2010 Australia - Broadband Market - Overview and Statistics

National Broadband Network

Australia is among the leading countries whose government is actively investigating the social and economic benefits that can be achieved through the deployment of a mainly fibre-based telecoms infrastructure. Services that depend on high quality broadband infrastructure include tele-health, e-education, e-business, digital media, e-government, smart meters etc. In countries where the national telco is lagging behind we see that local governments have no choice other than to take a leadership role, as they have done with similar infrastructure over the last 100 years.

In December 2009 the OECD published its report on these issues and indicated that governments could justify the costs of fast broadband by using them to cut cost in sectors such as healthcare, education, transport and energy. On average, a cost saving of between 0.5% and 1.5% in each of these four sectors over a ten year period could justify the cost of building the NBN.

Governments are now starting querying whether this basic infrastructure should not be financed in the same way as other infrastructure, by making it a national right paid for through consolidated revenue, government bonds or, as the OECD indicated, government savings.

The decision from the Australian government to launch a $43 billion national FttH broadband network is a clear indication that they believe broadband is essential infrastructure. It fulfils a national purpose as its trans-sector multiplier effect delivers massive social and economic benefits in healthcare, education, energy and the environment. A digital economy requires an open broadband infrastructure, and for that to work it can only be built by a utility (NBN Co). While there certainly are questions regarding the business model and the investment plan, there is widespread support for the visionary plan. During 2010 the business model needs to be developed, which will take into account the socio-economic benefits the infrastructure can deliver to the country.

Statistical Overview and Forecast

Broadband statistics provided relate to the number of subscribers and market shares of major providers as well as additional data relating to DSL, cable and other broadband technologies. The total number of broadband subscribers crossed the 7.5 million mark in 2010, a 17% increase during 2009. Growth in recent years has been driven by further strong uptake of DSL subscribers, although recent growth has not as strong as the previous two years as the majority of the market has now made the transition from dial-up to broadband. In the longer term the development of a fibre optic network operated by a National Broadband operator is likely to have a significant impact on the take up of DSL or cable based services

Segmentation is provided by dial-up/broadband and include statistics on website usage. An overview of the ISP market, including number of ISPs and market trends is also included.

The business market has been quick to embrace broadband and by 2009 the vast majority of the business sector had made the transition. Further growth is continuing in 2010. As business users gradually move to faster broadband access via ADSL2+ and, when it’s built, services from the fibre-based NBN, they are increasingly embracing new broadband applications. This report provides a detailed overview of the key drivers and trends behind broadband adoption in the Australian business market. New data for 2010 has been included. A number of market surveys are also included across a wide range of topics including e-business, broadband usage, IT and consumer satisfaction, and the farming sector.

A range of topics are covered in relation to the usage of internet and broadband services in the residential sector. It also provides overall statistics of the residential telecoms market. It includes BuddeComm estimates of the market in 2010 and data from a number of market surveys covering consumer usage and behavioural patterns, as well as internet and broadband usage statistics. It provides an analysis of the drivers behind internet adoption among Australian households. Surveys covered include a statistical overview from the ABS regarding computer and internet usage among Australian households, which includes a breakdown analysis of residential computer and internet usage by a wide range of criteria. The figures used here are the latest available but some statistics are not due for update until late 2010 or 2011.

Though there are roughly 200 ISPs in Australia the retail broadband market is dominated in Australia by a small number of firms. Telstra provides nearly 45% of services and has roughly four times as many retail subscribers as the second largest player Optus with around 11% of the market. iiNet and TPG and Primus are other major players and each has around a 5% share. The remaining 30% of the market is shared between around 180 small and medium sized providers. Consolidation in the retail ISP market has occurred with a number of mergers in the last two years. The most notable of these deals was between iiNet and Westnet and between TPG, Soul and Chariot Internet. Of critical importance to ISPs is whether to further invest in DSLAM infrastructure as the fibre optic based national broadband network is built. Further investment will enable ISPs to directly connect subscribers to their network rather than relying on purchasing wholesale services. However in the longer term the NBN may render this investment obsolete as subscribers are migrated to the fibre network.

While the resale of DSL based services using Telstra’s Unbundled Local Loop service was economically unviable for voice services, it did enable platform based competition to provide broadband services. Many firms have installed their own DSLAM infrastructure enabling them to provide fairly high speed Internet services via ADSL2+. This regulatory framework related to ULL has encouraged investment and the number of broadband users with access to services has increased. However a key concern moving forward is the impact on investment in DSLAM infrastructure may become obsolete once Fibre to the Premises networks are built. The Governments proposal to build a National Broadband Network may invoke changes in the regulatory environment relating to DSL based broadband services. As such the existing regulatory regime will need to be balanced against the emerging regime relating to the fibre network.

HFC cable networks

Hybrid Fibre Coax networks are communications networks that use a combination of optical fibres and coaxial cable. HFC networks support voice, data, and TV services. Network operators are upgrading their networks to stay competitive in the broadband market by offering very high bandwidth data services. There are two HFC network operators in Australia, Telstra and Optus, both serving customers in the large major metropolitan centres.

The phasing out of dial-up internet connections in Australia has continued with nearly 90% of internet connections now being non-dial-up. At the end of 2009 there were 935,000 cable broadband subscribers, a penetration rate of around 15% of the total broadband market in Australia. Telstra has indicated it will seek to expand the number of services it provides over its HFC network to compete with fibre-based services provided on a wholesale basis by a NBN operator. At the end of 2009 Telstra launched very high-speed internet services in Melbourne. However, if the price of fibre-based services provided by the NBN operator is attractive to Telstra relative to the cost of servicing subscribers through an upgraded HFC network, then we may see Telstra abandon a strategy to upgrade the HFC in other major centres.

Greenfield FttH

Australia is seeing a dramatic rise in the number of FttH operators. The deployment of FttH in greenfield estates is a dramatically growing industry; but while the design of a fibre solution can be seen as a rather simple task, having it designed correctly and then operated effectively and with long term success is quite a different matter. Currently in Australia and New Zealand there are fifteen different FttH operators with various levels of experience and capability. In March 2010 new legislation was introduced in Parliament that will see all new housing sites to be either be supplied with FttH networks or being made ready (pit and pipe) for easy deployment of that infrastructure.