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Telecommunications in AustraliaUntil July 1997, Australia operated a duopoly in the provision of telecommunications services, with duopoly operators Telstra and Optus Communications [now SingTel Optus] also providing the infrastructure over which a range of other value-added service providers were able to offer services. From this data, the market was opened to full competition amongst 209 licensed carriers, of which 157 were active, and 63 nominated carrier declarations. This includes:
TelstraIn spite of the open market, Telstra has vigorously defended its local market from competition, using tactics such as:
Such practices lead to accussations by other carriers that Telstra was not meeting its obligations to provide indiscriminate access to their networks to foster fair competition. Telstra has also been accused of failing to meet its legal requirement to provide interconnection facilities with new carriers and of having misled or deceived potential customers of new carriers. SingTel OptusSingTel Optus is owned by Singapore Telecom and remains Telstra's biggest competitor. Other Main Telecommunication OperatorsOther significant operators include: AAPT - owned by Telecom New Zealand - has in recent years reorganized to focus on particular market segments. Has acquired PowerTel to avoid a rumoured takeover bid from SingTel Optus. Primus Telecom Australia
Overall MarketAfter a struggle in 2006 for Telcos a to hold on to network revenues, content propelled a major upswing in overall revenue and profitabiltiy. Whilst content and other value add services do not change the underlying profitability challenge of network, it does indicate the need for carriers to change their business and pricing models. Voice revenues further declined with the emergence of VoIP, and future revenue challenges will occur with the convergence of telecommunications and media markets, with broadband TV and sophisticated delivery models such as triple play. This vertical layering of services and revenues may help a carrier retain market share, but the challenge to retain margins is more complex. Rather than engaging in anti-competitive behaviour and price wars, carriers need to look at how to unite in growing the communications industry as a whole. Trench warfare and guerilla activities are rarely sustainable tactics. At present, the levels of competition is Australian telecommunications is not progressing, rather it is forcing the country as a whole to lag behind other major countries in terms of product and service innovation.
InfrastructureAustralia’s telecommunications infrastructure is advanced and extensive, extending into Asia with backbones across the Tasman Sea to New Zealand, to Asia and the USA. Their global connectivity is both undersea cable and satellite based, including:
Australia Access RegimeThe access regime in both Australia and New Zealand has been one of the most critical elements for a competitive telecommunications environment in both countries.
Both Telecom NZ [in the NZ market] and Telstra in the Australian market have been seen by their respective governments as being anti-competitive in their wholesaling practices, significantly delaying the advanement of telecommunications in both countries. The Australian Competition and Consumer Commission [ACCC] has introduced a fair competition regime, forcing Telstra to open its network in a more competivie framework. Naturally, Telstra has used all all its legal options to delay the process for as long as possible. If anything, the move by the ACCC spurred Telstra to ramp up its ant-competitive behaviour again in late 2005.
Telecommunications PricingTelstra has successfully retained a stranglehold on the fixed market; reaping around 75% of its profitable revenues from access and voice services. Telstra has successfully maintained hold of the fixed market, accounting 75% of its profitable revenues from access and voice services. Voice, now a commodity service is under threat from resale competition, VoIP and mobile substitution. In response, Telstra has been rebalancing its services and significantly increased its line rentals, causing a 15% increase in residential charges. Price caps, bundling and triple play are having a massive effect on the pricing of new telecoms services. With sluggish network development by carriers other than Hutchinson, largely waiting to ascertain the outcome of the governments demand for Telstra to open its network to thrid parties at more competitive terms, the telecommunications infrastructure in Australia has fallen back significantly compared to other major nations. Pricing StrategiesPrice caps, bundling and soon triple play are expected to have a major impact on the pricing of new telecoms services. The International call market has become the focus of profit replacement with roaming charges escalating to become amongst the highest in the world. BundlingBy 2007, larger retail service providers such as Telstra, Optus and AAPT, adopted a bundling strategy with fixed-line voice, mobile and broadband, as well as introducing capped or bucket plans for fixed-line services. Triple play allows for lower unit costs with profitability spread over three platforms instead of one. This has driven price restructuring and tariff rebalancing, albeit there is a danger of dubious pricing models being adopted in an effort to retain market share. CompetitionThe main threat to Telstras dominance is the rapid uptake of VoIP, and DSLAM rollouts. VoIP has lessened the urgency from a customer perspective in some areas, with VoIP seen as an evolution [rather than revolution] from poor QoS networks into what has been in many cases an improved QoS.
