What to expect with regard to Australia’s Mobile Networks- Know the significant changes in the future Telcos

Mobile Network

In the coming years, you are going to see some significant changes in Australia’s Mobile Networks. With TPG set to launch a fourth mobile network, the rise of new WiFi-based services and 5G is set to become a reality in the new decade.

Lately, TPG Telecom Ltd has announced it intends to become Australia’s fourth mobile network operator, along with Telstra, Optus and Vodafone. TPG Telecom Ltd has purchased spectrum licenses for A$1.26 billion and will spend another A$600 million building the network infrastructure. However, it has emphasised it will not be competing across the whole Australian market, just 80% of the population.

So here are some facts based on recent developments about what Australia’s cellular network scene to look like by 2022.

The Growth of 5G

The Growth of 5G
The Growth of 5G

The number of global 5G networks has increased over the past two years and is expected to continue, while usage has also grown. Despite that, some players in the telecommunications industry face headwinds in the coming year, including the commoditisation of telecom services and balancing 5G revenue opportunities in the face of what has been described as the Largest Capex Supercycle in Decades.

Competition amongst Telecom Companies

Competition amongst Telecom Companies
Competition amongst Telecom Companies

Connectivity operators bear the brunt of challenges, competition, while devices and applications from the likes of Apple, Google, and Facebook create competition for services beyond connectivity.

That makes the need for operators ‘global scale more necessary: if you don’t have a global scale, it’s difficult to offer products and services. Operators claim they cannot sell only gigabytes, but it’s difficult to move up amid competition.

In Australia, Telstra has had Telstra Smart Home, but the emergence of, e.g., Google Nest forced Telstra to exit that market. Telstra also launched its Wi-Fi and Bluetooth tag. Then Apple came in with AirTags and Telstra again had to make the decision to exit that market. When local operators try to move up the value chain by offering products, global-scale competition and domestic regulation stymie them. The operator business went from being a profitable business as owner of the entire stack to a commoditized seller of gigabytes.

The Spectrum

The Spectrum
The Spectrum

The spectrum itself is quite a challenge.  In Germany, Mercedes has argued that it wants access to the spectrum to deploy 5G in its factories. Modern factories tend to be agile; they don’t want wired equipment, and they don’t think Wi-Fi is robust enough, so 5G becomes the solution. However, Mercedes may accept it is quite tough to run the network than it thought and revert back to an operator partner.

The latency in 5G goes from 4G’s 25 milliseconds down to five milliseconds, but it takes a person 100 milliseconds to react to anything. It doesn’t matter for consumers (except maybe in gaming), so the benefits are greater in the enterprise — factory automation, driverless trucks, driverless tractors, etc. A lot of the 5G use cases, apps, and revenue possibilities will come on the enterprise side.

Partnerships

Partnerships
Partnerships

This is one of the business strategies to show promise is partnering within vertical industries to develop applications, and operators are studying which industries make sense and what it requires. For example, Telus in Canada is going all in on agtech. Maybe in Australia, mining makes sense. Now operators are looking at application partnerships and targeting specific vertical industries to place the right bets.

If those bets are successful, operators may be able to expand their business globally. For example, let’s say an operator becomes very good at providing connectivity for John Deere, a global manufacturer of farming equipment. John Deere might enlist that operator to implement the same services in other countries to avoid training individuals from scratch in each locale. Of course, the spectrum will be locally owned, but the managed services and other facilities might scale globally.

5G Cannot Answer Every Question

5G Cannot Answer Every Question
5G Cannot Answer Every Question

5G rollout in Australia won’t replace fiber infrastructure. There is still a limited spectrum available for 5G and mobile, and the benefit of that spectrum is predominantly for mobile users. Once users are in a fixed position, it’s quite better to use the fiber, even if 5G is very fast. If everybody tried to watch Netflix over 5G, there wouldn’t be enough spectrum. 5G also requires a significant number of base stations, and they require power and backhaul. You have to build fiber out to those stations to get the backhaul back from it. You’ll need that if you don’t already have fiber at home to deploy 5G.

Cybersecurity

Cybersecurity
Cybersecurity

One thing that remains significant is cybersecurity, and mobile and cellular technologies have taken it seriously. Everything has been encrypted from day one. Cellular technology is safer compared to Wi-Fi. Operators will maintain security because it will be important as we move into the digitization of various industries using 5G.

For most people, you have three different worlds that end up on your device: your private life, with your banking and various apps; your government, which in some cases has begun to move to digital with tax returns; and your employer, which sometimes requires you to download various tools such as verification apps. If we can trust the device, 5G will develop faster. If we cannot trust the device, the development will move slower. Focusing on the cybersecurity and security aspects might be even more important than focusing on low latency.

About the author

Kamal Kaur