Many consumers are understandably curious about the future of internet delivery in the home, given the increasing similarity of fixed and mobile services. In fact, with the completion of the National Broadband Network (NBN) expected to coincide with the early rollout of 5G mobile services in 2020, this topic is more relevant than ever.
In light of this, Vodafone Australia recently commissioned the highly-respected Centre for International Economics (CIE) to investigate and report on fixed and mobile convergence within the Australian telecommunications sector. The Mobile and Fixed Line Convergence report, which has now been released, details the current state of convergence within the market and makes a number of predictions for the future of internet delivery.
The report presents the results of a survey of 1,000 households about internet use at home and identifies a number of trends, including Australia’s growing appetite for data, an increase in mobile data limits, and the increasing popularity of smartphones over PCs. The report predicts that data usage will continue to rise steeply, with median household data usage soaring to 350GB by 2021.
Finding 5G’s place in Australian Households
Among the households surveyed, 39 percent currently use less than 50GB of data per month. This is well below the survey median of 100GB and the ABS internet activity survey median of 145GB per month. The CIE found that this group of consumers could have their data needs met by a mobile-only service.
Currently, 17 percent of Australian households are using mobile-only broadband, compared to less than 10 percent in France and the United Kingdom. This is partly due to the falling price of mobile data, combined with the lack of portability of fixed devices. The report predicts that if mobile data prices fall to a price comparable to fixed broadband data prices, then the number of mobile-only broadband users could increase from 17 to 40 percent in 2020.
Meanwhile, 35 percent of households surveyed revealed they would never consider switching to mobile-only broadband due to perceptions regarding reliability, compatibility and speed. However, the report also identifies that many of these issues would be resolved with the introduction of 5G mobile technology.
Most importantly, the report highlights that 5G mobile services will not be a direct substitute for all NBN customers but rather provide greater choice, freedom and competition for many consumers. The report makes a number of recommendations for the future of both the NBN and 5G services including the adoption of a technology-neutral approach by government, and that policy makers should not seek to protect the NBN from competition from 5G. The report also highlights the commercial opportunities for the NBN in enabling the rollout of 5G services.
The future of the Universal Service Obligation
Far from shying from the big issues, the report also addresses Telstra’s USO contract and NBN’s unused 5G spectrum holdings. The report echoes the findings of the Productivity Commission that a combination of NBN and mobile services would likely meet or exceed minimum standards for voice and broadband delivery and that the USO should be terminated on completion of the NBN rollout with the funds redirected to providing access to those in the NBN satellite footprint and users with accessibility requirements.
Commenting on NBN’s 5G spectrum holdings, the report stated that public resources must be used in a way that provide the maximum benefit for the public and access to these resources should be done in a way that encourages competition, rather than supporting the profitability of the NBN.
Modelling conducted by the CIE found that poor policy decisions regarding these and other important issues could cost the Australian economy $10 billion every year as well as increase prices for consumers by around 40 per cent.
This report shows the potential for 5G to be a disruptive force within the telecommunications industry. Understanding how these two technologies evolve and converge will allow both businesses and policymakers to maximise the benefits both 5G and the NBN bring to Australian households and businesses.
This article provides just a brief overview of the CIE’s in-depth look into the future of 5G and NBN. For more detail on this topic, read the full report.
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