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Emerging from COVID-19, operators are upgrading fixed and mobile networks to support the changes in work patterns, while governments are looking to the telecommunications industry to enable economic growth and avoid a digital divide.

Total internet access revenue showed marginal growth in Australia in 2020 while demand for at-home connectivity rose, driven by a 38 percent growth in download volumes1. The total Australian internet access market was worth A$30.1 billion in 2020, a modest year-on-year growth of 1.14 percent.

COVID-19 demonstrated the value of strong telecommunications infrastructure to governments, operators and the community, with existing infrastructure underpinning the pivot to home-working and enabling economic recovery. With a view that flexible work patterns will become the norm going forward, it is expected that a greater proportion of Australians will work from home on an ongoing basis. Whilst connectivity has been good, commitments by operators to improve the quality and reach of both fixed and mobile telecommunications infrastructure has been welcomed.

NBN Co has announced a new tranche of investment, aiming to provide 75 percent of Australian premises with speeds up to 1 Gbps by 2023.

The $4.5 billion network upgrades that NBN Co announced in September 2020 are now starting to be executed. These upgrades will provide 75 percent of Australian premises with speeds up to 1 Gbps by 2023, through installing fibre in the last mile of the network. As at April 2020, 8.1 million homes and businesses were already connected to the NBN network2, however only 11 percent were using speeds of 100Mbps or faster3. More customers can be expected to upgrade to higher speeds as connectivity becomes an essential utility, but adoption to higher speeds by households and small and medium-sized businesses remains a challenge.

Government funding provides a much needed boost for regional and rural telecommunications infrastructure.

Reflecting the essential nature of internet access, regional and rural telecommunications infrastructure received greater focus and funding this period. Commonwealth and State governments, NBN Co and Telstra announced respective co-funding programs to promote better regional connectivity. Governments have either announced new programs, for example Victoria’s $626 million program to boost regional small business connectivity, or continued the execution of inflight programs, for example the Commonwealth’s Regional Connectivity Program and NSW’s Gig State program. Victoria’s program is one of the first that specifically targets economic stimulus directly related to making investments in improved digital connectivity, with the mission to build a digital economy.

The forthcoming expansion of 5G coverage around the country is set to boost both mobile internet usage and the uptake of fixed wireless services.

The COVID-19 period has seen mobile operators continue their 5G rollouts, further boosted in April 2021 by the auctioning of higher frequency, mmWave spectrum which is needed to fulfil the 5G promise of gigabit speeds. The high capital requirements of deploying 5G has forced some operators to review funding capacity, as returns from their core mobile businesses continue to decline. This is leading to smaller operators rationing deployment to more urbanised areas. Infrastructure that is becoming commoditised will be candidates to be carved out, as operators focus on assets that provide longer-term differentiation. Furthermore, Optus and Telstra have announced they will sell their tower assets in 2021. This is expected to fundamentally change market structure, separating wholesale and retail businesses and dismantling the vertical integration that has long been a hallmark of the mobile sector.

Overall, ongoing network improvements and a resultant upswing in data consumption are expected to fuel further volume growth in 2021, with revenue growth subdued due to the prevalence of unlimited usage pricing bundles. 

Q1 2021 Highlights

  • NBN Co is executing its next wave of network upgrade, boosting the internet access speeds to 75 percent of premises.

  • Greater co-investment focus by government on internet access in regional and rural areas, in a bid to stimulate the digital economy and avoid a digital divide. 

  • Continued rollout of 5G, and the change in market structure with Optus and Telstra expected to complete sales of their tower assets.

Fast, reliable internet connectivity underpins economic growth and the digital economy.

Forecasts at a glance

Total Internet Access Market (A$ millions)

CAGR 2019-2025 based on the midpoint forecast scenario

Total Internet Access Market 3.1%

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