The COVID-19 pandemic has driven consumers and businesses to significantly increase their usage of telecommunications, particularly for video conferencing. Although the state of emergency surrounding the COVID-19 pandemic in Australia has significantly lessened, with outbreaks now infrequent and requiring less severe restrictions to control, video conferencing and general telecommunications usage is still significantly higher than pre-COVID-19 levels.
The risk of snap border lockdowns interstate, and a continued restriction on most movements for international borders have made users more reliant on video conferencing and other telecommunications for both business and personal needs. A change to Medicare to support telehealth consultations has also supported demand for industry services, as patients have required both mobile and fixed line telecommunications to access medical consultations, particularly for general practitioner (GP) services.
5G phone home
Despite a significant rise in mobile and data usage, it may come as a surprise that telecommunications operators have not significantly benefited from this trend. Wireless telecommunications operators, particularly the major mobile network operators:
have struggled to maintain pre-COVID-19 revenue due to a loss of international roaming revenue. An increase in remote working has also resulted in a reduced need for mobile telecommunications, placing downward pressure on total voice and data usage. New 5G mobile technology was initially anticipated to be a strong area of growth for mobile telecommunications, but its impact has been insignificant in the mobile market since the beginning of the COVID-19 pandemic. Revenue for the Wireless Telecommunications Carriers industry is expected to decline at an annualised 2.1% over the five years through 2020-21, to $20.9 billion.
Turning the volume up
The Wired Telecommunications Network Operation industry has also struggled to grow over the period, partly due to a transition in the industry away from older networks maintained by telecommunications network operators such as Telstra onto the National Broadband Network (NBN). NBN Co has struggled to increase average revenue per user despite a significant increase in the volume of data sent across the network, in part due to temporary discounts offered on wholesale services to retail providers as part of its COVID-19 relief package. Revenue for the Wired Telecommunications Network Operation industry is expected to decline at an annualised 2.4% over the five years through 2020-21, to $11.5 billion.
Making waves
Telecom operators have sought to use 5G fixed wireless services as a means of potentially bypassing the NBN and providing high-speed internet to underserviced suburbs and communities. Such a move could significantly increase the margins on internet services for telecom providers, but also be a potential threat to the NBN in its current state. Without continued growth in subscribers and average revenue per user, NBN Co may struggle to pay off its debts and could result in a potential write-down or even a sell-off of the company. Such an action could significantly disrupt the industry, although may also result in lower wholesale costs for retailers, which would benefit industry operator profitability.
IBISWorld Industry and Company Report mentioned in this release:
Wired Telecommunications Network Operation industry in Australia
Wireless Telecommunications Carriers industry in Australia
NBN Co Ltd
Telstra Corporation Limited
TPG Telecom Limited
Singtel Optus Pty Ltd
