Tight Margins, Tough Competition in the Broadband Era
Broadband Revenue Passes $2bn in 2006, Growth to Slow Through 2011
Sydney , AUSTRALIA — 21 November 2006 — The fast, early growth in broadband revenue has seen the market pass $2.04 billion in 2006. However, according to new research from Market Clarity, the coming years will see slower growth as broadband penetration nears its limits.
According to Market Clarity’s new publication The Australian Internet Market Tracker: History and Forecast 2000-2011, Australia’s population of 3.52 million broadband services in June 2006 will grow to more than 6.8 million by June 2011. Intense competition between providers is likely to squeeze revenue growth, so that while user numbers will nearly double in that period, revenue will only rise to $3.24 billion by June 2011.
“As service ARPU and margins decline, providers will need to pay more attention to retaining customers and offering them high-margin value-added services,” said Shara Evans, CEO of Market Clarity.
“Broadband now generates 3.5 times as much revenue as dial-up services in Australia,” Evans said, “and from 2005 to 2006, broadband revenue grew by more than $700 million. By the end of the decade, though, broadband revenue growth will be in the tens of millions rather than the hundreds of millions,” she said.
With a broadband market expected to pass 6.8 million business and residential customers by June 2011, Evans said, the remaining market growth will be very small. This is likely to bring about escalation of ‘churn wars’ between ISPs and put ongoing pressure on consumer service prices.
“Providers who can genuinely differentiate their services will have the best chance of growth,” Evans said. “In the consumer market, this may mean offering the best performance for rich content like music and videos, or it may be through services such as VoIP.”
Business providers, who can differentiate themselves with network performance and service quality, may be better placed to protect their margins, but the business broadband market is dwarfed by the consumer market.
Evans expects ADSL to remain the dominant broadband technology in Australia for the foreseeable future, accounting for nearly 5 million of the 6.8 million services in operation by June 2011. The remaining customers will be spread between Cable (HFC) users, wireless customers, and satellite broadband. Other access technologies such as fibre-to-the-home and broadband-over-powerlines will struggle to attract a significant share of the market except in areas where ADSL is not available.
Market Clarity’s research also documents the growth in high-speed services, with today’s “entry level” broadband of 256 Kbps expected to peak next year and decline afterwards.
The Australian Internet Market Tracker: History and Forecast 2000-2011 Reports are available now from Market Clarity in spreadsheet or presentation formats.
About Market Clarity
Market Clarity is an award-winning telecommunications analyst firm founded in January 2006 by leading Australian telecommunications researcher and strategic consultant, Shara Evans. The firm covers all aspects of telecommunications, including traditional and converged services and technologies. Market Clarity’s extensive databases of technical and market information cover a wide range of facts and figures on the technologies and services that are shaping the Australian telecommunications market. Market Clarity’s GIS tools and research databases enable the correlation and presentation of highly complex information in an intuitive geographic (map) format.
Market Clarity’s insights are derived from a deep understanding of technology, coupled with comprehensive research, which examines each segment of a service’s value chain as well as underlying population demographics. By leveraging its engineering knowledge with an ongoing primary research program, Market Clarity provides insight, intelligence and advice on all aspects of the Australian telecommunications market including traditional, converged and future technologies. Market Clarity’s unparalleled market knowledge and research databases are brought to all consulting engagements.
Market Clarity’s contribution to telecommunications in Australia was recognised by the telecommunications industry’s peak body, the Communications Alliance, which awarded the company its 2007 ACOMMS award for Services to the Industry – Professional Services.
Market Clarity is headquartered in Sydney, Australia.