NBN set to survive, Mobile Broadband booms, but revenues down
Analysis Telecoms Market – mid-2013
This report provides expert insights into the Australian telecoms market. It goes beyond the hype and the spin and analyses all the key developments in this market, highlighting where the opportunities are and where to look out for the pitfalls.
It is important to be aware that the market currently operates in a two-tiered fashion. First, by far the greatest attention of politicians and the media is focused on the national broadband market. After five years of political skirmishing the Coalition’s NBN policy is now very close to the policy that supports the network currently being rolled out. Very large parts of it now have bipartisan support. Few politicians will actually admit this, but the future existence of the NBN is secure.
However, at another level, the real market action in 2013 is taking place in the mobile broadband market. The spectrum auctions have seen Telstra as the clear winner and it is set to dominate the 4G LTE market. This will have serious consequences for the other players in the market, especially Optus, whose future depends on mobile. It won’t be too long before we start seeing monopolistic tendencies in this market.
In the meantime, in many sectors the NBN is no longer the story. Instead it has created other, new stories in the various sections of our society and our economy, many of which are highlighted in this report.
Because of all of this the telecoms industry is involved in a massive transformation. Since the arrival of the internet, the focus of the industry has moved from providing defined end-products to becoming a facilitator in the development of a range of new products, companies, and indeed new industries.
The question is whether they will be able to embrace the developments around the digital economy. Trans-sector services such as e-health, tele-education, e-government, smart grids and IoT (M2M), all require a utilities-based wholesale infrastructure that is separated from the retail services that will be carried over them.
Obviously the Australian market – and in particular the ICT market – does not operate in isolation, so it is important to look at what impact international developments have on mobile and fixed broadband, the digital economy, and telecommunications markets in general.
As overseas examples are often mentioned by Australian politicians it is also important to be aware of what is actually happening in these countries and what is not – and also, importantly, what is selective reporting or outright hype.
This report provides a brief global analysis and then moves into the American, European, New Zealand, Asian and Africa – the hottest but perhaps less relevant market to Australia, but nevertheless one which has attracted the greatest attention from investors around the globe, including some from Australia.
After this we report in detail on the specific Hot Trends in Australia.
The Hot Trends
National Broadband Network
At the start of 2013 NBN Co indicated that the rollout plan was now slightly above target. This bodes well for a rapid rollout of the network, to reach close to four million connections by 2015. With all the major foundations now in place it should be reasonably plain sailing from here. As more detailed information becomes available from the Opposition, while there remain strong areas of disagreement, the reality is that despite the possibility of a change of government in late 2013 the NBN is here to stay.
The mobile market is being driven by smartphone uptake and this is also driving mobile broadband usage and the increase of over-the-top applications that are now depriving the MNOs of their traditional income streams. The power in the market has shifted from the operators to the smartphone vendors and app developers.
Total mobile services revenue is expected to grow to nearly $18 billion in 2012, but with the introduction of the lower network termination rates, decreasing the cost of monthly mobile broadband to consumers, growth may be slowed.
In 2013 there are more than 5.5 billion mobile broadband subscribers. The release of additional 4G networks and increases in capital expenditure by the mobile network operators will see increased market penetration with the availability of these 4G/LTE networks.
M2M and the Internet of Things
With the NBN and LTE now well and truly underway it is important to look at what will be the real value of this new infrastructure. The infrastructure that is now being built offers a range of features such as ubiquitousness, affordability, low latency, high speed and high capacity. It will link millions of devices, such as sensors, that will enable us to more efficiently and effectively manage our environment, traffic, infrastructures, and our society as a whole. This hot trend is going to be a real game-changer. It will transform every single sector of society and the economy, and it will be out of this environment that new businesses – and indeed new industries – will be born.
Digital TV, Pay TV, IPTV, Smart TV
With subscription TV household penetration under 30%, we are seeing more content available online through IPTV and we can also view additional FTA channels using digital TV, and listen to radio streaming online or on digital radio in the capital cities. We are now waiting for the next generation of smart TVs. They will most likely challenge the current IPTV developments.
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