Publication Overview
This annual publication provides analysis on the telecoms market moving into 2013 it includes forecasts, overviews and discussions on:
• Trends in Global Telecoms
• National Broadband Network
• International broadband and trans-sector activities
• Mobile communications market
• Mobile broadband
• The Internet of Things and cloud computing
• Smart infrastructure (grids, transport, cities, buildings)
• Digital Economy
Researchers:- Paul Budde, Stephen McNamara, Kylie Wansink
Current publication date:- July 12 (25th Edition)
Executive Summary
Broadband infrastructure central to a $1 trillion economy
BuddeComm estimates that the overall telecoms services revenue passed the $40 billion mark in 2011, reflecting the mildness of the downturn in Australia compared with other countries. However, as was the case in 2011, growth remains very subdued in 2012. This is attributable to the continued decline in the fixed-line markets and the levelling off of mobile subscriptions, along with reduced pricing from operators attempting to attract increased market share.
Overall in 2011 fixed line revenues fell to around $10.5 billion across all operators.
Telstra still dominates the Australian telecoms market, although it received just under a 60% market share of total revenues in 2011, well down from the 80% market share it held in the early 2000s.
Optus’s share of service revenues continues to stagnate between 20% and 22%. However its wholesale business had a market shift in 2011 and its growth suggests that, even with a subdued market, Optus’s overall share could surpass 23% by 2013.
The Vodafone/Hutchison merger, along with the subsequent network issues, has contributed to that company’s market share dropping however, the increasing network expansion could see Vodafone returning to its previous share of total industry revenue..
The second-tier market is making gains in broadband; and they are gearing up for IPTV, which will then be bundled into their other product offerings. Although the bundled market often results in a fall in overall revenues it generally maintains a higher ARPU. Further consolidation is happening in 2012.
The fixed voice market revenue is declining in the second-tier market, but so too are mobile and broadband revenues. Falling revenue reflects increased bundle value, as well as consumers moving away from fixed voice services, but this may also be a symptom of increased reliance on VoIP-based and naked DSL platforms in the second-tier market. Nevertheless overall revenues in second-tier mobile and data services (including internet access) continue to show growth.
The second-tier telcos’ share of revenue has continued to grow since 2009, to just over 9% of total revenues by mid-2011. It is expected to increase slightly by 2013, to around 12%.
The fixed broadband market is still growing in size in 2012 and last year the percentage increase was higher than in the last couple of years. The increase in numbers appears to be coming from the continued drop-off in dial-up customers as they move to a faster and often cheaper service, plus the uptake by new customers.
Some key factors that have been contributing to the slow growth of this segment – eg, the hardware limitations in Telstra’s street cabinets – will be removed during 2012 with Telstra’s ‘Top Hat’ program.
Continued strong adoption of services such as Ethernet and private IP in the business data market segment saw revenue growth of around 15% in 2011.
The mobile market, now worth more than $17.5 billion, continues to expand – up 8% in 2011. As well as growth in overall SIOs mobile broadband grows strongly, reflecting the high adoption rate of mobile broadband datacards, as well as new devices such as the iPad, Android phones and tablets and new iPhone devices.
Declines in the fixed market limited overall telecommunications market growth in 2010 to just 2.7%, and, with the expectation of further fixed market falls, subdued broadband growth and the likelihood of intense competition in the mobile market (which will inhibit ARPU growth), BuddeComm expects overall market growth to be limited to around 1%-1.5% in 2011 and 2012.
This report provides analyses of the major developments in the various sectors of the industry as they are occurring in Australia and around the globe.
Key trends and developments
Political leadership
The world is facing a significant number of challenges. The key problem associated with these challenges is a lack of smart government policies that are based on integrated solutions crossing sector boundaries. Political leadership from the top is needed if this is to be achieved. It is called the trans-sector approach, where silos need to be replaced with horizontal collaborative structures – and ICT is the glue needed to build these.
FttH and the NBN
Australia is highly reliant on its income from natural resources and, like other resource-rich countries, it needs to diversify its economy. Interestingly, it is these resource-rich countries that are leading the rollout of FttH around the world.
The first NBN retail prices are looking very promising. Entry level charges are most competitive and according to BuddeComm this will see a 70%+ uptake rate once sufficient rollout mass is achieved.
Mobile Broadband
It is becoming increasingly clear that only structural change can save the mobile industry. BuddeComm regularly brings this issue forward, similar to the discussion in relation to the structural separation of the fixed networks that we began just over a decade ago.
