Good news for Australian operators scrambling to launch 5G services – unlike in the US, there’s actually more consumer interest in 5G … as a home broadband option.
A recent research report from Australian technology analyst firm Telsyte found that 1 in 3 Australian consumers are interested in 5G-based home Internet services, which works out to around 3 million households potentially using 5G either as a primary or additional access technology as early as 2021.
That interest is coming primarily from consumers who have already cut the cord and only use mobile broadband for internet access already, or from younger consumers (aged 16 to 34) who are more likely to have heard of 5G and tend to live in rental accommodations (meaning that people who move more frequently more likely find it easier for their broadband connection follow them around rather than go through the hassle of having a fixed-broadband connection reinstalled at a new address).
What that means for Australian cellcos is that their first legitimate 5G business case may well be upselling broadband connections to cord-cutters. Which is nowhere near as sexy or exciting as self-driving cars and virtual reality holograms, but a business case is a business case.
In a sense, it’s easy to understand the appeal of 5G an alternative to the NBN – not least because actually getting connected to NBN remains a painful experience for many consumers (although NBN Co assures us regularly that it’s working on that, and new rules from the AMCA may also help), and of those who have managed to connect to the NBN, a third of them wish they could switch back to their old service, according to a June survey from Finder.com.au. However, the Telsyte report adds that the bigger opportunity for 5G isn’t in cord-cutting in itself, but upgrading hybrid fixed-wireless offerings.
For a start, 5G’s viability as a fixed-broadband replacement will be limited by spectrum availability and exponential growth of data usage, as well as potentially higher costs. In fact, Telsyte cautions that actual uptake of any 5G home broadband offering is going to depend heavily on how much cellcos charge for it, as well as contractual obligations they have with NBN.
That’s why Telsyte reckons that the big short-term opportunity for 5G will be dual-mode routers that utilize both fixed-line NBN connections and mobile broadband, a business model that Telstra and Vodafone already offer (from the press release):
This might give rise to more dual-mode routers which will utilise both fixed and wireless networks, using software to manage traffic across either network, having redundancy as well as the ability for lower latency and high burst speeds.
“Fixed and wireless technologies such as 5G can work hand-in-hand,” Telsyte senior analyst Alvin Lee says.
“Most consumers don’t want to think about what technologies are behind their Internet access, they just want it to be fast, good value and work seamlessly” Lee says.
This also creates an opportunity for NBN Co to “update existing non-metro fixed wireless with 5G as well as using it as an option for upgrading the FTTN network in the future,” Lee adds.
And so the evidence mounts that 5G will initially serve as a home broadband option – which is as well, since mobile services won’t be possible until the handsets start arriving sometime next year, and even then, 5G will only be deployed in a handful of metro areas (and only in certain districts, mainly).
Even when 5G goes fully mobile, we’re unlikely to see a mass rush by consumers to switch over – Telsyte estimates that only 32% of mobile SIOs (services in operation) will be 5G by the end of June in FY2023. For cellcos launching mobile 5G in 2019-2020, that’s a three-to-four year wait just get a third of their subscribers to adopt 5G.
One potential extra benefit of 5G as a residential service is that it could also give operators a leg up in smart home solutions. In Hong Kong, for example, China Mobile has named smart home services as a key pillar of its 5G strategy.
Meanwhile, it’s interesting that while US consumers are reportedly unaware or uninterested in 5G (despite Verizon having already launched it as a fixed-wireless service), Australian consumers seem more tuned in to 5G. The same Telsyte report also found that that 37% of Australian mobile users will choose their service provider based on whether or not they offer 5G (assuming that not all operators are offering 5G at the time they decide to switch providers).
So if nothing else, the PR blitz by Australian operators to brag about their 5G prowess appears to have been more successful than similar efforts in the US.