Broadband Geo-Economics in Australia
3 January 2007
Market Clarity is pleased to announce the availability of our 2007 Market Tracker Series covering Australian telecommunications history and forecasts from 2000-2011, for the following market sectors:
- Internet services: Broadband and Narrowband subscribers and revenue from 2000-2011. Information is segmented by retail and wholesale services, business and residential services, technology, data rates (bandwidth), with details by service provider.
- VoIP and Hosted IP Telephony services: Internet-based, Private-network based and Hosted Voice service subscribers, revenue, and minutes (to the extent available), segmented by retail and wholesale services, as well as business and residential services. The Hosted IP Telephony market is segmented by SME, Large Enterprise and Corporate/Government sectors, as well as by retail and wholesale services.
- Fixed Voice services: Coverage includes basic access lines, voice minutes, and revenue, segmented by retail and wholesale services, business and residential services, with details by service provider.
- Mobile Voice and Data services: Coverage includes retail and wholesale services, services in operation, minutes of use, pre-paid/post-paid splits, residential/business splits, SMS/MMS numbers, revenue and ARPU, with details by service provider.
- Data services: Coverage includes subscribers, customers, revenue and average service yield for IP/MPLS, Ethernet, Dark Fibre, Frame Relay, ATM, Leased Lines and ISDN. Each data service type is segmented by retail and wholesale services.
Information for each of these sectors is published as a separate report in the Market Tracker series, and is available in the following formats:
- PDF-based presentation style report featuring graphs of all key information: History + Forecast from 2000-2011 and market share (revenue, subscribers) for June 2006.
- Spreadsheet-based analysis with service provider details from 2000-2006, and History + Forecasts from 2000-2011. The spreadsheet pack contains all of the raw information used to create the graphs in the PDF-based presentation style report.
- Combination pack: PDF-based presentation style report + Spreadsheet.
In this Newsletter, we present highlights from the Internet segment research.
We are also pleased to outline what we believe is a first in the Australian market, the Telecommunications Business Intelligence Service, which combines Market Clarity’s extensive service provider, telecoms infrastructure and forecasting databases, along with our overall market intelligence into a one-stop shop to support infrastructure investment decisions.
It would be easy to think that broadband remains a perpetual feast. Australians are still making the switch from dial-up to broadband at a healthy rate, and the new world of ADSL2+ is sparking the beginnings of an upward shift in the plan speeds consumers are buying — at least in the cities, where the service is mostly available.
Broadband has now overtaken dial-up as the dominant means for Australians to access the Internet. While in overall population terms Australia has only a moderate broadband penetration, more than half of Australia’s Internet users are now on broadband services. As of June 2006, Market Clarity identified 3.52 million broadband SIOs (services in operation) compared to just 2.81 million dial-up SIOs.
The “tipping point” has been passed: there are now more broadband users than dial-up users in the Australian Internet market.
Even this may be over-stating the residual dial-up market, since at least some of the dial-up accounts that still remain will belong to broadband customers who maintain a cheap narrowband account either for backup purposes, or for Internet access while travelling.
By 2011, Market Clarity is predicting that the broadband customer base will be more than 6.8 million. At that time, 68.5% of households will have broadband access – considerably higher than the June 2006 household penetration rate of 36.6%.
Figure 1 — The Australian Internet Market – Services in Operation (SIOs): 2000 to 2011
We also expect that by 2011, broadband will reach into nearly every employing business.
However, on a purely population basis Australia’s broadband penetration rate was 17.1% in June 2006, and 20.0% in December 2006. And by June 2011, Market Clarity is predicting a 31.6% penetration rate.
This sounds like a woeful performance in population terms. Even if we reach this level by 2011, we’ll still be behind many other countries, because they’ll be moving ahead as well, won’t they?
People forget that in the residential market, the total number of households limits overall broadband penetration. Different countries have a different typical family size, but we all have this in common: the number of residential premises is lower than the number of people. For every country, there is a saturation point: when every home has broadband, residential broadband penetration will stop growing — if more people need to use a household broadband service, they’ll buy a higher capacity connection, but they won’t buy an extra line.
So the countries that are ahead of us in broadband penetration — Denmark, the Netherlands, Iceland, the UK, Canada, the US, Switzerland, Korea and Japan — will reach that residential broadband plateau sooner than we will. And nations with large family sizes will reach this plateau sooner than nations with smaller families.
Australia: Measuring Broadband Penetration
What’s surprising about Australia’s broadband penetration is that it’s much better than we have any right to expect.
Here’s where the geo-economics of broadband comes into play.
It’s fashionable for commentators to dismiss the impact of Australian geography on our telecommunications networks, usually because small, rich countries are so often used as the yardsticks for broadband availability.
Market Clarity believes that most people forget the scale of the difference. To coin a cliché, “Western Australia is larger than Western Europe” — but we still only have a very small population, and away from the coastal fringe, we are spread very, very thinly.
And even so, we manage to achieve broadband penetration by population that’s at the OECD median – and suffer criticism for poor performance.
