Australia - Mobile Infrastructure
Australia’s MNOs prepare for migration to 5G
The Australian mobile market is dominated by the three major mobile network operators Telstra, Optus, and Vodafone (VHA), though there are numerous MVNOs which have a significant market share. MVNOs have been able to offer LTE services on a wholesale basis since early 2016, thus encouraging growth in the LTE sector and cementing the role which MVNOs play in the overall market.
Operators provide a full range of services essential for commerce as well as communication and social networking. Voice services remain a staple for revenue, though in terms of revenue share voice is steadily losing ground to various forms of mobile data. Mobile broadband usage has taken off during the last few years, a trend which will continue in the wake of the marketing of a wide range of affordable and more capable devices, and of LTE population coverage which by the end of 2016 had reached about 98%. Subscribers to 2G networks are fast becoming a historical footnote: 2G infrastructure now carries less than 1% of total network traffic for all three MNOs Telstra closed down its 2G services in December 2016, and both Optus and Vodafone will follow suite in 2017. They will redeploy physical assets and also assign spectrum for LTE and the anticipated 5G services through deploying Single RAN technologies.
Although mobile penetration was about 143% at the close of 2016, it continues to rise as users make use of multiple SIM cards and connected devices. Under competitive pressure, MNOs must find innovative business models and services, and provide attractive bundles to increase revenue.
To address poor services in rural areas, the government has progressed with its Mobile Black Spot Programs, funded by the federal and state governments as well as by MNOs. Deployment for the second round will start in 2017, and the work to deploy several hundred new or upgraded base stations is expected to be completed by 2018.
Telstra remains the market leader with about 17.2 million subscribers reported as of June 2016 (including mobile broadband), while Optus had around 8.41 million subscribers as of September 2016. Vodafone has arrested the long decline in its subscriber base, reporting a 2.6% year-on-year growth in its subscriber base in the year to June 2016, discounting MVNO customers. The gains indicate that the company’s significant investment in recent years, and strategy for growth under new leadership, is paying dividends.
Pressure on pricing will continue to place a strain on operator revenue into fiscal 2017, with revenue from mobile data services failing to offset the sharpening decline in revenue from voice services. This is being exacerbated by the popularity of OTT services which has led to a fall in SMS traffic and revenue. In addition OTT services are helping to reduce voice traffic volume, while with VoLTE technologies voice traffic is rendered as data.
The three LTE networks operated by Optus, Telstra and Vodafone have developed rapidly during the past two years as these players strive to provide an infrastructure capable of meetings customer demand for mobile broadband services. Telstra continues to be a global leader in mobile services, being a partner with Ericsson in developing 5G. The two companies have demonstrated 1Gb/s capabilities over a commercial LTE network using carrier aggregation technology, and will use the 2018 Commonwealth Games in Queensland to trial a range of technologies including a prototype 5G.
Details of Round 2 Black Spot Program;
Vodafone switches LTE data traffic to new core network, reports growth in revenue and subscribers into 2016;
MNOS launch VoLTE services;
Telstra commits to $5 billion mobile spend over three years;
Smartphone sales drop in response to market saturation;
Telstra closes down its 2G network;
Lycamobile providing LTE services through Telstra Wholesale;
Australia rated with the highest mobile broadband speed globally;
Kogan Mobile providing LTE on Vodafone’s network;
Telstra and Ericsson to use Commonwealth Games to trial 5G capabilities;
Telstra launches five-band carrier aggregation;
Mobile data traffic expected to grow six-fold to 2018;
Report update includes telcos’ operating data to Q3 2016, ACMA market report 2015, TIO’s 2016 annual report; market surveys into 2016, ABS data to June 2016, Akamai broadband survey data to Q2 2016, recent market developments.
Companies mentioned in this report:
MeU Mobile; Amaysim, Woolworths, Crazy Johns, JB HiFi, Telstra, Optus, VHA, Hutchison Australia, 3, nbn, Virgin Mobile, Aldi Mobile; Huawei, Lebara, AAPT, Kogan Mobile, GRLmobile, Red Bull Mobile, Macquarie Telecom, Boost Tel, Pivotel, Globalstar, SingTel, Vividwireless, Ericsson, EnergyAustralia, Unwired, Apple, Nokia, BlackBerry, HTC, Google, Sony, Samsung, Mobile Muster, Motorola.
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