Is telecommunications approaching its end-game?

Industry growth faces limits as mobile speeds over 10 Mbps and fixed speeds over 50 Mbps offer diminishing returns.

David Kennedy · Venture Insights11 October 2024Period: October 20244 min read

10 Mbits/s→

Sufficient mobile data speed for most users

50 Mbits/s→

Sufficient fixed broadband speed for most users

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Abstract

This report examines the thesis that current fibre and mobile technologies have reached a point of sufficiency for most consumer needs, suggesting that future industry growth will be structurally limited. With data usage growth expected to plateau by the end of the decade and 5G failing to generate significant new revenue streams, the telecommunications sector must shift its focus from performance iterations to a low-cost utility model. The analysis explores the implications for investment, pricing, and regulation in a maturing market.

Key Takeaways

Data usage growth is stabilising and is expected to reach a plateau by the end of the 2020s.
Mobile speeds over 10 Mbits/s and fixed speeds over 50 Mbits/s provide diminishing returns for the average consumer experience.
The Australian telecommunications industry is currently struggling to cover its capital costs as real prices continue to fall.

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Frequently Asked Questions

Structural growth is nearing its limit, with data usage expected to plateau by the end of the 2020s. Consumption is fundamentally constrained by a 24-hour daily time limit, and current speeds already exceed the 3 Mbits/s required for high-definition video streaming.

5G has not generated significant new revenue streams because mobile speeds over 10 Mbits/s offer diminishing returns for the average consumer experience. Consequently, the Australian industry is currently failing to cover its capital costs as real prices continue to decline.

No, as fixed speeds over 50 Mbits/s and mobile speeds over 10 Mbits/s provide negligible improvements to user satisfaction. Capital investment must pivot from performance iterations to ensuring network ubiquity and low-cost utility operations.

The sector is transitioning to a low-cost utility model characterized by wholesale and retail separation. This shift will necessitate increased network-sharing and industry consolidation to maintain viability in a market where performance has reached sufficiency.

Is telecommunications approaching its end-game?

Abstract

Key Takeaways

Frequently Asked Questions

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