This report covers recent developments related to a range of regulatory, infrastructural and competition issues in Australia's telecom market. It provides statistics from operators as well as data from a number of surveys undertaken in 2015 and 2016. The report includes updates on recent progress with the build-out of the NBN, as well as updates on proposals governing wholesale access to NBN infrastructure, pricing, and revenue structures aimed at expanding services in rural areas. It also assesses plans to amend spectrum allocations and usage in a bid to improve broadband availability.
The report also rovides updated financial and operating data on the main telcos as well as the second-tier players.
Researchers:- Phil Harpur, Henry Lancaster
Executive Summary
Australia's telco market grows slowly with mobile broadband driving growth
The overall telecoms services revenue reached over $42 billion in 2016, a growth of under 1% for the 12 months to June 2016. The overall market is predicted to grow at a stronger rate in 2017. The strongest growth is coming from the second tier providers, which grew at over 10% during that time period. The market incumbent Telstra still dominates the local telco landscape with well over 50% market share, however this market share is gradually declining. Prices for fixed-line and mobile voice services are being driven down by competition among operators, and by consumer reluctance to tolerate price increases, which engenders higher churn to other providers. Thus opportunities to drive revenue growth through higher consumer and business spend in the short term are limited to mobile data services.
Revenue for Public Switched Telephone Network (PSTN, fixed-line voice and local access) services continue to decline for all telcos. This reflects changing consumer habits. On the one hand, operators are switching their legacy PSTN infrastructure to VoIP, while consumers are also making fewer fixed-line calls in preference to mobile calls and calls through platforms such as Skype. As the NBN progresses, the majority of voice traffic will be IP-based. Fixed-line broadband on the copper network will also decline gradually as fibre and fixed-wireless broadband services become more widely available, though the Coalition's multi-technology NBN architecture, with its emphasis on VDSL with Fibre-to-the Node (FttN), will make greater use of copper than did Labour's plan for a national Fibre-to-the-Premises(FttP) network.
While fixed-line telephony traffic and revenue is declining, the mobile broadband market is growing steadily. Though far outpaced by mobile data traffic, mobile data revenue is becoming a significant revenue stream for providers. While mobile voice remains the dominant source of revenue for Mobile Network Operators (MNOs), it will soon be overtaken by mobile data revenue. In time, much of the voice traffic will be data packet via technologies such as Voice over Long-term Evolution (VoLTE).
The release of spectrum for LTE mobile broadband use, as well as and increased uptake by consumers and businesses, is easing helping to offset the decline in revenue from fixed-line services, though as user uptake increases so will the amount of bandwidth consumed. This requires additional investment among operators in spectrum assets and in upgraded mobile infrastructure.
From 2017 Telstra and Optus are better placed to capitalise on spectrum assets, having been able to make use of their 700MHz concessions since a year prior and so further develop their LTE subscriber base. Vodafone remains under some strain though it has seen encouraging revenue growth in recent quarters, supported by a revival of its subscriber base following a long period of decline. This change of fortune is a reflection of optimism among the company's management as well as a return of consumer confidence following network upgrades. By early 2017 the operator claimed to provide 96% population coverage with its LTE infrastructure, and had deployed VoLTE services across its LTE network. It also aimed to add more than 100 base stations to its LTE network during 2017, focussed on underserved areas.
Pressure on pricing will continue to place a strain on operator revenue into fiscal 2017, with revenue from mobile data services failing to offset the sharpening decline in revenue from voice services. This is being exacerbated by the popularity of OTT services which has led to a fall in SMS traffic and revenue. In addition OTT services are helping to reduce voice traffic volume, while with VoLTE technologies voice traffic is rendered as data.
The three LTE networks operated by Optus, Telstra and Vodafone have developed rapidly during the past two years as these players strive to provide an infrastructure capable of meetings customer demand for mobile broadband services. Telstra continues to be a global leader in mobile services, being a partner with Ericsson in developing 5G. The two companies have demonstrated 1Gb/s capabilities over a commercial LTE network using carrier aggregation technology, and will use the 2018 Commonwealth Games in Queensland to trial a range of technologies including a prototype 5G.
