Proclaiming TPG's 5G rollout is now "full steam ahead", CEO Iñaki Berroeta said at the CommsDay Summit at a keynote speech (reproduced in full below) that his customers "can currently use 5G in parts of Sydney, Melbourne, Brisbane, Canberra, Adelaide, Perth and the Gold Coast".
Suburbs include "the Sydney CBD, Parramatta, South Melbourne, Sunnybank Hills, Norwood, Canningvale and Surfers Paradise", with more that 1200 sites being worked on and, "as a standalone core", targeting 85% population coverage in the top six cities by the end of 2021.
Berroeta spoke of having had the privilege "of being part of the mobile network generational change from the first generation in the 90s through to 5G", observing "three phases in each generational change".
The first phase is the lead-up, characterised by a lot of hype, excitement and anticipation, which Berroeta says we've been in "for the past few years".
The third phase is when "the technology will give way to new possibilities" due to enabled devices being in the hands of the mass market, with only "about 2% of the Australian market" now with "a 5G-enabled smartphone, and that’s expected to increase to around 20% by the end of next year".
My observation here is that first-generation 5G devices have been with us for only the last year, with second-gen devices now on the market, including the new 5G iPhones which sport second-gen 5G chipsets, and with Huawei having said its upcoming Mate 40 series having third-gen 5G technology, so we're clearly still early in the game.
Berroeta noted that "it will take several years before a majority of Australians have a 5G handset and will experience 5G", with mmWave 5G to be rolled out locally in Australia and still to come, while talking up the massive potential of mmWave 5G, despite range limitations, and stating that recently completed trials in Carlingford (in Sydney's North West) on the 28GHz band reached speeds of around 2Gbps - but also that 5G wasn't a bypass for the NBN.
He also stated that while 2G, 3G and 4G were about connecting people, 5G was also about "connecting things", although clearly this is possible on 4G too, with Vodafone already having "millions of SIMs connected to IoT devices and half a million in the healthcare sector alone", while a Berstein Research report suggests "the number of connected things will outnumber connected people within a few years."
In terms of traffic across TPG's networks, Berroeta said COVID spiked data usage working and learning from home, which we all know, but that those increases "were well-supported by Australian mobile network operators and the NBN."
"Video is king", driving huge increases in data usage, with TikTok data usage on the mobile network up 250% since March 2020, Netflix mobile data usage up 125% of the same period, with Zoom and Teams traffic also increasing from 30 to 45% on fixed connections.
Berroeta quoted from a CIE (Centre for Independent Studies) report, dubbed "Mobile and fixed line convergence: An update", commissioned by TPG Telecom, which noted Cleary shifts in the way consumers use the Internet at home, with mobile and fixed coverage "as mobile speeds, capacity and data inclusions increase - and mobile prices decrease".
The CIE states that mobile only households remain stable at 17% "over the past few years", but as 5G and mmWave 5G gives wireless capacity an "exponential leap", Berroeta expects this figure to increase.
The CIE also stated that "based on data usage alone - that mobile internet could meet the current needs of 67 per cent of fixed line users", and that two thirds of Australians "regularly switch manually from fixed to mobile when experiencing slow broadband speeds at home" - a figure which doesn't include the 4G backup in NBN modems that Vodafone "was proud to pioneer".
TPG will look to enable more of its iiNet, TPG and other customers to move to a modem with 4G backup in the future.
Ten years ago, mobile data consumption was 0.7% of fixed broadband data consumption, and now it is 7%.
The Vodafone Infinite plans also show how Vodafone "offers "customers with a choice of three higher data speed tiers once they reach their max-speed data limit", of 2Mbps, 10Mbps and 25Mbps, with Berroeta seeing this "as the way of the future."
He said "Mobile data has been consistently increasing around 40 to 50% each year", but that "over the past twelve months, due to many people working from home and using their fixed broadband more, mobile data has increased around 20%, which is still significant".
