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Australia - Broadband Market - Insights, Statistics and Forecasts

  • June 2014
  • -
  • Paul Budde Communication Pty Ltd
  • -
  • 99 pages

Broadband market enters a new era following the NBN strategic review
The National Broadband Network continuing evolution
Since being implemented in 2012, Australia's NBN has undergone significant changes. The late-2013 strategic review of the NBN, commissioned by a newly elected government, established a very different framework. Instead of 93% of the population being covered by FttP, the new architecture has called for a hybrid network incorporating FttP and FttN, and utilising existing DSL and HFC plant.

Overall, the initial development of the NBN reflected a serious response to the relatively poor quality of Australia's broadband infrastructure. It was also a response to the intransigence of the dominant telco, Telstra. The government was minded to change its broadband infrastructure plan from a regional to a national focus, which to a degree has been linked to the development of the digital economy supporting policies relating to e-commerce, e-health, e-education and smart grid infrastructure. These are all aimed at utilising the NBN for a myriad of purposes beyond broadband.
Residential and business broadband markets: growing adoption of faster services
Although the business market in Australia was quick to embrace broadband, mainly to access faster data speeds, a significant proportion of smaller operators has yet to establish an online presence, and by early 2014 only about 38% had a business website.

The government's 'Broadband Availability and Quality' report, published in December 2013, showed that 1.4 million premises (13% of the total) across many areas of the country had no adequate broadband infrastructure. These areas include regional and remote regions but also pockets within urban communities. Given the state of broadband availability and speeds, many businesses still depend on mobile rather than fixed-line broadband. A growing number in areas where access to the NBN has been made available have switched to fibre broadband services, which enable these companies to compete in the global economy more effectively. The faster speeds of fibre infrastructure will see the rapid adoption by businesses of services such cloud computing, online interaction, and media conferencing.
Business broadband has also allowed greater choices in working environments, with the ability for employees to tele-work, either from home or on the road while making use of improved mobile broadband. As such, smartphones and tablets form an increasing part of the business ICT environment.

DSL and HFC markets: stable growth as copper plant survives within the NBN

The DSL sector continues to show resilience in the marketplace, bolstered in recent years by operators adopting new technologies which can deliver greater data capacity on legacy copper infrastructure. In conjunction with Telstra's unbundled local loop service, which provides a platform for competitors to offer broadband services, the slow-down in the rollout of the NBN has also meant that the number of customers expected to migrate from copper to fibre-based services is far lower than initial NBN Co forecasts. Many telcos have installed their own DSLAM infrastructure, enabling them to provide fairly high-speed internet services via ADSL2+.
Following the strategic review of the NBN, which emphasised a combination of FttN and HFC architecture, the transition from DSL to fibre-based infrastructure is likely to be on a far smaller scale than formerly envisaged.

The cable sector has been stable in recent years, and though Telstra and Optus have upgraded parts of their cable networks with DOCSIS3.0 technology, there has been little investment in expanding network footprint given that operators expected these networks to be incorporated within the NBN and then superseded by FttP. The new NBN has placed a greater emphasis on existing hybrid fibre coax plant being part of the national broadband plan. As such, many cable customers in NBN areas will not be migrated to the new fibre network.

In early 2014 there are fewer than one million cable broadband subscribers, accounting for less than to 8% of the total broadband market in Australia. However, most of these subscribers are high-end users providing relatively high ARPU for the cablecos.

Mobile broadband growth supported by Australia's globally impressive LTE infrastructure

By the end of 2014 about a third of Australia's mobile subscribers will be on LTE networks. Telstra took the lead in this market, followed by Optus and Vodafone which launched services during 2013. These MNOs have invested in spectrum and network upgrades to bolster network capacity, while the geographic extension of LTE will see wider take-up from consumers in coming years. Although the MNOs will be expecting a greater return on their investments, partly by charging a premium for LTE services, price competition will keep revenue growth low.

This report provides key data and in-depth analysis on trends in the Australian broadband market. It reviews the NBN since its inception in 2007, as provides insights into the steps that have been taken subsequently. It assesses the ISP market, detailing the number of operators in each sector as well as the strategies of the major players. Comparisons with international markets are included to present an overview of the broadband landscape. It also analyses the drivers behind internet adoption among Australian households, supported by a range of surveys and statistical overviews from sources including the ABS, ACMA and the government's Broadband Availability and Quality Report.

