2013 Australia Telecoms Market Analysis - Top Trends Moving into 2014

Publication Overview

This annual publication provides analysis on the telecoms market moving into 2014. It includes forecasts, overviews and discussions on:

  • Trends in Global Telecoms
  • The National Broadband Network is here to stay
  • FttH – awesome – but what is its purpose
  • Mobile communications market – declining profits
  • Mobile broadband – shows where the future of communications is going.
  • The Internet of Things and cloud computing addressing complex societies and economies
  • Smart infrastructure (grids, transport, cities, buildings)
  • Digital Productivity for innovation and new jobs

Researchers:- Paul Budde, Kylie Wansink
Current publication date:- June 2013 (26th Edition)

 

Executive Summary

NBN set to survive, Mobile Broadband booms, but Revenues down

Analysis Telecoms Market – mid-2013

This report provides expert insights into the Australian telecoms market. It goes beyond the hype and the spin and analyses all the key developments in this market, highlighting where the opportunities are and where to look out for the pitfalls.

It is important to be aware that the market currently operates in a two-tiered fashion. First, by far the greatest attention of politicians and the media is focused on the national broadband market. After five years of political skirmishing the Coalition’s NBN policy is now very close to the policy that supports the network currently being rolled out. Very large parts of it now have bipartisan support. Few politicians will actually admit this, but the future existence of the NBN is secure.

However, at another level, the real market action in 2013 is taking place in the mobile broadband market. The spectrum auctions have seen Telstra as the clear winner and it is set to dominate the 4G LTE market. This will have serious consequences for the other players in the market, especially Optus, whose future depends on mobile. It won’t be too long before we start seeing monopolistic tendencies in this market.

In the meantime, in many sectors the NBN is no longer the story. Instead it has created other, new stories in the various sections of our society and our economy, many of which are highlighted in this report.

Because of all of this the telecoms industry is involved in a massive transformation. Since the arrival of the internet, the focus of the industry has moved from providing defined end-products to becoming a facilitator in the development of a range of new products, companies, and indeed new industries.

The question is whether they will be able to embrace the developments around the digital economy. Trans-sector services such as e-health, tele-education, e-government, smart grids and IoT (M2M), all require a utilities-based wholesale infrastructure that is separated from the retail services that will be carried over them.

Obviously the Australian market – and in particular the ICT market – does not operate in isolation, so it is important to look at what impact international developments have on mobile and fixed broadband, the digital economy, and telecommunications markets in general.

As overseas examples are often mentioned by Australian politicians it is also important to be aware of what is actually happening in these countries and what is not – and also, importantly, what is selective reporting or outright hype.

This report provides a brief global analysis and then moves into the American, European, New Zealand, Asian and Africa – the hottest but perhaps less relevant market to Australia, but nevertheless one which has attracted the greatest attention from investors around the globe, including some from Australia.

After this we report in detail on the specific Hot Trends in Australia.

The Hot Trends

National Broadband Network

At the start of 2013 NBN Co indicated that the rollout plan was now slightly above target. This bodes well for a rapid rollout of the network, to reach close to four million connections by 2015. With all the major foundations now in place it should be reasonably plain sailing from here. As more detailed information becomes available from the Opposition, while there remain strong areas of disagreement, the reality is that despite the possibility of a change of government in late 2013 the NBN is here to stay.

Mobile Communications

The mobile market is being driven by smartphone uptake and this is also driving mobile broadband usage and the increase of over-the-top applications that are now depriving the MNOs of their traditional income streams. The power in the market has shifted from the operators to the smartphone vendors and app developers.

Total mobile services revenue is expected to grow to nearly $18 billion in 2012, but with the introduction of the lower network termination rates, decreasing the cost of monthly mobile broadband to consumers, growth may be slowed.

Mobile Broadband

In 2013 there are more than 5.5 billion mobile broadband subscribers. The release of additional 4G networks and increases in capital expenditure by the mobile network operators will see increased market penetration with the availability of these 4G/LTE networks.

