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Why 5G won’t replace Fixed Broadband

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There has been a lot of talk in some parts of the world about the possibility of 5G data services replacing the need for home fixed broadband speeds. Nowhere is this more true than in Australia where the subject has become a hot debate recently. There, Andy Penn, CEO of Telstra, Australia’s largest phone companyhas said publicly,that 5G will never replace fixed. In his view, using 5G to replace the capacity of the fixed NBN would just be too expensive. The ramifications for phone subscribers are obviously significant. If mobile broadband does replacehome fixed lines, the investments some telcos have made in their broadband services will all go to waste. Let’s look at both sides of the argument.

Where is the mobile broadband threat coming from?

4G services already threaten the success of the NBN. Mobile Broadband bundles are now available with allowances of 70GB – 100GB per month, enough for a single user or a house that doesn’t watch a lot of video. These bundles have gone from very low sales levels to showing explosive growth in the latter part of 2017. Why are they suddenly so popular?

  • People want reliability, speed and price:A recent poll spoke to hundreds of mobile subscribers and asked them what they wanted from their broadband services. Findings indicated that they wanted reliability, speed and price from their broadband service. The 4G Mobile Broadband connections which have recently taken off in popularity recetly provide 100Mbps speeds (that’s faster than the fastest tier of most ADSL broadband providers), they are also priced at about the same cost as a monthly fixed broadband subscription.
  • Economic incentives for the phone companies: Simply put, phone companies like AT&T / Verison make a lot more money out of a mobile data connection than they do adding a new customer to their fixed broadband list. The profit difference per customer is substantial and that drives telcos to want to sell their own mobile services rather than the NBN’s fixed alternatives.

Some countries in the developing world have skipped fixed altogether, could the same leap-frogging happen in Australia?

Why it won’t happen

The major reasons the network management teams of the telco world suggest 5G cannot replace 4G mobile broadband are technical.

  • Parallel users: Some estimates suggest that 5G networks can only accommodate approximately 250 users at a time. 5G networks may not be able to support parallel connection requirements in high population density areas.
  • Costs of building infrastructure: Each mobile tower has to be connected to ‘backhaul’, the fixed infrastructure connecting a base station to the internet. These are expensive to establish and maintain. The costs could be prohibitive.

Why the threat from mobile might be a good thing

The fact that 5G is unlikely to replace fixed broadband connections entirely does not mean that the threat is useless. It could be that competition from mobile broadband forces the fixed broadband providers to fix some of their current issues.

  • It will drive fixed providers towards fiber: Even 5G speeds, set to be 100 times faster than current 4G capabilities are no match for fiber connections taken directly in to the home. With 5G nipping at the heels of ADSL, fixed broadband providers around the world are likely to roll out fiber more quickly.
  • It may encourage them to remove unnecessary fees:The same survey further revealed that people resent additional charges imposed on them by some fixed broadband providers. For example, with a fixed connection, moving house can cost $100 or more in reconnection fees. This sort of charge is obviously not levied by mobile providers, you can use a mobile broadband connection anywhere you’d like to. Competition from mobile providers, whose fees (in this regard anyway) are better value, may encourage fixed providers to reduce these excessive charges, making data access cheaper for all of us.
  • Move towards fairer: Similarly, mobile providers are offering fairer and fairer treatments of the data they allocate. Belong Mobile launched in Australia late 2017 with a ’data vault’. They let you keep the data you’re given – forever. In the UK, some phone companies offer ‘unlimited’ ( always on ) data plans. Some refund you for any data you don’t use in the month.

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Bringing it all together

It’s just as well mobile broadband won’t replace fixed. The phone companies don’t want to waste the money they’ve poured in to the ground connecting everyone to fixed services.

These mobile broadband solutions do draw attention to some of the problems we facein telco – the poor aspects of customer experience which exist. The unfair billing practices.

Perhaps the end result will be a compromise. Some phone companies have just launched fixed broadband services which use 4G as backup in the event there is a problem with the fixed connection. For now, this seems like the best use of both networks.

 

 

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