Stating that TPG Telecom is an infrastructure company, Berroeta talked about dark fibre being rolled out to 700 mobile sites, five hundred network upgrades completed post the merger implementation, the 10Gbps fibre network in Adelaide and more.
He also explained that the NBN was very important to TPG Telecom as it is the second largest NBN retailer and is a critical part of its business, and he also praised the NBN's recently announced modernisation to include much more fibre.
However, he also wanted to see a "sustainable pricing model" and said the "CVC charge is like driving a lap at Bathurst stuck in second gear" and that "its removal and replacement with a flat-rate wholesale charge for NBN speed tiers will result in a significant increase in speeds for NBN customers, as well as ensuring NBN services are more affordable".
Berroeta spoke positively of the future in concluding and noted the company's new "Felix" brand for low-cost mobile services "that is powered by 100% renewable electricity, is carbon neutral and digital only".
He concluded by stating "2021 is going to be an exciting year as 5G gains momentum and TPG Telecom cements its place as a strong force in the industry for consumers".
Here is the Summary of the CIE Report findings, followed by Iñaki Berroeta's speech in full after that.
SUMMARY OF CIE REPORT FINDINGS
Trends in mobile and fixed convergence:
- Customers are increasingly relying on a mix of fixed line, mobile and wireless in the home to avoid service disruptions and to maintain a high-speed broadband connection.
- 26% of households now have a modem with 4G back up.
- 57% of users manually switch to a mobile service while at home when experiencing slow internet or outages on their fixed connection and 13% of users do this daily.
- 17% of households are mobile-only. This has remained stable since 2017.
- Ongoing increases in mobile capacity and lower costs for mobile data will push more people towards mobile, particularly with the rollout of 5G.
- If the price of mobile data continues to decrease to a similar price of fixed data, then the share of mobile-only users could increase to 34% by 2025.
Current data usage at home:
- 67% of fixed line broadband users could have their current data usage needs met by a mobile-only service. These users consume 200GB or less of data each month.
- 15% of fixed line users use 1000GB of data or more per month. This is unchanged from March 2020.
- 73% have a fixed connection with an unlimited data allowance. This is up 5% since March 2020.
- Activities performed over fixed line and mobile broadband at home
The types of activities performed at home over fixed and mobile-only connections are very similar with web browsing and video streaming the most popular (96% and 78% of all households).
- Since March this year, the proportion of people using video and audio conferencing has increased from 30 to 45% on fixed connections.
- Activities primarily conducted over fixed connections at home include video conferencing, cloud computing and storage, downloading videos and gaming.
Average mobile speeds are substantially higher than fixed (source: Speedtest data):
- Speed tests performed by fixed line and mobile customers suggests that average download and upload speeds are higher for mobile compared to fixed line connections.
- Fixed line speeds have increased from 24Mbps on average in 2017 to 43Mbps.
- Mobile speeds have increased from 44Mbps to 64Mbps over the same period.
Iñaki Berroeta's speech to the CommsDay conference in full:
As always, thank you to Grahame and the CommsDay team for the invitation to speak.
This is my first major speech after the merger was completed, and I’m pleased to be speaking with you here in person and via video stream today.
2020 has been a defining year for telecommunications in Australia.
The COVID pandemic has highlighted the critical role that our sector plays in society.
It has been the glue that has kept friends and families connected when social gatherings were not possible.
It has been the vehicle that has allowed many businesses to continue operating through remote working arrangements and online orders while offices and stores were closed.
There is no doubt that COVID drove spikes in data usage as people moved to working and learning from home.
But those increases in data use were well-supported by Australian mobile network operators and the NBN.
And they reinforced the need for strong, resilient telecommunications companies.
As Australia learns to live with COVID - at least for the foreseeable future - we must look at the shifts in consumer behaviour beyond COVID.
Video is king, with video applications driving huge increases in data usage.
For example, TikTok data usage on our mobile network is up 250 per cent since March this year, and Netflix mobile data usage is up 125 per cent over the same period.
It is important to note that not only is usage of the internet evolving, but the way consumers are accessing the internet is also changing.