Structural Industry ChangesIn order for the industry to move beyond the heavily tilted competitive platform of 2005, serious structural changes were needed to align their current businesses towards the challenges of media convergence. The cannibalisation effects of VoIP and changing access models, with triple play are emerging as the model forward. The industry is attempting to align itself along one of the three key structures: Infrastructure - changing ROI models to recognise network infrastructure as underpinning NG service revenues, rather than being a revenue collector on its own. Content - responsible for the major surge in telecoms revenue in the past few years Appliances - handsets, PBX, VoIP systems etc
Fixed LineFixed Line Service Providers include:
MobileThere are three main players in the mobile market:
Although these three continue to fight out the larger market shares, Hutchison has been taking significant market share following the launch of its 3G service in Sydney and Melbourne in April 2003. Service QualityOverall, mobile service quality is poor in Australia. Vodafone is particularly poor in built up city centres, and Telstra's service quality is widely regarded as particularly poor in rural and remote areas. Telstra PrivatisationTelstras QoS has delayed the sale of the government's remaining 50.1% stake in the operator. The privatization of Telstra evolved over three tranches, all of which have been subject to delays, with the third completed in November 2006. At this time, the government held just 17.8% of Telstra's shares.
Australia 3GThe main aim of 3G systems is to provide a more robust network with a range of data and multimedia services. Hutchison launched the first 3G service in 2003. More services were launched in 2005. Initial services were positioned in the top end of the mobile market where 3G can be promoted as a premium product. Hutchison became the first 3G-only operator in the country in 2006. When 3G was first conceived [late 1980s - early 1990s] wireless broadband services driven by the Internet were not evident. With Mobile data revenues declining, wireless broadband started to make an impact in the market, leaving 3G behind. By mid-2006 there were still only just over one million subscribers (5%). Hutchinson remains the leader of innovative 3G services. Other competitive elements have come from:
Broadband - ADSLFollowing Telstra's aggressive launch of its DSL retail charges in 2004, the broadband market finally took off. By mid-2006 there were nearly 3.5 million users, 80% using DSL. With over 300 Broadband Service Providers [BSPs] the resale market is highly competitivethroat. Despite Telstra's anti-competitive behaviour, competitors still dominate the DSL retail market [60%]. Customer complaints of poor service and slow speeds dominate the broadband market in 2007, with ADSL complainants increasing. In addition, around half-a -million regional users are deprived of broadband access. Government intervention is attempting to force remedial action and bring Australia back into global parity in basic communications. Broadband is seen as being vital to both the economy and the community. It is estimated that by 2015, broadband revenue will indirectly contribute over $90 billion to the Australian economy via organisations using broadband as a critical element in their business model. This includes:
Providing the general population with easy access to information and services is an economic driver for all countries. New business models and partnerships need to be developed in order to profit from these economic opportunities. This will not happen without government intervention to force closer co-operation between network carriers. Current activity includes:
Broadband - Cable ModemsCable modems connect fibre cable and HFC cable networks to the Internet. The advantage for the cable TV operators is the potential to transmit voice, data, and TV services via the same cable, with cable modems facilitating access to the Internet and potentially digital TV. In Australia, market penetration is limited by the availability of the cable TV networks. The main cable TV players are Telstra and Optus. However, both carriers are more focused on high speed broadband rollout and NGN, than they are on cable modems. Telstra has indicated it will withdraw from this market in 2008. The future of this market will largely depend upon:
Many see the end of cable telecommunications, with the increasing speed of DSL. The broadband market has suffered from both the lack of availability of broadband services and the lack of true broadband [2Mb+]. Reinvigoration will depend upon competitive prices for such high speed services and new applications such as IPTV and VoIP over broadband. Over 2007 Broadband Australia funding attracted a number of new industry initiatives.
Wireless Personal Area Network [WPAN]The rejection of the UWB standard disrupted the merger of Bluetooth and UWB, however the concept of WPANs remains very strong. WiMAX is still a key development in Australia. With or without UWB, WiMAX networks will begin to move towards WPANs. This will result in an AI [artificial intelligence] network infrastructure, linked to personal mobility devices with high storage capacity and parallel processing. Data will move freely around this wireless grid, which of course, will also be linked into the fixed network. Next: Australia Telecommunications Market Growth More on Telecommunications in AustraliaOverview | Market Growth | Mobile | Telcos | Telstra | SingTel Optus | Vodafone
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