Key developments:

iiNet to deploy up to 30,000 WiFi hotpots in capital cities; Victorian government looks to offer free WiFi in three cities; Optus trials TD-LTE broadband using the 2300MHz band; m-payment and m-banking developments; NBN transition developments; DOCSIS standard upgrade to 3.1; VDSL2 and vectoring DSL developments; ACCC sets wholesale DSL prices to mid-2014; tablet penetration among households reaches 44%; iiNet acquires Adam Internet, sells TransACT fibre infrastructure to NBN Co; interim satellite service reaches capacity; Foxtel's anticipated launch of triple play services to affect broadband market share among key players; includes ACMA reports for 2013, surveys to end-2013, company results for FY2013; ABS data to June 2013; analysis of the NBN strategic review; market developments to March 2014.

Companies covered in this report include:

Telstra, Optus, NBN Co, VHA, BigAir, vividwireless, Unwired, TPG, Vodafone, AUSTAR, FOXTEL, Neighbourhood Cable, M2, iiNet, Primus, TransACT.
Data in this report is the latest available at the time of preparation and may not be for the current year

Table Of Contents

Australia - Broadband Market - Insights, Statistics and Forecasts
1. General Overview and Market Insights
1.1 Overall size of the market
1.1.1 Total broadband subscribers
1.1.2 Market shares
1.2 Access revenues
1.2.1 Statistical overview
1.2.2 Average Revenue per User (ARPU)
1.3 Other surveys and statistics
1.3.1 Australian Bureau of Statistics (ABS) Survey update December 2013
1.3.2 Statistical information by technology
1.3.3 Broadband speeds
1.3.4 Broadband traffic
1.4 ISP market overview
1.4.1 The market going into 2014
1.4.2 Data limiting
1.4.3 ISP market statistics
1.4.4 ISPs contracting but some sectors may expand
1.4.5 Digital Media Triple play business models (separate report)
1.4.6 Voice over Internet Protocol (VoIP) added to naked DSL
1.5 Benchmarking with other countries
1.5.1 Fixed broadband
1.5.2 Wireless broadband
2. Statistical Overview of the DSL Market and its Providers
2.1 Brief overview of the NBN
2.2 Regulatory environment analysis
2.2.1 The impact of fibre optic networks on digital subscriber line (DSL) regulation
2.2.2 Unbundling of the local loop (ULL) and line sharing
2.2.3 Wholesale DSL pricing
2.3 DSL infrastructure
2.3.1 Overview
2.3.2 Tool for competitors
2.3.3 DSLAM infrastructure
2.3.4 Street cabinet IP DSLAM2 upgrades (Top Hat)
2.3.5 VDSL developments
2.3.6 VDSL vectoring
2.4 Brief overview of broadband providers market
2.4.1 Market consolidation
2.4.2 The shrinking number of ISPs
2.4.3 Market share statistics
3. Statistical Overview of the HFC Market
3.1 Technology
3.1.1 Hybrid fibre coax (HFC)
3.1.2 The DOCSIS standard
3.1.3 The next development for DOCSIS
3.2 Market statistics and estimates
3.3 Austar United Communications Ltd (AUSTAR)
3.3.1 Overview
3.4 BES/e-wire
3.4.1 Overview
3.5 TransACT
3.5.1 Overview
3.6 Telstra
3.6.1 Background information
3.6.2 Network upgrades
3.7 Optus
3.7.1 Overview
3.7.2 Network upgrades
3.8 Industry analysis
3.8.1 Do we need infrastructure-based competition?
3.8.2 Moving on from the HFC of the past
3.8.3 No long-term future in HFC cable broadband
3.8.4 HFC decommissioning as NBN rolls out?
3.8.5 From HFC to Fibre-to-the-Home (FttP)
3.8.6 Open access policy
4. Statistical Overview of the Mobile Broadband Market
4.1 Market overview and analysis
4.1.1 Market overview
4.1.2 Uptake in 4G adds to mobile broadband users
4.1.3 Vodafone launches LTE
4.1.4 Mobile data and messaging exceeds voice revenues
4.1.5 Globalgig hotspot local and international data roaming
4.1.6 Capital expenditure builds into the future
4.1.7 Overview of 4G frequency usage
4.1.8 Spectrum reallocations
4.1.9 Hardware drives applications
4.1.10 Mobile broadband to drive structural change
4.1.11 Mobile broadband slowly substitutes fixed services.
4.1.12 The economic impact of mobile broadband
4.2 Mobile broadband market statistics
4.2.1 Mobile broadband subscribers
4.2.2 Mobile broadband revenues
4.2.3 Fixed wireless broadband market
4.3 Forecasts and other developments
4.3.1 Mobile advertising
4.3.2 M-payment services
4.3.3 M-banking
4.3.4 Mobile broadband boom the killer app for FttP
4.3.5 Fixed/mobile call market
4.3.6 Revenue forecasts
5. Business Broadband Market Statistics
5.1 Market trends
5.1.1 Business market overview
5.1.2 ISPs targeting the business sector
5.1.3 Broadbanded companies moving forward
5.1.4 The NBN and the business market
5.1.5 Business need faster speeds to communicate
5.2 Business market surveys
