Telstra confirms industry’s worst kept secret

Jeremy Mitchell; Chief Corporate Affairs Officer at Huawei Australia Jeremy Mitchell; Chief Corporate Affairs Officer at Huawei Australia

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Telstra confirms industry's worst kept secret

Speaking at an Australian Stock Exchange event yesterday in comments recorded in Commsday Telstra CEO Andy Penn confirmed the telecom industry’s worst kept secret: The Turnbull Government’s 5G ban on Huawei saved Telstra’s bacon in the 5G market.

As Mr. Penn admitted in his comments, “We’ve gone very hard after 5G and we believe we’re incredibly well positioned compared to Optus and TPG & Vodafone.

“They have got quite a bit of work to do in relation to the redesign of their network because of their past selection on suppliers, which they’re no longer able to use for 5G. So we think they’ll be busy doing that.”

Mr. Penn’s comments confirm what Huawei has always said since the imposition of the 5G ban by the Turnbull Government that barring our company from delivering 5G technology to our customers has delayed their full rollouts of 5G technology and provided a substantial advantage to Telstra.

Prior to the imposition of the 5G ban Huawei had been engaged in advanced technical trials with several of our operator customers and was well placed to help them launch commercial services into the market – in both urban and regional markets – in early 2019.

As well as the launch delay which provided Telstra crucial first-mover advantage the Huawei 5G ban has also added considerable costs to Australia’s 5G deployment – with Telstra own recent price increase of up to $15 per month for 5G customers delivering ample proof of this.

The UK Government admitted following its recent decision on Huawei that excluding us from 5G in the UK would add around £2 billion to the cost of the UK 5G rollout – although many independent experts say the cost will be much higher than that.

Huawei has always argued that the 5G ban would mean a slower and more expensive 5G deployment and we have already been proved correct on both counts – and now the focus will turn to 5G coverage.

As both Oxford Economics and Frontier Economics found in their independent research banning Huawei means higher 5G rollout costs of up to 30% for operators – and this means operators simply can’t deploy 5G to as many places.

5G is increasingly being seen as an industrial tool – especially in agriculture – and major US agriculture manufacturer John Deere recently said it wanted to see “every husk of corn” covered by 5G in the United States.

Sadly, the higher costs of delivering 5G in Australia mean it is extremely unlikely that our farmers across the country – that provide such a crucial resource and revenue source for our country – will be able to get that 5G connectivity that could help them revolutionize their businesses.

Whilst we admire Mr. Penn’s honesty in admitting that Telstra has been a huge beneficiary of the 5G ban imposed by the Turnbull Government the fact is that the ban has been extremely bad news for much of the rest of the industry and more importantly consumers.

Not only will it strengthen Telstra’s vice-like grip on regional and rural Australia but it has also helped to significantly shore up Telstra’s core mobile network business, potentially allowing the company to acquire NBN Co via its InfraCo division in the future.

Such a move will once again provide Telstra with market dominance in fixed and mobile in Australia meaning local consumers are heading back to the bad old days of having a dominate player that is forcing up prices and creating a digital divide for regional and rural Australia.

Jeremy Mitchell is Chief Corporate Affairs Officer at Huawei Australia

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