Broadband market enters a new era following
the NBN strategic review
The National Broadband Network continuing evolution
Since being implemented in 2012, Australia’s
NBN has undergone significant changes. The late-2013 strategic review of the
NBN, commissioned by a newly elected government, established a very different
framework. Instead of 93% of the population being covered by FttP, the new
architecture has called for a hybrid network incorporating FttP and FttN, and
utilising existing DSL and HFC plant.
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Overall, the initial development of the NBN
reflected a serious response to the relatively poor quality of Australia’s
broadband infrastructure. It was also a response to the intransigence of the
dominant telco, Telstra. The government was minded to change its broadband
infrastructure plan from a regional to a national focus, which to a degree has
been linked to the development of the digital economy supporting policies
relating to e-commerce, e-health, e-education and smart grid infrastructure.
These are all aimed at utilising the NBN for a myriad of purposes beyond
broadband.
Residential and business broadband markets:
growing adoption of faster services
Although the business market in Australia was
quick to embrace broadband, mainly to access faster data speeds, a significant
proportion of smaller operators has yet to establish an online presence, and
by early 2014 only about 38% had a business website.
The government’s ‘Broadband Availability and
Quality’ report, published in December 2013, showed that 1.4 million premises
(13% of the total) across many areas of the country had no adequate broadband
infrastructure. These areas include regional and remote regions but also
pockets within urban communities. Given the state of broadband availability
and speeds, many businesses still depend on mobile rather than fixed-line
broadband. A growing number in areas where access to the NBN has been made
available have switched to fibre broadband services, which enable these
companies to compete in the global economy more effectively. The faster speeds
of fibre infrastructure will see the rapid adoption by businesses of services
such cloud computing, online interaction, and media conferencing.
Business broadband has also allowed greater
choices in working environments, with the ability for employees to tele-work,
either from home or on the road while making use of improved mobile broadband.
As such, smartphones and tablets form an increasing part of the business ICT
environment.
DSL and HFC markets: stable growth as copper
plant survives within the NBN
The DSL sector continues to show resilience in
the marketplace, bolstered in recent years by operators adopting new
technologies which can deliver greater data capacity on legacy copper
infrastructure. In conjunction with Telstra’s unbundled local loop service,
which provides a platform for competitors to offer broadband services, the
slow-down in the rollout of the NBN has also meant that the number of
customers expected to migrate from copper to fibre-based services is far lower
than initial NBN Co forecasts. Many telcos have installed their own DSLAM
infrastructure, enabling them to provide fairly high-speed internet services
via ADSL2+.
Following the strategic review of the NBN,
which emphasised a combination of FttN and HFC architecture, the transition from
DSL to fibre-based infrastructure is likely to be on a far smaller scale than
formerly envisaged.
The cable sector has been stable in recent
years, and though Telstra and Optus have upgraded parts of their cable
networks with DOCSIS3.0 technology, there has been little investment in
expanding network footprint given that operators expected these networks to be
incorporated within the NBN and then superseded by FttP. The new NBN has
placed a greater emphasis on existing hybrid fibre coax plant being part of
the national broadband plan. As such, many cable customers in NBN areas will
not be migrated to the new fibre network.
In early 2014 there are fewer than one million
cable broadband subscribers, accounting for less than to 8% of the total
broadband market in Australia. However, most of these subscribers are high-end
users providing relatively high ARPU for the cablecos.
Mobile broadband growth supported by
Australia’s globally impressive LTE infrastructure
By the end of 2014 about a third of
Australia’s mobile subscribers will be on LTE networks. Telstra took the lead
in this market, followed by Optus and Vodafone which launched services during
2013. These MNOs have invested in spectrum and network upgrades to bolster
network capacity, while the geographic extension of LTE will see wider take-up
from consumers in coming years. Although the MNOs will be expecting a greater
return on their investments, partly by charging a premium for LTE services,
price competition will keep revenue growth low.
This report provides key data and in-depth
analysis on trends in the Australian broadband market. It reviews the NBN
since its inception in 2007, as provides insights into the steps that have
been taken subsequently. It assesses the ISP market, detailing the number of
operators in each sector as well as the strategies of the major players.
Comparisons with international markets are included to present an overview of
the broadband landscape. It also analyses the drivers behind internet adoption
among Australian households, supported by a range of surveys and statistical
overviews from sources including the ABS, ACMA and the government’s Broadband
Availability and Quality Report.
Key developments:
iiNet to deploy up to 30,000 WiFi hotpots in
capital cities; Victorian government looks to offer free WiFi in three cities;
Optus trials TD-LTE broadband using the 2300MHz band; m-payment and m-banking
developments; NBN transition developments; DOCSIS standard upgrade to 3.1;
VDSL2 and vectoring DSL developments; ACCC sets wholesale DSL prices to
mid-2014; tablet penetration among households reaches 44%; iiNet acquires Adam
Internet, sells TransACT fibre infrastructure to NBN Co; interim satellite
service reaches capacity; Foxtel’s anticipated launch of triple play services
to affect broadband market share among key players; includes ACMA reports for
2013, surveys to end-2013, company results for FY2013; ABS data to June 2013;
analysis of the NBN strategic review; market developments to March 2014.
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