During 2012 BuddeComm estimates that the total mobile broadband market will generate revenues that are 17% up from 2010, the vast majority of which will be accounted for by 3G mobile broadband revenues. In 2011 growth continued across a range of platforms and technologies, with the use of 3G mobile and wireless broadband services growing by 70%.
Digital Economy
According to Access Economics technologies in the key sectors of electricity, irrigation, health, transport and broadband communications would increase the net present value of Australia’s GDP by $35-$80 billion over the first ten years of their deployment. An Ericsson report found that doubling the broadband speed for an OECD economy increased GDP by 0.3% – and a 10% increase in broadband penetration increases GDP by 1%. A Deloitte report found that today the value of the internet to the Australian economy rivals iron ore exports. The report found that the internet contributed $50 billion in 2010, equivalent to 3.6% of Australia’s GDP, and predicted a growth of 7% over the next few years, to reach $70 billion by 2016.
IoT
Whether we are talking about smart cities, smart transport, smart grids, smart buildings or e-health – what is needed is good data that can be analysed in real time, allowing people and/or machines to make instant decisions in relation to issues such as energy efficiency, traffic situations, weather activities, and personal health, as well as commercial decisions. The infrastructure that can be used to link sectors together in a dynamic way is referred to as M2M or ‘the internet of things’.
The telco industry
The telecommunication industry is currently involved in a massive transformation. Since the arrival of the internet, the focus of the industry has shifted from providing defined end products to becoming a facilitator in the development of a range of new products, companies, and even new industries.
Telstra’s transitional process clearly shows that it shares the vision that has been developed around the national broadband network (NBN). But not only that – the company is now emerging as a leader in the industry, putting its new approach into practice, with a focus on the customer, innovation and new business opportunities.
Table of Contents
• 1.Key Market and Industry Analysis o 1.1Telecom Market – mid 2012
 1.1.1The future of the telecoms industry
 1.1.2Open systems lead to ‘economies of scope’
 1.1.3Broadband is essential for social and economic development
 1.1.4The gigabyte household needs FttH access
 1.1.5The Internet Monopoly
 1.1.6Trans-sector regulation
 1.1.7NBN and the Opposition
 1.1.8Will the half-built HFC disaster be repeated by the Coalition?
 1.1.9Mobile competition starts to bite in Australia
 1.1.10Are banks finally taking e-payments seriously?
 1.1.11Healthcare – next sector on the block for e-transformation
 1.1.12Tele-education – the quiet achiever
 1.1.13Australia still waiting for in-store e-shopping
 1.1.14Will infrastructure constrain the digital entertainment market?
 1.1.15Smart connected TVs and online streaming are a threat to the pay TV industry
 1.1.16Smart technologies challenging traditional energy scenarios
 1.1.17The upcoming electric vehicle tsunami
 1.1.18Who will dominate the IoT market?
 1.1.19Digital Cities: digital dreams?
 1.1.20Smart cities require holistic approach o 1.2Is there a future for the Telcos
 1.2.1Telecoms market is transforming but the telcos are not
 1.2.2Telcos lost the internet battle
 1.2.3Telcos also lost the mobile content battle
 1.2.4Next on the chopping block – the infrastructure
 1.2.5So what is next for the telcos?
 1.2.6IoT the next frontier
 1.2.7Is bandwidth the new growth market for the telcos?
 1.2.8Conclusion o 1.3Fundamental Changes to the Industry
 1.3.1The spectrum crunch
 1.3.2Mobile infrastructure becomes a fibre feed-in
 1.3.3Industry consolidation is a must
 1.3.4Market leadership no longer with the operators
 1.3.5Mobile broadband: killer app for FttH
 1.3.6Case study: Europe o 1.4The Social and Economic Impact of the Digital Revolution
 1.4.1Politicians underestimate the digital revolution
 1.4.2How governments lost the ICT plot
 1.4.3Desperate need for government innovation
 1.4.4Politicians should stop populist party politics
 1.4.5Urgent need for smart policies and smart tools
 1.4.6The need for Digital infrastructure
 1.4.7NBN a blueprint for other trans-sector policies?
 1.4.8Australia’s international PV success story
 1.4.9Citizens understand the crisis
 1.4.10No progress without new trans-sector policies
 1.4.11Conclusions
• 2.National Broadband Network o 2.1Market and Industry – Analysis 2012
 2.1.1The NBN and the opportunity for ‘virtual’ players
 2.1.2Will infrastructure constrain the digital entertainment market?
