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Australia - Mobile Infrastructure


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Australia - Mobile Infrastructure

Australian MNOs aiming for near-national LTE coverage

Despite pressures on pricing, revenue is expected to show continued growth for fiscal 2015, though future revenue growth will be impacted by continuing activity from a number of the larger MVNOs Positive growth offsetting downward pressure on mobile voice revenue should be expected from mobile data services as the reach of LTE networks is extended into 2016. For the MNOs, the latest results are positive. Telstra reported a 9.8% increase in mobile revenue in the year to December 2014, while Optus recovered from revenue decline in FY2014, recording a 6.7% increase in FY2015. VHA, which has been dogged by steep revenue declines for a number of years on the back of customer disaffection with service offerings, reported a 2.9% increase in revenue for the first half of 2015, supported by a 2.1% increase in its subscriber base. The operator’s investments are clearly beginning to deliver rewards, resulting in a change in customer sentiments as it addresses popular concerns over poor network quality and stability.

Continuing dominance of the triopoly players

Australia’s mobile market continues to be dominated by the three major mobile network operators Telstra, Optus, and Vodafone (VHA). Voice services remain a staple for revenue for all three, though in terms of revenue share voice is steadily losing ground to various forms of mobile data, which has evolved from basic SMS messaging to encompass high-end applications including gaming and m-commerce.

To address poor mobile services in rural areas, the government in June 2015 announced the first of two Mobile Black Spot Programs, funded by the federal and state governments as well as by the two commissioned MNOs Telstra and Vodafone. The work to deploy some 500 new or upgraded base stations will start at the end of 2015 and be completed by 2018.

Infrastructure moving to 4G, with 5G on the horizon

From the mid-2000s consumers took to 3G in earnest as they migrated from 2G networks. In line with the migration of 3G, operators such as Telstra plan to discontinue 2G-based networks are repurpose spectrum, for 3G and 4G use. Nevertheless, 2G retains a use in specific areas such as M2M applications.

Just as 3G grew to dominate the mobile landscape, so is its dominance now fast fading as LTE networks gain headway and consumers migrate to the new technology. By mid-2015 Vodafone provided 90% metro population coverage with its LTE infrastructure, while both Optus and Telstra are each ramping up to 98% coverage by the end of 2016. Already, up to 80% of all new smartphones sold are LTE-capable.

Steady subscriber growth maintained

Growth in the number of mobile subscribers in Australia has slowed in recent years, reflecting the relatively high penetration rate, which my mid-2015 had reached about 137%. Although a significant proportion of subscribers make use of multiple phones or SIM cards, growth is stimulated by a steady increase in the population. Operators can also expect to benefit from further migration among consumers from fixed-line to mobile telecoms, supported by the practical benefits to consumers of improved quality of mobile data services resulting from network upgrades and the wide-scale reach of LTE infrastructure.

Spectrum policy changes to improve regional services

Following the auction of spectrum in the 700MHz band in early 2015, licensees have been able to makes use of their concessions since January 2015. This has led to a rapid extension of mobile broadband availability across most areas of the country, and involved each MNO investing more than a billion dollars annually in network upgrades. Competitive pressure among the MNOs is ensuring that more funding is being made available to upgrade these networks to 2017 at least. In addition, the government in mid-2015 released funds for its two-stage Mobile Black Spot program, while a pending licensing procedure affecting the 1800MHz band will see improved mobile services in rural regions.

Smartphone market hand-in-hand with network improvements

Smartphone use in Australia continues to grow among consumers, with the smartphone sector now accounting for about 80-90% of all new devices sold. Smartphones and tablets are becoming a dominant internet access channel among the younger demographic. In addition, these devices are beginning to dominate overall e-commerce, being used in about a third of all e-commerce transactions. This proportion will increase into 2016 in line with the availability of devices with larger screens, more mobile-friendly websites, easier payment systems and a widening availability of faster mobile networks.

Key developments:

Vodafone switches LTE data traffic to new core network, reports 2.9% growth in revenue for the first half of 2015;
Vodafone and Telstra prep for launch of VoLTE services;
Telstra commits to $5 billion mobile spend over three years;
4G subscriber base increasing;
Rapid growth in phablet sales impacts tablet market;
Smartphone penetration showing sustained growth;
Report update includes telcos’ financial and operating updates to June 2015; recent market developments.

