Australian Telecoms Market Analysis - Top Trends into 2012

Additional Information

Massive ubiquitous broadband and the Internet of ThingsKey global trends moving into 2012

With the NBN and mobile broadband networks now well and truly underway it is important to look at what the real value of this new infrastructure will be.

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 ‘Internet of Things’ 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. This is one of the reasons so many overseas ICT companies are increasing their presence in Australia. The NBN is an ideal test-bed for such developments. A great deal of attention is being paid to cloud computing and the NBN can be viewed as one gigantic cloud.

The development of cloud computing involves a business transition, and company strategies and policies will need to be changed before its potential can be monetised by businesses. A key factor here is that organisations will have to raise ICT from the level of an infrastructure issue to that of a business opportunity. Cloud computing will need to be seen as a valuable business tool - one that will differentiate a company from others.

The Australian National Broadband Network

The focus in Australia, however, is on the National Broadband Network. The year 2011 saw a watershed of developments, the highlight being the passing of the all-important legislation needed to establish the appropriate regulatory environment to support the rollout.

Furthermore, the government delivered on its trans-sector initiatives, with significant initiatives and policy decisions in the areas of e-health and smart grids. But much more is needed here.

All of this is setting the scene for an extraordinary amount of work. This has already commenced but it will explode over 2012 and beyond. The business opportunities across various sectors are enormous and the international telecoms market is following with great interest the developments in Australia, as they will set the scene for future telecoms developments around the world.

Australia will be the first country in the world where the whole industry will adopt a new plan for its future. In the past this was based on ad hoc decisions and there was little room for long-term planning. Competition survived on the crumbs that fell from the Telstra table, and on regulatory relief, which often took many years to arrive and was often too late to help a starving competitive environment. Uncertainty was a major obstacle. All decisions depended on Telstra and there was little hope for individual initiatives.

The single most important element of the National Broadband Network is that it will provide certainty about future direction. There will be problems, and the outcome will not be perfect, but for the first time individual companies are far more in charge of their own destiny.

Naturally these changes will not happen overnight and there will be a transitional period during which all parties (Telstra and its competitors) will have to cooperate - this will require some ‘give and take’.

In mid-2011 Telstra signed the final agreement with the government that will see it closing its own customer access network and leasing its infrastructure to NBN Co. The company continues with its major transition plan and also launched an $800 million investment in cloud computing.

The ongoing boom of mobile broadband

The mobile communications market in Australia, as in other developed economies, is continuing to see a further shift in emphasis from voice to more 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.

Mobile broadband has steadily become more popular, spurred on by the advent of smartphones from vendors like Apple, HTC and RIM. By mid-2011 close to half of the population owned a smartphone.

Competition between mobile operators is set to intensify, resulting in lower mobile call charges for customers. Telstra recently removed the gloves and increased its position in the market; this will produce a decrease in mobile prices. Furthermore, more customers will reduce their use of fixed-line voice and data services in favour of mobile services.

Digital media

We are getting a clearer view of where this media industry is headed. The picture is still a bit blurred but increasingly we see the traditional TV media concentrating on digital TV. Investment-wise, that is where their money is going. They have been unable to keep up with the digital media activities of the new players who are dominating the broadband content and services market.

We are starting to see other activities that we classify as part of the digital economy, such as e-commerce, e-health, e-learning and smart grids.

By mid-2011 the number of users of the social networking sites continues to grow, with over ten million Facebook users and more than 2.5 million twitter users in Australia.

Smart grids

The years 2009 and 2010 saw the implementation of new government policies that will form the basis for future developments. The Smart Grid/Smart City project will have a significant effect but, perhaps even more importantly, this government initiative has clearly been a wake-up call to all electricity companies to become more serious about their smart grid plans. Procrastination is no longer a viable option and all the electricity companies have now embarked on their own industry transformation plans and will be starting to implement the first elements of their smart grids.

The Carbon Price Scheme announced in 2011 will certainly stimulate new investments in the energy sectors. Green technologies and smart grids will attract billions of dollars’ worth of new investment.

Smart transport

Current intelligent transport systems technologies use dedicated short-range communications to transfer data over short distances between in-vehicle mobile radio units and roadside units - that is, fixed point-to-point services. Arrangements to facilitate the use of intelligent transport systems have been developed internationally in the 5850-5925MHz band (the 5.9GHz band), while in mid-2011 ACMA still classified this as a medium priority for finalisation.

Smart infrastructure is also being looked at in the context of the national broadband network, the aim of which is to provide the basic telecommunication infrastructure for a range of sectors, including transport. Special access is provided in the NBN Bill for utilities. In mid-2011, with a carbon tax due to commence in 2012, smart transport systems may also now be in a position to reduce the carbon footprint and energy use across many of the transport industries, while lowering GHG emissions at the same time.

Data in this report is the latest available at the time of preparation and may not be for the current year.