5G mobile to slash NBN connections
As many as 40 per cent of households may not use the $49 billion National Broadband Network given the looming arrival of 5G mobile broadband technology and the fact that 10 per cent of homes are not expected to connect to the internet.
A survey of 1500 broadband internet users by analyst Venture Insights found that of the 85 per cent who were plugged in by fibre or copper-wire connections, 30 per cent said they would be willing to switch to a wireless service in the next two years.
“What we saw was people had doubts over the quality of NBN services and consumers generally are becoming more comfortable with wireless services to access the internet,” said Nigel Pugh, head of consulting at Venture Insights.
NBN Co has estimated it will lose 15 per cent of the market to people using non-NBN wireless and mobile systems, while a further 10 per cent of homes, mainly holiday homes and vacant properties, would have no internet connections. That meant 25 per cent of NBN-connected homes would not use the service.
However, the Venture Insights figures, which support forecasts by other experts, suggest NBN Co could be far worse affected by people opting to bypass the massive infrastructure project altogether.
NBN Co is expected to announce weak quarterly results on Monday morning, in part due to its being forced to suspend its hybrid fibre-coaxial (HFC) rollout in most capitals due to performance problems, putting further pressure on Malcolm Turnbull to concede the project will not make a commercial return.
The NBN rollout is more than half complete and will focus extensively on capital cities in coming months.
The government has been able to keep the NBN Co, a government-controlled company, “off-balance-sheet”. However, if it fails to deliver a minimum commercial return of about 3 per cent it instead will be required to add the project’s tens of billions of debt to the government’s deficit.
The 15 per cent of broadband users surveyed by Venture Insights who did not access the internet by fibre or copper connections used mobile phones or tablets (connected to telco networks), fixed wireless services — which are offered by NBN Co as well as by private operators such as Uniti in Melbourne — or were connected via satellite provided by NBN Co.
The new 5G — or fifth-generation — mobile technology is expected to arrive in Australia by late next year, which is substantially earlier than had been expected, and telcos Optus and TPG are understood to be preparing to heavily market the technology as an alternative to the NBN. Mobile technology such as 4G and 5G refers to internet delivered over mobile networks to a device with a SIM card installed.
In April last year, TPG paid the federal government $1.26bn for mobile spectrum — over which it will be able to provide 4G and 5G services — and said it would spend $800m connecting 80 per cent of the nation. TPG is already marketing a fibre internet product in direct competition to the NBN.
Telco analyst Ian Martin of New Street Research has said the number of people bypassing the NBN by using wireless and mobile technology had grown to 17 per cent by June 30 last year — up from the NBN Co’s forecast 15 per cent — and that figure was expected to grow to about 25 per cent.
However there are limitations with the mobile technology, in particular because consumer products often carry far lower download limits and are prone to congestion. An NBN Co spokesman said the network would be “well placed” to compete with 5G.