Summary
The report reveals the proposal from the government to invest $43 billion in a national Fibre to the Home broadband network is a clear indication that they believe broadband infrastructure is a collective good. With its trans-sector multiplier effect it delivers massive social and economic benefits. The second major component of the proposals relates to reform of the regulatory regime for the telecommunications industry. These reforms aim to improve competition, strengthen consumer safeguards and reduce bureaucratic overheads imposed by the state industry regulator. Crucially the reform may include measures to address Telstra's vertical and horizontal integration, such as functional separation or limitations to the cross-ownership of fixed-line and cable networks and media assets
A trans-sector approach is required to guide us through the development of the NBN. It is critical to look across a variety of industry sectors to create synergy. There are significant opportunities to utilise new telecoms networks for e-health, e-education and smart grids.
With respect to broadband infrastructure, Australia desperately needs to foster open networks to support competition. The unbundling of the local loop and the installation of DSL equipment by third parties within Telstra's exchanges has resulted in a significant increase in competition. The development of a wholesale-only national fibre optic network based on open access principles is likely to secure these gains. However in order to satisfy demand for bandwidth core network backbones need to increase in capacity, perhaps as much as a hundred fold from their current capability. In fact some industry commentators contend that with increased state investment in the backbone potentially there would be little need to invest in the fibre optic network from the telephone exchange to the premises. This component would look after itself in a normal commercial fashion, mostly without the need for any subsidies.
Network operators currently utilise the copper access network to provide DSL based broadband services and the HFC cable network to provide similar products. While the government plans for a wholesale based national broadband network may change fundamental aspects of the telecoms industry in Australia, the copper and HFC based network will continue to co-exist alongside the fibre based networks for the foreseeable future.
Though there are roughly 200 ISPs in Australia and the retail broadband market in Australia is dominated by a small number of firms. Telstra provides nearly 45% of services and has roughly four times as many retail subscribers as the second largest player Optus with around 11% of the market. iiNet and TPG and Primus are other major players and each has around a 5% share. The remaining 30% of the market is shared between around 180 small and medium sized providers. Consolidation in the retail ISP market has occurred with a number of mergers in the last two years. The most notable of these deals was between iiNet and Westnet and between TPG, Soul and Chariot Internet.
Of critical importance to ISP's is whether to further invest in DSLAM infrastructure as the fibre optic based national broadband network is built. Further investment will enable ISP's to directly connect subscribers to their network rather than relying on purchasing wholesale services. However in the longer term the national broadband network may render this investment obsolete as subscribers are migrated to the fibre network.
There are two HFC network operators in Australia, Telstra and Optus, both serving customers in the large major metropolitan centres. By early 2009, we estimate that there were 830,000 cable broadband subscribers, a penetration rate of around 15% of the total broadband market in Australia. Telstra has indicated it will seek to expand the number of services it provides over its HFC network to compete with fibre-based services provided on a wholesale basis by a NBN operator. Telstra plans to launch very high-speed Internet services in Melbourne by the end of 2009. However, if the price of fibre-based services provided by the NBN operator is attractive to Telstra relative to the cost of servicing subscribers through an upgraded HFC network, then we may see Telstra abandon a strategy to upgrade the HFC in other major centres.
With respect to municipality broadband, councils and communities are beginning to understand the social and economic benefits that broadband can bring to their communities. It is therefore of critical importance that cities are taking charge of the development of their knowledge-based environments. A proactive local government is a vital element in the development of broadband, to the point where it can begin to deliver community benefits in terms of education, healthcare, community services and job creation.
The statistical sections of this report provide broadband statistics relating to the number of subscribers and market shares of major providers as well as additional data relating to DSL, cable and other broadband technologies. Of particular note is that the wireless broadband market is currently booming and this trend is expected to continue into 2010.
