Broadband Market - adds $100 billion to economy
Broadband is seen as being vital to both the economy and the community. BuddeComm estimates that it will add over $100 billon to the Australian economy over the next ten to fifteen years, by organisations that will use broadband as a critical element in their business model; in the distribution of their services to their customers; and as a communication, electronic marketing and electronic production tool. Savings in health care, education and energy needs to be added to this list.
All this requires proper planning and government and industry debates. Within the next two to three years most Internet households will be based on broadband. However, it will not be until other broadband devices are available, over the next five years, that broadband will spiral beyond the Internet households.
Because the rest of the world is progressing much more quickly (Australia is still running approximately 2 years behind its counterparts), Australia is losing out on competitive advantage. Furthermore, the Australian people are missing out on important lifestyle improvements. The key factor for this failure however, is moving from technology to affordability. While the technology has become available (ADSL2+), the price is too high for 60%+ of current broadband users.
Recent regulatory changes have also seen the ACCC putting its emphasis on facilities-based competition (ULL and DSLAMs) rather than on resale. This further undermines the position of not just the smaller ISPs, but also of the larger ISPs, like Primus and AAPT, which have significant numbers of resale customers.
After having struggled for nearly a decade to get ULL implemented, it is rather ironic that the government has now proposed to close this level of competition with its National Broadband Network Request for Proposal. While the Minister recognises the problem and has indicated that he will address it, there are currently no guarantees that the current ULL/DSLAM environment will be secured. Without any structural changes proposed under the RFP either, it is very much in Telstra’s interest to build as quickly as possible a new monopoly, this time based on FttN.
As it currently stands ULL and its DSLAM infrastructure will become obsolete once the FttN network is in place. It is most likely that this will happen in metro Australia within a very few short years. In regional areas the copper-based network will of course linger on for many more years, as it will be far more economically difficult to upgrade the infrastructure here.
At the same time the government is fully aware of the effects that this will have on competition and it is more than likely that a compromise will be struck on the issue.
Key highlights
- The total number of broadband subscribers reached 4.4 million by mid-2007, a 29% increase over the 12 months. This compares with a 64% increase in subscribers to mid-2006.
- For the 12 months to mid-2008 the annual growth should slow down further to 19%, to reach around 5.2 million broadband subscribers.
- Broadband subscriber growth started to slow down in 2007, and will taper off further during the 2008 to 2010 period. Australia is still trailing two years behind penetration levels in Europe and Asia.
- The market is beginning to approach the natural fixed broadband subscriber ceiling of around 7 million subscribers. Mobile broadband will extend this market beyond the fixed connections.
- In the retail market, Telstra ADSL constituted about 34% of the market in 2007 and resellers took about 49% of the retail market. Telstra Cable and Optus Cable constituted around 7% of the market each and other operators, around 4% of the market.
- By 2015 we estimate that the broadband market (including digital media) will have grown to around $45 billion, by which time it will have absorbed what we now call the data communications market as well.
- Approximately 90% of Australia’s national network could feasibly be upgraded with an FttH rollout. We believe this will ultimately happen over a 10-year period to 2018; the remainder of the national network will need to be serviced by wireless and satellite access providers.
For detailed information on the new BuddeComm Report: 2008 Australia Broadband Market Overview and Statistics see:
