Additional InformationMarket to grow to $80 billion by 2020The Australian telecommunications industry is preparing itself for the National Broadband Network. While it will be several years before the full impact of the NBN is felt, it will also take several years to change the industry around. Companies will have to reorganise themselves into new markets such as infrastructure and construction; middleware such as data centres, content hosting, cloud computing, OSS/BSS; and retail.
This reorganisation and repositioning is already noticeable in current market activities, where the focus is moving from ARPU to market share. Prices in mobile and fixed broadband have dropped significantly during 2010 as operators try to win as many customers as possible. These customer bases are becoming very valuable and more companies will want to do business with their customers through digital services. The telcos and ISPS are positioning themselves as attractive partners for such developments.
Declining traditional revenue
The total telecoms service market is segmented according to major provider (Telstra, Optus VHA and other providers). Telstra still dominates the overall Australian telecom market, with more than 60% market share of overall revenues in 2009/10. However, Telstra’s annual results for 2010 showed declining revenue in most segments, and this did not improve much in 2011.
PSTN revenues (fixed-line voice and local access revenues), continue on a downward spiral for all the telcos, while the data market has now overtaken the mobile sector as the main driver of growth, driven by the retail broadband sector.
Fixed-line voice is declining in the second-tier market at an even faster rate than in the first-tier market - by more than 11% in 2008/09 and more than 8% in 2009/10. Falling revenue reflects increased bundle value, as well as consumers moving away from fixed-line voice services. However it may also be a symptom of increased reliance on VoIP-based platforms (such as iiNet’s successful BoB promotion) for voice service provision in the second-tier market. Revenues in second-tier mobile services and data services (including Internet access) continue to show satisfactory growth.
NBN - full steam ahead into 2012
With the legislation in place significant progress has been made during 2011 in preparation for the rollout of the NBN. The last major part of the complex puzzle was the arrangements with Telstra. Since the change in management in 2009, that company has embraced the NBN and embarked on its own business transformation process. Significant new steps have been taken, which are already positioning the company at the forefront of the new business opportunities that will arise once the NBN is in place. Separately, it has negotiated good deals with the government in relation to its infrastructure assets and the handover of customers from its old networks to the NBN.
The mobile market in 2011
In 2011 the mobile communications market in Australia, as in other developed economies, is seeing a further shift in emphasis from voice to data-orientated services, driven by more new handsets and applications. Penetration has outstripped the size of the market, which indicates that people are increasingly using multiple services and multiple devices.
While voice is still the dominant mobile service in Australia, mobile data has steadily become more popular, spurred on by the advent of smartphones from vendors like Apple, HTC and RIM. These smartphones facilitate a wide range of data applications and services. However the winner in 2011 will be the handsets based on Google’s Android operating system. No longer held back by the mobile operators, mobile broadband growth has been extremely rapid since late 2007 and this is also to be the main feature of 2011 and 2012.
Australia’s competitive mobile industry
Mobile services have expanded beyond voice and SMS, as operators seek to increase their revenues and market share as the mobile penetration rate of around 125% continues to rise in the saturated mobile market in 2011/12.
The arrival of the iPhone forced the industry to change - rather than controlling the apps and portals market the industry has become a broadband infrastructure facilitator. This has created a new growth area in the industry, which is based more on infrastructure than on apps or services. Total mobile services revenue earned by the major mobile operators is set to continue to grow, but at a slower rate than the growth seen in the final years of the previous decade. This may reflect price competition from Telstra, the effect of increased competition from MVNOs - eg, Lebara - and the effect of a saturated market and competition.Data in this report is the latest available at the time of preparation and may not be for the current year.
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