The Australian mobile services market is expected to enter the realm of 5G in 2019, quickly changing the current market dynamic driven by price competition, according to new research from emerging technology analyst firm Telsyte.
The Telsyte Australian Mobile Services Market Study 2018 found 616,000 new SIO (Services In Operation) were added during the 6 months to December 2017, ending the period with a total of 34.2 million SIO.
The market collectively achieved similar net growth compared to the same period in 2016 (593k), with handsets being the main driver followed by machine-to-machine (M2M) connections and mobile broadband. Telstra and Mobile Virtual Network Operators (MVNOs) combined had the largest growth, contributing more than 70 per cent of the total net SIOs additions.
Telsyte estimates the number of 5G connections will reach over 10 million by the end of FY2022 and at least one network operator will begin shutting down 3G services by 2020. The arrival of 5G is set to enable further innovation in mobile services plans and bundled services, helping create differentiation in the market for MNOs.
The study also found competition in the BYO handset market is intensifying and consumers are benefiting from much better deals across the board compared to a year ago. Mobile Network Operators (MNOs) have substantially increased mobile data inclusions on their BYO contract plans, putting pressure on MVNOs.
The average data allowance on mobile plans grew by more than 100 per cent in 2017 while average data usage on smartphones only grew by 49 per cent. Consequently, Telsyte found that around half of the average data allowance per user was utilised in 2017, down from 67 per cent in 2016.
Telsyte research shows, 1 in 3 (32 per cent) still feel they are paying too much for their current mobile services. Those that have exceeded their monthly data allowance at least once during 2017 were twice as likely to intend to change their service provider than the average.
Mobile connectivity is now critical to most Australians. More than 1 in 4 Australians were forced to tether to their mobile connection in the last 12 months due to a slow, or non-working, fixed broadband connection at home or work. Amongst those forced to tether, 32 per cent said they are likely to upgrade their mobile data limit.
Despite this behaviour the consumption of fixed broadband data showed no sign of slowing down with usage expected to continue to grow at around 40 per cent per annum.
Two-thirds of Australian smartphone users with fixed broadband at home claim that they would use their fixed broadband just as much, even if they had access to unlimited (or very large) mobile data. Only 11 per cent say they will decrease their fixed line usage by more than 50 per cent or stop using it altogether.
Telsyte believes a simple unlimited “any connection” option will be popular going forward as consumers become increasingly dependent on their digital devices, regardless of whether it connects via the mobile network, or a fixed line network.
“The market is conditioning people to consider and pay for different access technologies separately, but ultimately consumers just want their Internet to work, anywhere at any given time, on all their digital devices,” Telsyte Senior Analyst Alvin Lee said.
Telsyte believes more personal and household devices will be connected to the mobile networks when consumers are introduced with the “easy to connect” methods, such as those based on eSIMs.
eSIMs are integrated SIMs in digital devices such as smartphones, wearables, tablets and other Internet-connected devices. Devices with eSIMs can be connected to supporting cellular networks with a simplified process and without requiring a physical SIM card.
They also can reduce the internal space required, a critical advantage for smaller devices such as wearables. Currently the Apple Watch Series 3 LTE is the main device utilising this technology.
Telsyte’s research shows eSIMs are more likely to encourage Australians to connect additional devices to mobile networks. With the current low levels of data utilisation on mobile services, nearly 1 in 2 Australians (45 per cent) are interested in connecting their personal and household devices to mobile networks if they are eSIM enabled.
The most immediate opportunities are with laptops and tablets where around a third of Australians are interested in connecting via an eSIM.
While eSIMs present opportunities for carriers, they also have the potential to increase churn with most operators cautiously adopting this technology.