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2007 Australia - Telecoms Analyses and Forecasts

This report provides high-level strategic analysis and forecasts in the telecommunications market, covering both fixed end wireless industries and markets and key new products and services. It identifies business opportunities, points out the hype and the pitfalls, and will be of assistance in making the right business decisions.

The report also covers:-

  • The year ahead - 2008
  • Revenue forecasts and market share analysis
  • Analysis of the fixed market - infrastructure and applications ands key services
  • Analysis of competition issues, regulatory environment and government policies
  • Analysis of mobile communications, data and wireless broadband developments
  • Analysis of the digital media market


By 2015 the telecoms industry will grow from $34 billion to $72 billion. Increasingly new revenues will flow into the industry as companies continue to explore and develop the digital media opportunities that are becoming available over IP-based next generation telecommunications equipment, which will be carried over the fibre networks that will be deployed deeper and deeper into the network. These revenues will need to be shared with the existing technology and infrastructure operators, as well as a growing number of additional players. For more information, see chapter 2, page 11.

Fibre networks will significantly increase the quality and capacity of the infrastructure. It will allow sectors such healthcare, education and energy to utilise these networks for the delivery of high quality home services, such as video nursing services to monitor elderly people and hospital patients who have been discharged early from hospital. This will save costs significantly and increase availability of places/beds in hospitals and retirement villages. Continuing education and smart meters linked to the broadband smart grids are other key applications. For more information, see chapter 6, page 47.

In order to facilitate these developments new infrastructure is required, as well as a range of network capabilities to allow for the innovation required to move the market forward. Rather than continuing with the foolish debate in Australia about who can best overbuild networks, under what conditions, and who can throw more government money at these projects, we first need to create a better regulatory environment, one that is conducive to the development of this new national infrastructure. Rather than duplicating infrastructure we need to look at sharing it, and the best approach is to stimulate the operational and structural separation of the infrastructure from the services that operate over that network. Only when a workable solution is in place will it be possible to make intelligent decisions regarding investments and government funding. Competition needs predominantly to take place on a services level, and only where this is economically viable at infrastructure level. For more information, see chapter 5, page 33.

The first services possible over this new infrastructure are now becoming available. They are currently concentrated around VoIP and IPTV. However, because the telcos are trying to either stop these developments or monopolise them, progress has been slow. This has allowed the Internet media companies to develop their own web-based versions - like Internet telephony (Skype, Amazon, Google) and web-based entertainment (YouTube, MySpace, Flickr and many others). It appears that the telcos and ISPs have already lost the battle for VoIP, IPTV and other digital media services. For more information, see chapter 9, page 95.

Mobile is rapidly becoming a commodity, but the way the industry is structured at present allows the operators to protect their lucrative income, as they can still charge premium prices for this commodity. This also means that they are not seriously involved in developing more mobile data and wireless broadband services. They believe that this would lead to Internet-based services and the Internet media companies could then also offer their web-based services to mobile networks. This would undermine the mobile operators’ ability to maintain their premium prices. We believe that this situation will not be easy to change and breakthroughs are not expected until 2010-2012. For more information, see chapter 10, page 105.

Key Highlights

  • Total market value in 2007 will be $34 billion, growing to $72 billion by 2015 as new revenue streams will enter this market after 2010.
  • Telstra has a 44% market share at retail value and a 70% market share at wholesale value. It dominates 95% of the market profits.
  • Annual growth for 2007 is estimated at 3%, dipping to just under that figure in 2008.
  • Data/broadband has the highest growth, at 11% - voice has the lowest (2%).
  • Voice revenue still has the largest share (37%) followed by mobile (34%)
  • The second-tier retail market is estimated at around $9 billion.
  • High-speed networks will be developed, despite the current Mexican standoff.
  • Internet media companies and globalisation are key drivers behind all future developments.
  • Social and economic issues are more important than individual telecoms issues - this means ongoing government involvement in the industry.
  • Infrastructure overbuild should only occur where it is economically viable, otherwise infrastructure needs to be shared. This will lead to structural separation between infrastructure and services.
  • VoIP and IPTV are likely to be dominated by web-based services from the Internet media companies, rather than by the telcos and ISPs.
  • Telstra will remain the key telecoms infrastructure provider in Australia, but it will be split into separate companies under pressure of the financial market to maximise the company’s values.
  • Competition will move away from the telcos and ISPs to the digital media companies.
  • The move from mobile data to wireless broadband (4G) will be slow (2010-2012).
  • In the meantime, voice - at premium prices to the operators - will remain the killer app on mobile networks.
  • Fixed mobile convergence will only take off once 4G networks are in place.
  • Regional telecoms will remain heavily dependent on good government policies.
This report provides high-level strategic analysis and forecasts in the telecommunications market, covering both fixed end wireless industries and markets and key new products and services. It identifies business opportunities, points out the hype and the pitfalls, and will be of assistance in making the right business decisions.

