Telstra must invest in Asia while US telcos lag: analyst

Telstra must take advantage of the lack of US investment in the Asia/Pacific telecommunications industry, Ernst & Young has urged.

According to John Edwards, head of Ernst & Young Asia Pacific communications consulting services, investment opportunities exist within Asia/Pacific for Telstra and other players.

"We don't yet see the level of investment we expected to see. There has to be a trend for [increased investment] over the next few years," Edwards said.

Speaking at yesterday's release of Ernst & Young's study, The Connected Society: Winning the Battle for the Customer, Edwards said most outside investment in Asia is coming from European carriers, British Telecommunications and Vodafone.

"US telcos have more or less pulled back from Asia," he said.

According to Edwards, US telcos are faced with domestic issues, such as changes to the local call market, which are dominating their agendas.

"US telcos are making a big mistake by not investing in Asia," he said.

The lack of interest in Asia by the US heavyweights gives Telstra a leg-in to the region, but investment in the region, "is not particularly high on [the carrier's] agenda", Edwards said.

Edwards said he does not expect Telstra to deviate from its plan to establish points of presence throughout the region. He does however, expect Telstra, under the direction of CEO Ziggy Switkowski, to invest in multimedia and new technologies in the area.

Edwards also said he expects to see some consolidation across the region in the next two to three years.

"Customer benefits from the new competition have plateaued. We almost have to see some sort of consolidation over the next year or so," Edwards said.

Meanwhile, CEOs from telecommunication organisations across the world have identified the threat of new competitors as a major concern, the study revealed.

Uncertainty within the telco industry as well as the threat of new competitors who cannot be identified today are some issues concerning CEOs, Edwards said.

According to Edwards, a key trend to emerge from the Ernst & Young study, is the reality that customer needs and demands now drive the industry. Previously a well used pledge of carriers, customer needs have now become a reality for successful telcos in the competitive markets, he said.

Edwards said however, traditional telcos face the risk of losing customers, as "content packagers" in the form of Internet Service Providers (ISPs) and portal companies become full-service providers carrying both data and voice traffic.

Telcos have no option but to switch from voice networks to data networks, as use in the Internet, and IP transmission continue to grow, Edwards said.

"The level of investment [for the Internet] is substantial. Telcos have got to be prepared to lose chunks of money as they transform their business," Edwards said.