5.2.1 NBN Business Readiness Surveys
5.2.2 Remote access and operation needed
5.2.3 Small Business Telecommunications Service Use and Experience
5.2.4 Surveys reveal that moving online benefits businesses
5.2.5 Telstra Productivity Indicator
5.2.6 Sensis e-business report
5.2.7 Optus Future of Business Report
5.3 Business customer expenditure on telecoms
5.3.1 Overall telecom spend business market
5.3.2 SME market statistics
6. Residential Broadband Market Statistics
6.1 Statistical overview residential market total telecoms
6.2 Internet household statistics
6.2.1 Australian Bureau of Statistics (ABS) surveys and internet connectivity
6.2.2 Australian Communications and Media Authority (ACMA) surveys
6.3 Trends in the residential market
6.3.1 Data increases in volume
6.3.2 Mobile broadband no alternative to fixed line services.
6.3.3 Dial-up internet not hanging up, just yet
6.4 Household use of technology
6.4.1 Computer technologies
6.4.2 Broadband technologies
6.4.3 Internet social media activities
6.5 Other residential market surveys
6.5.1 Online services
6.5.2 Fixed broadband stats: a federal report
6.5.3 New generations survey
6.5.4 Customer service issues and the Telecommunications Industry Ombudsman (TIO)
6.5.5 Demand for cost-effective broadband
7. The National Broadband Network
7.1 General overview of the plan
7.2 How Australia got its NBN
7.3 National interest utility
7.4 NBN national infrastructure, not just telecomms
7.5 Economic reforms
7.5.1 Fundamental change to the economy
7.5.2 Business modelling - the key to success of the NBN
7.5.3 NBN Co 2.0
7.5.4 The multi-technology NBN
7.6 Why wireless broadband is no alternative to FttP
Table 1 Historical - Total broadband subscribers and annual change 2000 - 2004
Table 2 Total broadband subscribers and annual change 2005 - 2015
Table 3 Broadband subscribers, DSL and cable 2008 2014
Table 4 Broadband market overall market share by technology 2003 - 2014
Table 5 Broadband revenues by major provider 2005 - 2013
Table 6 Annual change in broadband access revenues by major provider 2006 - 2013
Table 7 Market share of broadband access revenues by major provider 2005 - 2014
Table 8 Estimated fixed broadband ARPUs 2006 - 2014
Table 9 Internet subscribers by access technology 2009 - 2013
Table 10 Broadband market share by technology and annual change 2008 - 2013
Table 11 Business, government and household internet subscribers 2009 - 2013
Table 12 Subscribers' average speed in Australia versus selected countries 2010 - 2013
Table 13 Proportion of internet subscribers by download speed 2009 - 2013
Table 14 Internet subscribers by download speed 2008 - 2013
Table 15 Terabytes of data downloaded by access technology (historic) 2008 - 2013
Table 16 Annual change in data downloaded by access technology 2011 - 2013
Table 17 Number of ISPs by size in the Australian market 2008 - 2013
Table 18 Number of ISPs 2001 - 2014
Table 19 Internet subscribers by key providers June 2013
Table 20 Fixed broadband access among internet households selected countries 2008 - 2013
Table 21 Top ten OECD countries by wireless broadband subscriptions 2012 - 2013
Table 22 Wholesale DSL pricing, per month per user 2013 2014
Table 23 Number of infrastructure providers by number of ADSL-enabled exchanges 2007 - 2008; 2010 - 2011
Table 24 Number of ADSL broadband subscribers 2008 2013
Table 25 DSL subscribers and availability by state/territory 2013
Table 26 DSL premises affected by distance from exchange 2013
Table 27 Number of DSLAMs by major providers 2009 - 2012
Table 28 Total number of DSLAMs 2006 - 2013
Table 29 Number of ADSL and ADSL2+-enabled exchanges 2013
Table 30 Top Hat enabled exchanges 2011 - 2013
Table 31 Broadband DSL retail subscribers by major provider 2009 - 2013
Table 32 Total business and residential broadband subscribers 2006 - 2014
Table 33 Telstra broadband subscribers by sector 2007 2013
Table 34 Cable broadband subscribers by major operator and annual change 2002 - 2014
Table 35 Cable subscribers versus other broadband technologies 2009 - 2013
Table 36 Optus financial data 2011 - 2013
Table 37 Optus financial data by sector 2009 - 2013
Table 38 Optus on-net broadband subscribers 2009 - 2013
Table 39 Wireless broadband subscribers by access type 2009 - 2014
Table 40 Mobile broadband subscribers by mobile network operator 2007 - 2013
Table 41 Estimated mobile broadband data downloaded in Petabytes 2007 - 2013; 2015
Table 42 Estimated mobile broadband revenues and annual change 2007 - 2014
Table 43 Mobile broadband monthly ARPU 2007 - 2014