M2M and the Internet of Things

With the NBN and LTE now well and truly underway it is important to look at what will be the real value of this new infrastructure. The infrastructure that is now being built offers a range of features such as ubiquitousness, affordability, low latency, high speed and high capacity. It will link millions of devices, such as sensors, that will enable us to more efficiently and effectively manage our environment, traffic, infrastructures, and our society as a whole. This hot trend is going to be a real game-changer. It will transform every single sector of society and the economy, and it will be out of this environment that new businesses – and indeed new industries – will be born.

Digital TV, Pay TV, IPTV, Smart TV

With subscription TV household penetration under 30%, we are seeing more content available online through IPTV and we can also view additional FTA channels using digital TV, and listen to radio streaming online or on digital radio in the capital cities. We are now waiting for the next generation of smart TVs. They will most likely challenge the current IPTV developments.

Table of Contents

  • 1. Analyses Telecoms Market – mid 2013
    • 1.1 Australia’s $43 billion telecoms market
      • 1.1.1 National Broadband Network
      • 1.1.2 Mobile operations
      • 1.1.3 Mobile broadband
      • 1.1.4 Major telcos
    • 1.2 Key trends and developments in infrastructure
      • 1.2.1 The thousands of unreported benefits of high-speed infrastructure
      • 1.2.2 The end of HFC and FttN networks is approaching
      • 1.2.3 Can we afford not to have a fibre optic infrastructure?
      • 1.2.4 Submarine cable services between Australia and NZ in the spotlight again
    • 1.3 Mobile developments, Key Trends and analyses
      • 1.3.1 Questions about the robustness of mobile networks
      • 1.3.2 The Digital spectrum auctions
      • 1.3.3 LTE deployments to rise and WiFi’s growing importance acknowledged
      • 1.3.4 Retaining the customer is important in current climate
      • 1.3.5 OTT mobile VoIP and messaging a threat to revenue
      • 1.3.6 Smart phone uptake driving industry growth
      • 1.3.7 Mobile Instant Messaging: a key threat to operators in 2013
    • 1.4 The digital transformation of Australia
    • 1.5 The mobile and digital economy
      • 1.5.1 Digital economy – e-commerce insights
      • 1.5.2 The mobile and online economy
    • 1.6 Transforming the social sectors
      • 1.6.1 Digital productivity
      • 1.6.2 E-Health
      • 1.6.3 E-Education
      • 1.6.4 E-Government
      • 1.6.5 Are we trying to solve the healthcare crisis from the wrong perspective?
      • 1.6.6 Big Data still a hot topic
    • 1.7 Broadcasting, IPTV and other digital media developments
      • 1.7.1 FTA broadcasting versus subscription TV versus IPTV and the battle for supremacy
      • 1.7.2 The death of TV – or not?
      • 1.7.3 Digital gaming formats thrive at the expense of traditional
    • 1.8 Smart Communities based on Intelligent Infrastructure
      • 1.8.1 Smart Societies
      • 1.8.2 Recent developments for Artificial Intelligence
      • 1.8.3 Smart Transport
      • 1.8.4 M2M and The Internet of Things
      • 1.8.5 Smart Energy
      • 1.8.6 Smart Meters in Victoria – Case Study
      • 1.8.7 People power in the energy market
      • 1.8.8 World first – prepaid electricity through smart grids
  • 2. International Analyses relevant to Australia
    • 2.1 The global telecoms market in 2013
    • 2.2 FttH – awesome – but what is its purpose?
    • 2.3 Analyses of key trends and developments in America
      • 2.3.1 America closing down its copper network – so what’s next?
