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2006 Australia - Mobile Communications - Voice Still the Killer App


Attention: There is an updated edition available for this report.

1. INDUSTRY MOVING INTO 2007
1.1 The mobile market - moving into 2007
1.2 Strong Vodafone performance but challenging road ahead
1.3 Hutchison still star performer but 3G arena heating up
1.4 Australian mobile market reaching saturation
1.5 Fixed-to-mobile substitution - a growing trend
1.6 3G will open up new niche revenue streams
1.7 Mobile networks not ideal for carrying data
1.8 Fixed line players move into mobile operator’s territory
1.9 3G prices will drop forcing down ARPU 1.10 The future of mobile - analysis mid-2006
1.10.1 Voice still the killer app
1.10.2 But data is the future
1.10.3 Rebalancing of the industry
1.10.4 Devices-driven developments
1.11 Goodbye Virgin Mobile
1.12 Mobile market monopolistic tendencies
1.13 How many mobile networks is too many?
1.14 Mobile structural separation needed for survival
2. REVENUE OVERVIEWS
2.1 Market moving into 2007
2.1.1 Prepaid a successful subscribers driver
2.1.2 Market maturity
2.2 Average Revenue Per User (ARPU)
2.2.1 Continuing decline
2.2.2 ARPU per operator
2.3 Revenue tables
2.4 Market shares
3. SUBSCRIBER STATISTICS
3.1 Size and dimensions of the market
3.2 Market shares major players
3.3 Key trends and developments
3.3.1 Lower than expected growth for 2006 and 2007
3.3.2 More usage as call charges drop
3.3.3 Slow growth in 3G
3.3.4 Mobile data waiting for new business models
3.3.5 Approaching penetration limits
3.4 Residential markets
3.4.1 Overview
3.4.2 The Youth Market
3.4.3 AT Kearney’s ‘Mobinet’ Study
3.5 Business market
4. INDUSTRY OVERVIEW AND ANALYSES
4.1.1 Network operators
4.1.2 The initial analogue operators
4.1.3 2G operators
4.2 3G
4.3 Service providers and resellers
4.3.1 Overview
4.3.2 Resellers on the Telstra network
4.3.3 Resellers on the Optus network
4.3.4 Resellers on the Vodafone network
4.4 Mobile Virtual Network Operators
4.4.1 Definition
4.4.2 Introduction
4.4.3 MVNO initiatives from Optus
4.4.4 dingo blue first to unbundle handsets (post mortem)
4.4.5 Virgin Mobile (post mortem)
4.4.6 Macquarie Telecom
4.4.7 CommodiTel
4.4.8 Analysis of MVNO developments
4.5 Retail operators
5. INDUSTRY DEVELOPMENTS
5.1 3G auctions
5.1.1 Telstra
5.1.2 Optus
5.1.3 Vodafone
5.1.4 Optus/Vodafone sharing arrangements
5.1.5 Hutchison 3G
5.1.6 CKW Wireless (Personal Broadband Australia)
5.1.7 IPWireless for Townsville
5.1.8 3G Investments (Qualcomm)
5.2 4G Research
6. INFRASTRUCTURE DEVELOPMENTS
6.1 Trends and developments
6.1.1 How many mobile networks is too many?
6.1.2 Mobile structural separation
6.1.3 Mobile phone infrastructure code improved by ACMA
6.1.4 Network sharing - an obvious step in the right direction
6.1.5 Sharing announcement 2
6.1.6 Other infrastructure developments
6.2 GSM Infrastructure Providers
6.2.1 Telstra MobileNet
6.2.2 Optus Mobile
6.2.3 Vodafone Australia
6.3 Other networks
6.3.1 Cocos (Keeling) Islands
6.3.2 Norfolk Island
6.3.3 Christmas Island
6.4 Code Division Multiple Access (CDMA) networks
6.4.1 Telstra
6.4.2 Hutchison - Orange
6.5 3G Infrastructure
6.6 IP Multimedia Subsystem (IMS)
6.6.1 Introduction
6.6.2 Partnership to promote IMS technology
6.7 Analogue network
6.7.1 Historic overview 1987-2000
6.8 Mobile sites infrastructure
6.8.1 Overview
6.8.2 Network partnering trial
6.8.3 Telecoms and the real estate market
6.8.4 Crown Castle
6.8.5 Vertical Telecoms (Vertel)
6.8.6 Entire Network Solutions
6.8.7 Industry taskforce for co-location
6.8.8 Deployment of Radiocommunications Infrastructure Code
6.8.9 Court limits carrier’s powers and immunities
7. THE END OF CDMA
7.1 The end of Telstra’s CDMA network
7.1.1 Closing down costs $800 million
7.1.2 CDMA resellers left out in the cold
7.2 Hutchison closing its CDMA network
7.3 CDMA spectrum
7.4 Telstra
7.4.1 National CDMA network
7.4.2 1xRTT
7.4.3 CDMA extension on highways
7.4.4 Flinders Island
