Telecommunications Spend and Demand in Victoria, 2012

Key findings

Telecommunications markets

• Victoria's telecommunications market has seen particularly rapid development in mobile data services as the range of devices utilising these networks increases.
• The Federal National Broadband Network (NBN) has begun to transform the sector. The rollout is set to provide fibre to around one third of Victorian premises over the next three years. Demand for high-speed broadband has increased in recent years and is forecast to continue to increase rapidly as the capabilities of the NBN are better understood and the mobile network is further upgraded.
• Total telecommunications expenditure for Victoria in 2011 is estimated to be $13.6 billion. By comparison, estimates for 2009-10 in the previous study estimated the market at $10.8 billion. The majority of this increased expenditure came from increased subscriptions for broadband up to 50Mbps and growth in mobile voice services. Total expenditure on fixed voice services fell between the two periods.
• Mobile data usage has grown substantially as prices fall and the range of devices able to use mobile data increases. However, those same rapid price declines meant growth in expenditure grew more slowly.

Unmet demand for broadband

• Ongoing ADSL infrastructure development means almost all inhabited areas of the State can now access at least 256Kbps services, with unmet demand for broadband at speeds of up to 8Mbps falling to just 12,723 premises state-wide.
• A challenge in the future lies in the extension of faster services. In 2011, ADSL+ and equivalent broadband services had reached 92.8% of households and 92.1% of businesses, representing growth of more than twenty percentage points in coverage compared with two years previously. However, coverage for services above the 50Mbps download speed mark remains low. 

Forecasts

• The construction of the NBN is expected to be the dominant infrastructure investment in Victoria over the next few years, with rapid growth in both supply of and demand for fixed broadband services above 50Mbps. However, it is estimated that two-thirds of households and businesses in Victoria will not have access to the NBN by 2016, meaning levels of unmet demand will be high.
• Mobile data demand is also expected to grow rapidly, with almost all demand for these services to be met owing to already widespread coverage. There is a question around the quality of service that may be provided to subscribers with existing coverage, with current infrastructure already capacity-constrained in areas, however such analysis is beyond the modelling scope of this study. Within the forecast period it is likely that the distinction between the two categories of mobile data will further blur, as smart phones take on more of the characteristics of mobile PCs.
• However, dial-up data – which is in terminal decline – will continue to fall insubscriber numbers, while the decline in fixed voice is set to continue.
• Overall telecommunications expenditure is forecast to increase by approximately 3.0% to $14.0 billion by 2016, with slower growth than in previous forecasts owing to the forecast decline in prices for mobile data services.

The NBN

• The NBN will provide high-speed internet at 100Mbps to 93% of Australian premises (slightly higher in a densely populated state such as Victoria). The balance will be covered by the wireless and satellite NBN services at a minimum of 12Mpbs. Although these areas will end up with a slower NBN service, they are still a highspeed service, and these regions are typically coming from a slower base, meaning the proportional increase in the bandwidth is similar, or in the case of premises where dial-up at 256kbps is the present technology level, higher. These regional areas are also likely to receive NBN coverage sooner, with the final wireless and satellite footprint being completed within the 5 year projection period used in this report. By comparison, the fibre network will not be completed until 2020.
• This report has been prepared on the assumption that the NBN rollout is undertaken in line with the 3-year rollout and expectations beyond this point.