What we need to get right as 5G dawns
Posted on April 9, 2019
3 min read
In just nine short months, we will find ourselves at the dawn of the 2020s. We’re already at the dawn of 5G and the dawn of the fourth industrial revolution. But to succeed in these times of great change Australia needs policy settings that are well crafted, support competition, encourage investment and protect customers, Telstra CEO Andrew Penn told the CommsDay Summit in Sydney today.
Mr Penn told Summit delegates telecommunications were fast becoming the most critical category of infrastructure in the world today. He said all telecommunications technologies – mobile and fixed, 4G and 5G, fibre and copper, HFC and fixed wireless, satellite and radio – had a role to play in meeting the huge growth in demand for coverage, capacity and speed.
Also critical was having the right policy setting in place to promote innovation and investment, he said.
“We absolutely need the right policy settings to promote investment, innovation, competition, safety and security and most importantly to protect customers and ensure digital inclusion,” Mr Penn said.
“High-quality telecommunications networks require an incredible amount of capital investment. There is no point in application developers or managed services providers investing in great products and services if network providers do not have the incentive to invest.
“Capital as a percentage of sales in the industry has been gradually creeping up globally over the last 15 years as the industry copes with the insatiable demand for more data, speed, coverage and resiliency. It is estimated that globally the mobile industry will invest almost half a trillion dollars between 2018 and 2020 on just preparing for and rolling out 5G.”
Mr Penn said the telecommunications industry has spent more than $36 billion on capex over the last three years but the return on that investment was dropping. He said recent PwC research found the return on invested capital had dropped from 12% in 2012 to just 7% in 2016.
“The NBN has obviously been a big contributor to this investment, but in fact more than half of it is actually coming from operators such as Telstra. We will invest in the order of $4bn alone this year,” Mr Penn said.
“However, at the same time capex is increasing, returns in the industry on that capex are reducing. This is unsustainable, as ultimately it will hurt investment capacity within the industry and lead to a degradation in the quality of networks.”
Mr Penn said the dawn of 5G meant a completely different scale of connectivity and this made it an important inflection point for the sector as the challenges, opportunities and complexities became increasingly clear, not just for industry but for government and regulators.
“With telecommunications becoming the world’s most important infrastructure there is a lot we need to get right in making sure our policies and regulations are well crafted, support competition, encourage investment and protect customers,” Mr Penn said.
“Done badly, even where policy has consumers’ best interests at heart, it is the consumers who suffer the most through higher costs and less responsiveness to their changing needs.
“Done well however, I believe we have an incredibly exciting future ahead, and we all have a role to play. And together I am certain we will deliver for the benefit of all Australians.”