The Fifth Generation #3
This week in IDC's The Fifth Generation:
- Will 5G offer countries a 'giant' economic advantage?
- T-Mobile wants to let customers use mobile plans for in-home broadband.
- Optus proclaims Telstra customers will need to 'wait' for 5G.
A Race to Win A 'Giant' Economic Advantage?
5G can provide a country with a "giant, strategic, economic advantage" said marketplace.org host Kai Ryssdal last week. Ryssdal says that there are all sorts of companies placing big bets on the "5G economic spoils". For example, gaming and entertainment companies, medical companies, UAV and car manufacturers. These companies plan to leverage 5G capabilities to enhance their products. This will provide competitive advantage and deeper customer experiences. Ryssdal asserts that the biggest economic impact will be felt in the country that launches 5G first. Hence China and the US are fighting it out to be first to grab these 5G economic spoils. Australia and New Zealand might not have large scale vehicle manufacturing or massive gaming industries. But, the potential economic benefit should not be underestimated. New Zealand is very good at entering and resonating with niche industries, exporting kiwi innovation to the world (for example Agritech) and they should look to grab some 5G 'economic spoils'.
Could Households go all Mobile?
American Mobile Network Operator T-Mobile has announced big 5G fixed wireless broadband plans. First, it intends to offer 5G fixed wireless in half of all US post code areas by 2024. Second, the company says it has ideas around enabling customers to use mobile services as a substitute for in-home broadband. Like retailers in New Zealand and Australia, T-Mobile offers an 'unlimited' mobile data plan (throttled after 50GB). Assumedly, T-Mobile would extend this plan to enable 5G mobile data as a substitute for home broadband. For T-Mobile, which does not offer fixed broadband, this is another market opportunity.
But would this make sense in the New Zealand or Australian markets where the mobile network operators also offer fixed home broadband? The answer is, 'possibly'. In September, Optus offered 80GB of mobile data for AU$52 per month. For some household types, with low-ish data consumption, such as households with no children, or flatmates, 80GB each could be enough to substitute home broadband. In New Zealand, let's say a household pays NZ$60 each for mobile and NZ$95 for home internet; NZ$214 per month total. If a retailer can offer a decent chunk of mobile data to share for less than the combined price of mobile and home plans, that could entice some households. The telco avoids wholesale fees, sends only one bill, and could reduce churn, by, in effect, bundling services.
However, Chorus says its average household monthly data usage has increased from 155GB per month last year to 210GB this year. The problem for fixed-to-mobile data substitution is the ability to offer plans that keep up with the growth in usage. To be fair, this remains an issue for fixed wireless broadband providers too, until they can launch (truly) unlimited data options.
5G Spectrum Update: Sorry guys, you'll have to wait.
According to Channel News, this week Optus' Head of Regulatory Affairs Andrew Sheridan said Telstra doesn’t have enough spectrum to offer a true 5G experience and that its customers may have to wait, in some cases, until March 2020.
Optus is sitting pretty on existing licenses in the 3.5GHz band. It says it has enough to provide a Fixed Wireless broadband service. It intends to launch the service in early 2019, providing an alternative to the Australia's National Broadband Network (NBN). Telstra has fired back at Optus saying that it expects to be able to gain early access to its 3.6Ghz spectrum.
Australia will hold its 3.6GHz spectrum auction in late November. It will sell 125MHz with the licenses available for use from March 2020.The government has capped the spectrum each competitor can hold. This ensures one operator can't obtain enough spectrum to exclude others. Optus already has more than the limit, excluding it from the auction. Network provider NBN is excluded for the same reason. NBN intends to add 5G capabilities to its fixed wireless network. Vodafone and TPG will bid for spectrum together. The other main bidder will be Telstra.
Despite NBNs plans, Chorus CEO Kate McKenzie said in August it was "pretty unlikely" that network provider Chorus would bid in spectrum auctions. There's no date set yet for auctions in New Zealand. The Radio Spectrum Management team are still looking at the best ways to free up some 3.6GHz spectrum earlier than the current license expiries in 2022.