2008 Australia - Telecoms Analyses and Forecasts

Publication Overview

This report provides high-level strategic overviews, analyses and forecasts in both fixed and wireless telecommunication markets and key new services in the emerging digital economy. It identifies business opportunities, points out the hype and the pitfalls, and will be of assistance in making the right business decisions. Key topics include:

·         Investing in the Communications Revolution;

·         Strategies for the Digital Economy;

·         Analysis of the National Broadband Plan;

·         Analysis of the Major Market Players;

·         Industry Competition and Consumer Issues;

·         Revenue Statistics & Forecasting to 2010 by Provider & Service;

·         Revenue Forecast and Analysis to 2018;

·         FttH and FttN Industry Analyses;

·         Wireless broadband Statistics and Forecasts;

·         Mobile Data Forecasts and Mobile Media.

 

Researchers:- Phil Harpur, Paul Budde

Current publication date:- October 2008 (6th Edition)

Next publication date:- October 2009

Executive Summary

Infrastructure

Globally the focus of telecommunications infrastructure has shifted towards FttH. In Australia, the absence of decision-making and the ongoing delays in the broadband market are impeding the government from the rolling out of next generation telecoms infrastructure before the end of 2009. 

Recent regulatory changes have also seen the ACCC putting its emphasis on facilities-based competition (ULL and DSLAMs) rather than on resale. This further undermines the position of not just the smaller ISPs, but also of the larger ISPs, like Primus and AAPT, which have significant numbers of resale customers. Further consolidation will be needed, especially in relation to those players with large resale customer bases. The acquisition of Westnet by iiNet and TPG by Soul should also be looked at in this context. 

Without a genuine participation from Telstra in the execution of the National Broadband Plan, any government investment would be wasted as Telstra refuses to participate in the process. Instead it has opted for a highly focused and successful campaign to delay any new form of competition. Without firm government action the currently announced delays in the NBN process will become enduring. 

E-government

The Australian Government is well aware of the importance of e-government and has shown leadership in developing online services. The benefits of e-government applications can include cutting costs and improving processes and information flow, but one of its primary aims is to improve customer service for citizens. 

Rapid growth for mobile data

There is a great deal of discussion going on about mobile data, wireless broadband and mobile media, but the reality is that mobile voice and SMS still generate 90% of mobile revenues. Full-blown, end-to-end IP-based wireless broadband infrastructure will not be in place until 2012-2015. So the changeover, especially over the next few years, will remain rather slow, with an initial change starting perhaps later in 2009 when Optus has its nationwide 3G HSDPA network in place. 

Nevertheless we are seeing a real explosion in mobile wireless broadband. People are starting to take up an extra subscription one for voice one for data. This will continue for a while before we see more combined offerings.  

VoIP

In a ‘voice’ sense, the additional value of VoIP could lie in developing further innovations linked to the social, value-added experience of certain voice calls – in cases where delayed communication is problematic because the quality of the event/experience outweighs the actual cost of the call. Broadband is now dominating the fixed-line market, and voice (VoIP) will play a key role in broadband, where it will also be linked with video communication. 

The Digital Economy

In Australia, the emphasis of the discussion is slowly shifting from access to applications and that is where the digital economy kicks in. It has been estimated that this economy can add one to two points to national GDP. The Digital Economy affects everybody. Existing players such as telcos, banks and players from the media and retail sector, will need to adapt to the new environment, while new players will enter these markets from different angles. 

Wireless broadband

It appears that WiMAX has now well and truly lost the battle to the 3G operators. The mobile wireless broadband market is now booming. This will leave any future WiMAX operators to develop in niche markets only. By 2018 only 10% of mobile revenues will come from mobile voice; furthermore, that will be based on VoIP. 

Key highlights:

Telstra’s infrastructure strategy

·         Telstra’s long term infrastructure strategy will move towards FttH, at least for metropolitan areas. New fibre is rolled out day by day deeper into the network and thus closer to end user premises.

·         At the same time the incumbent has its NGN well and truly underway. While the transformation may not be achieved within the projected three to five years it is absolutely critical to Telstra. 

Mobile data and media markets

·         Music services remains a key growth market, with the music industry rapidly developing a whole range of new music services – both real tones and full track.

