2006 Australia - Mobile Communications - Voice Still the Killer App

This report examines the Australian mobile communications market, identifying a number of important trends on both the demand and side supply side. The killer application on mobile remains voice and beyond voice, there will not be a lot of room for growth apart from the current niche market for mobile data in business. The report also analyses the activities of the major players � Telstra, Optus, Vodafone and Hutchison. Hutchison continues to outperform its competitors in terms of market growth, but competition is heating up in the 3G arena.

Industry moving into 2007
Subscriber Statistics
Revenue Overviews
Prepaid Services
Price competition
Infrastucture developments
3G overview, statistics, analysis
The end of CDMA
Handset Market

Overview and analyses
This report examines the Australian mobile communications market, identifying a number of important trends on both the demand and side supply side. The killer application on mobile remains voice and beyond voice, there will not be a lot of room for growth apart from the current niche market for mobile data in business. Finally we are now beginning to see a more rapid rollout of 3G services in Australia, as mobile operators must tap into new revenue streams. 3G will give operators the network efficiencies to become more competitive both in voice and data services. The report also analyses the activities of the major players � Telstra, Optus, Vodafone and Hutchison. Hutchison continues to outperform its competitors in terms of market growth, but competition is heating up in the 3G arena.

Key trends
Substitution has started rather late in Australia. While Vodafone had threatened with it for many years, it was Hutchison that led the charge in 2003 and 2004 but it was not until 2005 before some real action took place. Telstra reported a drop of 7% in fixed line, mainly seeing these customers moving over to mobile. Further price cuts are needed to bring Australia in line with the rest of the world. A forecast until 2010 is provided. Substitution will also fuel to developments in fixed-mobile conversion market. However wireless broadband could even play a bigger role here.

Statistical information
With around 20 million users and a penetration level above 95% the Australian mobile market is marching towards saturation. There is still room to manoeuvre with another two million users to be added to the customer base in the next three years. This report brings you up to data with 2006 data and some prediction out to 2007 and beyond. Market share, penetration statistics and some key trends are highlighted in this report. The growth is slowly coming down to single digit figures after more than a decade of double digit growth.

Mobile phones are rapidly becoming commodities and fierce price competition has set in to keep and win customers before the much-hyped next generation data services. Growth in subscribers is slowing and Average Revenue per User (ARPU) has been steadily declining as result of sharply increased prepaid subscriptions and a range of capped price plans. Telstra�s market share has been stable, but Optus has lost out to aggressive capped price campaigns from Hutchison and Vodafone. This report looks at operators� revenues, ARPU and revenue market shares moving into 2007.

Prepaid Service
Avoiding the monthly fee has always been � and still is � a very successful way to broaden the appeal of mobile services. Many potential subscribers, particularly outside the business market, are simply not prepared to pay a monthly fee for a service that they feel they may use only occasionally, particularly if they are tied in to minimum contracts of one, two or even three years. The prepaid model has taken off around the world, even in Australia after a reluctant start (50% penetration in 2006). Growth has seen distribution issues arise and electronic recharge options emerge.

From 2G to 3G
The mobile telecommunications infrastructure covers almost the entire population, with over 17,000 Base Transceiver Stations (BTS) in place. While many of these stations have antennae on obtrusive towers, most new sites in urban areas are now mounted on the sides of buildings and other structures. These antennae serve GSM, CDMA and WCDMA networks. CDMA networks are closing down in 2006/07. 3G networks arrived in 2005. By 2006 most infrastructure activities were concentrated around 3G. The 3G network-sharing deal is also analysed. This report summarises the key aspects of the infrastructure.

With the growing maturity of digital cellular systems around the world, attention has increasingly turned to the development of 3G cellular systems. The main objective of 3G systems is to provide a more robust network with a range of data and multimedia services. When 3G was first conceived in the late 1980s and early 1990s there was little or no discussion on issues such as wireless broadband services driven by the Internet. With mobile failing to open up more data revenues, wireless broadband could well take over this market, leaving 3G behind. By mid-2006 there were still only just over one million subscribers (5%).

The first 3G service was launched by Hutchison in 2003. After network sharing arrangements were signed in late 2004, more services are being launched in 2006. The initial services are positioned in the top end of the mobile market where there is more room for special services and where 3G can be promoted as a premium product. In another first for the company, Hutchison became the first 3G-only operator in the country in 2006.