In 2008 fixed broadband access among Internet household in Australia stood at around 67%, trailing the leading broadband nations, such as Denmark, Netherlands and Switzerland, which are approaching 100%. New Zealand lags further behind though both countries are like to close the gap due to reform of their respective telecommunications industries. At the beginning of 2009 only 26% of broadband connections provided peak download speeds of 8Mb/s or more, up slightly from 20% at the end of 2007. Australia lags its peers with respect to slower broadband connections too. In early 2009 around 51% of broadband connections deliver speeds of 1.5Mb/s or more, up from 35% at the end of 2007.
The business market has been quick to embrace broadband-by 2009 the vast majority of the business sector had made the transition. Further growth is expected moving into 2010 despite difficult economic conditions in Australia. As business users gradually move to faster broadband access via ADSL2+ and, when it's built, services from the fibre based national broadband network, businesses are increasingly embracing new broadband applications.
In 2008 business broadband usage increased by 143% from just over six million gigabytes downloaded in December 2007 to over fifteen million gigabytes downloaded in December 2008. Over the same period household usage grew by only 24% to 66 million gigabytes.
However business users have been earlier adopters of several broadband media services and in 2009, despite difficult economic conditions, household users may increasingly take up similar services, most notably, IPTV. However pricing of broadband media services is critical for household users. As such the emergence of an economically attractive revenue model based on advertising or other forms is critical.
Data in this report is the latest available at the time of preparation and may not be for the current year.
The following notes provide some background to our scenario forecasting methodology:
*This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
*The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
*All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.