·         Video-based services are the largest new addition to the mobile content industry – both downloads (Girls and Goals) and uploads – (blogging apps). This market is set for rapid growth over this period – both via MMS and direct video call type services.

·         Increased competition in the mobile market will see stronger competition in mobile data packages which will result in more consumers using their mobile devices to download their emails and to surf the Internet. This will see an explosion in the number of mobile Internet services that will be made available tailor-made to mobile users (small screens). 

E-education, E-health, and smart meters

·         The Internet and associated Web 2.0 technologies has also further broadened the quality and possibilities for remote education and the ‘virtual classroom.’

·         E-health is rapidly shaping up as one of the key killer apps on the truly high-speed broadband networks. The cost of this, however, is enormous and we simply can no longer afford to finance these huge advances through the public health systems.

·         The government’s smart meter project has been delayed. This needs to be changed so that utilities will be encouraged to invest in smart grids rather than smart meters. 

Internet media companies

·         Internet media companies such as Google, News Corp, Fairfax Digital and Yahoo! are just some of the leaders taking advantage of this with the introduction of new services and applications. This revival of the Internet has also led in part to the re-emergence of the Internet economy, and more specifically, e-commerce.

 

 

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

Table of Contents

  • 1. Investing in the Communications Revolution
    • 1.1 The communications revolution
    • 1.2 Build and they will come
      • 1.2.1 The importance of infrastructure
      • 1.2.2 Long-term policies and investment strategies
      • 1.2.3 Installation period – build and they will come
      • 1.2.4 Transition period – great upheaval
      • 1.2.5 Deployment period – reaping the rewards
    • 1.3 The communications revolution
      • 1.3.1 Subset of the ICT cycle
      • 1.3.2 Transition started with dotcom bust
      • 1.3.3 Global implications
      • 1.3.4 Dirt-cheap broadband
    • 1.4 Nanotechnology – towards 2050
    • 1.5 BuddeComm conclusions and recommendations
      • 1.5.1 Investors
      • 1.5.2 For business entrepreneurs
      • 1.5.3 For telco operators, service and content providers
      • 1.5.4 For governments
  • 2. The Telecoms Market moving into 2009
    • 2.1 Market overview
      • 2.1.1 The digital economy
      • 2.1.2 Telecommunications infrastructure
      • 2.1.3 Fixed voice market
      • 2.1.4 Fixed broadband
      • 2.1.5 Wireless broadband
      • 2.1.6 Mobile communications
      • 2.1.7 Mobile data and mobile broadband
      • 2.1.8 Mobile media
    • 2.2 Key infrastructure issues
      • 2.2.1 Fixed infrastructure
      • 2.2.2 Wireless infrastructure
    • 2.3 Analyses of the major players
      • 2.3.1 Telstra
      • 2.3.2 Optus
      • 2.3.3 AAPT must look for successful merger
      • 2.3.4 Vodafone holds steady in the mobile market
      • 2.3.5 Hutchison no longer the 3G market leader
  • 3. Industry Competition Issues
    • 3.1 The 17 National Broadband Network principles
      • 3.1.1 Ubiquity
      • 3.1.2 Open Access Network environment
      • 3.1.3 Industry benefits
      • 3.1.4 Technology
      • 3.1.5 Leveraging government investment
      • 3.1.6 Education
      • 3.1.7 Working groups
    • 3.2 Open Access is imperative
    • 3.3 Government needs to set the rules of engagement for new telco market
    • 3.4 Telstra is fuelling the competition
    • 3.5 ACCC needs to facilitate NGN industry workgroup
  • 4. Analysis of Consumer Issues
    • 4.1 Appalling customer service – analysis March 2008
      • 4.1.1 ADSL2+ out of reach of most customers
      • 4.1.2 Disconnect and reconnect – weeks without broadband
      • 4.1.3 Excuses and more excuses from the industry
      • 4.1.4 Conflicts of interest
      • 4.1.5 Australia – the land of excessive broadband charges