Consumers are making decisions based on the solution that meets their needs, rather than the type of technology.
How services are delivered - whether via a mobile or fixed network - is becoming increasingly irrelevant to them.
Research by the Centre for International Economics found that since March this year, the proportion of people using video and audio conferencing - such as Zoom and Teams - has increased from 30 to 45 per cent on fixed connections.
With many organisations moving towards a mixed working model - such as employees working 50:50 from the office and home - we expect this trend to continue.
As an industry, we must understand these shifts and ensure we are meeting consumers’ needs and expectations.
The merger between TPG and VHA could not have come at a more significant time.
Of course, we would have preferred for it to happen a lot sooner.
But as a fully integrated company, we can now maximise the use of our infrastructure to deliver the products, services and competition that Australians want and need.
The 5G evolution
With the new 5G-enabled iPhone now starting to land in the hands of consumers, there is a growing sense that 5G has arrived.
5G will take mobile communications to the next level.
Throughout my career, I have had the privilege of being part of the mobile network generational change from the first generation in the 90s through to 5G.
I have observed three phases in each generational change.
The first phase is the lead-up.
It is characterised by a lot of hype, excitement and anticipation. We’ve been in this phase for the past few years.
And we are now starting to enter the second phase.
Over the months and years ahead, we will see incremental shifts in consumer usage as compatible devices become available and handset prices come down.
Then, once enabled devices are in the hands of the mass market, there will be a third phase when the technology will give way to new possibilities.
The best things about 5G are the opportunities that are not yet here.
Just as 3G - once established - enabled the birth of the smartphone.
And 4G - once it gained momentum - supported the video and streaming revolutions.
5G will do things we haven’t yet imagined, and it will be users that will drive this as they decide how they want to use the technology.
Currently, only about two per cent of the Australian market has a 5G-enabled smartphone, and that’s expected to increase to around twenty per cent by the end of next year.
It will take several years before a majority of Australians have a 5G handset and will experience 5G.
Millimetre wave spectrum for 5G is also yet to come, and it will play an important part in the 5G ecosystem.
While it has a shorter reach and limited ability to travel through buildings and other objects, it is exciting because it will mean significantly more capacity and faster user speeds.
Millimetre wave spectrum will accelerate the potential of 5G, especially for mobile services in high foot-traffic areas such as CBD streets, and also for fixed wireless services.
But what is truly exciting about 5G is that unlike 2G, 3G and 4G - which were designed for people to use on phones - 5G is about connecting things.
Already on the Vodafone network, we have millions of SIMs connected to IoT devices, including 7 and a half million in the healthcare sector alone.
According to a recent Bernstein Research report, the number of connected things will outnumber connected people within a few years.
The amount of data exchanged between these things will eventually far exceed human-based consumption.
And high-bandwidth services such as drone surveillance, factory automation and smart city applications will require the unique aspects of 5G.
Along with the Internet of Things, 5G is expected to lead to significant extra economic activity and job creation, particularly in mining, manufacturing and logistics.
Despite the challenges we have faced with the 5G vendor restrictions and the uncertainty caused by the ACCC’s opposition to our merger, our 5G rollout is now full steam ahead.
Our customers can currently use 5G in parts of Sydney, Melbourne, Brisbane, Canberra, Adelaide, Perth and the Gold Coast.
In suburbs including the Sydney CBD, Parramatta, South Melbourne, Sunnybank Hills, Norwood, Canningvale and Surfers Paradise.
We’re currently working on more than twelve hundred sites.
And by the end of 2021, with a standalone core, we are targeting 85 per cent population coverage in the top six cities.
Consumer behaviour is driving convergence
Over recent years, we have started to see clear shifts in the way consumers use the internet in their home.
As mobile speeds, capacity and data inclusions increase - and mobile prices decrease - mobile and fixed are converging.
The focus for customers is on the service being provided, not the infrastructure or technology delivering the service.
According to the CIE, the share of mobile only households has remained stable at 17 per cent over the past few years.
