The State of Australian Telco – Impressions From Sector Leaders
Telecommunication has always been a challenging sector; one prone to changes and frustrations influenced by government and regulations. Anyone who works in the space will concur that smooth and breezy is not how one would ever have described the telco market, but this year, more than those before it, seems to be reaching a whole new level, and I want to explore why.
Working in the telco space, I have a unique vantage point of the challenges currently being faced, but rather than simply sharing my interpretation of what seems to be happening, I wanted to speak with those on the ground, leaders within telecommunications, to ask their impressions of what is going on with the sector this year.
What Our Telco Leaders Have to Say
“One word to describe it would be Confusion!
“We are all Flat out doing nothing.
“Australian Operators who own the spectrum (3 out of 4) and therefore spend the Capex/Opex are currently paused due to constraints placed on them by the Govt, and the Real Costing of replacing the incumbent and very entrenched Chinese 3G/4G RAN vendor is becoming alarmingly apparent. Thus network spend on Capacity or Coverage or upgrades is taking 2nd seat, due to impending ‘Regret Spend’ of continuing with current banned Vendor.
“Thus, the whole industry from Installer, Network Integrators, Supply Chain, Radio Equipment suppliers, Designers, Engineers and Technicians has minimised and almost stopped.”
– Senior Manager, Vendor
“We are in a kind of ‘Research Phase’. Can we deploy 5G on a very basic 4G layer? Will that work? What are the disadvantages? What is the cost? How much cheaper compared to swapping the whole network vs the problems and complexities this brings?”
– Director, Wireless Vendor.
“Quiet.. and chaotic! Most operators plans in the telco market have been covered by layers amongst layers of uncertainty. The hype was: “5G is here!”. But who can confidently roll it out? Telstra is implementing its T22 cost-cutting strategy and their 5G intro was all but a bookmark of Telstra’s tradition of introducing technologies first. Lately, for Telstra, a dollar spent – better be a dollar well spent! Optus is cautiously rolling out Ericsson technology and still hesitant to swap out its Huawei gear. Their introduction of 5G as a FWA solution shows scepticism of being able to reap immediate profits within the subscribers broadband space. Vodafone are most annoyed by the Huawei ban, and the TPG merger collapsing was just adding more salt to their wounds. It seems Vodafone are in an impasse situation between awaiting the political climate against China (thus Huawei) to settle, and the ACCC to revert on their merger no-Go decision.”
– Radio Engineering Manager
“It’s a game of survivor. The quietest I’ve seen it in 20 years.”
– Construction Project Manager
“I would describe the Telco environment this/last year as extremely challenging. I feel the industry is starting to become stifled by government involvement that has not necessarily been there in the past. In addition to this, we are seeing the continuous offshoring of computer-based roles such as design.”
– Procurement Manager
“From a construction and deployment perspective; slow and challenging. As the Carriers re-focus their capital spend taking into account 5G and general expansion I’m expecting the telco market to heat up in the later part of 2019.”
– Programme Manager
“2019 has been the year of slow. Very little activity and very little factual firm announcements for carriers regarding when they will start building again.
“The upside, work will start flowing again, downside, good people are lost to other industries, people and small business that have been thrown in save-themselves-mode will be unwilling to go the extra yards when carriers start pushing for results.
“Human factors not considered in bottom-line results.”
– Senior Project Manager
“The last 12 months has seen the continuing consolation of the Telecommunications industry in Australia. The Carriage Service Providers (CSP), Telstra and Optus are continuing with downsizing with offshoring of functions and Vodafone and TPG attempted another merger. nbnCo is near to completing construction and transitioning to an operations model, but will it become the Telecom Australia of the 1980’s before deregulation?
“To maintain a reliable Telco network in Australia, a critical infrastructure to support economic growth, investment will be required to upskill human capital due to the real and present scarcity of experienced resource at all levels. The future will require strategic leadership to balance the investment in the sustainability of the industry.”
– Project Director
“One word: challenging!!
“The industry has never been in more uncertain territory. With no P3 and the business case for 5g struggling to get momentum, the demand for services has never been lower. We need a killer app or new service that makes 5G vital!!”
– Field Operations Manager
“Market is slow this year in the mobile network, primarily caused by the need for 5G network rollout, which is very capital intensive. Telcos are making a cautious selection of Vendors with targeted rollout to relieve 4G capacity hotspots, which is further compounded by Huawei ban. Both Optus and Vodafone have not yet announced a major network-wide rollout with the selected vendors.”
– RAN Engineering Manager
Summarising the feelings of our leaders above, heavy involvement from government and general uncertainty about the plans and how to make money from 5G — thanks, in part, to the ban on Huawei — has seen movement in the sector almost grind to a halt. The significant impacts of this, when things are ready to pick up again, will be a loss of skilled professionals to other industries, and a lack of trust and resources from businesses that have struggled through this period.
However, because the current landscape is uncertain, businesses are carefully forming strategies to prepare for 5G and IoT. With this, we’ll eventually see large scale network transformation which will create huge opportunities across the technology sector.
While 5G sites are currently being built by Telstra and Optus, the progress to date has been slow and steady. Times may be challenging, but the good news is it’s starting to turn – right now.
– Leo Clifford, Telco Practice Lead