5G progress in Australia\ full fibre networks in the UK\ Victoria’s Ag-IoT trials\ datacentre rankings\ advertising forecast in the UK

 

 



In this week’s edition, we look at 5G progress in Australia, building out of full fibre networks in the UK, Victoria’s Ag-IoT trials, the latest datacentre rankings and advertising forecast in the UK.

CHART OF THE WEEK

Total UK ad spend year-on-year % change 2019-2020 by media



Source: ENDERS ANALYSIS FORECAST

Australian 5G update: Telstra and Optus build continues, VHA entry to influence price?

Consumer willingness to move to 5G mobile



Source: VENTURE INSIGHTS CONSUMER MOBILE SURVEY, MARCH 2019, N=1,026

2019 saw 5G services launched by Telstra and Optus. Telstra switched on 5G services in 26 Australian cities by December 2019, Optus had 300+ live 5G sites and Vodafone announced plans to launch 5G services in early 2020. Incremental pricing of 5G mobile services has effectively been waived to date by both Telstra and Optus and will be further influenced by how Vodafone prices its initial 5G services. We expect network slicing will be another area of focus for the MNOs in H2 2020 given the announcements by Telstra and Optus on gaming and video streaming. Click through to read our report for more details on the progress made by Australian telcos in rolling out 5G services in 2019 and how the competition may shape up in 2020.

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UK fibres up

High speed penetration of broadband bases



Source: ENDERS ANALYSIS BASED ON COMPANY REPORTS

The speeds made possible by full fibre build are unnecessary for most users in the short term, giving limited commercial advantage to those that can offer them, but are likely to prove essential in the medium/long term. The economics of full-scale, independent alternative networks look very challenging in our view – especially without the support of Sky – although there are some limited arbitrage/cherry-picking opportunities. The Openreach full fibre model makes economic sense under Ofcom’s proposed regulatory framework, provided it retains the lion’s share of the market, although considerable risks remain. For a more detailed look at the interesting array of opportunities and threats as full fibre networks are built out, click through to read the report from our UK research partner, Enders Analysis.

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Victoria’s Ag-IoT trials

On 3rd February 2020, the Victorian government announced a new IoT trial network using LoRaWAN for on-farm technology, which will help agricultural communities manage their crops and businesses better. NNNCo, an Australian IoT network provider, was selected by Agriculture Victoria to provide IoT network connectivity for this project with coverage across four key areas: Serpentine (sheep), Birchip (grains), Tatura (horticulture) and Maffra (dairy). Venture Insights was proud to have been an advisor to the Victorian Government for the establishment of this project, which is a part of their A$45m Connecting Victoria initiative to improve digital technology and infrastructure across regional Victoria. Click through to read this announcement by the Victorian government.

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Latest Leaderboard datacentre rankings (H2 2019)

Supply volume by player (%)



Source: VENTURE INSIGHTS, COMPANY ANNUAL REPORTS, PRESS RELEASES, INDUSTRY INTERVIEWS

In the latest Cloudscene Leaderboard rankings, Equinix has held on to its leading position in the datacentre space in North America, EMEA, Oceania, and Asia. These rankings are based on connectivity and density of datacentres in these regions. This is consistent with Venture Insights’ forecasts that Equinix will remain the largest player in Australia until 2024 and grow at a CAGR of 12% during FY18-FY26 period. Over the long term, Venture Insights expects the supply volume share of dominant Australian players such as NextDC, Equinix and Airtrunk to converge and the growth in the datacentre market to benefit from builds in the Tier 2 markets such as Sunshine Coast and Perth. Growth in Tier 2 markets will be driven by high property costs in Tier 1 locations, new subsea cables and lower latency requirements by upcoming applications such as edge computing. To get more insights on the current state and future of subsea cable and datacentre industry in Australia, click through to read our report.

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UK advertising forecasts

Online ad spend and online retail sales, 2012 = 100%



Source: ENDERS ANALYSIS BASED ON AA/WARC, ONS

We predict 4-5% growth in advertising expenditure on UK media in 2020, driven by double-digit growth of pure play online, expected to reach 58% of total spend this year, up from 55% in 2019. The outlook for the economy in 2020 is more positive than in 2019 because the risk of “crash-out” has given way to a more hopeful prospect of an EU-UK free trade agreement by the end of the year. On the consumer side of the UK economy, signs of fragility include the debt-fueled expansion of expenditure in excess of nominal income growth since 2016, a risky stance in the prospect of job losses. For a more detailed look at the analysis of the forecasts of the UK advertising market, click through to read the report from our UK research partner, Enders Analysis.

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