Significant growth expected in mobile services market
The mobile service market is finally turning around after steep declines during the height of the coronavirus pandemic. A recent GlobalData’s Australia Mobile Broadband Forecast Model analysis forecasts a 15.4% Compound Annual Growth Rate (CAGR) in Australia’s mobile services market.
This is a welcome about-face from last year’s numbers, when Telsyte analysts predicted a second consecutive year of declines in the mobile services market.
In this article, we’ll break down the expected growth in Australia’s mobile market, and discuss where the sudden boost is coming from.
More about the expected mobile services growth
The GlobalData’s Australia Mobile Broadband Forecast Model analysis predicts that Australia’s mobile services revenue will reach US$14.9bn by 2025, mostly due to the growth in revenue from mobile data services.
While mobile voice services is expected to grow at an impressive 12.7 percent CAGR between 2020 and 2025, mobile data services growth is expected to be even more impressive – 16.7 percent CAGR over the same period.
But there’s an even closer look into the source of expected growth. Mobile data will be key, but 5G will be the main driver within the mobile data services market.
The power of 5G
The fifth generation mobile network technology has promised consumers a lot. Before its launch in Australia, 5G was expected to provide lightening fast download speeds, up to 100 times faster than 4G LTE, as well as low to zero latency.
Upon its launch in 2019, however, 5G was barely faster than 4G, and in some cases it even lagged behind. In addition, with 5G just rolling out in its early stages, coverage was very limited.
However, both Optus and Telstra showed great progress in their 5G roll-out throughout 2019 and 2020. And TPG Telecom (Vodafone) finally turned on some 5G sites in 2020 as well. For instance, Telstra now claims their 5G coverage is 50 percent of the population, and the telco is targeting 75 percent by the end of June.
What has also improved is 5G speeds – in a recent test by Systemics PAB, Optus 5G averaged download speeds of 326Mbps and peak speeds of 1421Mbps. Telstra was behind at 295Mbps and 904Mbps, respectively. These are extremely fast for a mobile network.
Compare this to last year’s Opensignal report which saw Optus 5G average download speeds of just 170Mbps, and the significant improvements in 5G become evident.
And 5G is getting even better
It doesn’t stop there. While 5G technology has improved in just 2 years, it is expected to get a lot faster with mmWave.
In this first half of this year, the government is expected to auction off 5G spectrum in 26GHz band range, commonly referred to as mmWave. This spectrum will bring about the high capacity 5G that we heard about a couple years ago, much better than the already-fast 5G networks.
In the second half of this year, the government is also expected to allocate spectrum in 800/900MHz lower band for even broader 5G coverage throughout the country.
Final words – How much the power of 5G will boost mobile services
With 5G on its way to being a super mobile network, there’s no surprise that the technology will contribute heavily to Australia’s mobile services network growth in the coming years. GlobalData predicts a rise in 5G subscriptions from 5.7 percent of the the mobile data sector to 34.7 percent between 2020 and 2025. That’s a huge jump, expected to follow the 5G rollout.
So far, Telstra and Optus are ahead of the pack, but TPG Telecom should make some massive gains in the coming months, and certainly in the coming years.
And eventually, all MVNOs will likely get a taste of 5G. In fact, Optus has already opened up its mobile 5G network to MVNOs, and perhaps Telstra and Vodafone will take the same route soon.
5G is clearly the future of Australia’s mobile services market, and 4G will eventually become the back up mobile network wherever 5G service is lacking. Telstra has already announced its plans to switch off its 3G network by 2024, leaving more spectrum for 5G as a major mobile market growth driver.