catallaxy files

catallaxy in technical exile

Singing Animals and Noisy Scotsmen – The Australian Broadband Race

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Note: This commentary represents my personal opinions, views and analysis based on publicly available information.

With the ACCC this week releasing its latest broadband market snapshot, it’s probably a good time to check in on who the movers, shakers, winner and losers are in the Australian broadband race. First off – how big is the prize everyone is competing for? The ACCC puts the broadband market in December 2005 at about 2.8 millions services, up from 2.1 million in June 2005.

Leading the race to win those customers is Australia’s incumbent telco – Telstra. At its half yearly results announcement, Telstra claimed it had 43% retail market share and stated it had added about 317k retail broadband subscribers in the December half. This represents about 46% of the market growth – suggesting Telstra has actually been growing its retail market share.

In second place is Optus, which reported 496k total broadband subscribers at the end of December, representing about 18% market share. However alarm bells must be going off somewhere in Optus because this suggests a market share fall of about 1% since June 05.

Singing animals alone are obviously not the key to broadband success, and falling market share may explain Optus’ decision to revamp its pricing last November and introduce a new entry level price point this month The launch of Optus’ 20Mbps “DSL .Direct” service in 100 exchange this month should also help address their market share decline.

Meanwhile, growing pains seem to have hindered iiNet during the later half of 2005. For those who came in late – iiNet is the Perth based ISP that has grown from a garage ISP in 1993, to Australia’s number three ISP in 2005, with 7% broadband market share in June 2005. Part of this growth has been natural – but the largest part in recent years has come through acquisitions. The February 2005 acquisition of that icon of the oz Internet industry – OzEmail, was iiNet’s entry into the big league in the Australian telco space.

Since then however– iiNet has looked a bit like a snake trying to eat its prey, with the OzEmail website, brand and (eventually) customers, gradually being swallowed up and absorbed into the iiNet network.

It’s the last of these that appears to have caused it the most indigestion. Late in December ii conceded in an earning downgrade to the ASX that problems with the OzEmail integration meant it would not achieve it’s subscriber targets. Despite a multi-million dollar advertising campaign in the latter half of the year, iinet finished with 165k subscribers, and a fall in market share to 6%.

From here on in, the picture is less clear as a some of the players don’t publicly report subscriber numbers. Of those that do report, Primus is next in line, with 125k broadband subscribers at Dec 05, which equates to about 4% market share.

At 63k subscribers, AAPT’s market share is well below what one might expect from a company generally considered to be one of the main telco players in Australia. But AAPT was late to the broadband game and so is playing catch-up to the rest of it’s telco peers. It would therefore presumably have been pleased that it managed to snare 7% of the market growth during the December 05 half, growing it’s market share from about 1% in June to 2% in December.

The biggest challenge .to AAPT’s aspirations is probably not the success of Telstra, but the decision by other challengers like Optus and Primus to get more aggressive. Still, it will be interesting to see how they go for the current half, given their investment in advertising during the Commonwealth games.

The other player perhaps worth mentioning is Unwired. The largest independent wireless player, its 42k customers probably isn’t a bad effort considering its coverage was limited to Sydney – with it only launching in Melbourne this week. Still, with all the competition in wireless these days, things are probably only going to get tougher.

Wrapping up – Telstra and AAPT look to have had a good half in terms of market share growth. Optus has struggled to win customers, whilst growing pains have hindered iiNet’s December half. Primus meanwhile, looks to have just continued to hum along adding customers and migrating them to its own DSL network. AAPT would seem to have finally gotten serious about broadband and is now trying to play catch up. Meanwhile Unwired is (probably) leading the charge for independent wireless operators, but faces an increasingly competitive market.

It’s going to be an interesting June half.

Data Sources

    ACCC Broadband Market Snapshot

    Telstra Investor Relations Site

    Singtel Investor Relations Site

    iiNet Investor Relations Site

    Primus Investor Relations Site

    Telecom NZ Investor Relations Site

    Unwired Investor Relations Site

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Written by Admin

April 6, 2006 at 8:23 am

Posted in Uncategorized

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