The Australian telecommunications industry is in the midst of significant change. To find out where it’s headed, GLG recently assembled two specialists in the field: Sue Bryant, Chief Digital Officer, board member, and partner at 460degrees, an expert management agency based in Melbourne, Victoria, Australia, which specializes in technology; and Barry Lerner, a partner specializing in technology at the executive search and board advisory firm Blenheim Partners in Sydney, New South Wales, Australia. Edited excerpts of their presentations and discussion follow.

Susan Bryant: First, some background. The telecom industry in Australia consists of three major carriers and an infrastructure provider, National Broadband Network (NBN), which provides fiber and fixed-line networks. Those who mount their technology on the towers are Telstra, Optus, and TPG, formerly known as VHA, plus NBN. About 60% of the towers are owned by Telstra and Optus, and Optus plans to auction off its towers over the next month or two. According to newspaper reports, Telstra has separated its tower company and created its own tower business. There also are many local tower companies here in Australia.

In metro areas, the tower market mix is pretty much an equal division among Telstra, Optus, and local tower companies. In less populous regions, the towers are skewed toward the carriers, because they need to provide universal service, which obliges them to use mobile networks in those areas, and because Australians don’t want to lose mobile service when traveling between cities.

Currently, Australia has deployed a reasonable amount of 5G and is in the process of auctioning off spectrum to provide for more. That will increase the need for towers.

For the tower companies, the key expenses are tower operation and maintenance of the towers themselves. But the building, engineering, and construction of new towers are what’s really important. As a result, a lot of the thinking at tower companies involves reducing operating and maintenance costs and how to partner with companies that might construct new towers and rolling out fiber to them.

Tower companies also are trying to figure out how to make more money from their current assets. Some are partnering with companies that deploy fiber and install radio access network equipment on the towers on behalf of phone companies. Other tower companies are considering entering that business themselves.

In the further deployment of 5G, we could see a combination of towers and poles being used, which may mean that the nature of the poles themselves may change from simply tall pieces of timber to more complex units where radio access network (RAN) equipment can be placed within the pole, providing small edge-computing capability. There’s also talk of repurposing local exchange buildings as data centers or building containerized data centers, which could be other sources of revenue from towers.

To reduce costs, tower companies also are trying to use technology to do remote monitoring and maintenance. Many are installing IoT (Internet of Things) sensors, and there’s even talk about using drones to do visual inspections.

Barry Lerner: Turning to regulatory issues, we need to consider the complex environment for towers and the various groups that are involved.

First, there are the requirements of ARPANSA, the Australian Radiation Protection and Nuclear Safety Agency, which sets limits on the level of acceptable electromagnetic radiation of all types that the towers can emit. The Australian Communication Infrastructure Forum, now called the New Australian Communication Alliance, provides guidance about working with local communities and about how to get permits and approvals. Another group, the Australian Communications and Media Authority, takes complaints from residents and townships about towers, and while they don’t do much with the information, they collect it. Each state also has to follow worker health and safety guidelines and the federal Department of Infrastructure, Transport, Regional Development, and Communications has rules that apply to Crown and sacred land.

The other thing I want to touch on is spectrum. We hear a lot about different waves and different bands. To make it very simple, what we call low-band are the frequencies below one gigahertz. Today telecommunications companies deliver 4G LTE and 5G on multiple bandwidths between 700 and 3500MHz ranges, whereas mmWave bands are extremely high frequencies starting from 26GHz. The mmWave bands can offer faster speeds than midband frequencies such as 3.5GHz (also referred to as sub 6); their range is smaller. Australian 5G networks will use a combination of these.

When we get to the mmWave level of 24 to 40 gigahertz, which is the promised land of one-millisecond delays, you can go only a very short distance and the signal can’t penetrate walls or windows that have ultraviolet protection. An mmWave has a very low obstruction penetration, as well as a distance limitation of around four to five city blocks.

Can fiber and 5G coexist?

Barry Lerner: Fiber and wireless will both be needed to deliver the next-generation services. They complement each other to ensure that delay-sensitive services such as telemedicine can be delivered without any time distortion. Fiber provides the connectivity back from the tower, pole, or smart lamp pole that is hosting the 5G radio access network.

Susan Bryant: The question really is whether the last mile is wireless or fixed. A lot of telecom people will tell you they think eventually the world will become mobile and wireless, but that’s an access statement. We still have to have lots of fiber.

GLG: On the issue of towers versus poles, how do you see future revenue and investment being split between the two?

Barry Lerner: The question is not one versus the other, it’s where you will use a pole and where will you use a tower. The tower is ideal to deliver the bandwidths (400 to 3500) that can cover large areas with minimal impact on maximum data transfer rate. As mentioned earlier, mmWave — which is low delay and very high data transfer, but with limited area coverage — will be dependent on small cells mounted on poles, lampposts, buildings, traffic lights, etc.

Susan Bryant: In Australia, it’s still very unclear as to who owns the poles. Obviously, many are owned by utility companies, but cities own some, as well as transport departments. I do not think the Australian market has sorted itself out yet as to who’s the pole provider of choice, and local councils will and rightly so want to ensure aesthetics to the visual scenery is not affected negatively.

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This telecommunications industry article is adapted from the March 11, 2021, GLG Remote Roundtable “Shuffling Telecom Assets.” If you would like access to this teleconference or would like to speak with telecommunications experts like these or any of our more than 900,000 industry experts, contact us.