet connection without the hassles of installation and cables is likely to be well received by customers. The service will not require an existing phone line, but will need an Optus Home Wireless Broadband device to connect to the internet.

Foolish takeaway

Although Telstra currently controls the lion’s share of the fixed broadband market, investors have become concerned that upon rollout of the NBN it will lose its ability to dominant the fixed broadband market. However its reliable internet and mobile connections coupled with outstanding customer service should see it maintain its dominant position for years to come.

Recently many analysts have become even more concerned about Optus’s ability to maintain its market share since its number of mobile customers has not grown in recent years. It will require innovative products and superior customer service if it is to grow its share of both the fixed broadband and mobile markets.

Should you buy, sell or hold Telstra?

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new report: "Is It Time to Sell Telstra?"

Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.