“Accelerating” 5G competition threatens NBN

“NBN also expects this investment and competitive behaviour to continue and for competition to become increasingly vigorous into the future”.

Telstra, Optus and TPG have each introduced fast, cost effective Fixed Wireless Access 5G broadband, which is capable of delivering high data transfer speeds and low latency.

NBN Co claims each are advertising comparable fixed-wireless services $5 to $15 lower than its similar fixed-line option.

5G has also stolen significant market share from New Zealand’s far superior NBN-equivalent infrastructure “Spark”.

Given NBN Co’s massive fixed costs (expected to be $57 billion by 2024), it requires the lion’s share of Australian households to be signed up in order to deliver a to deliver a commercial return to the government.

But if a significant share of households leave the NBN for wireless alternatives, then these fixed costs will necessarily be spread over a smaller subscriber base.

Thus, the economics of the NBN will become even more challenging as mobile broadband technologies to evolve and continue to steal market share.

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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