      • 2.3.2 Broadband – the American way
      • 2.3.3 Tom Wheeler – new FCC Chairman
      • 2.3.4 US fibre projects: go-aheads omit the major telcos
      • 2.3.5 Impressive LTE deployments masking fixed-line broadband crisis in USA
      • 2.3.6 New WiFi spectrum developments
      • 2.3.7 Smart grid networks exploiting wireless broadband
    • 2.4 Analyses of key trends and developments in Europe
      • 2.4.1 Europe’s fibre infrastructure gaining pace through investment stimuli
      • 2.4.2 UK prepares for White Space spectrum trials
      • 2.4.3 Spanish joint-network investment in FttH seeing returns
      • 2.4.4 French government rekindles national FttH investment programme
      • 2.4.5 Telekom Deutschland expands WiFi capabilities with Fon
    • 2.5 Analyses of key trends and developments in New Zealand
      • 2.5.1 Ultra-Fast Broadband and the Regional Broadband Initiatives
      • 2.5.2 The mobile market
    • 2.6 Analyses of key trends and developments in Asia
      • 2.6.1 Asia define massive presence in global mobile and broadband markets
      • 2.6.2 Fixed voice subscriber market declines - China leading the way
      • 2.6.3 Singapore’s national broadband network roll-out reaches completion
      • 2.6.4 Data use keeps surging across fixed and mobile networks in S Korea
    • 2.7 LTE and FttX fuel data demand in Hong Kong
    • 2.8 The hottest market in the world is Africa
      • 2.8.1 Fibre networks sustaining growth in Internet and broadband sector
      • 2.8.2 Nigeria Africa’s largest telecom market
  • 3. National Broadband Network Analyses - mid 2013
    • 3.1 I am barracking for the NBN – leaving politics aside
    • 3.2 The future of the NBN after the election
    • 3.3 The pros and cons of vectoring
    • 3.4 Will LTE steal the broadband revolution?
    • 3.5 Multi Dwelling Unit broadband
    • 3.6 The Coalitions NBN Policy
      • 3.6.1 The plan needs some further work
      • 3.6.2 Another step forward
    • 3.7 Why not take up Michael Quigley’s suggestion?
    • 3.8 Major credibility issues for NBN Co
    • 3.9 Is the NBN Co business model flawed?
    • 3.10 NBN – telecoms or digital infrastructure – a SAU question
    • 3.11 Pilbara – a lost NBN opportunity
    • 3.12 Surge in high speed broadband demand
    • 3.13 NBN leadership or NBN procrastination
    • 3.14 The Dutch Disease, broadband and the mining boom
    • 3.15 Comparisons with broadband plans from AT&T and BT (separate report)
    • 3.16 NBN could slash telecoms maintenance costs
    • 3.17 Broadband demand-side management
    • 3.18 The NBN and the opportunity for ‘virtual’ players
    • 3.19 Will infrastructure constrain the digital entertainment market?
    • 3.20 Will the half-built HFC disaster be repeated?
    • 3.21 Four million households within reach of the NBN by 2015
    • 3.22 Digital infrastructure essential to manage the transition to the e-world
  • 4. The Broadcasting Market in 2013
    • 4.1 Media reform paranoia
    • 4.2 The death of TV – or not?
    • 4.3 Changes to the industry
    • 4.4 Customers churn to other media models
    • 4.5 Analogue TV to cease by 2014 – whats next
    • 4.6 Digital TV nears 100% penetration
    • 4.7 Digital dividend
    • 4.8 Restacking the spectrum
    • 4.9 Viewer Access Satellite Television and restransmission
    • 4.10 Additional infrastructure to boost reception
    • 4.11 Local content and licensing fee reductions
    • 4.12 Digital Radio
    • 4.13 National Broadband Network to use multicasting
    • 4.14 Revenue trends in the media sector
  • 5. Mobile Communications - The Market in 2013
    • 5.1 Market and industry analyses
      • 5.1.1 Two years a strong mobile competition
