Australia Market Growth
Growth of the telecommunications market in Australia has been spurned
by demand for:
- Online content
- Faster Internet speeds
- VoIP
- New consumer trends
Since 2006, a new generation of businesses have emerged around
the latest Internet technologies and online consumer trends. After
serious concerns due to marginalised voice revenues, network providers
are once again experiencing extraordinary revenue growth and reshaping
the telecommunications sector.
The bouyant demand for online content is driving online advertising
revenue with double or triple digit revenue increases for the industry’s
leading companies, such as:
- Destra
Corporation - Digital music, video and entertainment
company achieved 438% revenue growth in the 2006-07 financial
year, making it number 1.
- Ansearch
- online portal and advertising business, with 401% revenue growth
in 2006-07
Others achieving impressive growth through selling digital content
and advertising are:
- Comtel
- offers complete mobile solutions, including mobile telephones,
mobile data services, vehicle tracking and location devices and
satellite phones.
- MobileActive
- global mobile phone content and entertainment provider, including
music, games, video, information services, graphics and applications.
- Interactive
Data Services - specializes in 'mobilizing' other company's
data and content – for example, ezy-prepaid (a Prepaid Mobile
customer care portal)
VoIP Businesses
Faster broadband and more tech savvy customers have helped drive
fast growth for voice-over-internet businesses such as:
Telco Advisers and Re-sellers
Helping businesses take advantage of the digital communication
revolution:
Cables and Transmitters
The companies building the cables and transmitters through which
all these new online opportunities flow are also taking their share:
Online Advertising & Content - Delstra
The top three businesses in online advertising and content are
exposed to the global online advertising market, which is expected
to be worth $US46 billion in 2008.
Founded in the mid 1990s, Destra has evolved from selling content
to web hosting and back again. Currently it is focusing on advertising.
Destra has consolidated its position as Australia’s leading
online content company, with 14 acquisitions in 18 months providing
the basis for 2006-07 revenue of almost $67 million. This has been
driven by sharp growth in online advertising revenue.
Business’s growth is expected to continue to come from advertising
rather than selling the music, video and entertainment content itself.
The expectation is that morea nd more content will be given away
free, with revenue derived from the advertising wrapper around the
content.
Even Rupert Murdoch recognised this when he dropped the subscription
fee for The Wall Street Journal, claiming he could generate five
times the revenue selling advertising. Destra is in a similar situation.
Destra stands apart from other fast growing business in the sector
in its exposure to the mass media market. According to Paul Budde
"Many businesses are achieving success in niche markets, but
they won’t be able to make the transition to a mass market
company. Destra has done that, it is absolutely a serious media
company and no longer a niche player".
Online Communities - Comtel
Comtel builds communities around mobile phone services rather than
digital content. A recent product Amici - a cheap mobile services
aimed at 18 - 29 year olds, which includes special offers from advertisers.
This is a prime example of content and service revenue being displayed
by advertising.
Comtel owns several websites and portals, their fastest growing
revenue source. The new service will introduce a similiar business
model to the mobile phone customer base.
Comtels business model is very much Content + Advertising.
VoIP
VOIP is still growing, but the industry is divided as to the future
of voice-over-internet-protocol providers such as My Net Fone and
Engin.
Usability barriers around QoS continue to prevent businesses from
relying totally on Internet voice services, confining VoIP to a
relatively narrow niche for some time to come.
Any change in the VoIP market is likely to come through mass proliferation
with Microsoft, IBM, SAP and Oracle all considering packaging VoIP
communication services within their platforms. They will effectively
give away the VoIP business.
However, My Net Fone managing director Andy Fung holds a very different
view of the future of his business, which had 104% revenue growth
to $3.275 million in 2006-07. After experiencing growth in their
customer base from 10,000 in 2006 to around 50,000 today, he believes
VOIP is going mainstream now, and as broadband user numbers and
speeds rise, more people will feel comfortable purchasing voice
services.”
Tier 2 Service Providers
Tier One Telcos Telstra and Optus are continuing to perform strongly,
with second tier [Internet Generation] Telcos becoming more entrenched
in the market.
Leading Tier 2 companies include:
- IiNet - WA-based broadband company with 7% growth to almost
$230 million revenue
- Soul Communications/SP Telemedia
- Macquarie Telecom Group
- AAPT PowerTel
These businesses have survived the acquisition frenzy over recent
years are are now entering a period of consolidation, focusing on
increasing profits.
The tough market conditions these young Telcos endured has forced
them to better adjust to operate low margin, high volume businesses.
Low margins demand high volume, and these companies are achieving
mass.
Pipe Networks
Pipe Networks broke all the rules and as a broadband infrastructure
company built a business by taking on the big boys. The business
has been profitable from very early days, and sustained 88% growth
to $24 million revenue generated in 2006-07. Impressive!
To supplement its fibre city networks, Pipe Networks is current
building an undersea broadband cable from Australia to the US territory
of Guam. This will propel Pipe Networks to a new level in the years
ahead.
The fibre cable to Guam will introduce genuine competition in the
trans-ocean market, taking on Southern Cross and Telstra.
WiMax Services
Big Air and
Clever Communications
have focused on building WiMax services to provide broadband to
business customers. The future is still uncertain over whether WiMax
will be sustainable in metropolitan cities, where terrestrial fibre
networks and improving mobile broadband speeds pose stiff competition.
Clever Communications Australia chief executive Scott Carter,
stands firmly behind its WiMAx investment, claiming that many businesses
need fast, reliable broadband now, not in five or 10 years time.
Clever is able to provide 10Mbps speeds to 80% of Australian business
today whereas “Other (3G-based) wireless networks are designed
primarily for a consumer market, but we are focused on businesses
only, so we see a long term future in that", claims Carter.
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