Companies mentioned in this report:

SingTel, Vodafone, 3, VHA, Optus, Telstra, AUSTAR, unwired, Vividwireless, NBC, Optus, AAPT, Hutchinson, Walker Wireless, ActewAGL, NBN, Amaysim, Woolworths, Crazy Johns, JB HiFi, Virgin Mobile, Aldi Mobile; Huawei, Lebara, AAPT, Kogan Mobile, GRLmobile, Red Bull Mobile, Macquarie Telecom, Boost Tel, Pivotel, Globalstar.


  • EXECUTIVE SUMMARY
  • INDUSTRY OVERVIEW
    • BACKGROUND INFORMATION
    • SUBSCRIBER STATISTICS
      • Table Mobile market subscribers, penetration rate and annual change – 2010 – 2015
      • Table Total mobile services market revenue and annual change – 2010 – 2015
      • Table Mobile subscriber gains and losses by MNO – 2009 – 2014
    • MOBILE COVERAGE BLACK SPOTS
    • RURAL AUSTRALIA IN FAVOUR OF NBN MOBILE SERVICES
    • MOBILE CALLING PLAN STANDARDISATION A START TO A CLEARER CHOICE
    • ROAMING
    • NBN AS BACKHAUL
    • MOBILE TECHNOLOGY BOOST PRODUCTIVITY
    • CUTTING THE FIXED-LINE CORD
      • Table Mobile-only phone users – 2010 - 2014
    • MOBILE CONSOLIDATION IS UNAVOIDABLE
    • DATA MINING – THE NEXT DRIVER OF MOBILE REVENUE
    • MOBILE NETWORK OPERATORS (MNOS)
      • Telstra
        • Table Telstra - overview of mobile subscribers – 2008 - 2014
      • SingTel Optus
        • Table Optus revenue – 2012 - 2015
        • Table Optus mobile pre/postpaid customers – 2008 - 2015
      • Vodafone Hutchison Australia (VHA)
        • Table VHA subscribers by type – 2009 – 2015
        • Table VHA MVNO customers – 2014 – 2015
    • NETWORK TECHNOLOGIES
      • HSPA-based services
      • Long-term Evolution (LTE)
      • 2G services (historic)
    • MOBILE VIRTUAL NETWORK OPERATORS (MVNOS)
      • Background on the MVNO sector
      • Market overview
        • Table Mobile subscribers share by MNO and MVNO – 2014 – 2015
      • Other developments in the MVNO market
      • Amaysim
        • Table Amaysim at a glance
      • Red Bull Mobile
      • Kogan Mobile
      • Aldi Mobile
      • Lebara Mobile
      • Macquarie Telecom
      • Virgin Mobile
      • Woolworths Mobile
    • MOBILE RESELLERS
      • Background information
      • Resellers on the Telstra network
      • Resellers on the Optus network
      • Resellers on the Vodafone network
    • MOBILE VIRTUAL NETWORK ENABLERS (MVNES)
      • Background information
      • Pivotel
        • Table Pivotel Communications at a glance
        • Table Pivotel Globalstar satellite data costs – July 2015
      • M2 Telecommunications Group
  • MOBILE RETAIL MARKET
    • AN OVERVIEW OF THE MOBILE RETAIL MARKET
      • Major retail categories
      • Retail margins
      • Retail revenues
      • Consolidation
      • The move from prepaid to postpaid
      • Mobile broadband (separate report)
      • Superior customer care to come from a new TCP Code
      • Mobile calling plan standardisation a start to a clearer choice
      • Replacement market
        • Table Selected retailers – number of outlets by state
      • Wholesale aggregators
        • Table The wholesale market in Australia - key players - 2014
    • MAJOR MOBILE RETAIL COMPANIES
      • Background information
      • Vertically integrated operators
      • Independents retailing services exclusively for mobile operators
      • Independents retailing services for a variety of network operators
  • STATISTICAL OVERVIEW OF THE MOBILE MARKET
    • REVENUE OVERVIEW AND STATISTICS
      • Statistical sources
      • Total mobile services revenue and forecasts
        • Table Historic - Total mobile services market revenue and annual change – 1993 - 2004
        • Table Total mobile services market revenue and annual change – 2005 - 2015
      • Operator revenue statistics overview
        • Table Telstra mobile services revenue – 2009 - 2015