Australia's broadband sector is making improved progress in its migration to a multi-technology NBN. This has left considerable room for further development in the DSL and cable sectors, both of which are benefiting from the deployment of new technologies. The DSL sector is showing resilience as operators make greater use of VDSL, while the company responsible for the national rollout, nbn (NBN Co) has trialled G.fast technology and expects to provide services based on this upgrade during 2017. HFC is also gaining a new lease of life, with nbn also preparing to trial DOCSIS3.1 technology with a view to commercialising services by mid-2017.
Key developments:
- The overall telecoms services revenue reached over $42 billion in 2016.
- The overall market is predicted to grow at a stronger rate in 2017.
- Strongest market growth is coming from the second tier providers.
- Telstra still dominates the local telco landscape with around 60% overall market share.
- Telstra's market share is however gradually declining.
- Prices for fixed-line and mobile voice services are being driven down by competition among operators.
Companies mentioned in this report:
SingTel, VHA, Optus, Telstra, iiNet, TPG, Vocus, Macquarie Telecom
Table of Contents
1. Industry analyses
- 1.1 Digital, sharing, interconnected infrastructure
- 1.1.1 Introduction
- 1.1.2 The fixed telecoms market
- 1.1.3 The fixed broadband market
- 1.1.4 The National Broadband Network
- 1.1.5 Data Centres
- 1.1.6 Data Analytics
- 1.1.7 IoT/M2M
- 1.1.8 Cyber Crime
- 1.2 The mobile market
- 1.2.1 Introduction
- 1.2.2 Market Broadband Market
- 1.2.3 Digital Media platforms
- 1.2.4 Mobile Advertising and Digital Marketing
- 1.2.5 Apps, Entertainment, Social Networks and Gaming
- 1.2.6 Mobile Media and Mobile Device Market
- 1.3 Video Streaming market
- 1.3.1 Broadcasting and Pay TV
- 1.3.2 Video Streaming
- 1.3.3 Mobile Video Streaming
- 1.3.4 Digital Radio
2. Statistical overview of the telecoms market
- 2.1 Statistical overview - by provider
- 2.1.1 Revenue, growth and market share by major provider
- 2.1.2 Telstra
- 2.1.3 Optus
- 2.1.4 Company Analysis
- 2.1.5 Vodafone Hutchison Australia
- 2.1.6 Capital expenditure
- 2.1.7 2nd Tier Telcos
- 2.2 Statistical overview - by service
- 2.2.1 Analysis
- 2.2.2 Revenue Statistics
3. Telecoms services - wholesale and competitive access
- 3.1 Introduction of regulatory instruments
- 3.2 Regulatory instruments - analysis
- 3.3 Final access determinations for fixed line telecommunications
- 3.4 Layer 2 bitstream on non-NBN Co networks
- 3.5 Difference between peering and interconnection
- 3.6 The thriving wholesale aggregation market
4. Statistical overview of the broadband market
- 4.1 National Broadband Network - statistics and surveys
- 4.1.1 The NBN wholesale market - ACCC report May 2016
- 4.1.2 Market Surveys
- 4.1.3 The Digital Economy - Trans-Sector Market
- 4.1.4 Business Market Survey
- 4.2 FttN and VDSL
- 4.2.1 FttN in NBN's FY Results 2016
- 4.2.2 FttN vs FttH take-up
- 4.2.3 Analysis - High-speed broadband take-up is increasing
- 4.2.4 FttN overview 2014-2018
- 4.3 FttH statistical overview 2014-2018
- 4.4 DSL market statistics and analyses
- 4.4.1 Brief overview of the NBN
- 4.4.2 Regulatory environment - analysis
- 4.4.3 DSL infrastructure
- 4.4.4 Brief overview of broadband providers market
- 4.5 Business market - statistics and analyses
- 4.5.1 Market trends
- 4.5.2 Business market surveys
