This tables only report provides 160 statistical tables for Internet, broadband and all aspects of the digital economy in Australia.
Researcher:- Paul Budde
Current publication date:- August 2010 (4th Edition)
Next publication date:- August 2011
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.
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.
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. 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
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.
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.
Market conditions and changes to technology have impacted the broadcasting industry over the past 12 months, and more so than any other year in the past decade. These conditions are expected to continue to impact the industry through intense competition for viewers and advertising. While the global financial crisis has left its mark on all media, Free TV in Australia weathered the storm better than expected. The formation of Freeview, the launch of Free TV’s new multi-channels and the expansion of the networks’ online and cross platform offerings are set to impact significantly on the industry’s free-to-air offering.
Due to the high cost of infrastructure and intense competition from the free-to-air counterparts, the two pay TV companies are battling it out to turn revenues into profits. However, the net losses of pay TV’s past are now narrowing and profits being restored. ARPU of both Austar and Foxtel continue to improve, driven by higher tier packages. By mid-2009 pay TV penetration had reached 33%, and while growth is expected to continue modestly during 2010, Australian figures are well below those of the developed markets around the world.
By 2009, Digital TV penetration had passed the 50% mark and steady growth is expected to continue. The free-to-air TV stations have increased their promotion of their digital TV channels and slowly but steadily there is more awareness among the viewers. However, the question remains if the new channels will attract enough new advertising money to warrant the new investments.
Radio is available over AM and FM frequencies, and almost three-quarters of all radio is commercially operated. The ABC accounts for almost all of the remaining radio audience. All five major commercial radio broadcasters have established national networks through aggregation. Digital radio launched in Australia in 2009 after years of commercial trials. The launch has started in capital cities and will roll-out progressively to other broadcast centres. The cost to the radio industry to provide digital radio services is expected to be roughly between $300 and $400 million. By that time many industry experts believe that the radio industry could be overtaken by new technologies such as wireless Internet radio.
Most of the media companies have a vested interest in protecting their traditional businesses. Over the last 50 years they have been able to obtain certain political advantages that have allowed them to carve our monopolistic markets. The picture is still slightly blurred but it is becoming increasingly apparent that the traditional TV media is concentrating on digital TV. Separately, other activities are beginning to emerge – activities that we classify as digital economy (e-commerce, e-health, e-learning, smart grids, etc). The traditional media companies have all established themselves in the emerging digital media market, with Seven, Nine and the ABC being the first to enter. However, the ABC more rapidly increased their market share among digital viewers.
Defying market expectations, expenditure on online advertisements in Australia grew 18.5% year-on-year. Unabated by the current poor economic environment, sales reportedly increased to $1.8 billion at the end of the 2009 financial year. More specifically Australia’s online search advertising market achieved a 30% growth rate during 2008/09, with both revenues per ad and the amount of search ads served continuing to rise.
Over recent years video applications over broadband have emerged, as Internet media companies and content producers seek to exploit the added speed and capacity of broadband infrastructure. The killer application on these networks is video-based communication, mainly produced by users themselves.
Music has been the key driver behind the early developments in the digital media, both in mobile and fixed networks. While mobile is the preferred technology for listening to music, the business models are not conducive to helping people become accustomed to using these networks for music delivery. Most will use free or cheap Internet sites to gain access to music.
Social media developments are fascinating and exciting. They show the great potential of the new communication and information tools that are becoming available, thanks to the Internet, Web 2.0, email and broadband infrastructure. However, for these new social media tools to succeed they need to be fully integrated into our daily communication. Online gaming, particularly games based on virtual simulations, are increasingly becoming linked in with social networking services.
This market has remained fairly static over the past few years, with more and more activities moving ‘off deck’. The major mobile media providers, therefore, are now the digital media providers on the Internet who have established mobile device access to their services.
Premium rate SMS services have developed into a $200 million market. However this is a far cry from the predictions made in the late 1990s, which anticipated a multibillion-dollar market. Despite a decade of mobile data hype the access charges to PSMS remain far too high and in 2009 the market began to contract.
E-health is rapidly shaping up as one of the key killer apps on the truly high-speed broadband networks, and millions of people around the world can potentially benefit from e-health applications. The Australian government is linking e-health developments to the National Broadband Network. Early diagnosis and post-treatment patient monitoring are two areas where significant synergies may be found using applications provided to users at home. As the financing of the public health systems in Australia becomes increasingly costly an opportunity exists to lower costs through more effective use of web services for healthcare consumers.
The Internet and associated Web 2.0 technologies have further broadened the quality and opportunities for remote education and the ‘virtual classroom’. E-learning is also becoming increasingly important in training health professionals in remote areas. Corporations and universities are continuing to adopt e-learning solutions in an effort to lower costs and provide training and education to a wider audience. It is thought that the current economic environment will see e-education growth being curtailed somewhat as companies rein in spending on non-essential training; however this climate may also promote technology as a cheaper alternative to classroom-style training.
The Australian government already provides its citizens with relatively sophisticated e-government services, and with the establishment of a fibre-based broadband network it may improve and broaden the range of web services for which it is responsible. As such, Australia is a fascinating and relatively advanced market for both e-education and e-government services.
Data in this report is the latest available at the time of preparation and may not be for the current year.
Number of pages 57
Last updated 18 Aug 2010
Analyst: Paul Budde
Paul is by far, the leading telecommunications analyst in Australia. Not only is his company's research first class and timely, it is superbly contextual to the complexities of today's modern media and communications technology. He is always extremely generous in sharing his knowledge with others and has a great ability to connect people together and be a thought leader on topics of National interest such as the NBN, FttH and Smart Grids.
Bruce Duyshart, Director Strategic Technology, Lend Lease
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