Mobile Broadband to Squeeze the Fixed Broadband Market
12 December 2008
We should apologise for having so little to say to our friends and customers during 2008. Market Clarity has had an extremely busy year, and we have unfortunately allowed this newsletter to lie fallow for most of the time.
However, with the launch of our new Market Tracker publication, The Australian Internet Market – Market Tracker 2000-2013, it’s clearly time to get in touch again.
In the new tracker, we’ve expanded our forecasting and analysis with a host of new features. Along with the detailed tables of SIOs, residential and business services, revenues and ARPU, this year’s Internet tracker includes:
- Vertical industry breakdowns;
- State breadkdowns: overall, business and residential;
- Metrop-regional breakdowns: overall, business and residential;
- High-speed service adoption analysis;
- 3G Broadband Analysis;
- And much more.
Market Clarity has also grown a lot during 2008. We now have 17 staff, and would like to introduce the new members in our team:
- In the Market Tracker Team, we have added Con Tzaidas as Manager of the Financial Analysis team. Formerly Group Manager for Pricing in Telstra Business and Government, Con brings a wealth of analytical and managerial experience to Market Clarity.
- In Market Clarity’s Software Team, we welcome Hassan Gabru, who brings more than eight years’ database and software development to Market Clarity, and James Petrovic, who has more than ten years’ experience as a geospatial scientist and will add vital new skills to support Market Clarity’s Telecommunications Infrastructure Database. UTS intern Jay Wickramarachchi also joins the Software Team providing network development and support.
- Also in Market Clarity’s Intern Team, we welcome Dawood Odeh, Alastair Orleans and Anthony Chandra.
Market Clarity is proud to continue our relationship with the UTS’s internship program in its IT and Telecommunications degrees. These five-year degree programs require students to undertake industry internships. To date, these internships have been extremely successful, with all intern graduates remaining at Market Clarity. Our 2009 intern recruitment program in now under way, and we are delighted at the continuing success of this mentoring program.
One of the things that’s kept us busy has been the rapid expansion of both our custom geospatial analysis of telecom assets and our off-the-shelf infrastructure maps. Market Clarity constantly refreshes and updates its infrastructure data, to make sure we can offer our customers the most accurate and up-to-date telecommunications infrastructure analysis in the country.
Market Clarity offers a range of maps, including thematic maps which portray spatial variations and interrelationships of geographical distributions including multiple telecommunications infrastructure types and boundaries, as shown below.
Many people have warned that the regulatory uncertainties surrounding the NBN would inhibit broadband infrastructure investment. It appears to Market Clarity that this has come to pass: carriers and service providers seem to have spent much of 2008 “marking time” on their infrastructure plans.
In the beginning of the year, Market Clarity published its “State of Broadband Infrastructure in Australia (February 2008)“. One of the indicators we reported illustrated the rollout plans of ADSL providers at that time.
In February, when that report was first published, Telstra’s competitors (excluding the then-current OPEL project) had announced plans to install 254 new DSLAMs in 184 exchanges. Today, the competitive broadband providers only list expansion plans for 84 DSLAMs in 80 distinct exchanges. Notably, 70 of these DSLAMs have been on the drawing-board since February, and 32 of the previously planned DSLAMs have been completely cancelled.
Fixed broadband providers are likely to find themselves increasingly caught between a rock and a hard place. Not only do they face uncertainty over the NBN process, they are now facing the twin challenges of market saturation in existing coverage areas and competition from 3G mobile broadband services.
In The Australian Internet Market – Market Tracker 2000-2013, Market Clarity’s research demonstrates that there are now more than six million residential Internet Services in Operation (SIOs), not counting wireless broadband services. In other words, given that there are just over 8.3 million households in this country, residential Internet penetration is already close to 75%, and the majority of those customers are already broadband customers.
Interestingly, close to 31% of the residential broadband market is already on plans that offer services at or above 8 Mbps, clearly indicating a market shift to higher speed services.
Given that some households will always be outside the footprint of exchange-based DSL technologies, the years approaching 2013 will see DSL-based broadband penetration approach its saturation point, even excluding the impact of the NBN.
On its own, this is enough to bring about a profound change in the broadband provider market, since footprint expansion would no longer drive new subscriptions. Technologies able to reach beyond DSL’s footprint are required to drive new subscriptions. Until such time as new infrastructure is available, providers will face a margin squeeze as they try to head-hunt each others’ customers.
Providers also face a second threat: the rapid expansion of the 3G mobile broadband market.
In only a few years, the 3G mobile broadband market has garnered more than 1.2 million customers.
Of course, not all of today’s 3G broadband customers are “lost” to the fixed broadband market. Some will be travellers who subscribe to a 3G data service so as to stay connected. Others will be regional households with a fixed antenna, and who are out of DSL’s reach. Still other 3G devices will be installed in business networks to provide an emergency backup connection.
However, it’s clear to Market Clarity that mobile Internet connectivity is emerging as the next major broadband market. By 2013, we believe there will be more than 6 million 3G mobile broadband connections in Australia, rivalling the slowing fixed broadband market (which will grow to nearly 8.5 million in the same period).
While the industry has, at least in its infrastructure, been marking time during 2008, we believe broadband providers will need to find a way to kick-start their growth in 2009, or be left behind by the 3G networks.