2007 Australia - Telecoms Analyses and Forecasts

By 2015 the telecoms industry will grow from $34 billion to $72 billion. Increasingly new revenues will flow into the industry as companies continue to explore and develop the digital media opportunities that are becoming available over IP-based next generation telecommunications equipment, which will be carried over the fibre networks that will be deployed deeper and deeper into the network. These revenues will need to be shared with the existing technology and infrastructure operators, as well as a growing number of additional players. For more information, see chapter 2, page 11.

Fibre networks will significantly increase the quality and capacity of the infrastructure. It will allow sectors such healthcare, education and energy to utilise these networks for the delivery of high quality home services, such as video nursing services to monitor elderly people and hospital patients who have been discharged early from hospital. This will save costs significantly and increase availability of places/beds in hospitals and retirement villages. Continuing education and smart meters linked to the broadband smart grids are other key applications. For more information, see chapter 6, page 47.

In order to facilitate these developments new infrastructure is required, as well as a range of network capabilities to allow for the innovation required to move the market forward. Rather than continuing with the foolish debate in Australia about who can best overbuild networks, under what conditions, and who can throw more government money at these projects, we first need to create a better regulatory environment, one that is conducive to the development of this new national infrastructure. Rather than duplicating infrastructure we need to look at sharing it, and the best approach is to stimulate the operational and structural separation of the infrastructure from the services that operate over that network. Only when a workable solution is in place will it be possible to make intelligent decisions regarding investments and government funding. Competition needs predominantly to take place on a services level, and only where this is economically viable at infrastructure level. For more information, see chapter 5, page 33.

The first services possible over this new infrastructure are now becoming available. They are currently concentrated around VoIP and IPTV. However, because the telcos are trying to either stop these developments or monopolise them, progress has been slow. This has allowed the Internet media companies to develop their own web-based versions – like Internet telephony (Skype, Amazon, Google) and web-based entertainment (YouTube, MySpace, Flickr and many others). It appears that the telcos and ISPs have already lost the battle for VoIP, IPTV and other digital media services. For more information, see chapter 9, page 95.

Mobile is rapidly becoming a commodity, but the way the industry is structured at present allows the operators to protect their lucrative income, as they can still charge premium prices for this commodity. This also means that they are not seriously involved in developing more mobile data and wireless broadband services. They believe that this would lead to Internet-based services and the Internet media companies could then also offer their web-based services to mobile networks. This would undermine the mobile operators’ ability to maintain their premium prices. We believe that this situation will not be easy to change and breakthroughs are not expected until 2010-2012. For more information, see chapter 10, page 105.

Key Highlights

• Total market value in 2007 will be $34 billion, growing to $72 billion by 2015 as new revenue streams will enter this market after 2010.
• Telstra has a 44% market share at retail value and a 70% market share at wholesale value. It dominates 95% of the market profits.
• Annual growth for 2007 is estimated at 3%, dipping to just under that figure in 2008.
• Data/broadband has the highest growth, at 11% – voice has the lowest (2%).
• Voice revenue still has the largest share (37%) followed by mobile (34%)
• The second-tier retail market is estimated at around $9 billion.
• High-speed networks will be developed, despite the current Mexican standoff.
• Internet media companies and globalisation are key drivers behind all future developments.
• Social and economic issues are more important than individual telecoms issues – this means ongoing government involvement in the industry.
• Infrastructure overbuild should only occur where it is economically viable, otherwise infrastructure needs to be shared. This will lead to structural separation between infrastructure and services.
• VoIP and IPTV are likely to be dominated by web-based services from the Internet media companies, rather than by the telcos and ISPs.
• Telstra will remain the key telecoms infrastructure provider in Australia, but it will be split into separate companies under pressure of the financial market to maximise the company’s values.
• Competition will move away from the telcos and ISPs to the digital media companies.
• The move from mobile data to wireless broadband (4G) will be slow (2010-2012).
• In the meantime, voice – at premium prices to the operators – will remain the killer app on mobile networks.
• Fixed mobile convergence will only take off once 4G networks are in place.
• Regional telecoms will remain heavily dependent on good government policies.

This report provides high-level strategic analysis and forecasts in the telecommunications market, covering both fixed end wireless industries and markets and key new products and services. It identifies business opportunities, points out the hype and the pitfalls, and will be of assistance in making the right business decisions.

Further information provided:

• Revenue forecasts of the Australian telecoms market, allowing for the customer’s own business planning.
• Analysis of the business opportunities and pitfalls; identifying the product and market opportunities.
• Analysis of the likely outcome of various scenarios, avoiding costly mistakes and making the right business decisions.
• Why wireless broadband will be very slow to develop and what the opportunities are in the meantime.
• The reality of the new infrastructure developments. They will take between 7 and 15 years to be fully deployed, so no hasty decisions, please.
• Guidelines for policymakers in relation to national interest issues in telecoms infrastructure and digital media.

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