Table of contents
1. The National Broadband Network
1.1 Analysis of the new plans
1.1.1 Details of the NBN proposal
1.1.2 National Broadband Corporation
1.1.3 FttH infrastructure
1.1.4 The business model
1.1.5 Trans-sector thinking
1.1.6 Regulatory issues
1.1.7 Open network = innovation and affordability
1.1.8 Co-development of fibre and the digital economy
1.1.9 What's next for Telstra?
1.2 Critical considerations
1.2.1 Governance and management of the NBN/NBC
1.2.2 Regulations-critical considerations
1.2.3 Wholesale
1.2.4 Technology critical consideration
1.2.5 Basic infrastructure
1.2.6 Comments from international experts
1.3 Trans-sector vision
1.3.1 Introduction
1.3.2 Background information
1.3.3 National welfare depends on new thinking concepts
1.3.4 Missing link: political leadership
1.3.5 How many stimulus packages can we afford?
1.3.6 The multiplier effect
1.3.7 Smart communities, where do we start?
1.3.8 We lack the structures to implement trans-sector visions
1.3.9 The sectors
1.3.10 Smart communities and smart buildings
1.3.11 Trans-sector thinking
2. Infrastructure Analysis
2.1 Overview of broadband infrastructure analysis
2.2 Infrastructure developments-2009
2.3 What is broadband and why is it needed?
2.4 Damning report from Engineers Australia
2.5 National backbone needs to increase one hundredfold
2.5.1 Open systems the only way forward
2.6 Boom and bust cycle in local access
2.6.1 Global infrastructure nearing collapse
2.6.2 Wild growth in local access
2.6.3 Dark fibre providers setting the scene
2.6.4 Financial crisis
2.7 Regional developments
2.7.1 New plans on the horizon
2.7.2 Broadband has deteriorated in regional Australia
2.7.3 Tasmania: Australia's FttH test bed
2.8 Infrastructure broadband map for Australia-update 2009
3. Network Operators and Wholesalers
3.1 Regulatory environment
3.1.1 The impact of fibre optic networks on DSL regulation
3.1.2 Unbundling of the Local Loop (ULL) and line sharing
3.2 DSL infrastructure
3.2.1 Overview
3.2.2 Tool for competitors
3.3 DSL services
3.3.1 ADSL2+
3.3.2 Naked DSL
3.3.3 VDSL and VDSL2
3.4 Market analysis
3.4.1 The end of ULL and DSLAMs
3.4.2 DSLAM competitors gained an early foothold
3.4.3 Continual delays by Telstra
3.4.4 Telstra ADSL2+
3.4.5 No convergence with TV, but complimenting
3.4.6 FttH superior to ADSL2+
3.4.7 Australian rules for ADSL2+
3.4.8 High-speed Internet & HD TV to regional & rural areas
3.5 Industry structure
3.6 Structural separation enlarges the retail pie
3.7 Reliance on wholesale DSL access
4. ADSL2+ Providers
4.1 Major service provider profiles
4.1.1 Telstra
4.1.2 Optus
4.1.3 iiNet
4.1.4 TPG / Soul
4.1.5 Powertel / AAPT
4.1.6 Primus
4.1.7 Internode
4.1.8 Netspace
4.1.9 Adam Internet
4.1.10 Exetel
4.1.11 Pacnet
4.1.12 Telarus
5. HFC Cable Networks
5.1 Technology
5.1.1 Hybrid Fibre Coax (HFC)
5.1.2 The DOCSIS standard
5.2 Market statistics and forecasts
5.3 Telstra
5.3.1 Overview
5.3.2 DOCSIS 3.0 rollout
5.4 Optus
5.4.1 Overview
5.5 Industry analyses
5.5.1 Telstra's DOCSIS 3.0 broadband rollout
5.5.2 No long-term future in HFC cable broadband
5.5.3 From HFC to FttH
6. Home Networks
6.1 Statistics and forecasts
6.1.1 Slow but steady growth throughout 2008
6.1.2 Survey on home entertainment centres-2008
6.1.3 The Connected Home-2007 report
6.1.4 Interfacing with home networks
6.1.5 Smart Wired House-survey findings
6.2 Home networking developments
6.2.1 Broadband-enabled connected homes
6.2.2 Home automation market
6.2.3 Home wireless market
7. Municipality Broadband
7.1 Introduction
7.2 Tender allows for regional networks
7.2.1 Regional solutions perfect fit for Australia
7.2.2 The undermining of the national carrier
7.2.3 Update following the NBN announcement of 2009
7.3 Market overview
7.4 Broadband Connect-what's next?
7.4.1 Introduction
7.4.2 Why should local government be involved
7.4.3 NBN and local councils
7.5 Progress report-2007, 2008, 2009
7.5.1 Broadband action time for local councils
7.5.2 Significant progress, but also lots of frustration
7.5.3 Intuitive understanding of social and economic benefits
7.6 Cities are taking charge
7.6.1 Introduction
7.6.2 Global lessons
7.6.3 Cities are charging ahead with broadbanding
7.7 How to get started
7.7.1 The local council model
7.7.2 Framework for local government policies
7.7.3 Steering committees
7.7.4 Pro-active local governments are essential
7.7.5 Broadband rollouts
7.8 The roles of the players
