Dissatisfied with NBN pricing, Australian telcos are making an end-run around the wholesale network with 5G fixed wireless.
TPG Telecom has become the latest to join the FWA party, announcing the start of service next month. The two big telcos, Telstra and Optus, are already in the 5G home broadband game, which threatens to trim market share from the national wholesaler.
Telstra revealed today that its 5G pilot service over the past five months has delivered an average 378Mbps downlink and 46Mbps uplink – a big improvement on the speeds available to the vast majority of NBN users.
The growing deployment of high-capacity wireless might seem a no-brainer in a huge and lightly populated landmass, but the shift also underlines the inability of the copper-heavy NBN to provide affordable high-speed bandwidth.
NBN Co completed its initial national rollout target in the middle of last year. It now passes 11.9 million homes and businesses, with 8.1 million connected. But fewer than 20% of these have access to FTTH, with most making do with copper or HFC.
Supply and demand
Tesltra CEO Andy Penn has described the NBN's wholesale pricing, which increases with the volume of data consumed, as unsustainable. Virtually all retail ISPs have rejected NBN Co's latest pricing offer, which eases some data caps but retains the same structure.
TPG Telecom Iñaki Berroeta told the company AGM last Thursday its recently acquired 26GHz spectrum will be used to offer 5G fixed services to the mass market as an NBN alternative.
It will begin commercial trials with invited customers from next month, he said.
The company, newly formed by the merger between broadband player TPG and Vodafone-Hutchison, has calculated it can save A$50 million ($39.4 million) for every 100,000 FWA NBN end-users that it can migrate to its own network.
NBN Co, which already has 350,000 FWA customers using LTE, is planning to deploy 5G on mmWave spectrum, though it has not announced any details.
It is also planning to stay ahead of the 5G services with fiber and HFC upgrades that will mean 3.5 million premises can access at least 500Mbps downstream bandwidth by 2023.
The unpaid bill
5G won't kill the NBN, but it will take business away from a financially fragile operation loaded up with debt. The state-owned telco owes A$19.5 billion to the national government, with revenue last year of A$3.5 billion.
Consultant Paul Budde estimates that as much as around 15% of NBN's market is vulnerable to 5G substitution. He said that 5G can compete with the NBN, but he doesn't believe it will be offered at a discount to capture market share.
"The cost of 5G for using services such as Netflix on a regular basis will be prohibitive," he told Light Reading. But he said the regulator, the ACCC, should intervene to force NBN Co to cut its prices. "NBN Co should not be allowed to recoup its excessive cost simply because it can as it has become a monopoly. The ACCC should step in to prevent this from happening."
- After seven years of copper, Australian NBN pivots to fiber
- Australian operators pay A$648M for mmWave spectrum
- NBN Co stretching limits of mmWave as it preps 5G
- Broadband's new normal as Aus, NZ navigate the pandemic
- NBN Co has nowhere to go on pricing
— Robert Clark, contributing editor, special to Light Reading