Plenty of interesting items emerged from Telstra’s investor day, but two that caught my eye were David Thodey’s prediction that wireless broadband will overtake fixed (as it has already done in growth terms), and his statement that Telstra intends cutting its fixed broadband prices.

It’s become clear that fixed broadband growth has stalled (as keen watchers of the Australian Bureau of Statistics’ Internet data already know), but the reasons for this are harder to discern.

Part of it is the scale of the remaining opportunity. Australia has more than four million fixed broadband connections, about half of the roughly eight million households in the country. When you’re already at 50% penetration, growth will naturally be slower than it was a few years ago.

Part of it is substitution. Without a large-scale customer study, it’s hard to estimate how many users give up fixed broadband for mobile, but the ABS stats suggest a small amount of substitution going on, with the number of DSL subscribers falling by around 5,000 from December 2008 to June 2009.

While it’s always risky to turn correlation into causation, I believe some of the slowing in the fixed broadband market is due to “NBN uncertainty”. The competitive sector, concerned at the risk of stranded investments, hasn't rolled new DSLAMs this year at the same pace as a couple of years ago.

The deployment of competitive infrastructure was a kind of feedback loop. Service providers deployed new infrastructure, which gave more consumers competitive choice in broadband (and lower prices); consumers adopted the new services, which encouraged providers to keep expanding their rollouts. A slowdown in rollout breaks this cycle.

This is what makes David Thodey’s remarks about the cost of broadband interesting, because lower prices can be seen as an attempt to reinvigorate growth in the fixed broadband market. Will we see a return to the broadband price wars that took place earlier in the decade? Would a new price war return the fixed broadband sector to growth more like the market’s heyday? 

And how do we interpret an attempt to kick-start the fixed market in light of Thodey’s assertion that wireless could overtake fixed?

Partly, it’s because Thodey's wireless prediction was a longer-term forecast: he expects wireless subscriptions to be 60% of Telstra's broadband services by 2015, more than five years from now. In the meantime, there's still a few million households that aren't using fixed broadband, and Telstra wants to give adoption a kick along with lower prices.

But in the longer term, there are good reasons for Telstra to favour mobile broadband. Not only does the mobile broadband market look more lucrative than fixed services, it's also playing to the users' enthusiasm for mobile gadgets.

And there’s the NBN question again. If Telstra can negotiate a deal with the government that protects its access to new spectrum (not guaranteed, but still on the table), then wireless services are clearly more attractive to the carrier than fixed services in which it will ultimately become merely another retailer on a neutral wholesale backbone.

If the government’s current NBN plans end up stalled or failing in the Senate - and assuming the unlikely scenario that there's a double-dissolution election that the Rudd government fails to win - then the future of the fixed network will be taken back to square one. A post-2010 Liberal government would be committed to leaving Telstra essentially alone, and creating yet another plan for getting better broadband in Australia.

And even then, wireless mobile broadband would remain the more attractive proposition for the carrier, regardless of what happens in the fixed network.

If Thodey’s prediction comes true, it will do so partly because Telstra has the power to make it so, if it can craft the network, packages, prices and services in such a way that customers move to its wireless services rather than moving somewhere else.