2011 Australia - Mobile Communications - Statistics and Forecasts

Australia’s $17bn mobile industry hits 125% penetration

The market in 2011

In 2011 the mobile communications market in Australia, as in other developed economies, is seeing a further shift in emphasis from voice to data-orientated services, driven by more new handsets and applications. Penetration has outstripped the size of the market, which indicates that people are increasingly using multiple services and multiple devices.

While voice is still the dominant mobile service in Australia, mobile data has steadily become more popular, spurred on by the advent of smartphones from vendors like Apple, HTC and RIM. These smartphones facilitate a wide range of data applications and services. However the winner in 2011 will be the handsets based on Google’s Android operating system. No longer held back by the mobile operators, mobile broadband growth has been extremely rapid since late 2007 and this is also to be the main feature of 2011.

Competition between mobile operators is set to intensify, resulting in lower mobile call charges for customers. Telstra recently took the gloves off and has increased its position in the market.

This will combine to produce a decrease in mobile prices. Furthermore, more customers will reduce their use of fixed-line voice and data services in favour of mobile services.

Mobile penetration: 125%

There are around six million more mobile subscribers than people in Australia. As smartphone uptake increases growth is likely to continue in the foreseeable future, even though subscriber penetration rates are about 125% of the population.

Growth is being driven by population increases and a rise in the number of people using two mobile subscriptions – one for personal use and one for business use. Australian operators are likely to have more than 28 million mobile subscribers by late 2011 as more and more users migrate to a mobile-only environment. Telstra is still the market leader, with more than eleven million subscribers; Optus has around nine million subscribers; and VHA still has roughly seven million subscribers.

A $17 billion market

The industry as a whole will earn around $17 billion in revenue from mobile. Mobile services now represent considerably more than 50% of overall industry revenues in Australia. During 2011-2012 revenue growth is expected to be influenced by the following three major factors:

• the broader economic environment; economic growth could well be subdued into late 2011 and 2012;
• revenue growth because of increased price competition from Telstra and MVNOs;
• new telephony services, including the LTE, will affect the pace of revenue growth.

However, it is also possible that strong adoption of new smartphones and data devices could drive continued growth, particularly in data services, which may offset other factors.

Australia’s competitive mobile industry

Mobile services have expanded beyond voice and SMS, as operators seek to increase their revenues and market share as the mobile penetration rate of around 125% continues to rise in the saturated mobile market in 2011/12.

The arrival of the iPhone forced the industry to change – rather than controlling the apps and portals market the industry has become a broadband infrastructure facilitator. This has created a new growth area in the industry, which is based more on infrastructure than on apps or services.

Total mobile services revenue earned by the major mobile operators is set to continue to grow, but at a slower rate than the growth seen in the final years of the previous decade. This may reflect price competition from Telstra, the effect of increased competition from MVNOs – eg, Lebara – and the effect of a saturated market and competition.

The mobile retail market is rapidly becoming more significant as the use of mobile devices extends well and truly beyond traditional voice and SMS. Retailers are fast becoming the focal point for interaction with customers, many of whom have individual needs which require a higher level of customer service. Many customers are now also using social networking to make contact with stores.

The non-specialist retail market such as food stores and petrol stations are catering for the prepaid market, while the specialised retailers are catering for a rapidly increasing postpaid market. Postpaid subscribers have been growing, while the prepaid market has been shrinking with a greater uptake of smartphones and mobile broadband plans.

Total sales volumes are also continuing to increase as customers are changing their mobile handsets more frequently, often only to a newer model smartphone. There are no indications that this situation is likely to alter in 2011/12.

Let the battle for spectrum begin

The Australian government sought public comment on the benefits and costs of maximising what has become known as Australia’s ‘digital dividend’, the term used to describe the radio frequency spectrum made available as a result of the switchover to digital-only television. In doing so it has announced it will release a contiguous block of spectrum between 694MHz and 820MHz to be freed up from switchover.

The government has established a target of 126MHz of contiguous ultra-high-frequency spectrum. In its latest report, the Australian Communications and Media Authority (ACMA) has flagged spectrum shortages and makes recommendations to secure extra bandwidth. Ultra-high-frequency spectrum block is expected to be available at the end of 2013, while other frequencies in the 700MHz and 2.5GHz ranges are to be reallocated across the 2011-2016 timeframe.

Smartphones

As the Australian smartphone sector takes off the handset market has seen a shift towards other vendors such as HTC and Apple. For many years this sector has been dominated by Nokia, but in late 2011, as the iPhone takes the users’ choice as the top phone, Nokia may see its total market share drop below 30% – although in the lower end of the market it may remain a dominant force.

While the cost of mobile broadband is still markedly expensive compared to fixed broadband increased usage is being led by smartphones, as around 50% of smartphone users use a mobile phone to access the internet. While the iPhone started the trend, competition from the Android operating system and others will see the smartphone market continue to increase to around 50% penetration by end-2011.

Market highlights:

• Mobile services have expanded beyond voice and SMS, as operators seek to increase their revenues and market share as the mobile penetration rate of around 125% continues to rise in the saturated mobile market in 2011/12.
• Total mobile services revenue is expected to reach $17 billion in 2011, representing a growth rate of around 8%, down from the double-digit growth rates of 2009. However over the next three years competition and commoditisation will lead to even lower ARPUs.
• Ultra-high-frequency spectrum block is expected to be available at the end of 2013, while other frequencies in the 700MHz and 2.5GHz ranges are to be reallocated across the 2011-2016 timeframe.
• The mobile retail market is rapidly becoming more significant as the use of mobile devices extends well and truly beyond traditional voice and SMS.
• With around 60% of subscribers using 3G services the market is characterised by a high uptake of mobile value-added services across enterprise mobility and consumer segments.

Data in this report is the latest available at the time of preparation and may not be for the current year.