Further information provided:
  • Revenue forecasts of the Australian telecoms market, allowing for the customer’s own business planning.
  • Analysis of the business opportunities and pitfalls; identifying the product and market opportunities.
  • Analysis of the likely outcome of various scenarios, avoiding costly mistakes and making the right business decisions.
  • Why wireless broadband will be very slow to develop and what the opportunities are in the meantime.
  • The reality of the new infrastructure developments. They will take between 7 and 15 years to be fully deployed, so no hasty decisions, please.
  • Guidelines for policymakers in relation to national interest issues in telecoms infrastructure and digital media.
  • Data in this report is the latest available at the time of preparation and may not be for the current year.

1. 2008 - THE YEAR AHEAD
1.1 Are you ready for 2008?
1.2 Mexican stand-off
1.3 Structural changes
1.4 VoIP
1.5 IPTV
1.6 WiMAX
1.7 Corporate markets
1.8 Industry environment
1.9 Telstra
1.10 The rest of the industry
1.11 The market moving towards 2008
1.11.1 Access to telecoms services
1.11.2 Rapidly changing voice market
1.11.3 Good news telco stories
1.11.4 Regional telecommunications
1.11.5 Digital media
1.12 Customer service
2. REVENUE, FORECASTS & MARKET SHARE ANALYSIS
2.1 Total market
2.1.1 By major provider
2.1.2 By service
2.2 Mobile market
2.3 2nd tier market
2.4 Data and broadband market
3. TELECOMMUNICATIONS - REVENUE FORECASTS 2007 - 2015
3.1 By markets
3.2 By products
3.2.1 Overall market
3.2.2 Access market
3.2.3 Voice market
3.2.4 Content
3.3 By industry
3.4 Where to go from here?
4. COMPETITION ISSUES
4.1 Let the ACCC do its job
4.2 Yet another panel to investigate telecoms
4.3 Minister in the firing line
4.4 Precarious state of affairs
4.4.1 Good old Aussie pork-barrelling
4.4.2 New Telstra-Optus duopoly
4.4.3 No innovations and competition
4.4.4 Short-term political gains
4.4.5 Why do we need broadband?
4.5 At last - the T4 campaign
4.5.1 The campaign
4.5.2 Analysis and comments
4.6 Back to the Dark Ages
4.7 We are losing our telco focus
4.8 ACCC needs to facilitate NGN industry workgroup
5. STRUCTURAL SEPARATION
5.1 Structural separation and the private equity market
5.1.1 The great separation debate
5.1.2 The tsunami of structural change (analysis)
5.1.3 Private equity interests
5.2 A defiant Telstra
5.2.1 Key issues - those in favour
5.2.2 Those against - Telstra
5.2.3 Opportunities for others
6. INFRASTRUCTURE ANALYSES
6.1 The year 2007
6.1.1 Strategic selection of infrastructure
6.1.2 Telstra on board re national interest issue
6.1.3 IT applications driving broadband infrastructure
6.1.4 Infrastructure choices
6.1.5 Telstra’s FttN Plans
6.1.6 Trujillo: Australia, you won’t get fibre
6.1.7 Regional infrastructure
6.1.8 Market analysis
6.1.9 Wireless broadband opportunities
6.1.10 Utilities expanding into regional areas
6.2 NGN market analyses
6.2.1 Analysis of Telstra’s NGN progress
6.2.2 NGN in action
6.2.3 It’s worthwhile fighting for open networks
6.2.4 Internet economy requires NGNs - now
6.3 Broadband - infrastructure analysis
6.3.1 Australia’s new broadband landscape
6.3.2 Technology issues
6.3.3 What is broadband and why is it needed?
6.3.4 True broadband
6.3.5 Mexican stand-off on broadband infrastructure
6.3.6 Boom and bust cycle in local access
6.3.7 Broadband deteriorating in regional Australia
6.3.8 Open networks needed for broadband services