- 4.5.3 Business customer expenditure on telecoms
- 4.6 Residential market - statistics and analyses
- 4.6.1 Statistical overview residential market - total telecoms
- 4.6.2 Internet household statistics
- 4.6.3 Trends in the residential market
- 4.6.4 Household use of technology
- 4.6.5 Other residential market surveys
5. Statistical overview of the mobile market
- 5.1 Revenue overview and statistics
- 5.1.1 Statistical sources
- 5.1.2 Total mobile services revenue and forecasts
- 5.1.3 Operator revenue statistics overview
- 5.1.4 Average revenue per user (ARPU)
- 5.2 Subscriber statistics
- 5.2.1 Statistical sources
- 5.2.2 Mobile subscriber statistics
- 5.2.3 Mobile Usage Stats
- 5.3 Mobile Broadband statistics, LTE and 5G
- 5.3.1 Market overview and analysis
- 5.3.2 Mobile broadband market statistics
6. Video streaming - trends, developments and statistics
- 6.1 Impact of SVOD on traditional TV
- 6.1.1 Overview
- 6.1.2 Catch-up TV
- 6.1.3 Opportunities for Broadcasters
- 6.2 SVOD Market Sizing and Subscribers
- 6.2.1 Overall Market
- 6.2.2 Subscribers and Pricing by Provider
- 6.2.3 Forecasts and Future Trends
7. Pay TV, Free-to-Air - statistics and analysis
- 7.1 Overview
- 7.2 Subscriber statistics
- 7.3 Consumer penetration statistics
- 7.4 Usage Statistics
- 7.5 Revenue statistics
- 7.6 Advertising revenue
- Table 1 - Total Telecoms Revenue ($ billion) by Major Provider / Category - 2014 - 2017
- Table 2 - Total Telecoms Revenue Annual Growth by Major Provider - 2015 - 2017
- Table 3 - Total Telecoms Revenue Market Share by Major Provider / Category - 2014 - 2017
- Table 4 - Historic - Total telecoms revenues by smaller operators, and total - 2005 - 2013
- Table 5 - Historic - Total telecoms revenues by major providers - 2000 - 2004
- Table 6 - Telstra Group total revenue - 2005 - 2016
- Table 7 - Telstra Group - Top Line Annual Financial Results - 2011 - 2016
- Table 8 - Telstra Group - Top Line Financial Results - Annual Change - 2011 - 2016
- Table 9 - Telstra Group - Revenue by Product Segment and Annual Change - 2015 - 2016
- Table 10 - Overview of Optus overall operating revenue summary - 2000 - 2016
- Table 11 - Optus - Financial Result - Division - 2014 - 2016
- Table 12 - Vodafone Australia revenue - 2009 - 2016
- Table 13 - HTA key metrics - financial overview - 2009 - 2016
- Table 14 - VHA Monthly ARPU - 2015- 2016
- Table 15 - Historic - Monthly ARPU and by segment - 2009 - 2012
- Table 16 - Vodafone Australia revenue (historic) - 1996; 1998 - 2008
- Table 17- Total capital expenditure by major network provider - 2009 - 2016
- Table 18 -Second-tier telcos - total revenue ($ million) and annual change - 2010 - 2017
- Table 19 -Second-tier telcos - revenue ($ million) by major provider - 2014 - 2016
- Table 20 -Second-tier telcos - revenue by major provider - annual change - 2015 - 2016
- Table 21 -Second-tier telcos - Revenue Market Share revenue by major provider - 2016
- Table 22 - Historic - Second-tier telcos - revenue by provider - 2010 - 2014
- Table 23 - Historic - Second-tier telcos - revenue by major provider - annual change - 2010 - 2014
- Table 24 - Historic - Second-tier telcos - revenue by major provider - relative market shares - 2010 - 2014
- Table 25 - Historic - Second-tier telcos - revenue by provider (historic) - 2004 - 2007
- Table 26 - Historic - Second-tier telcos - revenue by major provider - relative market shares - 2004 - 2007
- Table 27 - TPG revenue and annual change - 2001 - 2016