    • 4.2 Changing consumer issues in a changing telecoms environment
      • 4.2.1 Commodity-based industry – commodity-based customer feedback
      • 4.2.2 Open networks will involve more and new players
      • 4.2.3 First changes within the next three years
      • 4.2.4 Consumer will become more central
      • 4.2.5 National healthcare, education and energy services
      • 4.2.6 The problems will occur in the transition period
    • 4.3 How serious are we about the protection of our children?
  • 5. Revenue Statistics, Analysis & Forecasting
    • 5.1 Statistical overviews and forecasts by provider 2008 - 2010
      • 5.1.1 Total telecommunications services market
      • 5.1.2 Telstra
      • 5.1.3 Optus
    • 5.2 Statistical overviews and forecasts by service 2008 - 2010
      • 5.2.1 Total telco market by major service
      • 5.2.2 Wholesale market
      • 5.2.3 Mobile market
      • 5.2.4 Data and broadband market
    • 5.3 2nd-tier telcos - revenues, forecasts & market shares
      • 5.3.1 Introduction
      • 5.3.2 2nd tier revenues, forecasts and market shares
      • 5.3.3 Strategy overviews of a selection of the key players
    • 5.4 Revenue forecasts to 2018
      • 5.4.1 By markets
      • 5.4.2 By-products
      • 5.4.3 By industry
      • 5.4.4 Where to go from here?
  • 6. Strategies for the Digital Economy
    • 6.1 Case study: Australian gGovernment is leading the way
    • 6.2 Essential for health, education and energy services
    • 6.3 Whole-of-government approach is necessary
    • 6.4 Regulatory frameworks are failing
    • 6.5 National benefits are astounding
    • 6.6 Conclusions
  • 7. Broadband Overview and Analysis
    • 7.1 Broadband overview and analysis
      • 7.1.1 Market and industry analysis mid-2008
      • 7.1.2 ISP market overview – where is the industry heading?
      • 7.1.3 Broadband in a broader perspective – analyses
      • 7.1.4 Broadband statistics and forecasts
      • 7.1.5 Home networks
      • 7.1.6 Policy analysis – the way forward has to be FttH
      • 7.1.7 Telstra’s FttN plan
      • 7.1.8 Forecasting FttH
  • 8. National Broadband Plan
    • 8.1 Analyses of Request for Proposals (RFP)
      • 8.1.1 Introduction – overview of government’s RFP
      • 8.1.2 How did we get to where we are now?
      • 8.1.3 RFP is addressing the symptoms rather than the cause
      • 8.1.4 Government is shying away from making the tough decisions
      • 8.1.5 Choice: Telstra’s monopolistic profits or affordable consumer prices
      • 8.1.6 Lack of leadership will haunt the government
      • 8.1.7 Structural changes are the only solution
      • 8.1.8 Money can’t buy me love
      • 8.1.9 BuddeComm’s predicted outcomes of the RFP process
      • 8.1.10 Where is the regulator?
      • 8.1.11 The Minister is again raising the bar for himself
    • 8.2 Analysis 2008
      • 8.2.1 Australia applauded for its broadband vision
      • 8.2.2 Australia strongly criticised for its execution
      • 8.2.3 Telstra is executing a focused and well-considered plan
      • 8.2.4 More than one way to skin the cat
      • 8.2.5 Self-regulation favours Telstra
      • 8.2.6 Only one way forward – structural separation
  • 9. FttH and FttN Market Analyses
    • 9.1 Different fibre scenarios
      • 9.1.1 FttN versus FttC networks
      • 9.1.2 FttH versus FttN
    • 9.2 FttN already out of date
    • 9.3 Start with low-hanging FttH fruit
      • 9.3.1 Greenfield developments
    • 9.4 Policy analysis 2008
      • 9.4.1 Missing – regulatory guidance
      • 9.4.2 We all know we need functional separation – so why don’t we do it?
      • 9.4.3 Make the decision and Telstra will change
      • 9.4.4 Do we really need the money?
    • 9.5 Developments
      • 9.5.1 FttH becoming a reality
      • 9.5.2 FttH starts making business sense
      • 9.5.3 Mass market FttH still years away
      • 9.5.4 FttH still an expensive exercise
      • 9.5.5 Regional fibre
    • 9.6 Slow move towards fibre – historic analysis
      • 9.6.1 Mexican standoff
      • 9.6.2 From HFC to FttH
      • 9.6.3 The Foxtel anomaly
      • 9.6.4 Iron grip on facilities
      • 9.6.5 Still running behind
      • 9.6.6 Telstra obstacles