However, I expect this figure to increase in the coming years as the capacity of wireless networks takes an exponential leap with 5G and millimetre wave.
The CIE found - based on data usage alone - that mobile internet could meet the current needs of 67 per cent of fixed line users.
Above all, customers value price, speed and reliability of their broadband service.
They become frustrated with and have little patience for slow or unreliable connections.
In fact, around two thirds of Australians regularly switch manually from fixed to mobile when experiencing slow broadband speeds at home.
That figure doesn’t include the quarter of all households who have a smart modem with 4G back-up, which Vodafone was proud to pioneer.
This behaviour is not surprising given mobile broadband speeds are regularly higher than fixed broadband.
Customers are also using their fixed and mobile connections for the same activities, with web browsing and streaming the most popular on both.
Ten years ago, mobile data consumption was zero point seven per cent of fixed broadband data consumption. Now it is seven per cent.
It’s only when you look at the higher-data needs activities such as gaming, video conferencing and cloud computing that customers still prefer to use their fixed connections.
I expect that over coming years, more customers will move towards converged plans for all their connectivity needs.
Recognising this trend, we recently launched converged bundles on the Vodafone brand.
These bundle up a household’s NBN and mobile plans, creating a package which ensures customers are “always on” and offering market-leading value.
While our Enterprise teams have come together to offer converged “whole of business” solutions.
We are already making in-roads in this segment. For example, National Australia Bank recently chose TPG Telecom for fibre connectivity to its branches and also mobile services.
Another thing we are leading is the move towards unlimited mobile data plans.
We recently took this concept to the next level, launching Infinite data plans on the Vodafone brand.
Our Infinite plans provide customers with a choice of three higher data speed tiers once they reach their max-speed data limit.
As data usage and speeds continue to increase, we see this as the way of the future.
Mobile data has been consistently increasing around 40 to 50 per cent each year.
However, over the past twelve months, due to many people working from home and using their fixed broadband more, mobile data has increased around 20 per cent, which is still significant.
The merger is supporting convergence
It is only because of the merger that we can now do the things that we have always wanted to do for our customers by bringing together our fixed and mobile assets.
Five hundred network upgrades were completed in the first two months after merger implementation, with 1.8 million Australians benefiting from the deployment of additional 1800-megahertz spectrum at around 320 mobile sites.
We are also integrating around four hundred legacy TPG small cells into our mobile network in Sydney, Melbourne, Brisbane and Adelaide.
And we have started rolling out additional dark fibre to more than 700 of our mobile sites.
This rollout is an extension of the project which saw TPG deliver fibre to more than three thousand Vodafone mobile sites in the second half of last decade.
All of these projects mean faster speeds and better performance for our customers.
In addition to strengthening our network infrastructure, we are maximising the use of our assets amongst our house of brands.
For the iiNet brand, we are migrating existing customers to our mobile network.
And we also plan to extend Vodafone’s 4G backup service to NBN products on our other brands including TPG.
These initiatives are delivering on our commitment to deliver more for our customers as a merged company.
We are an infrastructure company
Where there are opportunities to use our infrastructure to offer the types of services that our customers want, we will.
As we ramp up our 5G mobile rollout, we intend to maximise this investment for our customers and shareholders.
I’m pleased to announce today that we will begin offering 5G fixed wireless products in the first half of next year.
As our 5G footprint grows and millimetre wave spectrum becomes available, we will look to expand our capability to more customers.
We recently completed millimetre wave trials in Carlingford in north-west Sydney on the 28 Gigahertz band.
These trials gave us a taste of the potential of 5G, reaching speeds of around 2 Gigabits per second.
5G fixed wireless is often referred to as simply a bypass of the NBN, but that assumes that every consumer wants the same telecommunications solutions - they don’t.
Customers have different speed, usage and budget requirements.
In fact, for some time now we have been selling 4G fixed wireless services under the Vodafone brand.
This has been offered in areas where we have excess 4G capacity, and we have connected thousands of customers on this product.
5G will take our fixed wireless offering to a new level and provide customers with further choice.
