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Australia ramps up on 5G – telcos and banks among the first to benefit

Australia has been touted as a leader in 5G, although the promises of the technology supporting the use of autonomous vehicles will not be realised for now

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Australia’s Commonwealth Bank has emerged as one of the early enterprise enthusiasts for 5G in the country, while Australian consumers are being wooed by the major telcos ahead of mainstream deployment of the technology starting this year.

Working with Telstra and Ericsson, Commonwealth Bank is exploring 5G to examine what the bank of the future might look like, and how the technology can reduce the network infrastructure in its branch network.

Pete Steel, executive general manager of the bank’s digital and retail operations and technology, said 5G has significant potential to enhance the availability, stability and performance of its network infrastructure, enabling it to provide quicker and better digital experiences for consumers.

Consumers are also in the sights of the major 5G network frontrunners such as Telstra and Optus, which have started to deploy 5G in a handful of areas. Vocus, meanwhile, has signalled its plans to market 5G as a better consumer alternative than entry-level NBN (National Broadband Network).

In December 2018, four companies – Dense Air, Mobile JV (a joint venture between TPG Telecom and Vodafone Hutchison Australia), Optus Mobile and Telstra – paid A$853m for all 350 lots offered by the government in the 5G spectrum auction in the 3.8 GHs band.

Despite the federal government’s decision to essentially ban Huawei equipment from 5G networks now under construction, there seems to have been little interruption to the major telcos’ schedules.

We hear a lot about autonomous cars, but imagine if have to have mobile towers every 200 metres along the highways.
Paul Budde, telecoms analyst

It is worth noting, however, that Huawei equipment is embedded in the radio access network supporting Optus’ and Vodafone’s 4G networks, and is critical for mobile services outside the major metropolitan areas, where it will also play a role in 5G deployments.

Optus already has two live 5G sites in Canberra, with the promise of a further 58 sites in coming months. It is now asking for expressions of interest from consumers to be among the first users of the 5G Home Broadband service, which it is offering for A$70 a month with a 50Mbps “satisfaction guarantee”.

Telstra has been switching on its 5G technology since August 2018, and has so far enabled more than 200 sites thanks to its “early access” licence to the spectrum issued by the Australian Communications and Media Authority.

This activity has led to the recently published 5G Leadership Index from consulting firm Arthur D Little, which categorised Australia as a leader – as opposed to a follower or laggard – for both 5G infrastructure availability and commercialisation.

Driving the activity is the promise of improved efficiency for telcos, the opportunity to explore edge computing solutions, and the promise of an economic dividend.

A 5G research report by Deloitte on behalf of Telstra released in 2018 cited forecasts from the Bureau of Communications and Arts Research which suggested that 5G had the potential to boost Australia’s GDP by at least A$32bn by 2030.

Deloitte’s survey of business leaders revealed that more than three-quarters (78%) expected faster, more reliable and responsive mobile communications to benefit their business.

The report also looked at how leading innovators, such as Surf Life Saving NSW, transport company Linfox and agricultural firm Peloris, are using drones and IoT (internet of things) systems that they expect to receive a boost from 5G – though business does remain concerned about the price of the upgraded services.

5G will always be more expensive – there may be niche applications where 5G makes sense but you cannot build a nationwide 5G network based on niche business applications.
Paul Budde, telecoms analyst

Alex Fernandez, Qualcomm’s senior director of business development and country manager for communications business, said: “5G is about speed and it adds a lot of new capacity with the new spectrum. We will go from two gigabits on LTE to five or seven gigabits on 5G.

“That is enabling new use cases such as XR [Qualcomm’s parlance for virtual, mixed and augmented reality] solutions and automotive. There is a plethora of new use cases with some still being defined – but there are more use cases going into 5G than we had going into 4G.”

Qualcomm, which announced its first-generation 5G chip in February 2019, expects demand to be consumer-led, especially once the second generation of chips is released, which will support standalone mobile or 5G hotspots to be built into mobile devices.

The flurry of 5G equipment announcements at Mobile World Congress in Barcelona in February points to the array of end-user devices now being developed to exploit the technology.

Sector-wise, Fernandez expects automotive and factories to be early adopters and beneficiaries of the network.

A word of caution

But telecoms analyst Paul Budde sounded a note of caution. He noted that 5G is far more network- and capacity-efficient than its predecessor, so existing carriers will be able to operate infrastructure in more efficient way, but was less convinced that consumers will race to 5G, which could take a couple of years to gain traction.

He also predicted that, despite the hype about autonomous cars and their potential use of 5G networks to communicate, there will be a delay.

“Is there a market first?” said Budde. “Also, you need to have large network coverage to deliver those services. In 5G, you would need towers every couple of hundred metres – that is a 100-fold increase in the number of mobile towers you have to put up, which is extremely costly.

“We hear a lot about autonomous cars, but imagine if have to have mobile towers every 200 metres along the highways.”

To stand a chance of making that commercially viable, Budde said there would have to be some form of co-operation between communications providers, or there would be an even more costly duplication or triplication of mobile towers to support 5G applications – particularly given Australia’s vast geography.

He said it is more likely that early use cases for the technology will emerge in more concentrated metropolitan locations, adding that it is likely to take until the mid-2020s before there is sufficient 5G coverage to allow the roll-out of many of the innovative data services now being canvassed.

Read more about 5G in APAC

  • Adoption of 5G across the Asia-Pacific region will be led by China, South Korea and Japan, but telcos will need to find the right pricing strategy to compete with IoT connectivity upstarts.
  • Malaysia has become the latest country to look into the security concerns surrounding Huawei, which has been accused by mostly western powers of conducting corporate espionage and potentially installing backdoors for the Chinese government.
  • Nokia and Intel are among others that have been working with telcos across the Asia-Pacific region to test 5G technologies and applications.
  • Singtel and its Australian subsidiary Optus have made one of the first 5G video calls in the Asia-Pacific region.

Budde expects the first adopters of 5G to be electricity companies, which have extensive networks and a need for better communication via sensors and devices.

City councils could also leverage 5G to improve traffic arrangements, he said, and smart buildings can use the technology to have “more energy efficiency and control when the shutters close”.

But Budde pointed out that there are other cheaper IoT technologies, such as Lora, that could impede 5G’s progress in some application areas.

“If you are an energy provider and have millions of asset elements you want to connect to, it makes an enormous difference if you do something for two to three cents or one to two dollars,” he said. “That is the question – can 5G compete with current IoT systems cost-effectively?

“5G will always be more expensive – there may be niche applications where 5G makes sense, but you cannot build a nationwide 5G network based on niche business applications.”

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