Aug 19 2019
Earlier this month, Vodafone New Zealand announced its intentions to begin constructing a 5G mobile network, with coverage for select areas in Auckland, Wellington, Christchurch and Queenstown to be in place by the end of the year.
5G, which is the latest in mobile network technology, uses high-frequency radio waves to transfer data with higher bandwidth and lower latency than current 4G networks. According to industry research company IBISWorld, demand for mobile data has grown exponentially over the past five years. Consumers have become increasingly reliant on mobile data for accessing the internet for both recreational and business use, which indicates that 5G services will likely be popular among consumers.
“Rival telecoms Spark New Zealand and 2degrees are also anticipated to rollout 5G networks over the next several years. However, these rollouts aren’t expected until at least 2020, giving Vodafone a competitive edge in the 5G market. As a result, Vodafone now has the potential to overtake Spark New Zealand as the market leader in the Wireless Telecommunications Carriers industry,” said IBISWorld Senior Industry Analyst, Liam Harrison.
Into the fast lane
5G networks are capable of download speeds in excess of 10Gbps, which is comparable to the top speeds available from fibre broadband connections. These top speeds are typically measured only in controlled environments, which means users will realistically experience speeds of between 50-100Mbps that are on par with mid-tier fibre connections.
These higher speeds will allow for a smoother user experience when watching videos, web browsing, video gaming and performing other mobile internet-related activities. This factor is anticipated to encourage users to change over to a 5G network and potentially generate greater premiums on these mobile plans.
“Mobile network operators in Australia have started rolling out 5G plans. Telstra has rolled out 5G networks in select areas, offering 5G access free to customers with a compatible device for the first 12 months, before charging a premium of $15 AUD from July 2020 onwards. Vodafone New Zealand is likely to follow a similar path,” said Mr Harrison.
However, unlike Australia, the possibility of mobile substitution, where consumers replace fixed internet services with mobile internet, is expected to be limited in New Zealand.
“Although 5G is expected to provide comparable speeds to mid-tier fibre connections, data caps are likely to limit consumers substituting fixed line internet services with mobile internet services. In Australia, the National Broadband Network’s multi-technology mix model has constrained the speeds fixed line services can offer, causing mobile internet to become more viable as an alternative,” said Mr Harrison.
Despite consumer interest in upgrading to new 5G services, most mobile phone users in New Zealand do not currently own phones compatible with 5G networks. Consequently, IBISWorld anticipates that the Telecommunications Goods Wholesaling industry will receive a boost from sales of 5G-compatible phones, as demand for new handsets is forecast to spike over the next five years.
Internet of Things
5G is considered an essential component in the continued rollout of the Internet of Things, as machines and computer systems become increasingly interconnected and automated. The lower latency and higher bandwidth of 5G technology allows for a greater variety of applications for machine-to-machine (M2M) communications, increasing the opportunities for businesses to automate and improve their current systems. Industries anticipated to benefit from 5G technology include:
“Many homes already benefit from M2M communications without realising it. Smart meters used for measuring utility usage require mobile networks to communicate data back and forth between utility providers. The 5G rollout will likely allow for faster and more advanced smart meter systems, which could provide valuable data for both utility providers and consumers,” said Mr Harrison.
Vodafone is currently limited in how fast it can rollout and expand 5G mobile networks, due to an existing Māori claim to radio spectrum when new property rights are created. As a result, 5G networks are not expected to be completely rolled out until at least 2022.
IBISWorld reports used to develop this release:
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3641
Mobile: 0422 773 995