5G to significantly impact broadband markets
Broadband markets will be significantly impacted by the rollout of 5G networks in Australia.
Sims said an interesting dynamic is developing between mobile networks and the nbn in Australia, because 5G networks will be the first generation of mobile technology capable of delivering broadband services comparable to fixed services in terms of speed and capacity.
“Mobile broadband services may become more of a viable substitute for fixed broadband,” he said.
“This is unprecedented in the Australian market and indeed globally. This is great news for consumers as it will create more choice of services and suppliers and see telco products better align with their needs, particularly those who value mobility, like renters.
“This leads us to an interesting competition issue: what does 5G mean for the nbn? We will need to wait and see what happens when 5G becomes widely available and how markets react.
“What we must never do, however, is seek to restrain others in order to protect the nbn business model. This would be a disaster for consumers.”
Critical to ensuring the 5G rollout was working for consumers’ benefit is ensuring it is done in a way that promotes competition.
“We know that 5G is going to lower the cost of delivering data, but those changes will be accompanied by large capital and operating costs; operators will need to acquire new spectrum, densify their networks by building more mobile towers, and make sure their transmission can support delivery of new services,” Sims said.
“Competition will drive this investment. It can be the catalyst for innovation and can see operators build wider, better networks, to provide higher quality services.
“However, investment costs can be significant, and if we want to see more competitors in mobiles we need to think carefully about how to best achieve sustainable competition and minimise barriers to entry.”
Sims discussed the government’s upcoming 5G spectrum auction being held by the ACMA, saying it was critical that spectrum allocation processes, including allocation limits, promote competition in downstream markets, rather than just competition in the allocation itself.
“Each spectrum allocation is a new opportunity for a potential entrant, a different service or improved coverage,” he said.
“What happens now will have a long-term impact on competition. We need to make sure we achieve the most efficient and pro-competitive use of spectrum.”
Sims noted TPG and VHA’s joint venture agreement to bid in the upcoming 3.6 GHz spectrum auction, separate to the proposed merger between the two companies.
“An agreement between competitors to share networks — separate to a formal merger — rather than compete to build them does have potential competition implications. However, we are also aware of the potential benefits of this from an efficiency perspective,” he said.
“We want to ensure that any network sharing happens in a way that enables operators to continue to differentiate between services, quality and products. Likewise, we want to ensure there are equal incentives on operators to invest in the network infrastructure.”
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