Next-generation 5G mobile technology has become the standard-bearer for a mobile-led future, a lightning rod for conspiracy theorists, and a yawn for consumers – but analysts believe the Australian rollout may struggle without an NBN-styled government intervention and some hard decisions about its relevance for regional areas that are “unhappy and frustrated” with current connectivity.
Telstra, for its part, has been pushing hard to build out its own 5G network, with CEO Andy Penn flagging the technology as “critical to Australia’s future prosperity” and the company recently joining Ericsson to report experimental speed tests of 4.2Gbps over a 5G mmWave data call.
Yet one call in a test lab is a world away from full commercial deployment, and 5G’s relatively short range– which requires massive numbers of base stations to be installed and interconnected in small areas – has complicated the capital structures for its rollout.
“There is no business model available anywhere in the world that shows that you can make more money from 5G than you can from 4G,” telecommunications analyst Paul Budde told Information Age, arguing that despite its kerb appeal 5G makes most business sense as an incremental upgrade to existing networks than as a completely new rollout.
“It’s fantastic,” he said, “but you and I are going to pay for that – and most people are happy with 4G.”
Left in the shadows
Carriers are pushing ahead with 5G rollouts in dense metropolitan areas and regional centres, where there are enough potential paying customers – and new applications like Internet of Things (IoT) sensor rollouts – to deliver commercial returns.
But the 5G business case drops off quickly as population thins out, leaving smaller regional centres with little prospect of realising the agricultural-technology pipe dream – of self-driving harvesters, autonomous networks of water sensors and surveillance drones – that 5G’s promoters have advocated.
“The opportunities to manage the risk of drought and excessive irrigated water use alone should justify strong government support to fast-track [5G’s] roll out across regional Australia,” WAFarmers CEO Trevor Whittington said in a submission to the government’s recent inquiry into 5G business cases.
“The question our members ask is not when but how fast.”
Frustrations with regional broadband are endemic and ongoing, with Victoria’s Strathbogie Shire recently adding its voice to the chorus pushing the government to improve connectivity.
“We are already trying to catch up, but the NBN and mobile phone coverage is letting us down,” chief executive officer Julie Salomon noted in a recent council submission to the government’s NBN inquiry.
“Unhappy and frustrated” regional consumers and businesses are struggling to deal with “poor” NBN experiences, with 90 per cent of respondents reporting slow speeds and 61 per cent of businesses suffering from “daily dropouts”.
“People in the regions have reason to believe that they are not getting the full benefit of the NBN, and to feel short-changed,” Salomon wrote, “and even with the arrival of new services like 5G mobile, the gap may not be closed.”
Yet the government’s ideological support for 5G continues to butt up against the hard economics of its very real enmeshment with the future national broadband network (NBN).
Former NBN Co chief technology officer Gary McLaren, for one, has argued that the government’s recent decision to upgrade much of the NBN to fibre reflects its desire to protect the network from 5G’s competitive threat.
Capital constraints and a need to deliver strong ROI, he believes, will leave regional Australians “looking from a distance and again wondering why the big cities are again getting all the government attention while they get left behind in the digital economy”.
Generating demand where none exists
That’s the same story that has been played out for years through the government’s 4G Mobile Black Spot Program (MBP).
The program was intended to support infrastructure competition across regional areas, but has ended up as being primarily a subsidy for Telstra’s 4G network – with challenger Optus only recently announcing its 100th site and Telstra using the funding to roll out over 880 mobile sites.
Mobile carriers are so disinterested in regional areas that a recent MBP funding round was actually undersubscribed – forcing the government to roll over allocated funding and raising real questions about how interested mobile carriers actually are in rolling out regional mobile services.
With 5G requiring hundreds of times as many base stations as 4G to provide a pervasive signal, the MBP’s direct-funding approach will struggle to adapt to the 5G world – which, Budde said, leaves government in a quandary.
“You have to ask yourself whether it makes sense to have 100,000 extra mobile stations from Telstra, Optus, TPG and Vodafone,” he said, “or whether infrastructure sharing is becoming a more important element – and whether the government has to start putting money in.”
Building a single 5G network that is shared between operators is technically possible – and it’s an approach that the City of Melbourne said should be “strongly encouraged or even enforced through an amendment to the Telecommunications Act 1997” – in its 5G inquiry submission.
Telstra has traditionally shied away from infrastructure sharing, preferring to build and maintain its own mobile services – yet recent reports said the company has told the federal government it won’t be able to deliver nationwide 5G services without government funding.
Penn has publicly encouraged the government to build a future vision “that is technology agnostic and provides an environment that is pro-investment and pro-innovation” – but to build that vision, the government will have to decide just how much it can afford to fund the mobile technology that could threaten its own NBN investment.