Thursday, 1 Feb 2024 | 4 min read
Think like an Aussie: 5G and our mobile plan refresh
Written by Jonathan Prosser, Chief Strategy Officer
It’s been 5 years since we saw the first 5G tower built in Australia and yet we, as both consumers and mobile industry players, are still waiting for its promised potential to be fully realised.
5G was promoted as a revolutionary technology that would be up to 100 times faster than 4G. The government’s rhetoric surrounding the launch of 5G included headlines like:
“[5G] could add an additional $1,300 to $2,000 in gross domestic product per person after the first decade of the rollout,” which is a conservative estimate, according to the same document.
But it seems like after the initial hype, the adoption of 5G has been a much slower crawl than anticipated. Australians have not embraced the upgrade to 5G with the same fervour as with 3G or 4G in the years prior. Of our mobile customers, those with 5G plans only account for about 2%. Research conducted by Deloitte backs this up, saying, “consumers appear indifferent to 5G”, with nearly 3 in 4 respondents saying they were not actively looking to upgrade.
One reason for this reluctance could be that for most consumers, the benefits of 5G – such as improved speed and latency when compared to 4G – are already provided by at-home, fixed-wired internet (Wi-Fi). While people are using their phones more than ever, they are mostly doing so from the comfort of their couch at home, which is connected to Wi-Fi.
Mobile data is most often used during our commutes, for about 20 to 40 minutes at a time, and most Aussies seem to have decided they are happy to use the 4G network for these short periods of time.
The 5G conundrum is further compounded by mobile data becoming cheaper over the years.
Not that long ago, we offered 10GB for $35, equating to $3.50 per GB. Now, $35 will get you 40GB, equating to 87.5 cents per GB. That's a 75% decrease in price per GB, which is a significant shift. This is known as data deflation.
Not only has there been a slow uptake of 5G plans, but data has become cheaper. So, how do Australia’s main mobile network operators recoup their significant investment in 5G infrastructure when the demand just isn’t meeting expectation? By changing the wholesale pricing, of course.
At a wholesale level, there has been an adoption of the "‘more-for-more’ model, in which [wholesalers] offer 50-100% more data across their plans at a higher cost.” Simultaneously, while plans are becoming more expensive, the lower-data plans are silently being removed from the market.
Here's the catch with better value plans - bigger isn’t always better.
According to ACCC data in June 2023, the average volume of data used by each mobile service per month was just 10.5GB, with post-paid services sitting slightly higher at 15.9GB per month. The same report shows that the median data allowance provided in mobile plans is 35GB per month, nearly 20GB more than what customers are reportedly using.
The ACCC perfectly summarised the issue we are seeing, “while consumers are getting more data allowance than before, it is unclear if they want or need it, as an average person isn’t currently going anywhere near using the average mobile data allowance.”
It’s important to reiterate that 5G is awesome (it saved me when I forgot to download my kids’ shows before a flight) and still has lots of potential, but that value isn’t necessarily for your average consumer. The resilience and speed of the 5G network shines for emerging technology; like self-driving vehicles, agriculture automations and analysis, and large-scale enterprise solutions, all of which are at least one step removed from the everyday consumer.
These innovations don’t add the kind of value shareholders are looking for just yet, but public companies still need to show their shareholders that they are recouping their investment in 5G.
This has resulted in a distinct shift in the market – with the aforementioned discrepancy, data is becoming cheaper, but plans are becoming more expensive – where mobile network operators are struggling to deliver a return-on-invested-capital (ROIC) that is palatable to investors. And so, in the coming months, Australians will likely feel the effects of this when their bill is delivered, irrespective of who they are with.
Why are we telling you this? It seems awfully strange that a telco is saying all this stuff.
Aussie Broadband takes our values very seriously and we owe it to our customers to be transparent about why things are happening.
From 1 February 2024, we will have new mobile plans in the market for both 4G and 5G. These plans will continue to follow the shift towards ‘more-for-more'. While we advocated for a set of plans that best suited our customers, we ultimately need to follow our mobile network provider’s wholesale structure and pricing decisions.
Our plans will buck the industry trend and continue giving our customers the choice of 4G or 5G, data inclusions, and price. We are also staying true to our value of No Bullsh*t and our view that speed-limited 5G is little more than marketing hocus pocus, a way to make the more-for-more look better than it actually is, so we won't be offering that.
Are we the cheapest mobile option? No. Will we continue to advocate for (and invest in) change for all Australians, both in the telco industry and beyond? Absolutely, you can bank on that. That is our Actual Aussie way.
Chief Strategy Officer
Jonathan is an experienced executive with 8 years’ experience in the Telco sector. Four of these involved leading Australia’s largest research programs on product, customer, marketing, and pricing in the Telco sector. Prior to this, he cloc...See all articles
Share this post with your mates!
Articles like this
How to help recession-proof your small business
Is Australia in a recession? Experts say the cost-of-living crisis, interest rate rises, and geo-political instability...
30 June 2023 | 7 min read
3 ways to make more EOFY sales
End-of-financial year (EOFY) sales are big business. The Australian Retailers Association estimated that Australian co...
1 June 2023 | 5 min read