​Half of all Aussie smartphones operating on faster 4G

​Half of all Aussie smartphones operating on faster 4G

Price is the number one driver when it comes to switching mobile service providers

BYO mobile plans are set to further shake up Australia’s mobile services market, resulting in less long term subscriptions.

With an estimated over 25 million handheld mobile services in operation (SIO) at the end of June 2016, analyst firm Telsyte reports that more than half of handsets are now on non-contract plans leaving the door open for more movement between carriers.

Among those who switched mobile service providers in 2015, two thirds opted for non-contract plans, an increase of more than 10 percent over 2014.

Telsyte believes Telstra’s high-profile network outages in the first half of 2016 combined with more competitive 4G plans available in the market will encourage mobile handset service subscribers to shop around.

Slowing mobile services growth

“We predict that M2M and secondary devices will be the main drivers for future market growth towards 2020 while the increase of handset SIO (Services in Operation) will be limited to net population growth as the market is highly mature,” Telsyte senior analyst for mobile services, Alvin Lee, said.

However, non-handset SIOs typically have lower ARPU (Average Revenue Per User) and do not contribute as much profit per service when compared to handsets.

For Lee, this might impact the profitability of carriers.

“Telstra is particularly vulnerable as it has experienced some of the lowest net SIO additions from handsets ever during six month to December 2015 and some 71 per cent of its new services came from lower ARPU machine-to-machine (M2M) connections,” he explained.

While Telsyte estimates Telstra will maintain a strong lead in the M2M (machine-to-machine) market, other service providers are likely to attack the telco’s handset market share aggressively.

Lee said that despite the healthy growth, M2M services only accounted for less than five percent of overall mobile services revenue.

Telsyte research is showing price remains the number one reason for switching carriers and more than half of consumers considering changing MSP are driven by price.

Consequently, Lee predicts price competition will likely see ARPU starting to decline for more MSPs in the second half of 2016.

4G crosses the halfway mark

Telsyte research shows that 52 percent of mobile SIOs are now on 4G networks, with penetration expected to reach 85 percent by 2020.

“With more than half of all smartphone services using 4G services, there will be more competition around delivering services to consumers that can make use of faster download speeds and larger download allowances such as streaming music, video and games,” Lee added.

“The ability of networks to tap into growing mobile trends such as Pokémon Go and live streaming will help grow data utilisation by consumers.

In 2015, the average growth of data allowances was 76 percent, however data usage only grew by 45 percent.

Currently, Telsyte estimates that two million Australian smartphone users had downloaded Pokémon Go by the end of July 2016.

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