        • Table Vodafone Australia revenue – 2009 - 2015
        • Table Optus key financial indicators – 2009 - 2015
        • Table Optus mobile revenue – 2013 – 2015
        • Table Historic - Mobile market revenue per major operator – 1993 - 2004
        • Table Historic - Annual change of mobile market revenue per major operator – 1994; 1997; 2000 - 2004
        • Table Annual change of mobile market revenue per major operator – 2005 - 2015
        • Table Mobile market share in revenue per major operator – 2000 - 2015
        • Table Estimated mobile service revenue by service, proportion of total – 2007 - 2015
        • Table Telstra mobile and broadband revenue – 2009 - 2015
      • Average revenue per user (ARPU)
        • Table Blended monthly ARPU by MNO – 2000 - 2015
        • Table Annual change in blended monthly ARPU by MNO – 2004 - 2015
        • Table Telstra postpaid ARPU per month – 2004 - 2015
        • Table Optus postpaid ARPU per month – 2004 - 2015
    • SUBSCRIBER STATISTICS
      • Statistical sources
      • Mobile subscriber statistics
        • Table Mobile market subscribers, penetration rate and annual change – 2000 - 2015
        • Table Historic - Mobile subscribers by carrier – 1993; 1997; 2000 - 2004
        • Table Vodafone – subscribers by type – 2009 – 2015
        • Table Telstra mobile subscribers – 2008 - 2014
        • Table Optus mobile subscribers – 2008 - 2015
        • Table Historic - Annual change of mobile subscribers by carrier – 1995; 1997; 2000 - 2004
        • Table Annual change of mobile subscribers by carrier – 2005 - 2015
        • Table Historic - Mobile subscriber market share by carrier – 1993; 1997; 2000 - 2004
        • Table Mobile subscriber market share by carrier – 2010 - 2014
        • Table Historic - 3G mobile subscribers by carrier – 2003 - 2011
        • Table Historic - Annual change of 3G mobile subscribers by carrier – 2007 - 2011
        • Table Proportion of 3G mobile subscribers versus total subscribers by carrier – 2006 - 2014
        • Table Historic - 2G mobile subscribers by carrier – 2006 - 2011
        • Table Historic - Annual change of 2G mobile subscribers by carrier – 2006 - 2011
      • Background information
        • Table Average LTE speed by MNO – 2012 - 2015
        • Table Vodafone – prepaid and contract subscribers – 2009 – 2015
        • Table Optus mobile pre/postpaid customers – 2008 - 2015
        • Table Telstra mobile subscribers – 2009 - 2014
        • Table Telstra wholesale subscribers – 2009 - 2014
  • MOBILE INFRASTRUCTURE
    • SPECTRUM OVERVIEW
      • Overview
      • Spectrum regulations
      • ACMA five-year outlook – 2012 - 2016
        • Table 700MHz reallocation – 2011 - 2014
        • Table Proposed 2.5GHz reallocation – 2011 - 2016
        • Table Expiring spectrum allocation timetable – 2015 - 2028
      • Spectrum-based services
        • Table Allocations for wireless access services (WAS) –2009
      • Spectrum ownership and licences
        • Table Mobile spectrum by operator in capital city and regional area
        • Table Ownership of selected frequencies for 2.3GHz and 3.4GHz services – 2015
    • SPECTRUM AUCTIONS
      • Introduction
      • Digital dividend auction – 2013
        • Table 700MHz and 2.5GHz auction results – 2013
      • 500MHz frequency
        • Table The 500MHz spectrum licences – 1997
      • 800MHz and 1.8GHz frequencies
        • Table Spectrum charges for spectrum bandwidth licenses expiring in 2013
        • Table Auction results
        • Table Final 1.8GHz spectrum auction results
      • 1880-1920MHz (1.9GHz) frequency
        • Table The 1900-1920MHzGHz spectrum auction results
      • 2010-2025MHz frequencies
      • 2.3GHz band
        • Table The 2.3GHz spectrum auction results – 2011