6.3.9 Incumbents are running behind
6.3.10 Analysis of other infrastructure initiatives
6.3.11 Copper is still very much alive
6.3.12 Proactive communities
7. VOIP MARKET
7.1 Statistical overview
7.1.1 VoIP Boom delayed forecasts
7.1.2 ISPs providing VoIP services
7.1.3 Australian businesses not enthusiastically embracing VoIP - June 2007
7.1.4 VoIP will not be effective without upgraded broadband
7.1.5 The ACCC on VoIP
7.1.6 ISPs push into voice market
7.1.7 Switch to VoIP - survey 2006
7.1.8 Survey reveals businesses are unprepared for VoIP security threats
7.1.9 VoIP good growth but no money
7.1.10 VoIP can slash phone bills by $500
7.1.11 Managed network services
7.1.12 Business distribution of Australian VoIP market
7.2 Market overview
7.2.1 The future of VoIP lies in videoconferencing
7.2.2 IT and telecoms no happy convergence
7.3 Analyses
7.3.1 Click-to-talk
7.3.2 VoIP quality deteriorating, but who cares? We do!
7.3.3 Is there a strategy behind Telstra’s bucket plan?
7.3.4 VoIP over-hyped
7.3.5 VoIP - a case of evolution, rather than revolution
7.3.6 Major battleground: SME market
8. INTERNET MARKET AND INDUSTRY ANALYSIS
8.1 The ISP market - mid-2007
8.1.1 Consolidation only half finished
8.1.2 Aggressive competition
8.1.3 Still very little value-added
8.1.4 More consolidation coming
8.1.5 Dial-up Internet
8.2 Transition to BSP for 60%
8.3 Future directions
8.4 Regional activities
9. BROADBAND MARKET
9.1 New broadband infrastructure initiatives
9.1.1 Metropolitan fibre network
9.1.2 Regional broadband competition
9.2 Regions can be commercially broadbanded
9.3 Bringing some sanity into the broadband debate
9.4 OECD vindicated re its broadband data
9.5 Where are the broadband devices?
9.6 Broadband: Australia is on the right track
9.7 Labor’s broadband plan
9.8 Low demand density for broadband services
9.9 Can we stop the broadband train crash?
9.10 Telstra moving towards VDSL
9.11 Broadband Blueprint?
9.11.1 Implementation before blue printing
9.11.2 States discussed blueprint
10. MOBILE MARKET ANALYSIS
10.1 Industry trends & analysis 2007
10.1.1 The mobile market - In 2007
10.1.2 Don’t believe the mobile hype
10.1.3 Mobile industry heading up a dead-end street
10.2 The 3G market
10.2.1 Statistical overview
10.2.2 The tough new world of 3G
10.2.3 Market Analyses
10.2.4 Network sharing and cost cutting
10.2.5 Analysis of Australia’s first 3G launch
10.2.6 Business modelling
11. MOBILE DATA MARKET
11.1 Forecasts
11.1.1 Mobile marketing remains a furphy
11.1.2 The market in 2007
11.2 Market issues
11.2.1 From WiMAX and 3G to 4G Mobile
11.2.2 Mobile TV
11.2.3 Mobile content - a market still kept hostage
12. WIRELESS BROADBAND
12.1 Analysis
12.1.1 Key years for wireless broadband: 2007/2008
12.1.2 Room for free wireless broadband
12.1.3 Wireless broadband providers on the rise
12.1.4 Competition analysis - Uwired and PBA versus Telstra
12.2 Statistics and forecasts
12.2.1 Market statistics
12.2.2 Market forecasts
13. DIGITAL MEDIA MARKET
13.1 We should ride the economic digital wave
13.2 The rise and rise of digital media
13.3 Convergence at work
13.4 Latest developments
13.4.1 Broadband and TV - not converging, but complementary
13.4.2 Video-on-Demand (VoD) - missed the boat
13.4.3 Every site needs its own YouTube
13.5 Developing markets
13.5.1 User Generated Content (UGC)
13.5.2 Social networking
13.6 Telcos and media versus Googles
14. GLOSSARY OF ABBREVIATIONS