7.8.1 Vision and cooperation pays off
7.8.2 State and local government
7.8.3 The industry
7.8.4 Broadband operators
7.9 Outlying areas
7.9.1 Economic non-viable areas
7.9.2 Local governments need to be involved
7.9.3 Councillors and bureaucrats need to be connected first
7.9.4 Pre-empt political action
7.9.5 Subsidies?
7.9.6 Cooperation with operators
7.10 How to move forwards
7.11 City marketing
7.11.1 The concept of Telematica
7.11.2 Three strategic elements of Telematica
7.11.3 High-speed communities
8. Statistical Overview and Forecast
8.1 Market statistics and forecasts
8.1.1 Household statistics
8.1.2 Market subscribers and forecasts
8.1.3 Market shares-2009
8.1.4 Internet access revenues
8.1.5 Broadband access revenues
8.1.6 Residential market-where the long term potential exists
8.1.7 Long-term forecast-2015
8.1.8 Market segment forecasts-2005-2015
8.2 ISP, Internet & broadband statistics
8.2.1 ISP market overview-where is the industry heading?
8.2.2 ACMA survey on Internet activity and content
8.2.3 ABS survey of Internet activity
8.2.4 ACMA survey on Internet subscribers
8.2.5 ITU report on Asia broadband rankings
8.2.6 ABS survey-household use of Internet information technology-2007
8.2.7 Other market surveys
8.3 Business market
8.3.1 Market trends
8.3.2 Business market-historic data mid-2000s
8.3.3 Business market surveys
8.4 Residential market
8.4.1 Residential usage trends
8.4.2 Revenue spend in the residential market
8.4.3 Australians use of technology
8.4.4 Household use of Internet IT
8.4.5 ACMA survey-consumer attitudes towards Internet take-up
8.4.6 Other residential market surveys
9. Glossary of Abbreviations
Table 1-DSLAMs sites taken up by access seekers and Telstra-2007-2008
Table 2-Number of infrastructure providers by number of ADSL enable exchanges-2007-2008
Table 3-Broadband availability by access technology-2008
Table 4-Broadband DSL retail subscribers by major provider-2004-2009
Table 5-Broadband ADSL retail subscribers by major provider-annual change-2005-2009
Table 6-ADSL2+ subscribers by provider-2006-2009
Table 7-Number of DSL-enabled exchanges-2006-2009
Table 8-Telstra DSL statistical overview-2008-2009
Table 9-Optus DSL statistical overview-2008-2009
Table 10-iiNet DSL statistical overview-2008-2009
Table 11-TPG DSL statistical overview-2008-2009
Table 12-PowerTel / AAPT DSL statistical overview-2008-2009
Table 13-Primus DSL statistical overview-2008-2009
Table 14-Internode DSL statistical overview-2008-2009
Table 15-Cable broadband subscribers by operator and annual change-2002-2010
Table 16-Home network penetration of households-2005; 2007-2008; 2010; 2015
Table 17-Australian multi dwelling units (100+)-2003-2009
Table 18-Key features that smart wiring customers seek-2004; 2006-2007
Table 19-Current level of smart wiring uptake-2004; 2006-2007
Table 20-Revenue forecasts-Australian home automation market-2004-2008
Table 21-Australian Internet users and penetration rate-2003-2009
Table 22-Broadband component of Internet households-2005-2010; 2015
Table 23-Fixed broadband access among Internet households in selected countries-2002-2009
Table 24-Broadband services share and percentage of annual increase-2007-2008
Table 25-Total broadband subscribers and annual change-1996-2011
Table 26-Broadband subscribers-total market-retail and wholesale values-2004-2010
Table 27-Broadband annual market-annual growth-retail and wholesale values-2004-2010
Table 28-Broadband subscribers-market shares-retail values-2004-2010
Table 29-Broadband subscribers-market shares (cable, ADSL)-wholesale values-2004-2010
Table 30-Internet access revenues (dial-up & broadband) by major provider-2003-2010
Table 31-Annual change in Internet access revenues (dial-up & broadband) by major provider-2004-2010
Table 32-Market share of Internet access revenues (dial-up & broadband) by major provider– 2004-2010
Table 33-Broadband access revenues by major provider-2005-2010
Table 34-Annual change in broadband access revenues by major provider-2006-2010
Table 35-Market share of broadband access revenues by major provider– 2005-2010
Table 36-Total fixed wireless broadband revenues-2005-2009
Table 37-Revenue make-up scenario forecasting-operational and structural separation-2010
Table 38-Residential spend per household per annum-2003; 2010; 2015
Table 39-Overview total telecoms/Internet market-2015
Table 40-Broadband revenues-2005; 2010; 2015
