Broadband Business market statistics 2003
Regional businesses missing out
According to the 2003 Barometer, rural small businesses were suffering from a regional technology divide, with their broadband take-up less than half the rate of metropolitan businesses.
Broadband penetration was significantly higher in metropolitan areas, with 49% of Internet enabled small businesses enjoying a high-speed, always-on connection. Yet in regional areas, where fast and immediate communication to remote customers or suppliers becomes critical, only 18% of Internet enabled small businesses had a broadband connection.
There were approximately 165,000 small regional businesses operating across Australia, according to ABS figures. For regional business to realise its full potential, the infrastructure that connects a business to its markets must be equally good as that available to metropolitan businesses. At the moment it is just not a level playing field.
The main reasons regional small business was lagging behind the metropolitan market in terms of broadband take-up were limited infrastructure, and a regional pricing structure that disadvantaged rural customers.
Customers outside metropolitan areas have been paying more for the same broadband technologies used by their city counterparts. Broadband take-up for small businesses surged ahead in metropolitan areas only when pricing, including home broadband pricing, reached a point that represented value and affordability for small business.
The study also found that 81% of Internet-enabled regional small businesses still had a dial-up connection, compared with just 58% in metropolitan areas. Also, 6% of Internet-enabled regional small businesses had an ISDN connection compared with just 4% in the metropolitan areas, suggesting that regional businesses wanted a reliable connection, but were suffering from fewer choices.
Table 7 – Internet/broadband share by state – 2003
State Internet Broadband
NSW/ACT 36.8% 41.0%
VIC 25.4% 31.2%
QLD 17.9% 14.7%
WA 9.7% 7.2%
SA 7.4% 4.2%
TAS 2.1% 1.0%
NT 0.7% 0.6%
(Source: Roy Morgan Research Pty Ltd)
Table 8 – Internet/broadband metropolitan and regional share of national market – 2003
Internet Broadband
Metropolitan 66.6% 85%
Regional 33.4% 15%
(Source: Roy Morgan Research Pty Ltd)
Broadband penetration at 50% – IDC
According to an IDC report published in mid-2003, Australian companies were prepared to spend money on advanced communications technology, such as VoIP – providing they could be convinced of the value. The research company reported that more than half of the 200 companies surveyed expected to increase spending on both broadband and IP services during 2003.
What they were looking for is a first-class network, quality of service and customer service capabilities. Executives were becoming happier with broadband and IP service providers. According to IDC, this is ‘a strong sign of a maturing market, with higher quality of network and service and increasing xDSL coverage’.
DSL deployment almost doubled to 49.5% of the 200 respondents in 2003; up from 25% in 2002.
VoIP and Internet Protocol Virtual Private Networks (IP VPNs) are the best way for service providers to add value beyond broadband access. Telstra was leading with the biggest market share in broadband business services on 50%, followed by Optus with 8.2%, and AAPT with 7.1%; iPrimus followed with 1.5% market share and the rest of IP services providers shared the remaining 23% (a handful didn’t use any or didn’t want to disclose).
IDC predicted that service providers could expect heightened interest in VoIP, following an increase in trials of this technology. But the company also warned that given the opportunity for disillusionment, carriers and integrators must carefully manage customer expectations for the risk and reward an integrated communications strategy can provide. Service providers and integrators also must have pragmatic tools such as best practice procedures, case studies, Return on Investment (ROI), TCO and network assessment to measure companies’ VoIP readiness.
A lot of education and partnering would be needed to maximize their full return. As voice services are critical, broadband and IP services providers need to position their offerings accordingly.
In mid-2004 we were proved to be right (see above), when IDC changed its forecast to 2.8 million broadband users by 2008.
Manufacturers show strong business uptake of broadband
An Australian Industry Group study in October 2003 into broadband usage identified a continuing rapid uptake by business of advanced telecommunications and confirmed the competitive benefits of broadband connection to performance and productivity.
At the same time, the report showed that large and medium businesses were outpacing their small and regional counterparts which were at risk of further lagging behind.
The Ai Group study was based on a survey of more than 800 manufacturers conducted in September 2003 and accounting for a combined turnover of $50 billion. The results of the survey demonstrated that business broadband uptake was around the levels of other comparable countries. This contrasted with a September 2003 study which placed Australia near the bottom of the pack of Organisation for Economic Co-operation and Development (OECD) countries (21st out of 29 countries) in terms of broadband take up per head of population, demonstrating the strength of the business sector in this area.
The survey however highlighted that many smaller businesses and businesses in regional areas were yet to understand these competitive benefits. One third of businesses not currently using advanced telecommunications indicated that they would do so within the next year, however most of this accelerated uptake would come from large and medium firms, increasing the technology gap with smaller and regional firms. Among small firms surveyed, 61% of those not using broadband felt that broadband technology was not needed or not of benefit to business performance.
The use of advanced telecommunications was relatively high among Australian manufacturing firms at 58% and this was expected to increase to 72% in the following 12 months. Telstra continued to lead the market both in terms of retail provision and ownership of infrastructure. The results confirm the benefits of broadband connection to business performance through increased efficiency and productivity.
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