NBN Co’s CFO, Philip Knox, is unperturbed by the rise of 5G mobile broadband, claiming that it does not pose a material threat to the National Broadband Network’s (NBN) business model:
“We spend virtually zero time thinking about it or talking about it. We’ve always said it’s a complementary technology. It’s highly optimised for mobility and less so for fixed wireless”…
He based his confidence on the fact 5G relies on millimetre wave spectrum, which, while it has far superior capacity than 4G spectrum, travels only a few hundred metres and struggles to penetrate solid surfaces.
Philip Knox should be concerned. Telstra, TPG and Optus are each rolling out relatively cheap, fast 5G alternatives to the NBN.
As reported last month by Fairfax:
Telstra this week delivered peak download speeds of 4.2 gigabits per second (Gbps), four times faster than the fastest NBN plan available to homes, using 5G technology.
Meanwhile, Optus is gearing up to launch two 5G wireless services priced at $75 a month and $90 a month respectively that on paper can easily go toe-to-toe against fixed-line NBN plans in the market.
The $75 a month plan promises maximum download speeds of 100 megabits per second (Mbps) and an average download speed of 85Mbps between the busy 7pm-11pm time slot. The $90 a month plan, according to Optus, “currently delivers an average download speed of 214Mbps (between 7pm-11pm)”…
Anecdotally, I struggle to maintain 40 Mbps down and 15 Mbs up on my 50/20 NBN plan. Yet when I caught up with my mate last week in the park, he was getting 80 Mbps down on his Telstra mobile (checked via SpeedTest.net). And I don’t even think he’s on 5G!
Given the poor service I receive on the NBN, I would change to 5G mobile broadband in a heartbeat if it was cost competitive and reliable. I suspect many other Australians would do the same.
Regardless, as more services and technologies emerge to compete against the NBN’s fixed-line broadband monopoly, the likelihood of NBN Co ever hitting its subscriber targets and breaking a profit will recede.
The Parliamentary Budget Office in March reported that the “fair value” (or saleable value) of the NBN was just $8.7 billion, which is than one-third the federal government’s equity investment.
This valuation is looking more shaky by the day as more competing players emerge.
Sooner rather than later, the federal government will need to bite the bullet and heavily write its NBN investment down.