      • 9.6.7 Government leadership
      • 9.6.8 HFC scenario
      • 9.6.9 Don’t expect miracles
  • 10. Key Trends in the Mobile Industry
    • 10.1 Telstra is taking the mobile lead
    • 10.2 The mobile voice market
    • 10.3 Mobile broadband
    • 10.4 Next Generation Mobile (NGM)
    • 10.5 Mobile content
    • 10.6 The end of mobile portals
    • 10.7 Off-deck services
    • 10.8 Mobile payments
    • 10.9 IP telemetry
    • 10.10 The handset market
    • 10.11 Nokia music store analysis
    • 10.12 The Apple iPhone
  • 11. Wireless Broadband Market
    • 11.1 Market overview
      • 11.1.1 Introduction
    • 11.2 Wireless broadband market statistics
      • 11.2.1 3G mobile wireless broadband showing explosive growth
      • 11.2.2 Wireless broadband subscribers
      • 11.2.3 Wireless broadband revenues
      • 11.2.4 Mobile data market
      • 11.2.5 Fixed wireless broadband market in limbo
    • 11.3 Mobility market
      • 11.3.1 Fixed – mobile call market
      • 11.3.2 Valued between $10 and $15 billion
      • 11.3.3 Revenue forecasts
  • 12. Mobile Data Forecasts
    • 12.1 Future developments
      • 12.1.1 Service evolution
      • 12.1.2 How to move forward?
    • 12.2 Mobile TV
    • 12.3 Market forecasts
      • 12.3.1 The blurred statistics of mobile data
      • 12.3.2 Mobile broadband
      • 12.3.3 Unique business opportunities
  • 13. Mobile Media
    • 13.1 The mobile content market in 2008
    • 13.2 The market for mobile digital media
    • 13.3 A market still kept hostage – analysis
      • 13.3.1 Not much progress in almost a decade
      • 13.3.2 Still no open networks
      • 13.3.3 Untapped potential
      • 13.3.4 We are a telecoms industry
      • 13.3.5 3G is taking off
      • 13.3.6 What do you mean – customer service?
      • 13.3.7 All we need is competition
    • 13.4 New marketing and distribution models
      • 13.4.1 On-deck services – operator portals
      • 13.4.2 Plenty of content providers
      • 13.4.3 Branding with partners
      • 13.4.4 The future: value-chain-based scenarios
    • 13.5 Mobile TV
    • 13.6 Premium Rate SMS (PSMS)
  • 14. Glossary of Abbreviations
  • Table 1 – Total telecoms service revenue by major provider – 2000 - 2010
  • Table 2 – Total telecoms service annual growth by major provider – 2001 - 2010
  • Table 3 – Total telecoms service market share by major provider – 2000 - 2010
  • Table 4 – Telstra Group total revenue and annual change – 1994 - 2010
  • Table 5 – Telstra Group revenue by service and annual change – 2007 - 2008
  • Table 6 – Telstra fixed telephony revenue and annual change – 2007 - 2008
  • Table 7 – Telstra PSTN products revenue and annual change – 2007 - 2008
  • Table 8 – Telstra mobile revenue and annual change – 2007 - 2008
  • Table 9 – Telstra Internet revenue and annual change – 2007 - 2008
  • Table 10 – Telstra IP and data access revenue and annual change – 2007 - 2008
  • Table 11 – Telstra offshore controlled entities revenue and annual change – 2007 - 2008
  • Table 12 – Optus overall operating revenue summary and annual change – 1994 - 2010
  • Table 13 – Optus revenue by major service division and annual change – 2007 - 2008
  • Table 14 – Optus revenue by major and minor service category and annual change – 2007 - 2008
  • Table 15 – Optus operating revenue by operating division & annual change – 2007 - 2008
  • Table 16 – Optus operational EBITDA by operating division and annual change – 2007 - 2008
  • Table 17 – Optus mobile revenue by division and annual change – 2007 - 2008
  • Table 18 – Business and Wholesale fixed revenue by service and annual change – 2007 - 2008
  • Table 19 – Consumer and SMB fixed revenue by service and annual change – 2007 - 2008
  • Table 20 – Total telecoms market – retail revenue by service – 2000 - 2010
  • Table 21 – Total telecoms market – annual retail growth by service – 2001 - 2010
  • Table 22 – Total telecoms market – retail market share by service – 2000 - 2010
  • Table 23 – Wholesale market revenues by major supplier – 1997 - 2010
  • Table 24 – Wholesale market revenues by major supplier – annual change – 1998 - 2010
  • Table 25 – Total mobile services market revenue and annual growth – 1993 - 2011