 2.1.3Waiting for the Coalition’s vision for Australia’s future
 2.1.4Will the half-built HFC disaster be repeated?
 2.1.5Four million households within reach of the NBN by 2015
 2.1.6Digital infrastructure essential to manage the transition to the e-world
 2.1.7Increased support for the NBN o 2.2Digital Economy
 2.2.1The issue is the digital economy, not broadband - analysis
 2.2.2National Digital Economy Strategy
 2.2.3NBN Art grants
 2.2.4Business participation on the NBN
 2.2.5More education required to sell the NBN to business users
 2.2.6Digital Inclusion
• 3.Industry Developments o 3.1Analysis of the Telstra Transition – The Next Phase
 3.1.1Analysis of the reorganisation
 3.1.2Analysis of Telstra’s cloud coup
 3.1.3NBN another step forward o 3.2Telstra puts pressure on the Competition
 3.2.1Telecoms competition carnage on its way
 3.2.2Low fares airline model for Telstra
 3.2.3Consolidation and rationalisation expected
 3.2.4Revenues under pressure o 3.3Breif Overview 2nd-tier Market o 3.4National Broadband Network - Market Forecasts 2015, 2020
• 4.The Mobile Market o 4.1The Market in 2012
 4.1.1Mobile competition starts to bite in Australia
 4.1.2Only structural change can save the mobile industry
 4.1.3High demand for mobile broadband
 4.1.4Mobile broadband – killer app for FttH
 4.1.5Watch out for the next WiFi wave
 4.1.6Spectrum key to broadband utility
 4.1.7Mobile network operators overview
 4.1.8Overview of trends and developments o 4.2Mobile Broadband – Statistical Overview and Forecasts
 4.2.1Market overview and analysis
 4.2.2Wireless broadband market statistics
 4.2.3Forecasts and other developments
 4.2.4Premium rate SMS (PSMS) portals and apps o 4.3Spectrum Key to Broadband Utility
 4.3.1Introduction
 4.3.2City/slum developments in emerging economies
 4.3.3Mobile broadband is national infrastructure (not just telecoms)
 4.3.4Spectrum harmonisation and infrastructure-sharing
 4.3.5Mobile broadband will stimulate investments in fibre networks
 4.3.6Competition issue
 4.3.7A comprehensive infrastructure plan is essential
• 5.The Internet of Things o 5.1Global Overview
 5.1.1‘Things’
 5.1.2From SCaDa to IoT
 5.1.3Sensors
 5.1.4Change in services driven by sensing and monitoring information
 5.1.5Who will dominate the IoT market?
 5.1.6Building smart communities and smart countries
 5.1.7Stage one – infrastructure
 5.1.8Stage two – trans-sector policies
 5.1.9Stage three – the business game-changer
 5.1.10Application examples
 5.1.11Staggering IoT predictions o 5.2Developments in Australia
 5.2.1Market forecast 2015
 5.2.2The first IoT statistics from Telstra
 5.2.3Smart Australia
 5.2.4Change in services driven by Sensing and monitoring information
 5.2.5How do we get there?
• 6.Smart Cities, Smart Infrastructure o 6.1Global Overview
 6.1.1Introduction
 6.1.2Building smart cities to ease the stress
 6.1.3Key components of smart cities
 6.1.4Strategies for smart communities
 6.1.5Global overview of smart communities
 6.1.6Intelligent Communities Forum o 6.2Developments in Australia
 6.2.1Smart cities, smart countries
 6.2.2Gigabyte household
 6.2.3Telstra’s connected home strategies
 6.2.4Intelligent infrastructure
• 7.Glossary of Abbreviations
• Table 1 – Worldwide smartphone operating systems by market share – 2007 – 2010; Q3 2011
• Table 2 – Top ten carriers worldwide by revenue – 2010; 2011
• Table 3 – Bharti Airtel mobile ARPU – 2004 - 2005; 2007 - 2011
• Table 4 – What does a better broadband service look like?
• Table 5 – Will better broadband increase your digital economy participation?
• Table 6 – What do you value in a broadband service?