List of Exhibits


Exhibit 1 - Key revenue trends - period to 2015
Exhibit 2 - Key regulatory and policy issues, as BuddeComm sees them
Exhibit 3 - Definition of a utility
Exhibit 4 - Verizon versus Skype
Exhibit 5 - The role of voice
Exhibit 6 - Some application bit rates
Exhibit 7 - Access technologies
Exhibit 8 - What does it mean? (DSL, 1Gb/s, DWDM transmission speeds)
Exhibit 9 - Overview of physical distribution networks for high-speed services
Exhibit 10 - Infrastructure - people power
Exhibit 11 - BuddeComm VoIP quality survey
Exhibit 12 - Paul Budde’s case study from 2G to Next G
Exhibit 13 - Why mobile marketing won’t work
Exhibit 14 - Examples of social networking websites - 2006


List of Tables


Table 1 - Total telecoms service wholesale revenue by major provider - 2004 - 2008
Table 2 - Total telecoms service wholesale annual growth by major provider - 2004 - 2008
Table 3 - Total telecoms service wholesale market shares by major provider - 2004 - 2008
Table 4 - Total telecoms market - retail revenue by service - 2004 - 2008
Table 5 - Total telecoms market - annual retail growth by service - 2004 - 2008
Table 6 - Total telecoms market - retail market share by service - 2004 - 2008
Table 7 - Revenue - mobile services market per major operator - 2004 - 2008*
Table 8 - Annual growth - mobile services market per major operator - 2004 - 2008*
Table 9 - Market share (%) by carrier - 2004 - 2007*
Table 10 - Average ARPU per month across all operators and annual change - 2004 - 2008
Table 11 - Second tier retail providers - voice, data & mobile - revenue - 2002 - 2007*
Table 12 - Second tier retail providers - voice, data & mobile - annual growth - 2003 - 2007*
Table 13 - Second tier retail providers - voice, data & mobile - market share - 2002 - 2007*
Table 14 - Data market share by provider - 2004 - 2007*
Table 15 - Dial-up, ADSL and cable subscribers - top ten market share - 2001 - 2006
Table 16 - Telecommunications services revenue by market - 2005; 2007; 2010; 2015
Table 17 - Telecommunications services revenue % by market - 2005; 2007; 2010; 2015
Table 18 - Telecommunications services revenue by product - 2000; 2005; 2007; 2010; 2015
Table 19 - Telecommunications services revenue % by product - 2000; 2005; 2007; 2010; 2015
Table 20 - ‘Internet economy’ telco revenue - 2000; 2005; 2007; 2010; 2015
Table 21 - ‘Internet economy’ telco - percentage of revenue - 2000; 2005; 2007; 2010; 2015
Table 22 - ‘Internet economy’ telco revenue - 2005; 2007; 2010; 2015
Table 23 - Access % of total telecoms spend - 2000; 2005; 2007; 2010; 2015
Table 24 - Content/advertising % total telecoms spend - 2000; 2005; 2007; 2010; 2015
Table 25 - Telecommunications services revenue by industry group - 2005; 2007; 2010; 2015
Table 26 - Telecommunications services revenue % by industry group - 2005; 2007; 2010; 2015
Table 27 - Skype users - Australia - 2004 - 2008
Table 28 - Paid VoIP users Australia - 2004 - 2010
Table 29 - Number of voice service providers in Australia by type of provider - June 2007
Table 30 - ISPs providing VoIP as part of bundled service offers by size of ISP - September 2006
Table 31 - Main business distribution Australian VoIP market - July 2006
Table 32 - Residential broadband ARPU and annual change - 2004 - 2007
Table 33 - Residential dial-up Internet ARPU and annual change - 2004 - 2007
Table 34 - Number of Australian households and technology penetration - 2007
Table 35 - Broadband component of Internet households - 2005 - 2010; 2015
Table 36 - 3G network subscribers - 2003 - 2007
Table 37 - 2G, 3G ARPU per month comparison - 2006
Table 38 - Number of ISPs by broadband service offered - 2006
Table 39 - Subscriber statistics by operator - late 2006
Table 40 - Forecast wireless penetration as % of fixed broadband - 2005; 2010; 2015

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