7.4.5 The Nortel connection into WiFi
7.5 Hutchison’s Orange network
7.6 Optus resale
7.7 AAPT (no service)
7.8 CDMA resale
7.9 Market and industry analyses
7.9.1 Telstra questions CDMA
7.9.2 Australia is a GSM country
7.9.3 Low cost alternative
7.9.4 Hutchison flawed Wireless Local Loop (WLL) concept
7.9.5 Wireless broadband
7.10 Forecasts and statistics
8. 3G - OVERVIEW, STATISTICS, ANALYSES
8.1 Statistical overview
8.2 Market Analyses
8.2.1 WiMAX for 4G
8.2.2 Increased awareness of 3G - but ….
8.2.3 Discount war drives down 3G ARPU
8.2.4 3G is dead - long live WiMAX
8.3 Network sharing and cost cutting
8.3.1 Network sharing
8.3.2 Where is the business case?
8.3.3 Network costs will be driving 3G
8.3.4 New business scenarios
8.4 Analysis of Australia’s first 3G launch
8.4.1 3 Australia a good start but…..
8.4.2 Positioning for the next five years
8.4.3 Further price initiatives needed soon
8.5 Business modelling
8.5.1 New business models needed
8.5.2 Damned if you do, damned if you don’t
9. RETAIL MARKET DEVELOPMENTS
9.1 Overview of the dealer market - 2006
9.1.1 Market statistics
9.1.2 Increase in sophisticated retail models
9.1.3 The industry reorganisation of 2005
9.2 Retailer market analysis - update 2006
9.2.1 Retail margin continues to be squeezed
9.2.2 Replacement market: 7 million
9.2.3 Market segmentation
9.3 Key retail operators
9.3.1 Strathfield Car Radio
9.3.2 Crazy John’s (Mobile World)
9.3.3 Tandy, Dick Smith, Harvey Norman
9.3.4 Leading Edge Telecoms
9.3.5 Fone Zone
9.3.6 Allphones
9.3.7 M8
9.3.8 First Mobile National Ltd
9.4 Retail outlets carriers
9.4.1 Telstra T-shops
9.4.2 Optus World
10. THE GROWING PREPAID SERVICES MARKET
10.1 The market in 2006
10.2 Developments and issues
10.2.1 Customer demand
10.2.2 Prepaid now well established
10.2.3 How competition changed the market (history)
10.2.4 Trends towards user-power
10.2.5 Prepaid Electronic Payment Services
10.2.6 Handset subsidies
10.2.7 Fast moving consumer goods
10.3 Market statistics
10.3.1 Overview
10.3.2 Market revenues
10.4 Business models
10.4.1 Card and PIN
10.5 Major players
10.5.1 Telecorp
11. PREPAID ELECTRONIC PAYMENT SERVICES MARKET
11.1 Introduction
11.2 Market forecasts
11.2.1 Mobile prepaid
11.2.2 Calling cards
11.3 Market overview
11.3.1 Retail outlets
11.3.2 Card and PIN
11.3.3 Distribution issues
11.4 Recharge models
11.4.1 Automatic Teller Machines (ATMs)
11.4.2 Electronic Funds Transfer Point of Sale (EFTPOS)
11.4.3 Multiple-use terminals
11.4.4 Integration onto POS PC screens
11.4.5 Telephone
11.5 Trends and developments
11.5.1 New electronic recharge cards
11.5.2 New markets
11.6 Revenue overview
11.7 Major players
11.7.1 E-pay Australia
11.7.2 Bill Express Limited
12. PRICE COMPETITION
12.1 Substitution, capped prices, FMC
12.1.1 Mobile substitution
12.1.2 Capped Prices
12.1.3 Market Analysis - 2006
12.1.4 Fixed Mobile Convergence
12.2 Termination, fixed-to-mobile charges
12.2.1 Mobile services prices - ACCC survey
12.2.2 National mobile termination fees
12.2.3 FtM analysis
12.2.4 History of the disputes
13. HANDSET MARKET
13.1 The market in 2006
13.1.1 Trends in mobile handsets
13.1.2 Outlook for 2007
13.2 Mobile handset survey - 2005
13.3 Handset subsidies
13.3.1 Unsustainable handset subsidies
13.3.2 Several Attempts to do away with subsidies
13.3.3 Reintroduction forced by competition (2003)
13.3.4 Failed unbundling attempt from Dingo Blue
13.4 Handset sales statistics
13.4.1 Replacement market
13.4.2 Changing trends
13.5 User demographics - 1998, 2000
13.6 Handset costs
13.7 Key players in Australia
13.8 Mobile phones targeted by viruses
14. GLOSSARY OF ABBREVIATIONS
Exhibit 1 - Mobile carriers and their key resellers
Exhibit 2 - Boost Tel
Exhibit 3 - MVNO models
Exhibit 4 - MVNO Opportunities
Exhibit 5 - Vodafone Live!
Exhibit 6 - Crown Castle
Exhibit 7 - Operators and their markets
Exhibit 8 - Ozphone
Exhibit 9 - Network costs
Exhibit 10 - Crazy John’s billing problems
Exhibit 11 - Key customer considerations


