A Telstra logo on a phone booth in the central business district of Sydney, Australia, on Feb. 13, 2018.David Gray/Reuters
Australian-based telecom Telstra is expanding into Canada, with new infrastructure that will connect Toronto businesses directly to the Asia-Pacific region through its network of undersea cables.
To offer the service, Telstra will establish in Toronto what is known as a “point of presence” – a place where fiber-optic cables meet and online traffic is routed – that will plug into its existing network in the United States, where it has been operating for about 25 years. The new link will connect Toronto-based businesses to a 400,000-kilometre cable network running along the Pacific Ocean floor and extending into the Asian and Australian markets.
The telecom’s presence in Canada will allow it to target enterprise customers such as technology and financial services firms with an eye on international growth by promising a faster, more secure line to their overseas operations. Telstra will start offering services in Toronto in early 2021, with plans to expand to Vancouver, Montreal and Calgary.
In addition to serving Canadian clients, the new infrastructure will also give Australian businesses more direct access to Canada, something that Telstra’s existing clients in that country have long been requesting, says Nicholas Collins, president of the Americas division at the Australian-based telecom.
“If you’re transacting mission-critical, time-sensitive information from Canada to Asia-Pacific, then this new infrastructure will enable that to be a little faster than where it is today,” Mr. Collins said.
Tim Stronge, vice-president of research at telecom market research firm TeleGeography, said it’s common for carriers to expand into new geographic markets in response to demand from their existing customers.
“They usually don’t want to take the financial risk of spending to set up a [point of presence] somewhere without knowing whether they are going to have customers on it,” Mr. Stronge said.
Telstra’s expansion comes amid a growing appetite for bandwidth driven by the continuing COVID-19 pandemic. Network traffic has surged globally as public-health measures moved workplaces, schools and many other activities online, and Mr. Collins doesn’t foresee demand subsiding.
“We don’t see it falling to prepandemic levels,” he said. “We think this is going to be such a fundamental shift in the way that people work moving forward, that the reliance on the network will continue to be fairly high.”
And as companies seek growth in the postpandemic economy, many will be looking to expand into new markets, opening foreign branches to support their expanding footprints, Mr. Collins said.
The Asian market is attractive owing to its rapidly growing middle class, which is expected to increase to 3.5 billion over the next decade. That’s up from about two billion currently, according to research from the Brookings Institution, a Washington-based public policy think tank.
“We’re excited about the opportunity that exists there, particularly as Canadian enterprises look for growth outside this part of the world,” Mr. Collins said.
There are a number of companies already offering service into the Asia-Pacific region through undersea cables, although none of them have an expansive network throughout Australia, Mr. Stronge said. That means that data from Canadian-headquartered companies with Australian operations traverse multiple carriers' networks. Telstra’s entry into Canada would be an advantage to such companies by simplifying their operations, Mr. Stronge said.
“You only have to manage one contract,” Mr. Stronge said. “With service agreements, if there is a fault somewhere on the line it’s easier to pin down if you’re dealing with only one carrier.”
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