2011 Australia - Broadband Market - Overview, Statistics and Forecasts

Broadband market keeps growing now standing at 11 million

In 2011 the governments of over 40 countries in the world are actively investigating the social and economic benefits that can be achieved through the deployment of a mainly fibre-based telecoms infrastructure.

Australia was the first country to get the digital productivity vision correct, thanks to government leadership. The USA soon followed (National Purpose) and the EU (Digital Agenda for Europe).

New Zealand, Singapore, Japan, Korea, Qatar and Sweden are showing real leadership as well. Economic and trans-sector innovations are now key items on the political agenda of these countries.

Services that depend on high quality broadband infrastructure include e-health, e-education, e-business, digital media, e-government, smart meters etc. In countries where the national telco is lagging behind governments have no choice but to take a leadership role, as they have done with similar infrastructure over the last 100 years.

Australia’s National Broadband Network

The Australian Labor Party’s election win of 2010 was at least partly due to the National Broadband Network policy. This proved that the Australian people do understand the importance of the National Broadband Network as essential infrastructure for a range of social and economic developments. This was followed by the release of the NBN Co business plan and the passing of critical legislation in early 2011.

The project is Australia’s largest ever infrastructure investment project.

While there is certainly a question mark surrounding the $36 billion price tag this did not deter the majority of the elected parliamentarians from supporting the concept.

The original concept for a national wholesale-based infrastructure for the digital economy remains in place, and the developments that have been initiated will now move full-steam-ahead. It is unlikely that there will be any serious threat to the survival of the National Broadband Network before the next election, as the project will have grown to such a size that it cannot be dismantled.

Statistical overview of the market

We present an overview of key statistics and trends in the Australian internet and broadband market, including internet subscribers segmented by geographical area and type of internet access technology. This report also provides market share and access revenue statistics.

We provide segmentation by dial-up, fixed broadband and wireless broadband. Surveys by government departments, including the Australian Bureau of Statistics (ABS), are provided. We also give an overview of new trends and technologies that are evolving from, and merging with, the internet sector.

An overview of the ISP market is given, including the number of ISPs by sector and market trends. Comparisons with international markets are provided to enable an overview of the Australian situation. The report’s statistics are provided in text, tabular and easy-to-read chart formats.

The business market in Australia was quick to embrace broadband and by 2009 the vast majority of that sector had already made the transition. A major reason businesses moved to broadband was to obtain faster speed, yet according to some studies in 2011 they still suffer from slow speeds.

Business broadband expansion continues into 2011, as these users move to mobile broadband, but the big driver will be from the fibre-based National Broadband Network. The faster speeds of this network will see business use explode with the uptake of services such as software as a service, along with cloud computing, online interactions and media conferencing, since all these services need high-speed broadband to succeed.

The report provides overall statistics of the residential telecoms market. It includes BuddeComm estimates of the market into 2011-2012 and data from a number of market surveys covering consumer usage and behavioural patterns, as well as internet and broadband usage statistics.

We also provide 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 over a wide range of criteria. The figures used are the latest available and some statistics from past surveys are made use of, to give a comparison over time.

Although there is some conjecture on actual internet service provider numbers, ranging from less than 400 through to more than 800, BuddeComm estimates that in 2011 there are around 450 ISPs providing services ranging from dial-up through to DSL, fibre and wireless solutions. Some ISPs only service small numbers – less than one hundred users.

By mid-2011 the retail fixed broadband market is dominated by a small number of companies. Telstra provides the majority of services and has more than four times as many retail subscribers as the second largest ISP, iiNet. The other top ISPs include TPG and Optus, with iPrimus holding less than half the number of subscribers that TPG has. ISP numbers are estimated to rise as the National Broadband Network rollout encourages even more service providers to enter the marketplace by providing the future services that the fibre-enabled NBN market will allow.

Consolidation has taken place in the retail ISP market, with a number of mergers in the last two years. The most notable of these deals was between iiNet and Westnet and TPG and Pipe Networks in 2009. iiNet also acquired Melbourne-based ISP Netspace and the AAPT consumer division in 2010. Continued consolidation is taking place.

The hybrid fibre coax networks operated by the two major carriers in Australia, Telstra and Optus, were upgraded to DOCSIS 3 in 2010 as a way of remaining competitive in the current broadband market –  that is, before the National Broadband Network is rolled out.

The other main player is Neighbourhood Cable, which operates a hybrid fibre coax network in Ballarat, Geelong and Mildura – all three regions also received a million dollar upgrade to the higher-speed 100Mb/s during 2010/11.

Home area networks refer to networks deployed in residential premises using wired or wireless technologies. Keeping pace with global trends devices in use in Australia are likely to become increasingly sophisticated in the next five years and competition and cooperation between network operators and consumer electronics manufacturers is likely to increase.

As home networking in Australia matures from being PC- and media-centric devices, such as digital TVs, DVRs, digital media centres, set-top boxes and game consoles, the need for more connectivity will arise. We will need to incorporate a variety of consumer electronic devices that require connectivity to the smart homes of the future. The rollout of the National Broadband Network and the integration of smart grids will further drive this sector of the home network market.

The deployment of FttH in greenfield estates is a dramatically growing industry; but, while the design of a fibre solution can be viewed as a rather simple task, having it designed correctly and operated effectively and with long-term success is quite a different matter. It is expected that by 2013 there will be more than 250,000 new households deployed by greenfield fibre estates.

Currently in Australia and New Zealand there are more than a dozen different major FttH operators with various levels of experience and capability. In 2011 new legislation was passed by parliament that will see all new major housing sites either being supplied with FttH networks or being made ready (pit and pipe) for easy deployment of that infrastructure by mid-2011.

Market highlights:

• In developed markets fibre-to-the-home will be the leading infrastructure force behind the economic and social transformation, but mobile broadband will deliver these changes in the developing world.
• Business broadband expansion continues into 2011 as users move to mobile broadband, but the big driver will be from the fibre-based National Broadband Network.
• Already an increasing number of households make use of multiple broadband connections via both wired and wireless service providers as some internet usage (for example, reading emails) moves across to wireless devices such as notebook PCs and smart phones. This is set to grow exponentially over the coming years, with mobile-based devices overtaking desktop-based devices used for broadband access.
• In 2010 broadband downloads had doubled since 2008. However the pricing of broadband media services is critical for household users, and as such the emergence of an economically attractive revenue model based on advertising or other forms is critical.
• For the 12 months to end-2010 the annual growth in DSL slowed down to approximately 10%, by which time the market would have reached around 9.7 million broadband subscribers. A further 17% growth is projected for 2010/11 to take the total market to 10.4 million subscribers. The majority of the growth by this time will be coming from the mobile wireless broadband market.
• At the beginning of 2011 there were less than one million cable broadband subscribers, a penetration rate of around 10% of the total broadband market in Australia.
• Home area networking is a very important area for a large number of industries and investment in home area networking services is likely to increase. The critical issue for home networking is the cost of access to the outside world. With broadband prices and universal access still restricting the uptake of new home network-based services, the growth in this market is likely to suffer.
• Since 2007 Australia has seen a dramatic rise in the number of fibre-to-the-home (FttH) operators and by early 2011 they had connected more than 20,000 households.
• In Australia and New Zealand there are close to 200 communities that are reticulated, or are planning to be reticulated, with FttH. Once fully deployed this will represent in excess of 200,000 households connected to fibre; however, as with all broad-acre developments, the construction of the estate and release of lots is carried out according to a staged approach and it can take up to 15 years to achieve fully deployed status. By early 2011 there were an estimated 20,000 households connected in Australia.

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