Telecommunications in Australia

Australia is a large country with a relatively small population. Its previous policy of restricting immigration to those of European (essentially, British) origin is now over. First, other Europeans were welcomed and, more recently, many Asians have settled in the country. It is now a multi-cultural society.

Australia is rich in natural resources, particularly minerals, and has a strong agricultural sector. Its high level of education and technical skills has allowed it to develop its services, which are now a major part of its economy.

Until 1991, the country had a tightly controlled telecom industry, with both domestic and international services being supplied by government departments. Since then the industry has been progressively liberalised and, today, competition is possible in all segments of the market.

On the regulatory side, when liberalisation and deregulation were first introduced, the government tried to take a light-handed approach, expecting that market forces left alone would result in competition developing. This has not happened, at least in the all-important local services market, and the government has belatedly decided to take a stronger line in its regulatory approach.

In 1996, the then government took the first steps to privatise the incumbent operator. That process is still dragging on, numerous delays being the result of various political and economic issues.

Local services continue to be dominated by the incumbent operator, Telstra, which operates the vast majority of local access lines and hence has a major influence over the industry as a whole. Telstra provides local services to users both directly and, via resellers, indirectly.

Domestic long distance services using fixed lines are in decline. Both the volume of traffic and revenues are now falling substantially. The reasons for this include fixed-to-mobile substitution and lower tariffs. Lower tariffs include the caps on expenditure that the operators have now implemented that limit individual call costs and monthly expenditure.

Australia's international call market is growing at a healthy rate. The volume of calls is increasing at some 10% p.a., assisted by the major recent reductions in the operators' tariffs. The operators have also been expanding their networks in an effort to provide better service to their customers.

Mobile telephony is generally in a healthy state, with five 2G networks and four 3G networks serving some 20 million users. Most of these are 2G users since the 3G networks are still being built.

Good coverage is experienced in the cities and coastal areas where the majority of the population lives, but rural areas continue to suffer from inadequate service.

Many forms of Wireless Data application are now available but none have been particularly successful, with the notable exception of SMS. All the operators are generating substantial revenue from their SMS services, and these revenues continue to increase.

Use of the Internet is continuing to grow in Australia. With an educated workforce, substantial GDP and a reasonably high level of PC penetration, the country is one of the leading Internet users in the Asia-Pacific region.

However, the rate of growth is the number of users has recently lost momentum. Also, much Internet access is still achieved through slow dial-up connections.

Until 2004, broadband penetration was one of the lowest in all of the developed economies. With the changes that have taken place in the past couple of years, including lower prices and greater competition, the situation has radically altered. While by no means being a front-runner in terms of broadband use, Australia has reduced the leeway quite considerably.

Australia is, by common consent, one of the most promising countries for the development of e-commerce in the Asia-Pacific region. In 2001, it was ranked second only to the U.S. by one major research organisation in terms of its e-commerce readiness.

Currently, much discussion is taking place about upgrading the country's national broadband infrastructure. The incumbent operator has offered to build a fibre-to-the-node (FTTN) network to replace much of the existing copper wire with fibre optic cable to nodes close to the customers' premises, and utilise ADSL over the existing wires from there into those premises. However, it will only do this if the regulatory regime is amended to its liking, thus presenting the government with a dilemma.

Pay-TV is becoming increasingly popular, with nearly one household in four now subscribing to some form of service. Subscriber growth is currently at around 6% p.a., and is expected to continue at or above that figure for the foreseeable future. The increasing availability of digital services over cable will help to underpin that growth.