      • Unused 2GHz spectrum
      • 3.4GHz frequencies
        • Table Final 3.4GHz – October 2000
      • 3G Auctions
        • Table 3G auction results per bidder – 2001
    • 3G AND 4G INFRASTRUCTURE
      • Background information
      • Network operators
      • Mobile sites infrastructure
        • Table Mobile base stations – 2009; 2011 - 2015
        • Table Crown Castle mobile tower acquisitions
      • Infrastructure analysis
  • MOBILE SATELLITE SERVICES
    • INTRODUCTION
    • SECOND GENERATION SATELLITES WITH GLOBALSTAR TO BENEFIT RURAL AUSTRALIANS
    • TWITTER ON SATELLITE PHONES
    • PUBLIC SUBSIDIES AND REGULATION
      • Overview
      • Mobile satellite service band plan
      • Mobile satellite phone subsidies
    • OVERVIEW OF OPERATORS
      • Telstra
      • Optus
      • Pivotal Group
        • Table Pivotel Globalstar satellite data costs – July 2015
      • VIX QuikTrak
      • AST Australia
      • Addcom
      • Indigo Telecom
      • FedSat – Australia's low earth orbit satellite (historic)
    • USAGE AND REVENUE ESTIMATES
      • Background information
        • Table Telstra mobile satellite users – 2009 - 2014
      • Revenue
        • Table Optus satellite revenue – 2007 - 2015
  • SMARTPHONES, TABLETS AND HANDSET MARKET
    • MARKET OVERVIEW
      • Trends in mobile handset market
        • Table Smartphone market share by carrier – 2013 - 2014
        • Table Smartphone ownership by age group – 2013
      • 4G market continues to grow
      • Telstra's T-Hub 2 – moving fixed-line customers to the future NBN
    • PREDICTIONS INTO 2015 AND BEYOND
      • Smartphone data usage increasing
        • Table Internet connections via mobile handsets – 2011 - 2014
      • Tablets and e-readers
    • SMARTPHONE, TABLET AND HANDSET STATISTICS
      • Shipments
        • Table Australian handset shipments (historic) –2004 - 2008
        • Table Australian handset shipments – 2009 - 2015
      • Handset recycling
        • Table Key recycling indicators – Mobile Muster – 2006 - 2013
      • Handset supplier market shares
        • Table Australian handset brand market share – major suppliers – 2008 - 2013
        • Table Use of advanced phone features – % of mobile user accesses of rich media/smartphone features - 2013
      • Smartphones and internet usage
        • Table Top 5 uses of mobile internet – 2009 - 2014
      • Tablet sales reaching a plateau
        • Table Estimated tablet users – 2010 - 2012; 2015 - 2016
      • Smartwatch market
    • ANALYSIS
      • Mobile vendors set to lose the proprietary battle
      • Mid-tier mobile phones to decline
        • Table Low-end, mid-tier and high-end mobile device markets – percentage of units sold – 2007; 2013.
    • MARKET SURVEYS
      • Overview
      • Smartphones lead to higher data spend
        • Table Apps info and payment plan data – 2009 - 2013
        • Table Monthly phone spend on services – 2010 - 2013
        • Table Types of use on smartphones – 2012 - 2013
        • Table Smartphone app use by age group – 2013
      • Smartphone users are action buyers
        • Table Smartphone and tablet use of services – 2014
      • Tablet usage strong but sales decline
        • Table Typical selected usage pattern of a tablet user – 2012 - 2013
      • Android remains the favoured operating system
        • Table Estimated Australian platform market share – 2008 - 2014
      • Enterprise mobility market increasing in value
    • THE FUTURE OF THE SMARTPHONE MARKET
      • Hardware becomes a utility platform
      • Platform for innovation and industry transformation
      • Breaking into new markets
      • Who will dominate the Wi-Fi market?
      • Conclusion
    • WEARABLE TECHNOLOGY

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