Australia / Analyst Insights
Hold the Line: New 5G Networks Are Poised to Shake Up Telecoms

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by Liam Harrison
Sep 25 2019

Fifth-generation (5G) mobile telecommunications have launched in Australia for both businesses and consumers this year, with the technology promising to shake up the telecommunications sector. Revenue for the Telecommunications Services subdivision is forecast to grow at an annualised 1.2% over the next five years. Despite the 5G rollout boosting subdivision revenue, intensifying price competition and a switch to fixed-line internet services, which are not included in the subdivision, are anticipated to constrain revenue growth over the period.

With significantly higher speeds than 4G networks, 5G networks have the potential to revolutionise mobile telecommunications. 5G technology is able to maintain a minimum speed of 50Mbps and can reach speeds in excess of 800Mbps using technology currently being deployed as part of the rollout. Millimetre wave 5G connections, which are currently largely restricted to test environments, can achieve speeds of over 10Gbps. However, the higher speed 5G connections have significantly limited range, with millimetre wave connections expected to only reach up to 400 metres from the closest base station. This distance is far less than that reachable by current 4G mobile networks, which can emit signals over many kilometres.

The Telecommunications Infrastructure Construction industry has benefited strongly from new telecommunications networks being rolled out over the past five years. Fixed-line telecommunications installations have to dig new ducts to install the fibre-optic cables necessary to build the NBN.

The 5G rollout poses a serious threat to the NBN, particularly for less frequent mobile internet users. The NBN’s Multi Technology Mix model, which was introduced as both a cost-saving and time-saving measure by the Federal Government in 2014, has constrained the maximum speed of many broadband connections around Australia. As a result, the NBN is increasingly coming under threat from mobile bypass. The threat of mobile bypass is particularly unique to Australia, as it requires both fixed and mobile internet connections to reach a speed, reliability and price crossover point to become significant.

The ACCC’s decision to reject the merger between TPG Telecom and Vodafone Hutchison Australia, currently subject to appeal, could be a defining moment for the future of Australia’s 5G network. If rejected, TPG would either need to invest in a mobile network to utilise the 4G and 5G spectrum holdings they currently own, or sell off these holdings at a loss, further adding to the losses mounting from the merger’s rejection. While Vodafone has less to lose initially from the merger’s rejection, the company will need to invest a significant amount of capital to build a national 5G network.

The Mobile Phone and Tablet Wholesaling industry is anticipated to benefit from the 5G network rollout, as consumers begin to replace their 4G handsets with 5G-compatible handsets. While all Android and iPhone models will support 5G over time, most 5G-compatible handsets currently available are high-end models.

Although iPhones dominate the wholesale market, Apple is expected to lose market share in the current year, as a lack of significant hardware updates in new models has reduced consumer interest. The new iPhone 11 also does not support 5G, which is anticipated to affect sales in the current year as 5G services become more prevalent across the country.


Related reports:

Telecommunications Services in Australia
Telecommunications Infrastructure Construction in Australia
Mobile Phone and Tablet Wholesaling in Australia
TPG Telecom Limited
Vodafone Hutchison Australia Pty Limited
Apple Pty Limited

Click here for a PDF version of this report