      • 5.1.2 Competition moving forwards beyond 2013
      • 5.1.3 Only structural change can save the mobile industry
      • 5.1.4 High demand for mobile broadband
      • 5.1.5 Mobile broadband – killer app for FttH
      • 5.1.6 Watch out for the next WiFi wave
      • 5.1.7 Spectrum key to broadband utility
    • 5.2 Mobile network operators overview
      • 5.2.1 Telstra
      • 5.2.2 Optus
      • 5.2.3 Vodafone
    • 5.3 Overview of trends and developments
      • 5.3.1 Mobile broadband
      • 5.3.2 Mobile subscribers
      • 5.3.3 Mobile voice
      • 5.3.4 Network termination rates lowered may drive mobile competition
      • 5.3.5 Smartphones
    • 5.4 Background information
      • 5.4.1 Subscriber statistics
      • 5.4.2 Mobile communications – revenue overview and statistics
      • 5.4.3 Mobile broadband – statistical overview and forecasts
  • 6. M2M and the Internet of Things
    • 6.1 Global Overviews
      • 6.1.1 Introduction
      • 6.1.2 The infrastructure
      • 6.1.3 Spectrum issue – more to it than meets the eye
      • 6.1.4 Mobile operators and the broadband boom
      • 6.1.5 Trans-sector policies
      • 6.1.6 Key technical developments
      • 6.1.7 The business game-changer
    • 6.2 Australian Developments
      • 6.2.1 Statistical information
      • 6.2.2 Market and Industry Analyses
      • 6.2.3 Key trends and Developments
      • 6.2.4 Change in services driven by Sensing and monitoring information
      • 6.2.5 Smart Projects
      • 6.2.6 Smart Cities, Smart Infrastructure
      • 6.2.7 Smart Transport, Smart Cars
      • 6.2.8 Smart Grid - Smart Grid, Smart City Project
  • 7. Mobile Communications - Key Drivers and Challenges in 2013
    • 7.1 Introduction
      • 7.1.1 OTT the new normal
      • 7.1.2 Good description of modern telecoms infrastructure
      • 7.1.3 The spectrum crunch
    • 7.2 Mobile infrastructure becomes a fibre feed-in
      • 7.2.1 80% of mobile broadband is consumed via WiFi
    • 7.3 Industry consolidation is a must
      • 7.3.1 Market leadership no longer with the operators
      • 7.3.2 Opportunities are bypassing the mobile industry
    • 7.4 The future of the smartphone market
      • 7.4.1 Hardware becomes a utility platform
      • 7.4.2 Platform for innovation and industry transformation
      • 7.4.3 Breaking into new markets
      • 7.4.4 Who will dominate the wi-fi market?
      • 7.4.5 Innovation to continue
    • 7.5 Mobile broadband: killer app for FttH
    • 7.6 Mobile infrastructure running out of steam
      • 7.6.1 Fixed Mobile Conversion
      • 7.6.2 Small cell networks
      • 7.6.3 Heterogeneous networks
      • 7.6.4 No clear future
    • 7.7 Case study: Europe
      • 7.7.1 Spectrum issues
      • 7.7.2 Spectrum issues
    • 7.8 Brief case study: Africa
      • 7.8.1 Region with the biggest remaining growth potential
    • 7.9 Conclusion
  • 8. Opportunites and Challenges for the Telcos
    • 8.1 From benign to hard-line monopoly
    • 8.2 Telco model of the future will be based on OTT
    • 8.3 The end of the line for PSTN and HFC networks
    • 8.4 Telecoms market is transforming but the telcos are not
      • 8.4.1 Telcos lost the internet battle
      • 8.4.2 Telcos also lost the mobile content battle
    • 8.5 Next on the chopping block – the infrastructure
    • 8.6 So what is next for the telcos?
      • 8.6.1 IoT and M2M: the next frontier
      • 8.6.2 Is bandwidth the new growth market for the telcos?
      • 8.6.3 Wi-fi and the role of the telcos
      • 8.6.4 Rebalancing telco infrastructure investments
    • 8.7 Conclusion
  • 9. Broadband - A Key Infrastructure for the Future
    • 9.1 Can we afford not to have a fibre optic infrastructure?