- Table 28 - TPG consumer - revenue breakdown by market segment (consumer) - 2010 - 2016
- Table 29 - TPG - revenue ($ million) breakdown by division - 2009 - 2016
- Table 30 - iiNet total revenue - 2004 - 2016
- Table 31 - iiNet - revenue breakdown by market segment - 2015 - 2016
- Table 32 - iiNet key financial statistics - 2007 - 2016
- Table 33 - Vocus key financial parameters - 2016
- Table 34 - Macquarie key financial indicators - 2008 - 2016
- Table 35 - Macquarie revenue by division - 2015 - 2016
- Table 36 - Total telecoms market - retail revenue by service - 2005 - 2017
- Table 37 - Total telecoms market - annual retail growth by service - 2001 - 2017
- Table 38 - Total telecoms market - retail market share by service - 2005 - 2017
- Table 39 - Historic - Total telecoms market - retail revenue by service - 2001 - 2004
- Table 40 - historic - Total telecoms market - retail market share by service - 2000 - 2004
- Table 41 - The wholesale market in Australia - key players - 2015
- Table 42 - Count of TC-4 AVCs* by metropolitan/regional designation (Subscribers)
- Table 43 - Support for NBN
- Table 44 - Benefits of broadband for individual households - a national framework
- Table 45 - Scenarios - summary of benefits in 2020
- Table 46 - Impacts of the NBN on industry output at 2020 (% change)
- Table 47 - FttN expenditure - 2014-2016
- Table 48 - NBN uptake rates FttH and FttN
- Table 49 - FttN Roll Out 2014-2018 (cumulative ('000)
- Table 50 - FttN - Weighted average cost per premise by technology (rounded nearest $100)
- Table 51 - FttH Premises Ready for Service 2014-2018
- Table 52 - FttH Premises Activated 2014 - 2018
- Table 53 - FttH Weighted average cost per premise by technology (rounded to the nearest 100)
- Table 54 - Wholesale DSL pricing, per month per user - 2013 - 2014
- Table 55 - DSL broadband subscribers -2008 - 2017
- Table 56 - Historic - DSL subscribers and availability by state/territory - 2013
- Table 57 - Historic - DSL premises affected by distance from exchange - 2013
- Table 58 - Number of DSLAMs by major providers - 2009 - 2012; 2014
- Table 59 - Total number of DSLAMs - 2006 - 2014
- Table 60 - Number of ADSL and ADSL2+-enabled exchanges - 2013 - 2016
- Table 61 - Fibre Access Broadband (FAB) exchanges - November 2015
- Table 62 - Top Hat enabled exchanges - 2011 - 2013
- Table 63 - Broadband DSL retail subscribers by major provider - 2011 - 2016
- Table 64 - Total business and residential broadband subscribers - 2006 - 2016
- Table 65 - Telstra broadband subscribers by sector - 2007 - 2015
- Table 66 - Online business revenue - 2013 - 2015
- Table 67 - Business, government and household dial-up subscribers - 2009 - 2015
- Table 68 - Business, government and household broadband subscribers - 2009 - 2014
- Table 69 - Business, government and household total internet subscribers - 2009 - 2014
- Table 70 - Business uptake of broadband by access type - 2010 - 2014
- Table 71 - SME online trends - websites versus social media - 2010 - 2015
- Table 72 - Historic - SME computer equipment ownership trends - 1999 - 2004
- Table 73 - SME computer equipment ownership trends - 2005 - 2015
- Table 74 - Computer hardware expenditure - SMEs and medium businesses - 2001 - 2014
- Table 75 - Business trends in internet connections - 1998 - 2015
- Table 76 - SMEs internet access methods, by technology - 2010 - 2015
- Table 77 - SMEs internet access methods, by technology - 2010 - 2015