  • Table 26 – Mobile services market revenue per major operator – 1993 - 2010
  • Table 27 – Annual growth of mobile services market per major operator – 1994 - 2010
  • Table 28 – Average ARPU ($ per month) across all operators – 1993 - 2010
  • Table 29 – Internet access revenues (dial-up & broadband) by major provider – 2003 - 2010
  • Table 30 – Annual change in Internet access revenues (dial-up & broadband) by major provider – 2004 - 2010
  • Table 31 – Market share of Internet access revenues (dial-up & broadband) by major provider – 2004 - 2010
  • Table 32 – Broadband access revenues by major provider – 2005 - 2010
  • Table 33 – Annual change in broadband access revenues (dial-up & broadband) by major provider – 2006 - 2010
  • Table 34 – Market share of broadband access revenues (dial-up & broadband) by major provider – 2005 - 2010
  • Table 35 – Data market (including broadband) revenue by provider – 1999 - 2010
  • Table 36 – Data market (including broadband) annual change by provider – 2000 - 2010
  • Table 37 – Data market (including broadband) – market share by provider – 2000 - 2010
  • Table 38 – Second tier telco revenues by service – 2000 - 2010
  • Table 39 – Second tier telco revenues by service – annual change – 2001 - 2010
  • Table 40 – Second tier telcos – revenue by provider – 2002 - 2009
  • Table 41 – Second tier telcos – revenue by major provider – annual growth – 2003 - 2009
  • Table 42 – Second tier telcos – revenue by major provider – market share – 2003 - 2009
  • Table 43 – Telecommunications services revenue by market – 2007 - 2008; 2013; 2018
  • Table 44 – Telecommunications services revenue % by market – 2007 - 2008; 2013; 2018
  • Table 45 – Telecommunications services revenue by product – 2000; 2007 - 2008; 2013; 2018
  • Table 46 – Telecommunications services revenue % by product – 2000; 2007 - 2008; 2013; 2018
  • Table 47 – Number of ISPs – 1995 - 2009
  • Table 48 – Australian Internet users and penetration – 2003 - 2009
  • Table 49 – Total broadband subscribers and annual change – 1996 - 2010
  • Table 50 – Wireless broadband subscribers by access type and annual change – 2006 - 2010
  • Table 51 – 3G wireless broadband subscribers by mobile operator – 2007 - 2008
  • Table 52 – Total fixed wireless broadband revenues and annual change – 2006 - 2010
  • Table 53 – Wireless broadband monthly ARPU – 2006 - 2010
  • Table 55 – Fixed wireless broadband subscribers by operator – 2007 - 2008
  • Table 56 – Forecast mobile wireless data and voice revenues – 2008; 2013; 2018
  • Exhibit 1 – Key elements of techno-economic revolutions
  • Exhibit 2 – Starting dates of the five technology cycles of the last 200 years
  • Exhibit 3 – Effects of the mass deployment phase of communications revolution
  • Exhibit 4 – Next cycle – nanorevolution
  • Exhibit 5 – What is a smart grid?
  • Exhibit 6 – Worrying research
  • Exhibit 7 – Key revenue trends – period to 2018
  • Exhibit 8 – Telehealth benefits of utilising national communications infrastructure
  • Exhibit 9 – How many Expert Groups?
  • Exhibit 10 – Residential broadband (BB) growth predictions – next ten years
  • Exhibit 11 – Infrastructure blueprint
  • Exhibit 12 – Mobile facts and figures
  • Exhibit 13 – What users want

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As you know, I have resigned from the Labor Ministry and have decided not to re-contest the seat of Charlton at the next election – both for personal reasons.

Before leaving Parliament, I particularly wish to record my thanks to you for your generous and constructive participation in the deliberations that generated significant economic policy reforms for the Australian community. Continuous economic transformation is a key challenge that faces all Governments.

The development of sound public policy should always be contestable. Ultimately, good and equitable outcomes are not concessions to any particular interest group, but the careful balancing of interests to create the greatest possible benefit for the nation. You have contributed to that, and I sincerely thank you for it.

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