Optus’ satellite phone deal is a future win, but has muted impact now

afr.com:

Optus has been on a tear. First, the telecommunications company spoiled Telstra’s plan to boost its coverage in the bush with airspace from TPG Telecom by convincing the Australian Competition Tribunal it would be bad for the marketplace.

Then last week it seemed to outflank Telstra and its prized network of regional towers altogether by announcing a pact with billionaire Elon Musk’s Starlink to let customers access calls, texts and the internet via satellite. Previous estimates have suggested that if Telstra were to lose its dominance in the bush it could cost the network hundreds of thousands if not millions of customers and pummel its pricing power. Optus’ move looked like a coup.

A SpaceX rocket launch in Florida carrying next-generation Starlink satellites, which will power Optus’ Australia-wide network. AP

But the market did not even blink, with Telstra’s shares up 1.4 per cent to $4.31 last week. Similar Starlink announcements by overseas telecommunications firms have also failed to move the needle.

The reason is that Musk’s technology is still on the bleeding edge. It will require Starlink to launch thousands of new satellites. They will start off as a handy way for backpackers to make contact rather than a way of alleviating rural boredom via Netflix and managing high technology farms. At least for the next few years, Telstra’s tower advantage will continue to tell.

There’s no doubting the appeal of Musk’s vision to eliminate coverage gaps by beaming signals directly from the sky, as anyone who has been caught in one would know. But even the most minimal version of the technology is 18 months away.

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