- Table 78 - Top uses of the internet by SMEs - 2011 - 2015
- Table 79 - Proportion of SMEs with social media presence - 2011 - 2015
- Table 80 - Estimated telco product mix of business customer spend - 2015
- Table 81 - Revenue mix - total spend of telecoms - SME market - 2015
- Table 82 - Revenue mix - total spend of telecoms - residential market - 2016 (e)
- Table 83 - Historic - Total households versus internet enabled households - 1999 - 2009
- Table 84 - Total households versus internet enabled households - 2010 - 2016
- Table 85 - Broadband component of internet enabled households - 2005 - 2016
- Table 86 - Fixed-line broadband data usage by users - 2008 - 2016
- Table 87 - Historic - Dial-up and broadband internet subscribers - 2003 - 2009
- Table 88 - Dial-up and broadband internet subscribers - 2010 - 2017
- Table 89 - Dial-up and broadband internet subscribers by access connection - 2010 - 2017
- Table 90 - Computerisation in the home - 2012 - 2015
- Table 91 - Technology use in the home - 2012 - 2015
- Table 92 - Proportion of the population using social networking sites - 2011 - 2016
- Table 93 - Top 5 online applications - 2013 - 2015
- Table 94 - Use of internet applications - 2010 - 2015
- Table 95 - New complaints to the TIO per 10,000 services in operation - 2013 - 2016
- Table 96 - Total new complaints to the TIO - 2006 - 2015
- Table 97 - Number of investigations by the TIO, by levels - 2009 - 2015
- Table 98 - Historic - Total mobile services market revenue and annual change - 1993 - 2009
- Table 99 - Total mobile services market revenue and annual change - 2010 - 2017
- Table 100 - Telstra mobile services revenue - 2009 - 2016
- Table 101 - Vodafone Australia revenue - 2009 - 2016
- Table 102 - Optus key financial indicators - 2009 - 2017
- Table 103 - Optus mobile revenue - 2013 - 2016
- Table 104 - Historic - Mobile market revenue per major operator - 1993 - 2004
- Table 105 - Historic - Annual change of mobile market revenue per major operator - 1994; 1997; 2000 - 2004
- Table 106 - Annual change of mobile market revenue per major operator - 2005 - 2016
- Table 107 - Mobile market share in revenue per major operator - 2000 - 2016
- Table 108 - Telstra mobile and broadband revenue - 2009 - 2016
- Table 109 - Blended monthly ARPU by MNO - 2000 - 2016
- Table 110 - Annual change in blended monthly ARPU by MNO - 2004 - 2016
- Table 111 - Telstra postpaid ARPU per month - 2004 - 2016
- Table 112 - Optus postpaid ARPU per month - 2004 - 2017
- Table 113 - Mobile subscribers, penetration rate and annual change - 2000 - 2017
- Table 114 - Vodafone mobile subscribers - 2009 - 2016
- Table 115 - Telstra mobile subscribers - 2008 - 2016
- Table 116 - Telstra active retail prepaid and contract mobile subscribers - 2011 - 2016
- Table 117 - Optus mobile subscribers - 2008 - 2016
- Table 118 - Historic - Annual change of mobile subscribers by carrier - 1995; 1997; 2000 - 2009
- Table 119 - Annual change of mobile subscribers by carrier - 2010 - 2016
- Table 120 - Retail mobile subscriber market share by carrier - 2015 - 2016
- Table 121 - Mobile subscriber market share by carrier - 2010 - 2016
- Table 122 - Historic - 3G mobile subscribers by carrier - 2003 - 2011
- Table 123 - Historic - Annual change of 3G mobile subscribers by carrier - 2007 - 2011
- Table 124 - Historic - Proportion of 3G mobile subscribers versus total subscribers by carrier - 2006 - 2011
- Table 125 - Historic - 2G mobile subscribers by carrier - 2006 - 2011
