Australia’s telecommunications sector is entering a period of structural tension. Connectivity has become an essential national service, underpinning emergency response, banking, energy systems, healthcare, transport and democratic participation. Yet the industry is still regulated and structured largely as a competitive consumer market. The ACCC’s latest Communications Market Report highlights a sector that remains operationally stable, but economically and strategically exposed.
The recent Optus outage should be understood in this broader context. It was not simply a technical incident but a governance failure in critical infrastructure. When a network disruption can simultaneously affect emergency services, payments, transport and millions of households, telecommunications can no longer be treated as a standard retail service. Policy settings, however, have not fully caught up with this reality.
Rising prices in mature markets
According to the ACCC report, the mobile market illustrates the challenge. Median mobile prices rose by around 6–7% over the past year, despite total service numbers remaining broadly flat. Growth has been concentrated in prepaid services, while the post-paid contract market is mature and saturated. At the same time, Telstra, Optus and TPG, including their sub-brands, continue to control around 87% of the mobile market.
This is not a market lacking competition at the retail level, but one where structural competition is limited. Price increases are being used to defend revenue in a low-growth environment rather than to fund step-change investment. Network-sharing arrangements have not materially restrained pricing behaviour, reinforcing the conclusion that competitive pressure remains shallow.
Fixed broadband and constrained investment
Fixed broadband shows similar stress points. NBN Co still operates around 8.7 million active services and carries close to 80% of total data traffic. Retail prices across most speed tiers continue to rise, yet NBN Co itself is tightly constrained by wholesale pricing caps and regulated returns. Its ability to respond flexibly to rising costs or accelerate investment in resilience and redundancy is limited by design.
Service growth has slowed, and actual connections have fallen short of forecasts. While upgrade programs continue, the underlying issue is not access but economics. Network operators face rising costs from energy, cybersecurity, redundancy requirements and ongoing upgrades, while revenue growth remains constrained. This combination increases the risk of underinvestment in long-term resilience.
MVNOs and the limits of retail competition
Australia’s experience with MVNOs underscores the limits of the current competition model. After more than 20 years, MVNOs collectively account for only around 13% of the mobile market. Most individual operators hold 1–2% at best. While they provide retail diversity and niche offerings, they do not deliver infrastructure competition.
MVNOs remain commercially and technically dependent on the major mobile network operators. Pricing, quality and innovation are ultimately shaped by wholesale terms. The persistence of price increases despite a crowded retail landscape confirms that MVNOs have not materially shifted market power or investment incentives.
Profitability pressure and essential service risk
Across both mobile and fixed markets, profitability is under pressure while expectations continue to rise. Telecommunications networks are expected to deliver near-perfect reliability, resilience in extreme events, and continuous capacity upgrades. Yet margins are tightening and returns are increasingly uncertain.
This creates a structural risk. In an essential service, underinvestment does not immediately show up as failure. It accumulates quietly in deferred upgrades, reduced redundancy and increased operational fragility. The Optus outage should be seen as an early warning of what happens when commercial pressures collide with essential service obligations.
The growing influence of global technology platforms
These pressures are compounded by the growing dominance of American technology giants. While Australian telcos carry the capital burden, regulatory obligations and resilience expectations, much of the economic value generated on their networks flows offshore. Cloud services, digital advertising, streaming platforms and AI workloads drive traffic growth but contribute little to funding the underlying infrastructure.
The result is a shift in the profit pool away from network operators, even as demands on those networks continue to rise.
Starlink as a warning signal
It is in this environment that Starlink has emerged as a national-scale competitor. By mid-2025, Starlink had reached around 375,000 Australian broadband services, making it the largest single broadband platform outside the NBN. Together with home wireless, non-NBN broadband now accounts for roughly 14% of national connections.
Starlink’s significance lies less in its current data volumes and more in what it represents. It operates at scale without wholesale access obligations, domestic infrastructure regulation or universal service requirements. Its growth highlights a regulatory asymmetry in which the most heavily regulated networks carry the greatest public responsibility, while the fastest-growing competitors carry almost none.
An unavoidable policy question
Taken together, these trends point to an industry drifting toward strategic vulnerability. Telecommunications is treated rhetorically as essential, but economically as discretionary. Competition exists, but largely at the retail margins rather than the infrastructure level. Profitability is declining, yet expectations for reliability and resilience continue to rise.
The central policy question Australia can no longer avoid is whether its telecommunications framework is fit for an era in which connectivity is critical national infrastructure. If investment incentives remain misaligned with public responsibility, underinvestment will become systemic rather than accidental. The cost of that failure will not be measured in market share or quarterly earnings, but in national resilience when the system is tested again.
Paul Budde