Table 41-Broadband market share by technology-2005; 2010; 2015
Table 42-Number of ISPs-1995-2010
Table 43-Number of ISPs by technology-2007
Table 44-Australian Internet users and penetration rate-2003-2009
Table 45-Internet household penetration forecasts-2008-2012
Table 46-Internet subscribers by access type for all ISPs-2005-2010
Table 47-Number of ISPs in the Australian market-2007-2008
Table 48-Business, government and household Internet subscribers-2007-2008
Table 49-Internet subscribers by download speed-June 2008
Table 50-Internet subscribers by access technology-2007-2008
Table 51-Internet households & business subscribers-1985; 1990; 1995; 1997; 1999-2007
Table 52-Dial-up and non-dial-up Internet subscribers-2003-2007
Table 53-Business, government and household Internet subscribers-2005-2007
Table 54-Internet subscribers by download speed-2007
Table 55-Total number of ISPs in Australia by size-2000-2007
Table 56-Internet subscribers by access technology-2006-2007
Table 57-Dial-up and broadband Internet services-1999-2007
Table 58-Australia broadband rankings among 43 Asia-Pacific nations-2008
Table 59-Household Internet connection by type of access-2004-2007
Table 60-Household Internet connection by type of access-2006-2007
Table 61-Personal use of the Internet by type of access-2006-2007
Table 62-Household Internet access by type of broadband access-2006-2007
Table 63-Households with access to a home computer and the Internet-Australia and selected countries-2007
Table 64-Business and government market spending-mid-2000s
Table 65-SME computer equipment ownership trends-1999-2008
Table 66-Business trends in Internet connections-1995-2008
Table 67-How SMEs access the Internet-2008
Table 68-Summary of current and expected uses of the Internet by SMEs-2008
Table 69-Applications running on IP networks-2005-2006; 2008
Table 70-How users currently access IP networks-2008
Table 71-Devices used to access IP networks-2008
Table 72-Employees with wireless broadband-2008-2009
Table 73-Increase in usage of non-voice applications in next year to 2009
Table 74-Plans for convergence of data & voice networks-2005; 2008
Table 75-How VoIP is deployed in networks-2008
Table 76-Applications running on IP networks using VoIP-2005-2006; 2008
Table 77-Benefits derived following VoIP implementation-2008
Table 78-Take-up of Internet services-farms versus households-April 2007
Table 79-Internet and broadband take-up-households, SME, farm sector-2007
Table 80-Broadband technology by state for farms-April 2007
Table 81-Farm broadband take-up by technology-April 2007
Table 82-Take-up of telecommunications services-farm versus household-April 2007
Table 83-Household consumer satisfaction with ISP-July 2006-June 2007
Table 84-Household consumer likelihood of switching ISP-July 2006-June 2007
Table 85-Growth in residential and business data usage-2007-2008
Table 86-Residential market revenue by industry segment-2008
Table 87-Computerisation in the home-2008
Table 88-Internet applications performed in the last 12 months-2008
Table 89-Total households with access to a home computer-2000-2007
Table 90-Households with access to a home computer-2000-2007
Table 91-Households with access to a home computer by region-2000-2007
Table 92-Total households with home Internet access-2000-2007
Table 93-Households with home Internet access-2000-2007
Table 94-Households with home Internet access by region-2000-2007
Table 95-Percentage use of the Internet according to location-2006-2007
Table 96-Percentage use of the Internet at home by purpose-2006-2007
Table 97-Frequency of use of the Internet at home by gender and region-2006-2007
Table 98-Percentage use of the Internet at home by purpose-2006-2007
Table 99-Usage of telecommunication services by device-2007
Table 100-Internet take-up by metropolitan/non-metropolitan area-2007
Table 101-Internet take-up by access type-2007
Table 102-Broadband take-up by access type-2007
Exhibit 1-Smart homes
Exhibit 2-Smart City-Masdar City, Abu Dhabi
Exhibit 3-Fixed networks overview-2009
Exhibit 4-Wireless networks-2009
Exhibit 5-Secondary technologies-2009
Exhibit 6-Multimedia/hybrids technologies-2009
Exhibit 7-HFC network status
Exhibit 8-Multi-dwelling units
Exhibit 9-Ready-to-go broadband towns-2007
Exhibit 10-Key ingredients for local broadband success
Exhibit 11-Key broadbanding steps
Exhibit 12-Some application bit rates