- Table 126 - Historic - Annual change of 2G mobile subscribers by carrier - 2006 - 2011
- Table 127 - Average LTE speed by MNO - 2012 - 2016
- Table 128 - Share of postpaid subscribers by operator - 2014 - 2015
- Table 129 - Share of prepaid subscribers by operators - 2014 - 2015
- Table 130 - Vodafone - prepaid and contract subscribers - 2009 - 2016
- Table 131 - Optus mobile prepaid and contract customers - 2008 - 2016
- Table 132 - Telstra mobile subscribers - 2009 - 2016
- Table 133 - MNO share of prepaid subscribers - 2009 - 2016
- Table 134 - MNO share of postpaid subscribers - 2009 - 2016
- Table 135 - MNO market proportion of prepaid and contract subscribers - 2009 - 2015
- Table 136 - Telstra wholesale subscribers - 2009 - 2016
- Table 137 - Vodafone wholesale (MVNO) subscribers - 2014 - 2016
- Table 138 - Mobile Usage per State - 2017
- Table 139 - Wireless broadband subscribers by access type - 2009 - 2016
- Table 140 - Mobile broadband subscribers by mobile network operator - 2007 - 2016
- Table 141 - Estimated mobile broadband data downloaded in Petabytes - 2007 - 2016
- Table 142 -Fixed wireless broadband subscribers - 2010 - 2016
- Table 143 - Historic - AUSTAR pay TV subscribers - 2008 - 2011
- Table 144 - Pay TV subscribers, Foxtel, others and total - 2008 - 2016
- Table 145 - Pay TV subscribers - annual change by major operator - 2008 - 2016
- Table 146 - Pay TV subscribers - annual change by major operator (historic) - 1997 - 2007
- Table 147 - Historic - Pay TV household penetration rates - 1997 - 2004
- Table 148 - Pay TV household penetration rates - 2005 - 2015
- Table 149 - Historic - Pay TV revenue by major operator - 1997 - 2004
- Table 150 - Pay TV revenue by major operator - 2005 - 2016
- Table 151 - Historic - Percentage change of pay TV revenue by major operator - 1998 - 2004
- Table 152 - Percentage change of pay TV revenue by major operator - 2005 - 2015
- Table 153 - Subscription TV advertising revenue and annual change - 2000 - 2015
- Chart 1 -Second-tier telcos - total revenue ($ million) and annual change - 2010 - 2017
- Chart 2 - Overview of total telecoms market - retail revenue by service - 2005 - 2017
- Chart 3 - Total telecoms market - retail market share by service - 2005 - 2017
- Chart 4 - Market share size of NBN trans-sector market - 2020
- Chart 5 - NBN services revenue share estimates by market share - 2015
- Chart 6 - NBN services revenue share estimates by market share - 2020
- Chart 7 - Telstra mobile services revenue - 2009 - 2016
- Chart 8 - Overview of Vodafone Australia revenue - 2009 - 2016
- Chart 9 -Optus key financial indicators - 2009 - 2017
- Chart 10 - Overview of mobile revenue share per major operator - 2000 - 2016
- Chart 11 - Telstra mobile and broadband revenue - 2010 - 2016
- Chart 12 - Overview of blended monthly ARPU by MNO - 2005 - 2016
- Chart 13 - Overview of mobile market subscribers versus population - 2005 - 2017
- Chart 14 - Overview of annual change of mobile subscribers by carrier - 2005 - 2016
- Chart 15 - Vodafone - prepaid and contract subscribers - 2009 - 2016
- Chart 16 - Optus mobile prepaid and contract customers - 2008 - 2016
- Chart 17 - Telstra mobile subscribers - 2009 - 2016
- Exhibit 1 - Summary of scenarios considered in this report
- Exhibit 2 - Unbundled Local Loop Bitstream
- Exhibit 3 - Overview of the TIO complaint handling process
- Exhibit 4 - Background information on the 3G race by the MNOs
