Consumer reluctance to pay more is limiting telco growth, Nokia boss Andrew Cope says

A cost of living crisis and a ‘disconnect’ between using more data and paying a larger bill is severely limiting the ability of the telco sector to grow, according to Nokia’s Andrew Cope.

Australians are finally beginning to realise how critical telecommunications infrastructure is but still refuse to pay more for better services, according to Nokia’s Andrew Cope.

Australians want faster internet speeds, and Optus’s nationwide outage last year has shown how reliant people have become on telecommunications. But Nokia’s local boss says few are willing to pay more for their phone and broadband bills, limiting growth across the sector.

Nokia’s head of Oceania, Andrew Cope, oversees the construction of networks for some of Australia’s largest telcos as well as rail companies, ports and other major industrial organisations.

“We live in this bizarre industry where everybody wants (telecommunications) to be faster, they want more, they love it, and they realise how important it is as the Optus outage showed last year and highlighted how critical the infrastructure is, but when you ask anybody to pay five more dollars they go crazy,” he said.

But reluctance from consumers to pay more for their phone and internet bills had severely limited the growth of the industry, which Mr Cope described as being in a “terrible state”.

“Somehow it’s quite understood by people that if you use more electricity, the bill is going to be higher, but when it comes to mobile communications or even fixed communications, there’s this total decoupling of use from price that everyone seems to believe exists.

Head of Nokia Oceania Andrew Cope.

“And it’s hurting the industry everywhere. It’s not just Australia or New Zealand but Oceania.”

That challenge was being further exacerbated by the current cost of living crisis, Mr Cope said. “There’s that disconnect still between the fact that if you want something to be super reliable, it comes with a price, and I think we’re still grappling with the cost of living in general being a challenge everywhere.”

Mr Cope said the state of the industry and the monetisation of 5G were the most talked about topics at Mobile World Congress in Barcelona, Spain, earlier this year.

He was speaking after Australia’s second and third-largest telecommunications companies have proposed a regional network sharing deal valued at $1.6bn.

The deal will see TPG access triple the number of mobile sites it currently has in regional Australia, while duplicate sites would be decommissioned. Optus would gain a significant advantage by accessing TPG’s spectrum.

Nokia shared a similar view to Optus interim chief executive Michael Venter, who last month told The Australian that the network sharing deal would help the network get a return on its network costs, which it spends about $1bn on per year to maintain and grow.

“Especially in a country the size of Australia, the utilisation of the network is very, very important from an economics point of view,” Mr Venter said.

Optus interim CEO Michael Venter

TPG has also recently criticised Meta and other technology titans, including Google and Netflix, which the telco said should be forced to help pay for universal access for phone and web services across Australia as the telecommunications industry faces extreme cost pressures from an explosion in data use across the country.

A number of telecommunications providers in Europe were also beginning to contract or share networks, Mr Cope said, adding that the sharing of mobile sites made more sense, especially in larger countries.

“Now it’s a matter of tightening the belts and finding that balance between cost and revenue that is sustainable long term,” he said.

The return on invested capital cases at TPG and Optus were “below the cost of money”, Mr Cope said, adding “this is not where you would put money as an investor”.

“There is a point where return on invested capital runs out because you just don’t have enough people to cover and earn revenue from to make the site sustainable,” he said.

“You get to a place where a site doesn’t generate enough revenue to cover the electricity bill or even the maintenance costs, let alone the capital cost of building it.”

Artificial intelligence systems were providing some new opportunities for telcos to cut costs as well as develop new business models or products.

Nokia had with its rail customers, which include Perth Transport Authority, Vic Rail And NSW Transport, been testing the use of AI and new fibre networks.

One recent discovery was that AI could be used to measure vibrations, which signalled potential issues with a track.

“We can monitor the way the signals in the fibre attenuate, and you can actually identify things like potential earthquakes and breaks,” Mr Cope said.