TPG prepares for mobile launch: Can a bold idea by a reclusive billionaire shake up the telco market?

IF YOU’RE thinking about a new plan, it might be worth holding off for as big changes are coming to the Aussie market.

THE Australian mobile market is about to get a huge shake-up and consumers stand to reap the rewards. So if you’re thinking about signing up to a new plan, it might be worth holding off until a new player makes its arrival.

TPG is set to launch the country’s fourth mobile network later this year and it promises to bring a vastly cheaper option for mobile customers in major cities.

For a large country like Australia with a relatively small population, having three mobile networks makes already makes it a pretty competitive market but it’s about to get a bit more crowded. And of course, more competition means better deals for consumers.

TPG’s stated plan is to spend about $1.8 billion on its network (excluding the cost of buying spectrum) and reach 80 per cent of the Australian population, focusing on attracting bargain hunters in the big cities.

Earlier in the year the company said its network would be ready to launch in the second half of 2018 and the telco is currently signing up interested customers.

At the heart of the launch, is a unique strategy cooked up by the telco’s famously reclusive billionaire CEO David Teoh who has a history of making bold bets on the future of telecommunications.

TPG is offering the first six months free, after which customers will be charged just $9.99 a month for unlimited data — but there are a couple caveats.

The first 1GB of data per day will be provided at 4G speeds, after which it will be capped at 1Mbps speeds for the rest of the day.

And more interestingly, during the initial free period, it will be a data-only service and only support calls made using voice over internet protocol (VoIP). TPG says it will include a tradition voice service at a later date but until then you’ll have to rely on using internet-based apps like WhatsApp to make your calls and texts.

Jason Aravanis is a Senior Industry Analyst as market research firm IBISWorld and says the whole telco industry will be paying close attention to how customers respond to the offer.

“It’s definitely a new approach but it does certainly reflect changing consumer trends,” he told news.com.au.

“Everyone knows that consumers aren’t really focusing on calls and texting these days, it’s all about data usage,” he said.

“Because you can use data to do things like Skype calls or send messages over Facebook messenger. So it’s a new approach.”

With its focus on metropolitan areas, mobile customers also won’t be able to travel to rural parts of the country and maintain connectivity.

Flexible customers are set to benefit with a cheaper option.

TPG, which also owns iiNet, is one of Australia’s biggest internet brands and so is no stranger to the market but the approach is certainly novel.

“It remains to be seen how successful this strategy will be because there still is a lot of consumers out there who rely on voice options and texting, so it’s a risky strategy,” Mr Aravanis said.

“I’m sure everyone across the telecommunications sector will be watching to see what happens because that could present an opportunity for other players to adopt a similar strategy.”

TPG was unable to be reached for comment for this story so we still don’t know exactly when its network will get switched on (it previously indicated Q3 or Q4) but the company is forthright about who it is targeting.

TPG Chief Operating Officer Craig Levy previously told news.com.au that the company is aiming to provide very low prices.

“We are going to be very aggressive,” he said. “We are aiming at the price sensitive part of the market.”

Executive chair David Teoh said the plans will provide a new option to mobile users.

“This promotion is the first of its kind in Australia, and signals a new era of competition in the mobile market and will undoubtedly bring great benefit to Australian consumers,” he said in a statement at the time of the announcement.

WHAT ABOUT THE ARRIVAL OF 5G?

Telstra and Optus are on track to be the first to market with the much hyped next generation of mobile technology that promises greater bandwidth, less lag and far greater speeds.

Telstra will win the 5G race, but it won’t take long for the others to catch up.

“Telstra is definitely in the lead,” Mr Aravanis said.

This month the telco made the world’s first end-to-end 5G non-stand-alone data call over a commercial mobile network which the company labelled as the closest any provider had come to making a 5G call in a real-world setting.

It’s expected 5G services will launch in Australia by late 2019.

“The other players do have to catch up but once the technology is out there it won’t take long for all the players to get on to a level playing field,” Mr Aravanis said.

Earlier this year TPG boss, Mr Teoh, told Fairfax that the company’s 5G outlook was “very positive” in the long term.

“We’re rolling out a very dense small cell network, we’re building fibre to these sites and when 5G is here it will be quite easy for us to upgrade those sites,” he said.

“We should see tremendous improvement in speed and latency.”

TPG’s network coverage will be restricted to major cities.

INCUMBENTS PUTTING ON A BRAVE FACE

Telstra, Optus and Vodafone say they welcome the new competition.

Speaking during the CommsDay Unwired conference on Wednesday, Vodafone Australia’s general manager of Technology Strategy Easwaren Siva said Vodafone was prepared to take on the new entrant.

“We were the third entrant, and competition is good for consumers so we relish TPG coming into the market,” Mr Siva said.

“I think it will invigorate the market, it will stimulate it, and I think we’re up for it ... the reality is they are the second-largest ISP, they have lots of good assets, and we can see the sites slowly come online.”

Telstra executive director of Network and Infrastructure Engineering, Channa Seneviratne, shared a similar sentiment with the audience, saying he “couldn’t agree more.”

“We welcome competition, I think it’s good for the market and it keeps us on our toes.”

But analysts aren’t necessarily buying the upbeat outlook.

While some expect TPG to eat into Vodafone’s market share in the cities, even with their superior coverage Optus and Telstra are also under pressure.

Thanks to the National Broadband Network and a changing mobile landscape, “Telstra’s position as the dominant player, is very much under threat,” Mr Aravanis said.

RELATED: Tesltra fights back with $199 unlimited data mobile plan

WHICH AREAS WILL GET TPG MOBILE SERVICE?

TPG coverage areas from launch will include CBD areas and numerous surrounding suburbs in Sydney, Melbourne, Adelaide, Canberra and Brisbane with more areas added over time, according to the company.

Sydney

The CBD, Darlinghurst, Haymarket, Surry Hills, Ultimo, Pyrmont, Chippendale, Redfern, Woolloomooloo, Paddington, Moore Park, Woollahra, Bondi Junction, Waterloo, Alexandria, Beaconsfield, Kensington, Randwick, Kingsford, Mascot, Newtown, Camperdown, Petersham, Leichhardt, Dulwich Hill, Summer Hill, Ashfield, Burwood, Strathfield, Homebush, Lidcombe, Chatswood, and Hurstville.

Melbourne

The CBD, Southbank, South Melbourne, Docklands, Port Melbourne, Footscray, South Yarra, St Kilda, Hawthorn, Toorak, Kooyong, Camberwell, Burwood, Kew, Malvern, Glen Iris, Caulfield, Elwood, North Melbourne, Carlton, Parkville, Fitzroy, Collingwood, East Melbourne, Richmond, Brunswick, Brunswick West, Moonee Ponds, Maribyrnong, Coburg, Pascoe Vale, and Darebin.

Brisbane

The CBD, Kangaroo Point, Spring Hill, Fortitude Valley, Newstead, New Farm, East Brisbane, South Brisbane, West End, Highgate Hill, Woolloongabba, Paddington, Auchenflower, Toowong, and Taringa.

Canberra

The CBD, Civic, Braddon, and Kingston.

Adelaide

The CBD and North Adelaide.

TPG CEO David Teoh is famous for his reclusiveness.