Table 44 Fixed wireless broadband subscribers by major operator 2008 - 2013
Table 45 Forecast mobile broadband and voice revenues 2008; 2013; 2018
Table 46 Business, government and household internet subscribers 2009 - 2013
Table 47 Business broadband connections, by platform Jun 2012
Table 48 Business uptake of broadband by access type 2010 - 2013
Table 49 SME online trends websites versus social media 2010 - 2013
Table 50 Historic - SME computer equipment ownership trends 1999 - 2004
Table 51 SME computer equipment ownership trends 2005 - 2013
Table 52 Computer hardware expenditure SMEs and medium businesses 2001 - 2013
Table 53 Business trends in internet connections 1998 - 2013
Table 54 SMEs internet access methods, by technology 2010 - 2013
Table 55 Top uses of the internet by SMEs 2010 - 2013
Table 56 Meeting customer expectations using internet applications 2011 - 2013; 2018
Table 57 Expectations of customer e-payments 2011 - 2012; 2015
Table 58 Estimated telco product mix of business customer spend 2014
Table 59 Estimated business and government market spending 2013
Table 60 Revenue mix total spend of telecoms SME market 2014
Table 61 Revenue mix total spend of telecoms residential market 2013
Table 62 Service providers' market share and revenue in the residential market 2013
Table 63 Historic - Total households versus internet enabled households 1999 - 2004
Table 64 Total households versus internet enabled households 2005 - 2014
Table 65 Broadband component of internet enabled households 2005 - 2015
Table 66 Proportion of internet households with children 2005 - 2009; 2010 - 2013
Table 67 Internet access households with children 2005 - 2009; 2010 - 2013
Table 68 Time spent online, by age June 2012
Table 69 Frequency of internet use, by internet population June 2012
Table 70 Fixed-line broadband data usage by users 2008 - 2013
Table 71 Fixed-line broadband data usage by users 2012 - 2013
Table 72 Historic - Dial-up and broadband internet subscribers 2003 - 2004
Table 73 Dial-up and broadband internet subscribers 2005 - 2013
Table 74 Computerisation in the home 2013
Table 75 Proportion of the population using social networking sites 2011 - 2013
Table 76 Social network site users 2012 - 2013
Table 77 Top 5 online applications - 2013
Table 78 Use of internet applications - 2013
Table 79 Total new complaints to the TIO 2006 - 2013
Table 80 Number of complaints to the TIO by levels 2009 - 2013
Chart 1 Total broadband subscribers and annual change 2005 - 2015
Chart 2 Overview of broadband access revenues by major provider 2005 - 2013
Chart 3 Overview of annual change in broadband access revenues by major provider 2006 - 2013
Chart 4 Overview of market share of broadband access revenues by major provider 2005 - 2014
Chart 5 Overview of fixed broadband ARPUs 2006 - 2014
Chart 6 Internet subscribers by download speed 2008 2013
Chart 7 Terabytes of data downloaded by access technology (historic) 2008 2013
Chart 8 Overview of number of DSLAMs by top six providers 2008 - 2012
Chart 9 Overview of total business and residential broadband subscribers 2006 - 2014
Chart 10 Overview of cable broadband subscribers by operator and annual change 2002 - 2013
Chart 11 Overview of cable subscribers versus other broadband technologies 2009 2013
Chart 12 Overview of mobile broadband subscribers by mobile network operator 2007 - 2013
Chart 13 Overview of estimated mobile broadband data downloaded in petabytes 2007 - 2013; 2015
Chart 14 Business uptake of broadband by access type 2010 2013
Chart 15 Overview of ICT uptake issues by businesses 2009 - 2012
Chart 16 Overview of SME computer equipment ownership trends by type 2005 - 2013
Chart 17 Overview of SME versus medium-sized business computer expenditure 2005 - 2013
Chart 18 Overview of residential market revenue and market share by major provider 2013
Chart 19 Overview of households with internet access 2004 - 2014
Chart 20 Overview of the decline in dial-up subscriptions 2004 - 2013
Chart 21 Overview of new complaints to the TIO 2006 - 2013
Chart 22 Overview of consumer and SME complaints by level 2009 - 2013
Exhibit 1 HFC network status
Exhibit 2 Overview of the TIO complaint handling process
Exhibit 1- Trans-sector vs. Cross-sector
Exhibit 3 Economic benefits of broadband overview of surveys

Companies Mentioned

Telstra, Optus, NBN Co, VHA, BigAir, vividwireless, Unwired, TPG, Vodafone, AUSTAR, FOXTEL, Neighbourhood Cable, M2, iiNet, Primus, TransACT.

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