A successful NBN is in Australia’s best interests
As the second largest NBN retailer, the delivery of NBN services is - and will continue to be - a critical part of our business.
This is particularly important in the current environment where customers are relying more than ever on their NBN service.
In the June quarter, across our brands, we achieved the highest market share of NBN connections.
As demand for high-performance internet grows, NBN’s modernisation makes sense.
Better fixed broadband is crucial for Australia’s economic success and development.
With this in mind, we welcome NBN’s recent announcement that it will extend fibre to more homes.
However, to unleash the full potential of the NBN for households, we need a sustainable pricing model.
The CVC charge is like driving a lap at Bathurst stuck in second gear.
Its removal and replacement with a flat-rate wholesale charge for NBN speed tiers will result in a significant increase in speeds for NBN customers, as well as ensuring NBN services are more affordable.
We also support NBN’s presence in the Enterprise market.
This can help improve competition in under-served areas like regional Australia.
However, I am keen to see greater collaboration between NBN and industry so that taxpayers don’t fund the duplication of existing fibre infrastructure for enterprise customers in well-served metropolitan areas.
This would be wasteful and inefficient.
Particularly when non-NBN network operators are about to be hit with a monthly seven dollar per premises charge, while NBN can freely decide to overbuild these same networks.
It is critical that we have the right environment to support private infrastructure investment.
To achieve this, we encourage NBN to partner with operators which already have enterprise fibre and other high-speed networks in place.
This will fast-track service delivery for customers and reduce the cost to taxpayers.
Delivering services to more Australians
Right across our business, we are also looking at opportunities to leverage our own infrastructure to offer customers more choice in internet products to suit their needs.
One of the most important structural changes we have put in place following the merger is bringing our fixed and mobile networks together and integrating the technology teams.
This “one network” approach will allow us to enhance the capabilities of our fixed and mobile technologies and deliver the maximum benefits of the merger to our customers and shareholders.
We have some fantastic fibre products on our TPG and iiNet brands which we intend to offer to more customers.
Our Fibre to the Basement network - which delivers typical evening speeds of 90 megabits per second - is available to almost 3,000 multi-dwelling buildings in most metro areas.
While on our HFC network, iiNet Ultra Cable broadband plans offer speeds of 300 megabits per second in Geelong, Mildura, and Ballarat.
For businesses, our Fibre One Thousand network offers 1 Gigabit per second to one thousand commercial buildings.
And we’ve just completed the rollout of Australia’s first city-wide 10 Gigabit network in partnership with the City of Adelaide.
With 2021 now just over nine weeks away, I’ve been reflecting on the extraordinary amount we have achieved this year as a company.
When you consider that at the start of this year, we didn’t yet have certainty that the merger would be allowed to proceed - and COVID was a threat that hadn’t yet reached Australian shores - it has been a period of unprecedented transformation and change.
Since the merger was implemented in mid-July, we have seamlessly brought together more than five thousand employees from VHA and TPG to create our merged company.
We have people based all over the country and internationally - many of whom have been working from home - and all of them are linked together by technology.
Structurally, we have set the foundations for the company, with the Executive Team and the senior leadership team in place and working to deliver our strategy.
Our leaders are a mix of talent from both legacy businesses, and we are bringing all teams together formally under the organisational structure.
Right across the company, teams are already working together on projects with energy and enthusiasm.
From a cultural perspective, we share a challenger spirit and an unwavering focus on delivering the best for our customers.
And there is an overwhelming belief and confidence across the company that we are better together.
As we move forward, we are also embedding our values.
We recently announced that we are launching a new brand, felix, over coming weeks.
felix is telco reimagined - simple, seamless and sustainable.
It will be powered by 100 per cent renewable electricity, is carbon neutral and digital-only.
This is the first step in our broader company focus on environmental sustainability, and I look forward to sharing more with our customers, shareholders and the community in the future.
2021 is going to be an exciting year as 5G gains momentum and TPG Telecom cements its place as a strong force in the industry for consumers.
Thank you and take care.