• Table 7 – Total payments to be made to Telstra – 2012 - 2019
• Table 8 – Telstra subscribers by sector – 2005 - 2012
• Table 9 – Telstra – fixed line by sector and mobile voice minutes of use – 2005 - 2012
• Table 10 – Selected Telstra revenues by service – 2008 - 2011
• Table 11 – Selected second tier telco revenues by service – 2003 - 2011
• Table 12 – Second-tier telcos – revenue by provider – 2008 - 2011
• Table 13 – Second-tier telcos – relative market shares by selected providers – 2008 - 2011
• Table 14 – Mobile market subscribers, penetration rate and annual change – 2010 - 2012
• Table 15 – Total mobile services market revenue and annual change – 2010 - 2013
• Table 16 – Wireless broadband subscribers by access type and annual change – 2007 - 2012
• Table 17 – 3G mobile broadband subscribers by mobile network operator – 2007 - 2012
• Table 18 – Estimated mobile broadband data downloaded in Petabytes – 2007 - 2012; 2015
• Table 19 – Estimated mobile broadband revenues and annual change – 2007 - 2012
• Table 20 – Mobile broadband monthly ARPU – 2007 - 2012
• Table 21 – Estimated mobile data revenue revenues by mobile network operator – 2008 - 2012
• Table 22 – Fixed wireless broadband subscribers by major operator – 2008 - 2012
• Table 23 – WiFi hotspots at its peak in the late 2000s
• Table 24 – Forecast mobile broadband and voice revenues – 2008; 2013; 2018
• Table 25 – Worldwide connected devices
• Chart 1 – Overview of total payments to be made to Telstra – 2012 - 2019
• Chart 2 – Overview of Telstra services in operation by sector – 2005 - 2012
• Chart 3 – Overview of Telstra – fixed line by sector and mobile voice minutes of use – 2005 - 2012
• Chart 4 – Selected Telstra revenues by service – 2008 - 2011
• Chart 5 – Selected second tier telco revenues by service – 2003 - 2011
• Chart 6 – Selected second-tier telcos – revenue – 2010 - 2011
• Chart 7 – Market share size of NBN trans-sector market – 2020
• Chart 8 – Mobile market subscribers, penetration rate and annual change – 2010 - 2012
• Chart 9 – Total mobile services market revenue and annual change – 2010 - 2013
• Chart 10 – Overview of 3G mobile broadband subscribers by mobile network operator – 2007 - 2012
• Chart 11 – Overview of estimated mobile broadband data downloaded in petabytes – 2007 - 2012; 2015
• Chart 12 – Overview of estimated mobile data revenue by mobile network operator – 2008 - 2012
• Chart 13 –Worldwide market share of M2M connections – 2011; 2020
• Exhibit 1 – Digital economy – key developments
• Exhibit 2 – Apple iPhone and Apple iTunes
• Exhibit 3 – Major shareholders in Bharti Airtel – April 2011
• Exhibit 4 – UMTS900 commercial network operators (3G) in Europe – 2011
• Exhibit 5 – UMTS900 commercial network operators (3G) in Europe – 2010
• Exhibit 6- Internet of Things – the next infrastructure inflection point
• Exhibit 7- Trans-sector vs. Cross-sector
• Exhibit 8 – Key applications of a digital economy
• Exhibit 9 – Round 1 funding recipients Digital Hubs and Digital Enterprise
• Exhibit 10 – Eligible round 2 communities Digital Hubs and Digital Enterprise
• Exhibit 11 – Digital local government program projects – round 1
• Exhibit 12 - Local councils added to the project in May 2012
• Exhibit 13 – Dharavi – a city in a city
• Exhibit 14 – Cows and the IoT
• Exhibit 15 – Smart shopping
• Exhibit 16 – Lifetime customer relationships
• Exhibit 17 – Many Eyes – e-science web site example
• Exhibit 18 – GigaPort and SURFnet
• Exhibit 19 – Smart City – Masdar City – Abu Dhabi
• Exhibit 20 – Smart Homes
• Exhibit 21 – Learning from e-cars
• Exhibit 22 – Example of trans-sector collaboration in a Smart City
• Exhibit 23 – Oncor (TXU) and the Current Group – Texas
• Exhibit 24 – Pacific Gas & Electric (PG&E) – California
• Exhibit 25 – Xcel Energy’s Smart Grid City
• Exhibit 26 – Southern California Edison, California
• Exhibit 27 – American Recovery and Reinvestment Act 2009
• Exhibit 28 – Smart shopping
• Exhibit 29 – Smart homes