Australia - History of the mobile commerce market 1998 - 2001

Report Cover Image

Last updated: 16 Dec 2014 Update History

Report Status: Archived

Report Pages: 24

Analyst: Paul Budde


In this report the Australian mobile telecommunication market between 1998 and 2001 will be described, from the perspective of the development of m-commerce. In actual fact, however, very little m-commerce activity took place during that period and it was not until the arrival of the smartphones in 2007/2008 that there was an opportunity to slowly start developing this market; in 2014 we are still in its very early phase.

There was plenty of interest in m-commerce during that period and many of the broader m-commerce concepts that have developed over recent years are, in essence, similar to those that were around in 2000. The main difference is that new technologies had to be created to make it possible to bypass the stranglehold that the mobile carriers and other vested interests, such as the banks, had on the development of this market. This was not unique to Australia; it was a feature of all economies where incumbent telecommunications carriers dominated the market.

M-commerce is not a distinct technology or service. It is more of a concept. There are often combinations of technologies involved in m-commerce. Perhaps it can best be defined as any service that uses a mobile telecommunications network and involves, in one way or another, a financial transaction. These financial transactions could be done via the telephone bill, credit card, the premium rate service (1900 telephone numbers), (reward) point collection and SMS charges. More integrated payment services have only begun to appear in very recent times.

The development of m-commerce is also linked to developments in infrastructure. No specific infrastructure platforms were built for m-commerce; the service is, in essence, just a form of mobile data. The so-called 2G digital mobile infrastructure, based on the GSM standard, which became available in the mid-1990s was not specifically designed for mobile data. It was basically intended to be an upgrade of the voice services. Mobile data was more of an afterthought that was developed because the technology allowed for it. With increasing interest in mobile data further enhancements were needed to actually provide mobile data services that were more equivalent to the ones people were accustomed to on the fixed network. As the 2G technology did not properly allow for such improvements intermediate networks enhancements needed to be developed, such as GPRS and WAP. However the real network breakthrough for such services happened in the mid-00s, when 3G technology was implemented. GPRS and WAP were also referred to as 2½G networks.

In the meantime, however, new digital messaging services started to be developed. Again this was not specifically planned for within the 2G network; it also was an afterthought. Because the service was unplanned it got off to a slow start – only after the carriers finally allowed for SMS interoperability in 2000 did the enormous growth of messaging services start, and this developed throughout the 00s. A similar carrier initiative to open up the m-commerce market over the 3G network could perhaps have resulted in similar growth, but that never happened.

The great interest shown in anything to do with mobile data, mobile internet and m-commerce from the very beginning was sufficient indication that, once affordable and innovative services were developed, there would be plenty of demand and business opportunities. However those who actually tried to develop such services at that time quickly found that they could not overcome the dominance of the mobile carriers in this market. This was frustrating for many IT companies and content and service providers.

Finally the 3G technology allowed companies such as Apple and Samsung to develop handsets that could bypass the carriers, and these smartphones had applications that could run on top of the network and did not require the involvement of the carriers. This finally kicked off the broader m-commerce market around 2007/2008.

Another important development was that after the initial build-out of the 2G network was completed competition started to increase in the 2000/2001 period – and it has continued ever since. However it was 2000/2001 before lower prices started to attract larger markets. By that time prepaid had also become more user-friendly and affordable and this in turn led to a range of consumer-based mobile services such as ringtones, icons and music. The ‘m-commerce’ impact of these services, however, mainly took place after the period under discussion.

The same applies to mobile internet portals. They began to arrive when the mobile market achieved mass market penetration. Carriers reluctantly began to provide mobile data services from other content and service providers. However, because of the high charges to the users of the services, as well as to the content providers, these portals only accounted for around 1% of mobile revenues by the time the smartphone arrived. Within one year after its arrival the emerging app market had already exceeded the total value of the mobile portal market.

Throughout that period there most certainly was demand for mobile data and m-commerce service, but the market structure of the day was not conducive to the development of large-scale activities.

Related Reports

Share this Report

TMT Intelligence

A platform to scale your intelligence tasks

Monitor critical insights with our AI-powered Market Intelligence Platform gathering and analyzing intelligence in real time. With AI trained to spot emerging trends and detect new strategic opportunities, our clients use TMT Intelligence to accelerate their growth.

If you want to know more about it, please see:

TMT Intelligence Platform

Research Methodology

BuddeComm's strategic business reports contain a combination of both primary and secondary research statistics, analyses written by our senior analysts supported by a network of experts, industry contacts and researchers from around the world as well as our own scenario forecasts.

For more details, please see:

Research Methodology

More than 4,000 customers from 140 countries utilise BuddeComm Research

Are you interested in BuddeComm's Custom Research Service?

News & Views

Have the latest telecommunications industry news delivered to your inbox by subscribing to BuddeComm's weekly newsletter.