Table 1 - Australia - 3G subscribers- mid-2006
Table 2 - Vodafone Group subscriber and revenue growth - Australia vs selected countries - 2005 - 2006
Table 3 - Blended (post/pre) ARPU ($ pa) by operator - 2003 - 2006
Table 4 - Blended (post/pre) ARPU ($ pa) by operator - 1998 - 2002 (historical)
Table 5 - ARPU per market segment (residential, SME, corporate) - 2004
Table 6 - Average ARPU across all operators - 1993 - 2007
Table 7 - Telstra average revenue per user per month - 2003-04, 2004-05
Table 8 - Optus average revenue per user per month - 2003-04, 2004-05
Table 9 - Vodafone average revenue per user per month - 2003-04, 2004-05
Table 10 - Hutchison average revenue per user per month - 2003-04, 2004-05
Table 11 - Revenues, mobile communications services market per major operator - 1993 - 2007
Table 12 - Market share revenues percent of mobile operators - 2000 - 2007
Table 13 - Revenue growth mobile market - 2000 - 2007
Table 14 - Mobile market subscribers, penetration and annual change - 1986 - 2008
Table 15 - Mobile subscribers by carrier - 1993 - 2006
Table 16 - Market share (%) by carrier - 1998 - 2006
Table 17 - Mobile digital subscribers by carrier - mid 2006
Table 18 - Market shares of customers for mobile carriers - 2002 - 2005
Table 19 - Increase in customer numbers for mobile carriers - 2002 - 2005
Table 20 - Revenue market share per market segment (corporate, SME, residential) - 1994 - 2007
Table 21 - Net subscriber growth per segment (corporate, SME, residential) - 1994 - 2005
Table 22 - Market shares of business market per major operator - 2005
Table 23 - Terrestrial mobile network coverage - 2002; 2005
Table 24 - Dimensions of MobileNet - AMPS - 1993 - 1996 (now closed)
Table 25 - Number of base stations by operator - 2006
Table 26 - Subscribers to 3G networks - 2003 - 2006
Table 27 - 2G, 3G Average ARPU per month comparison - 2006
Table 28 - Distribution channels - 2006
Table 29 - Leading retailer outlets - 2006
Table 30 - Prepaid customers - 1998 - 2007
Table 31 - Prepaid and postpaid retail customers - 30 June 2005
Table 32 - Prepaid market shares - 1999 - 2005
Table 33 - Market revenues prepaid - 1997 - 2007
Table 34 - Market share electronic payments of total prepaid - 2002 - 2006
Table 35 - Electronic payment market revenues - 2005
Table 36 - Electronic payment market revenues - 2006
Table 37 - Major electronic payment providers and their market share
Table 38 - Substitution forecast 2004 - 2010
Table 39 - Percentage change in mobile services index by user group - 2004 - 2005
Table 40 - Percentage change in price indexes for mobile services - 2000 - 2005
Table 41 - Revenue market shares FtM - 2003 - 2005
Table 42 - ACCC Mobile Review - 2003
Table 43 - Retail benchmarking monitoring mobile services - 2001 - 2003
Table 44 - Mobile Phone Shipment - 2005 - 2007
Table 45 - 2005 Handset Sales by Technology
Table 46 - Mobile phones by family type - 1998; 2000
Table 47 - Mobile phones by household income - 1998; 2000
Table 48 - Mobile phones by state - 1998; 2000
Table 49 - Mobile phones metro vs. regional - 1998; 2000
Table 50 - Average mobile phone cost - 1986; 1993; 1998 - 2000; 2006
Table 51 - Mobile handset supplier market shares (digital) - 1999; 2001; 2003; 2005

This report examines the Australian mobile communications market, identifying a number of important trends on both the demand and side supply side. The killer application on mobile remains voice and beyond voice, there will not be a lot of room for growth apart from the current niche market for mobile data in business. The report also analyses the activities of the major players - Telstra, Optus, Vodafone and Hutchison. Hutchison continues to outperform its competitors in terms of market growth, but competition is heating up in the 3G arena.