What happens when Australia’s broadband performance is assessed in light of the high urbanisation in this country, rather than looking purely at population penetration?
To work this out, Market Clarity looked at three sources: the first is a publication by the World Bank, World Development Indicators, which among its hundreds of data points provides relative measures of urbanisation for different countries; the second is the OECD’s broadband penetration table for June 2006; and the third is the CIA World Fact Book (for geographic data). It covers 28 of the 30 OECD members (only Luxembourg and Iceland are not included in these measures).
In World Development Indicators, the World Bank defines urbanisation as the proportion of population living in cities of more than 1 million people. By that definition, 92% of Australians live in urban areas, making us the most urbanised country in the OECD.
For all countries, we measured the non-urban population density; that is, the number of people per square kilometre if you exclude the people living in the small land areas devoted to cities.
This provides a measure of the economics of delivering broadband to the rural population – and it means we can look at broadband penetration in two dimensions:
- What is the current broadband penetration rate? And
- Are the underlying economics for broadband deployment favourable or unfavourable?
The result is plotted in Figure 2, below.
Figure 2 – The Impact of Non-Urban Population Density on Broadband Penetration (June 2006)
Countries on the right-hand side of the graph are very favourable places to deploy broadband: they have very dense populations even out in the countryside.
For instance, in Korea the rural population averages more than 77 people per square kilometre. Switzerland and Japan are similarly network-builders’ dreams: wealthy countries in which even the rural population is respectively 59 people per square kilometre and 71 people per square kilometre.
Australia’s rural density is so low that the scale of this chart puts us at zero: we have just 0.21 people per square kilometre when the city-dwellers are taken out of the equation. Yet we manage reasonable broadband penetration and strong growth in spite of a geo-economic climate that can best be described as hostile.
And that puts us in the minority of OECD countries: a group of 6 nations who are broadband achievers in spite of the tyranny of distance.
As time goes by, Market Clarity expects the high urban take-up of broadband services to provide rural spin-offs. Government policy will go some of the way, but we already see strong deployment of non-DSL technologies (particularly fixed wireless broadband) filling the gaps in regional areas. If the Federal Government’s current funding strategies succeed, Australia could easily find itself compared not to Canada (by far our closest cousin in broadband geo-economics), but with success stories like tiny Denmark or the Netherlands.
Helping Planners Plan
If you’re looking to take advantage of the gaps in Australia’s broadband coverage, you’ll need to learn about the geo-economics of your network infrastructure.
Market Clarity’s latest research service, the Telecommunications Business Intelligence Service, combines our years of forecasting experience with our new Telecommunications Infrastructure Database and business / residential demographic data from the Australian Bureau of Statistics, to give our customers something unique in Australia.
We can identify existing access and long-haul telecoms infrastructure down to a postcode basis, and relate infrastructure plans to the business and residential characteristics of target markets – anywhere in Australia.
Why should telecommunications infrastructure investment be a stab in the dark?
Market Clarity can help.
Carriers looking to invest in new telecommunications infrastructure – or investors assessing carriers’ investment plans – need more than guesswork to assess potential markets. They need facts.
Market Clarity announces a world-first service combining three key elements:
- Market Clarity’s Telecoms Infrastructure Database (IDB)
- Market Clarity’s Market Tracker databases
- Demographic information from the Australian Bureau of Statistics (ABS)
Market Clarity uses the information from our Telecoms Infrastructure Database, and cross-correlates it with service take-up trends from our Market Tracker forecast series, as well as information from the Australian Bureau of Statistics, to provide a customised Telecoms Business Intelligence Service .
Our Telecoms Infrastructure Database is constantly updated to keep track with the fast pace of technology rollout in the Australian market and can be used to field micro-queries to highly complex queries.
Information held in Market Clarity’s Telecoms IDB includes information from 111 infrastructure owners:
- DSLAM locations (more than 4,000 DSLAMs) – 19 Owners
- Access Fibre (more than 700 service areas) – 24 Owners
- Fixed Wireless Broadband (more than 1,000 base stations) – 69 Owners
- Mobile networks (2G and 3G base stations) – 4 Owners
- Long-haul fibre networks (200+ towns served by long-haul links) – 9 Owners
- HFC Systems – 4 Owners
- Long-haul Microwave – 28 Owners
Market Clarity has over 200,000 specific pieces of information in the Telecoms IDB. Because we’ve designed the database as a SQL-based information repository, we can query the database to pull out answers to a large variety of questions.
Information can be extracted by State, Statistical Division (region), Statistical Subdivision, Statistical Local Area (suburb), Postcode, or Exchange (for DSL).
This competitive intelligence will help you, our customers, reduce the risk in any new infrastructure deployment. Instead of working in the dark, you can build a business plan confident that you understand who your competitors will be –before you enter a new region.
Database extracts are generally provided in spreadsheet format, so that our customers can easily manipulate the resulting data sets. We can also provide further analysis, and report style outputs.
Contact us for further information on the Telecoms Business Intelligence Service .