Public sceptical about 5G benefits: Deloitte

Telstra and Optus may have launched 5G services in the market, but both telcos will have to put up with some short-term pain on their investment.

A customer looks at a mobile phone next to a 5G logo at a store in Hangzhou, China. Picture: AFP

Telstra and Optus may have launched 5G services in the market but both telcos will have to put up with some short-term pain before making a return on the billions they are pumping into the technology, according to Deloitte’s latest Mobile Consumer Survey.

According to Deloitte Partner and National Telecommunications lead, Peter Corbett, consumers remain sceptical of the benefits of 5G, with telcos yet to put a strong business case out for everyday Australians.

While the mobile operators are investing heavily to secure 5G spectrum and necessary infrastructure, Mr Corbett said they are unlikely to get consumers to pay for 5G mobile services.

“We are probably entering a period of disillusionment with the technology until it becomes clearer for consumers on how 5G will improve their day-to-day lives.”

“We have also seen a drop in the hype consumers are experiencing with 5 per cent fewer people looking to switch to 5G when it’s available or upon hearing good things in 2019 vs. 2018,” he said.

Up to 84 per cent of respondents in Deloitte’s survey said they were not prepared to pay the $15 premium operators are proposing for 5G, indicating that telcos need to better communicate the value of the upgrade to consumers.

According to Mr Corbett, 5G adoption is being hindered by the lack of a killer application.

“There was a clear business case for 4G – consumers wanted faster download speeds to stream content.”

“Telcos need to think about how they pitch their services because 5G is not just about speed with reliability much more important to consumers.”

“This is why making money from 5G is going to be more problematic for the telcos, the 4G go-to- market strategy is not going to work in Australia.”

Optus is rolling out a limited fixed wireless service across Australia, with chief executive Allen Lew citing as the first major service with the potential to generate revenue.

While fixed wireless will have its place, Mr Corbett said 5G-enabled smartphones will be the real drivers of adoption.

“Given that device adoption cycles have lengthened, with consumers holding on to their phones for much longer, it’s likely that the next device Australians do decide to pick up will be a 5G one.”

However, flagship 5G phones will be expensive and 5G mobile networks are still patchwork. Full deployment will require more spectrum and telcos rolling out small cells and Mr Corbett said that consumer engagement will need to be a key area of focus for telcos.

“The telcos can’t all of this by themselves they will need to work with councils, device manufacturers and regulators to make 5G work.”