Industry moving into 2007
Subscriber Statistics
Revenue Overviews
Prepaid Services
Price competition
Infrastucture developments
3G overview, statistics, analysis
The end of CDMA
Handset Market


Overview and analyses
This report examines the Australian mobile communications market, identifying a number of important trends on both the demand and side supply side. The killer application on mobile remains voice and beyond voice, there will not be a lot of room for growth apart from the current niche market for mobile data in business. Finally we are now beginning to see a more rapid rollout of 3G services in Australia, as mobile operators must tap into new revenue streams. 3G will give operators the network efficiencies to become more competitive both in voice and data services. The report also analyses the activities of the major players - Telstra, Optus, Vodafone and Hutchison. Hutchison continues to outperform its competitors in terms of market growth, but competition is heating up in the 3G arena.

Key trends
Substitution has started rather late in Australia. While Vodafone had threatened with it for many years, it was Hutchison that led the charge in 2003 and 2004 but it was not until 2005 before some real action took place. Telstra reported a drop of 7% in fixed line, mainly seeing these customers moving over to mobile. Further price cuts are needed to bring Australia in line with the rest of the world. A forecast until 2010 is provided. Substitution will also fuel to developments in fixed-mobile conversion market. However wireless broadband could even play a bigger role here.

Statistical information
With around 20 million users and a penetration level above 95% the Australian mobile market is marching towards saturation. There is still room to manoeuvre with another two million users to be added to the customer base in the next three years. This report brings you up to data with 2006 data and some prediction out to 2007 and beyond. Market share, penetration statistics and some key trends are highlighted in this report. The growth is slowly coming down to single digit figures after more than a decade of double digit growth.

Mobile phones are rapidly becoming commodities and fierce price competition has set in to keep and win customers before the much-hyped next generation data services. Growth in subscribers is slowing and Average Revenue per User (ARPU) has been steadily declining as result of sharply increased prepaid subscriptions and a range of capped price plans. Telstra’s market share has been stable, but Optus has lost out to aggressive capped price campaigns from Hutchison and Vodafone. This report looks at operators’ revenues, ARPU and revenue market shares moving into 2007.

Prepaid Service
Avoiding the monthly fee has always been - and still is - a very successful way to broaden the appeal of mobile services. Many potential subscribers, particularly outside the business market, are simply not prepared to pay a monthly fee for a service that they feel they may use only occasionally, particularly if they are tied in to minimum contracts of one, two or even three years. The prepaid model has taken off around the world, even in Australia after a reluctant start (50% penetration in 2006). Growth has seen distribution issues arise and electronic recharge options emerge.

From 2G to 3G
The mobile telecommunications infrastructure covers almost the entire population, with over 17,000 Base Transceiver Stations (BTS) in place. While many of these stations have antennae on obtrusive towers, most new sites in urban areas are now mounted on the sides of buildings and other structures. These antennae serve GSM, CDMA and WCDMA networks. CDMA networks are closing down in 2006/07. 3G networks arrived in 2005. By 2006 most infrastructure activities were concentrated around 3G. The 3G network-sharing deal is also analysed. This report summarises the key aspects of the infrastructure.

With the growing maturity of digital cellular systems around the world, attention has increasingly turned to the development of 3G cellular systems. The main objective of 3G systems is to provide a more robust network with a range of data and multimedia services. When 3G was first conceived in the late 1980s and early 1990s there was little or no discussion on issues such as wireless broadband services driven by the Internet. With mobile failing to open up more data revenues, wireless broadband could well take over this market, leaving 3G behind. By mid-2006 there were still only just over one million subscribers (5%).

The first 3G service was launched by Hutchison in 2003. After network sharing arrangements were signed in late 2004, more services are being launched in 2006. The initial services are positioned in the top end of the mobile market where there is more room for special services and where 3G can be promoted as a premium product. In another first for the company, Hutchison became the first 3G-only operator in the country in 2006.

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