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5G and nbn a dual challenge for Australian telecommunications operators – how they can adapt, survive and thrive

04 October 2018 | Australia, Asia Pacific
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As telecommunications operators globally experience significant technology disruption which is reshaping the industry landscape, they must develop new revenue streams to leverage emerging technologies to ensure they retain relevance in the digital economy, according to a new report released by global law firm Herbert Smith Freehills.

This particularly applies to Australian telcos who are forced to grapple with the dual challenges and opportunities of the nbn network and 5G.

Collaborate and Diversify: connectivity in the digital age offers strategies and insights to help telcos transform and compete in the evolving telecommunications space, offering potentially vital insights to benefit Australian operators.

Herbert Smith Freehills senior associate Kwok Tang said even the largest global telco players are having to adapt their business strategies to compete in a significantly changing market, and that Australian businesses must prepare for the changes to come.

“The report reflects on a number of key issues telco operators around the world need to consider in order to remain competitive in this changing market,” Mr Tang said.

“Recent mega-mergers and acquisitions, such as TPG’s merger with Vodafone and Comcast’s takeover of Sky, are examples of how telco companies are adapting to survive and thrive.”

“The telco industry in Australia has seen a remarkable shift and transformation over the years, and there is much more to come.”

nbn

The Australian telecommunications market has been shaped largely by two major events – the opening up of the market in the early 1990s, when Optus and others were granted carrier licences enabling them to compete with Telstra for the first time, and more recently the roll-out of the nbn network, according to Mr Tang. Both created and increased competition, bringing greater choice to Australian consumers, and tightening profit margins for telcos.

“This is a theme we’ve seen in major markets around the world. As a result they’re all looking at new ways to create new revenue streams and boost their profit margins in the face of changing pressures and industry dynamics,” he said.

nbn is the real distinction between our market and everywhere else. No other major market has had a government involved in creating a wholesale provider that’s levelled the playing field in the way the nbn network has.”

“That fact leads to opportunities and challenges; while Australia has seen accelerated competition and pressure on large telcos, operators who are hoping to expand into broadband see the development of nbn infrastructure as an opportunity.”

5G

Like the nbn network, 5G is both an opportunity and a challenge to telcos. With telcos expected to rollout their 5G networks nationwide by as early as 2020, the report explores the various collaborative investment models telcos could potentially consider to address the implementation costs associated with 5G infrastructure.

Mr Tang said 5G will present new opportunities, allowing consumers to have faster internet speeds. But telcos will need to decide how and when to invest in 5G infrastructure.

“Whilst it is possible that there will be small pockets of Australia covered by 5G in 2020, it is likely to take many more years for the majority of Australia to move on to 5G,” he said.

“For Australia to be a leader in the tech space, having access to fast connectivity is critical. The ability of Australian telcos to scale up and invest in 5G infrastructure by 2020 will show whether Australia is keeping pace with other markets leading the charge – such as South Korea – or whether we fall behind in that trend.”

Security

Mr Tang said that as 5G becomes more accessible, cyber security and data protection will become even more important areas of focus.

“Cyber security and data protection are already big areas of focus for all companies, telcos included,” he said. 

“As the Internet of Things becomes more prevalent, the risk of data breaches increases, and as the telco industry continues to explore the general standards required for 5G, security standards will need to be top of mind.”

Media Contact

For further information on this news article, please contact:

Paul Sutherland, Communications Manager

Melbourne
Tel: 
+61 3 9288 1817