2012 Australia - Telecoms Industry - Statistics and Forecasts

Australia – Telecom Market moving into 2013

Key trends and developments

Telstra has done exceptional well during 2011 and 2012 and set to continue this into 2013. Optus has been holding on but needs to come up with new innovations to progress further, the hope for Vodafone is that 2013 will see an end to their troubles and that they indeed are able to turn the corner and start reclaiming their position in the market. The second-tier market is making gains in broadband and they are stepping up IPTV and other OTT activities and these will then be bundled into their other product offerings. Although the bundled market often sees overall revenues fall, it generally maintains a higher ARPU. Also in 2013 further consolidation is expected.

It has become clear that OTT is ‘the new normal’ for the telecoms industry - with the emerging all-IP networks; telecoms services are basically moving to new business models. These services are seen as a threat by the traditional telcos and so far they have been unable to come back with a competitive reaction. The more likely scenario will be is that the telcos will remain in the access space and will offer wholesale services to the OTT and Apps providers as well as to an increasingly growing number of companies and sectors that are relying on the digital economy. Services here include data centres, cloud computing, data storage, content delivery and other value added infrastructure services.

Mobile and fixed infrastructure will increasing merge and in the end a fibre based network will support hundreds of thousands of smaller and bigger mobile stations delivering services to end users. It is estimated that mobile capacity need to grow a thousand fold over the next decade to cope with customer demand.

Industry and market statistics

Telstra continues to dominate the overall Australian telecom market although just under 60% market share of overall revenues in 2013. Market share continues to drop from the highs that it held in the early 2000s of around 80% market share.

The mobile broadband market is fast becoming a major income revenue stream for the providers, having taken over the mobile voice sector. But increased usage has caused data traffic jams on the 3G networks as the infrastructure was not designed for the rapid increase of traffic over the last couple of years.

Overall BuddeComm expects that the MNOs will have earned over $17.5 billion in revenue from mobile services by mid-2012 – a growth rate of just over 1% year-on-year. Future revenue growth will also be impacted because of increased prices from the MNOs, the MVNOs and the tactics that Vodafone will use after its network is fully upgraded. Although newer telephony services that LTE can provide have brought strong growth in the sector and these new services may increase revenue growth.

For the MNOs, the results of the latest financial year – Telstra’s total mobile revenue passed $8 billion, with Optus around $6 billion. VHA, the entity created with the merger of Vodafone and Hutchison, generated revenue close to $4.5 billion.

The release of 4G/LTE mobile broadband and increased uptake by consumers and businesses will certainly ease the issue in the short term, but as user uptake increases so will the amount of bandwidth consumed. Mobile data usage increased by nearly 80% year-on-year to mid-2012 with nearly seven terabytes downloaded over the air in a three-month period.

The second tier market has been dominated by industry consolidation, a process that is set to continue over coming years. Moving towards a structurally separated regulatory environment with a NBN at the horizon, size really does matter.

The other important development has been Telstra’s aggressive activities to increase their market shares and this has been hurting the 2nd tier market. This is clearly reflected in this year data, total revenues are under $3 billion, well under 10% of the total telecoms market in Australia. This again shows the dominance of in particular Telstra. This year we have left Vodafone out of the 2nd tier market segment, but for comparison reasons there are still references to them.

OTT - the new normal for the industry

It has become clear that OTT is ‘the new normal’ for the telecoms industry - with the emerging all-IP networks; telecoms services are basically moving to new business models. These services are seen as a threat by the traditional telcos and so far they have been unable to come back with a competitive reaction. The more likely scenario will be is that the telcos will remain in the access space and will offer wholesale services to the OTT and Apps providers as well as to an increasingly growing number of companies and sectors that are relying on the digital economy. Services here include data centres, cloud computing, data storage, content delivery and other value added infrastructure services.

Mobile and fixed infrastructure will increasing merge and in the end a fibre based network will support hundreds of thousands of smaller and bigger mobile stations delivering services to end users. It is estimated that mobile capacity need to grow a thousand fold over the next decade to cope with customer demand.

The Australian telecommunications market will change dramatically over the next ten years. Accelerated by government policies these changes will be driven by a total overhaul of the industry.

This will also transform the industry and developments such as cloud computing, M2M and Big Data  will be accelerated. The Over-the-Top (OTT) players are also becoming more and more prominent in the telecoms industry and this will start blurring some of the borders between infrastructure, IT and applications,

The NBN will become the predominant infrastructure, and as a utilities-based network it will also provide its services to other sectors, such as healthcare, education and business. With these sectors involved we will see the industry developing specific new business models around infrastructure, ICT and retail. IPTV and other media and entertainment applications will also start to play a more important role. The question remains how successful the telcos will be in retail space.

They will have to decide where they want to play. Infrastructure will largely move to NBN Co, its contractors (eg, Telstra) and a few backhaul providers. Companies also have the opportunity to become the ICT providers to those other sectors. The larger sectors, in particular, will create a sizeable demand for value-added infrastructure services. The first of such contracts signed in the healthcare industry offers glimpses of such a future.

All of this will assist the industry to broaden itself and double its size to around $80 billion by 2020.