5G mo­bile to slash NBN con­nec­tions

The Weekend Australian - - THE NATION - AN­THONY KLAN

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.

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