CHART OF THE WEEK

Apple 5G iPhone: Telstra’s opportunity for Christmas consumer churn

To position across the various handset affordability price points, the market is expecting Apple to release four 5G capable iPhones in Australia with three different screen sizes – which have been termed iPhone 12 Mini, iPhone 12, iPhone 12 Pro and the iPhone 12 Pro Max.

This marks over 12 months existing availability of 5G Android devices such as the Samsung S10 5G in Australia, so we expect that Apple will be hoping to build on the existing market awareness and anticipation of 5G services for its customer base.

As we highlight in the report, consumer focus on market pricing is high – but so is the relative interest in 5G technology, so we expect that Apple’s focus on different handset price points can go some way to offset these price concerns.

5G iPhone 12 – Results of Venture Quick Quiz

On the eve of Apple’s launch of its first 5G capable iPhones in Australia, we asked our Venture Insights newsletter base whether they would be interested in purchasing one of the new iPhones.  With the COVID-19 lockdowns, the shift to work from home and the current economic conditions, we do not expect Apple to break any previous Christmas sales records – however we do recognise that there has been over 12 months of existing 5G Android devices on the market, so we expect that Apple will be hoping to build on the existing market awareness and anticipation of 5G services for its customer base.
We also note that whilst our market data shows a strong consumer focus on telecommunications spend, there is also strong market interest in 5G technology.  Our quick quiz results showed that 30% of our mailing list are interested in purchasing the new Apple devices, with a further 20% interested but wanting to check the specs and price points first.  The remaining 50% of respondents were either not iPhone users or were happy to hold on to their existing handsets.  Even assuming that there would have been a higher than average chance of our subscribers being existing iPhone users, we think this is a good result for Apple.

This week, the NZ Competition Commission announced its final decision on key elements of New Zealand’s future fibre regulation of Chorus.

New Zealand will use a rate-of-return approach to calculate Chorus’ allowed revenues, but this week’s final decision does not set  specific revenue constraints or wholesale prices. Rather, it sets up the methodologies used to calculate Chorus’ allowed revenues, including how to calculate the value of its fibre network assets and the cost of the capital that it uses. In particular, New Zealand will use a building block model (BBM) to calculate the value of Chorus’ fibre assets.

A key issue is how the Chorus’ accumulated losses during the network build period are incorporated into the BBM. In addition to the core fibre assets, the RAB will include a financial loss asset that captures unrecovered returns that have accumulated up to the implementation date. This means that Chorus will be able to recover these losses through its future regulated fibre prices. The Commission will release further detail on the calculation of these losses in November.

New Zealand is well ahead of Australia in updating its telecommunications regulation. Variations to the nbn SAU to incorporate the non-FTTP technologies have been in limbo since 2016. This has given the ACCC extra leverage, as services not covered by the SAU are potentially subject to declaration and price regulation, but this has also increased regulatory uncertainty and is arguably inconsistent with the government’s multi-technology mix policy.

The nbn’s Initial Regulatory Period expires on 30 June 2023, and new arrangements for nbn’s long-term regulation must be put into place before then. The Australian Minister for Communications has just this week served the ACCC with a statement of expectations identifying a BBM as the appropriate approach to nbn regulation post-2023. This is consistent with the priority that the government places on ensuring sustainable investment in telecommunications infrastructure.

The ComCom’s deliberations will therefore be an important case study for the Australian government and the ACCC. We expect more regulatory convergence between the two countries as long-term arrangements are bedded down. Given the size of nbn’s accumulated losses, we expect this aspect of the post-2023 framework will attract significant interest from government, the nbn, and access seekers alike.

• STV now has a clear pathway to reduce its reliance on linear advertising by investing in production, while pushing the transition to digital forward with a UK-wide footprint
• To that end, STV Player has some momentum and recent production company acquisitions, increasing external commissions and PSB Out of London quotas should ensure STV Studios returns to growth in 2021
• Such development is imperative: COVID-19 has accelerated structural change in viewing habits meaning now that content must not only be great, but available widely and immersed in a smooth user experience just to have a chance