Why small telcos aren't keen on 5G

By Alex Choros

Last updated 17 December 2021

Smaller mobile providers are reluctant to offer 5G plans to their customers, with some concerned about relevance, while others are waiting for higher uptake of 5G phones.

Typically referred to Mobile Virtual Network Operators (MVNOs), these are small telcos that buy wholesale access to connectivity from Telstra, Optus, and Vodafone and then sell their own plans - often at a cheaper rate. As it stands, the 5G offering in this space is almost non-existent.

Optus is currently the only major provider to open up its 5G network to its MVNO customers. Smaller providers have had access to the Optus 5G network since October last year, but so far, Aussie Broadband and SpinTel are some of the only MVNOs offering 5G plans on the Optus network. This is despite providers including amaysim, Moose Mobile, and Circles.Life telling WhistleOut they planned to launch 5G phone plans last year.

Moose Mobile CEO Dean Lwin pointed to wholesale pricing being the reason the telco hasn't offered plans to the market yet, despite initially wanting to.

"We currently don't feel [5G] is relevant in the market yet and our pricing will be the same as Optus," said Lwin.

Lwin said Moose will consider a soft launch of 5G plans this year, but it's not a focus for the brand.

MVNOs are often seen as a budget alternative to the major telcos, and typically have better value options. When it comes to 5G, Optus has seemingly made wholesale pricing at the point where MVNOs need to match its mainline plans.

At time of writing, Aussie Broadband's 5G plans are identical to Optus' when it comes to data inclusions and price. For example, you're looking at $45 per month for a 20GB 5G plan on either telco. Optus' plan does however work out to be better value thanks to additions like Optus Sport, the ability to bundle a handset, and $10 per day international roaming.

It's a similar story with SpinTel plans, where customers can initially save on their first six months, but then pricing is all but identical to Optus for 5G options. This doesn't exactly fit in with the more affordable ethos that attracts customers to smaller providers.

According to WhistleOut's popularity data, the most popular MVNO plans tend to be under $30 per month. At time of writing, the most popular SIM-only plan on WhistleOut is a $15 per month offer from iiNet with 40GB, followed by a $10 per month plan from Circles.Life with 5GB. Expensive plans clearly aren't what many consumers expect from MVNOs.

Optus was unable to provide specific comments regarding its wholesale pricing and 5G MVNO uptake, but during a recent business briefing, CEO Kelly Bayer Rosmarin said she expects this to change over the coming years.

"We’re working with all of our different MVNO partners to make sure that they have access to and can roll out 5G as is appropriate for their customer bases and at the right price point as well," said Bayer Rosmarin.

"I think you’ll see that continuing to evolve over the coming years.”

Even MVNOs that are offering 5G phone plans are still seeing customers pick 4G-only options instead, according to Aussie Broadband General Manager of Marketing & Corporate Strategy, Matthew Kusi-Appauh.

"We’re still seeing a significantly higher number of customers choosing the 4G network compared to 5G at the moment," said Kusi-Appauh.

"This is largely because 5G is a relatively new product which is still being rolled out, and so the coverage is mostly concentrated in capital cities and metro areas for now. It is also worth considering that customers need to invest in a 5G capable handset to access the 5G network, so you’ll find some customers decide to opt for 4G instead. However, we expect more and more customers to sign up to 5G over time."

Despite this, Kusi-Appauh said it was important for Aussie Broadband to be seen as a technology leader.

"Being ahead of the game and bringing new products and solutions to our customers is what Aussie Broadband is all about."

Similarly, amaysim COO Isaac Ward said the lack of 5G phones was a key reason it hasn't launched 5G phone plans yet.

"Only a small percentage of our customers currently have 5G enabled handsets, though we expect this to change as a wider range of 5G enabled handsets and price points become available," said Ward. "We are well placed to launch 5G as the market matures, and in the meantime, continue to put customers at the heart of all we do."

Telstra and Vodafone have not opened up their 5G networks to their MVNO partners for mobile plans, and were unable to provide a timeline for when that may happen. And even if that were to happen imminently, it's very possible they'd see the same response as Optus.

At the start of last year, Boost Mobile founder Peter Adderton said the Telstra-powered telco had no plans to offer 5G to its customer base, as the benefits were too far off.

"5G doesn’t make a difference to the lives of our customers," Adderton said, "we will offer 5G to our customers, when it makes a difference to our customers."

Almost two years later, Adderton's comments still seemingly ring true. In WhistleOut's latest 5G attitudes survey, it was found that 55% of Australians are still confused by 5G, 47% don’t know if they have 5G coverage at home, and 39% believe 5G to be overhyped.

These figures aren’t all that surprising. As it stands, 5G is just a faster version of 4G. It has yet to enable new experiences in the same way going from 3G to 4G allowed Spotify and Netflix on the go. 5G doesn’t have the same kind of killer app to drive adoption yet.

The promise is better download speeds now, with Cool Things like self-driving cars, virtual reality streaming, and augmented reality experiences in the future. And with no clear timeline as to how far that future is off, premium plan pricing, and limited handset adoption, it’s no wonder that MVNOs are happy to wait.

Get the best telco deals first