Slattery: TPG will be second-biggest telco in five years

TPG will gain the bottom 20 percent of the market by offering a low-cost mobile product with no download limits, Bevan Slattery has predicted, adding that the network build should not cost as much as forecast.
Written by Corinne Reichert, Contributor

Australian telecommunications entrepreneur Bevan Slattery has predicted that TPG will become the second-largest carrier in Australia within five years, saying it will make a play for the bottom 20 percent of the market.

Speaking during the CommsDay Summit in Sydney on Tuesday, Slattery said TPG is likely to launch a "Jio-style" product wherein it will offer a mobile router with unlimited downloads at a low cost.

"I think in five years, TPG will be the number two telco in Australia," he said.

"I think they're going to launch a Jio-style service ... it'll be unlimited internet for like AU$30."

Slattery added that there will be a "massive cannibalisation" in the mobile telco market, with TPG perhaps on its way to becoming number one within 10 years.

The current Superloop CEO also expressed doubts that TPG's mobile network would cost as much as it has predicted, pointing out that the telco already has access to extensive fibre as well as subsea cable networks.

"They've got fibre to most of the buildings, and, with the Vodafone deal, fibre to most of the towers that this is on, so I think the capex is going to be significant but they're not going to be rolling it out to -- I believe, anyway, I'm not in the war room -- but they're not going to roll out anywhere near the coverage of the other providers," he explained.

"I think the rollout's going to cost [500 million to] 700 million, something like that. But they've already got the fibre in place, they've already got submarine cable capacity in place ... I think the capex requirement of that is probably overblown, and the only thing they need to really do is start strapping gear onto the end of the fibre.

"The amount of spectrum they've got is somewhat limiting -- in saying that, the technologies in 5G are different to 4G LTE ... you can probably get four times to 10 times the amount of consumption in the same spectrum on 5G," he added.

TPG had last month provided an update of its mobile network build-out, saying it has installed sites in Sydney and Melbourne.

"The mobile network builds in Australia and Singapore continue to progress well. Capital expenditure outlook on both projects remains in line with initial forecasts. Deployment in Australia is well under way. Sites already installed in Sydney and Melbourne," TPG said during its first-half FY18 financial results.

"Refined small cell deployment model to accelerate delivery of high volume of small cell sites in coming months. Small cell site access agreements now substantially complete. High density of small cell sites and deployment of Cloud RAN will provide a platform for 5G services."

TPG's AU$1.9 billion Australian mobile network is expected to be complete across Sydney, Melbourne, and Canberra by mid-2018, with TPG in September announcing signing contracts with technology partners on mobile sites, small cells, and macro cells.

Slattery also used his speech on Tuesday to say that wireless and millimetre-wave (mmWave) services are going to increasingly be used for last-mile access.

"I think millimetre wave and wireless is just going to be absolutely everywhere," he said.

"And the reasons for this is because two of the largest companies in the world are investing heavily in the space, being Facebook and Google: Google stopped building fibre to the home and decided to take up a wireless approach; Facebook are investing literally I think a billion dollars or 2 billion dollars a year from memory in millimetre wave ... and the reason for that is they see this as a cost-effective, low-cost way to actually deliver services to end users.

"Millimetre wave combined with MIMO and software controllers rewrites the book on last-mile access."

This wireless technology will enable non-line-of-sight applications using beamforming and reflections, Slattery said, with 1Gbps wireless access technology costing just AU$1,000 for a basic access node and between AU$3,000 and AU$5,000 for MIMO software-controlled endpoints.

This is why Superloop is continuing to invest extensively in fibre, he said, because it will all require fibre backhaul.

Again addressing his concerns with the "inept" regulation of the Australian telecommunications market, Slattery labelled the Australian Competition and Consumer Commission (ACCC) "yesterday's regulator".

The "quite extraordinary" level of government intervention in the industry is unique to Australia, he argued, saying he has never seen any other regulator prescribe to carriers how to advertise their speeds and conducting speed tests on their networks.

According to Slattery, the regulators run too many consultation papers demanding responses from industry, rather than actually conversing with or seeking advice from carriers.

"I have to say, as an industry we've got consultation fatigue. The amount of crap that comes out of -- they're asking opinions on absolutely everything. Guys, please, the government and the agencies within government: You need to be more consultative, you need to actually have conversations," he argued.

"We've got fatigue. We're getting smacked from left to right, we're getting told what we need to do, and I swear to god we could hire four people just to respond to industry consultation papers, which frankly, they generally ignore."

The government is additionally "too slow" on issues of security, encryption, privacy, and net neutrality, he said, with "inept regulators asleep at the wheel".

Lastly, Slattery used his speech to predict the demerging of Telstra in around five years' time, saying it could split out its wholesale and infrastructure assets to the new owner of the National Broadband Network (NBN).

He said Telstra would then simply focus on its retail and enterprise services.

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