    • 9.2 Broadband doesn’t just equal high-speed Internet
      • 9.2.1 Increase in broadband quality problems
      • 9.2.2 Internet traffic growth
    • 9.3 The thousands of unreported benefits of high-speed infrastructure
    • 9.4 The many aspects of broadband infrastructure
      • 9.4.1 Broadband equals healthcare infrastructure
      • 9.4.2 Broadband equals utility infrastructure
      • 9.4.3 Broadband equals education infrastructure
      • 9.4.4 Broadband equals media and e-business infrastructure
      • 9.4.5 Broadband equals smart cities
    • 9.5 Trans-sectoral thinking required for governments
    • 9.6 Barriers to NBN and broadband adoption
      • 9.6.1 Broken regulatory systems and the new broadband environment
      • 9.6.2 Barriers unique and numerous
    • 9.7 Conclusion
    • Table 1 – The results of the auction and the associated revenues are:
    • Table 2 – Top 10 fixed-line markets (ranked by penetration) - 2012
    • Table 3 – Household conversion to digital TV – 2009 - 2012
    • Table 4 – Australian media market – revenue by industry – 2007 - 2012
    • Table 5 – Australian media market – annual growth by industry – 2008 - 2012
    • Table 6 – Australian media market – by industry share – 2007 - 2011
    • Table 7 – Mobile broadband monthly ARPU – 2010 - 2013
    • Table 8 – Estimated mobile broadband revenues and annual change – 2010 - 2013
    • Table 9 – Mobile market subscribers, penetration rate and annual change – 2010 - 2013
    • Table 10 – Total mobile services market revenue and annual change – 2010 - 2013
    • Table 11 – Global mobile capital expenditure (CAPEX) – 2010 - 2013
    • Table 12 – Global mobile capital expenditure (CAPEX) – 2010 - 2013
    • Table 13 – Number of public WiFi hotspots worldwide – 2010 - 2016
    • Table 14 – Visitors to top web properties worldwide – 2013
    • Table 15 – Worldwide - broadband market share by access technology – 2010 - 2012
    • Table 16 – Global smart phone operating system market share – 2010; 2011; 2012
    • Table 17 – Top ten carriers worldwide by revenue – 2012
    • Table 18 – Top ten carriers worldwide by revenue – 2010; 2011
    • Table 19 - Bharti Airtel mobile ARPU – 2004 - 2005; 2007 - 2012
    • Table 20 – Worldwide fixed broadband subscribers and annual change – 2005 - 2013
    • Table 21 – Regional - Share of broadband subscribers – Q1 2011
    • Chart 1 – Overview of mobile broadband revenues and annual change – 2010 - 2012
    • Chart 2 – Overview of mobile market subscribers, penetration rate and annual change – 2010 - 2013
    • Chart 3 – Overview of total mobile services market revenue and annual change – 2010 - 2013
    • Chart 4 – Worldwide fixed broadband subscribers - 2005 – 2013
    • Exhibit 1 – NBN policy focus beyond the election
    • Exhibit 2 – Key performance indicators of the broadcasting, STV and IPTV markets – 2012
    • Exhibit 3 – Approximate data rates for selected services on mobile devices
    • Exhibit 4 – Digital Dividend
    • Exhibit 5 – US mobile data growth emphasising the need for non-spectrum solutions
    • Exhibit 6 – Status of UMTS900 commercial network (3G) in Europe – 2012
    • Exhibit 7 – UMTS900 commercial network operators (3G) in Europe – 2012
    • Exhibit 8 – Apple iPhone and Apple iTunes
    • Exhibit 9 – Telstra leading the global telco move towards the OTT model
    • Exhibit 10 – Digital economy – key developments
    • Exhibit 11 - Major shareholders in Bharti Airtel – April 2012
    • Exhibit 12 – Kansas City to receive Google’s ultra high-speed broadband network
    • Exhibit 13 – BuddeComm’s contribution towards broadband based trans-sector policies

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