Pentanet: Australia’s Regional Player Trying to be the Next Generation of Telco

M. Rogers

Summary Bullets:

• While many of the largest telecom operators in the world are struggling to monetize next generation technologies and services supported by 5G, one small regional player in Australia is doing just that.

• Pentanet, a Perth-based, regional FWA provider is using its 5G mmWave spectrum to launch gigabit-services using mesh technology while it is also taking on cloud gaming with an exclusive Nvidia partnership.

Around the globe, telecom operators continue to face increasing margin pressure and competition from OTTs in their traditional communications space. This has prompted the industry to explore new revenue streams to combat competitive pressures. New 5G networks are commonly cited as an asset operators can leverage to create differentiated services, taking advantage of the increased speeds and latency made available by the technology. Some common areas often cited as early 5G opportunities for the telcos include services in content like AR/VR or cloud gaming, improved fixed broadband using FWA, smart cities, and industrial applications. However, for many operators breaking into these new markets has proved challenging. The investment in new platforms is cost prohibitive at a time when they need to maintain legacy services that make up the core of their business. Some operators are unable to invest in 5G standalone, or nationwide rollouts which limits the performance of their network. In many cases it is the largest telcos with the deepest pockets that have been able to bring next generation services to market, either for consumers or enterprise. However, there is one small telecoms operator based in Perth, Australia that is demonstrating how telcos can bring next generation services to market even on a small scale.

Pentanet only launched in 2018, has already commercialized new technologies and services that are often talked about, but never explored by some of the world’s largest telcos. Specifically, the company, which started as a small traditional fixed wireless operator, offering line of sight coverage from its towers, has now launched a 5G mmWave spectrum powered mesh network, offering speeds up to 1 Gbps. Pentanet’s mmWave network is being positioned as a higher performance and lower cost alternative to Australia’s wholesale National Broadband Network (NBN) for homes and business. The company’s ”Nexus” network is powered by the 200MHz of the 26GHz spectrum band it won in the ACMA’s 2021 auction, which has been quickly leveraged to deliver a high performance commercial service. The company has claimed top speeds of 970 Mbps from its beta launch customers in H1 2022. Rather than traditional FWA, the network operates as a mesh, and leverages some technology from Meta’s “Terragraph” mesh network concept. Within the mesh network connected nodes (radio devices at customer premises) do not necessarily need to be within line of sight of a central tower, and can instead mesh with other customer nodes. This allows Pentanet to build out coverage and capacity without having to invest as much in tower infrastructure compared to traditional FWA. Today, the service, which costs AUD99 per month offers a very attractive alternative to the top tier NBN plans for home office and small business customers. Further, while the company remains in the red as it builds out its network, its current margin for Nexus subscribers is 80%.

Pentanet is also pursuing new opportunities in non-traditional content areas. The company has partnered with Nvidia to be the exclusive distributor of the chipmakers “GeForce Now” cloud gaming service in Australia. The service allows subscribers to gain access to a library of popular gaming titles that run on Nvidia servers at Pentanet’s Perth data centers with the video feed streamed to users’ PCs, mobile devices, or smart TVs. Pentanet already had 270,000 subscribers in Australia, and plans to expand to New Zealand next year.

Pentanet is embracing the next generation of telco services. While the company has challenges ahead as it tries to scale its Nexus network, and add more functionality to support more services, like VoIP or dedicated business internet, its early momentum in a competitive Australian market shows that even smaller players can offer next generation services.

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