Broadband is on the rise

Broadband is on the rise

Broadband is finally showing signs of taking off in Australia as providers and industry analysts report significant growth in subscriptions to wireless, cable and ADSL services across the country. This is despite only 8 per cent of Internet users having a broadband connection.

Two reports have been released detailing the use of broadband services throughout the country. They conclude that broadband is increasing and becoming more popular.

Internet market research company, Nielsen//NetRatings, reported the number of broadband users in Australian homes has jumped 150 per cent since April 2002.

Ten thousand users around Australia had their Internet usage monitored by Nielsen software installed on their PC. The subsequent report claims that more than one million Australians are now accessing the Internet using broadband.

Senior Analyst at Nielsen//NetRatings, Markus von der Luehe, said that, according to the research, broadband adoption would grow at a faster pace towards the end of the year.

He said the reason for the increase was more competition in the market and the emergence of more applications where users would require a broadband connection.

“These applications will be in the area of email with attachments, music download, video streaming and online gambling,” he said.

Markus said that due to the diversity of the Australian landscape, it was expensive for ISPs to invest in infrastructure. That resulted in broadband penetration being dominant in metropolitan areas, and not as strong in rural areas. The ratio was 80:20.

Nielsen Media Research showed that advertising spent on main media by broadband ISPs grew from more than $3 million in Q1 2002 to $6.27 million in Q1 2003, an increase of 107 per cent. Telstra’s share of this figure fell from 82 per cent to 38 per cent.

In other research, the Roy Morgan broadband report - based on more than 25,000 interviews - concluded that 4 per cent of Australians had a broadband connection and spent an average of 11 hours per week using the Internet. By contrast, dial-up users made up 58 per cent of the population.

The report states that 36 per cent of broadband users, compared to 16 per cent of dial-up users, had used the Internet for more than 5 years, sparking the Morgan report to conclude that although currently there was a small number of broadband users, the adoption of broadband increased after extended periods of Internet usage.

The major growth in broadband usage has been detailed in recent results from Telstra, Optus, Primus and Pacific Internet. Both Telstra and Optus now have over 100,000 cable broadband customers.

BigPond chief, Justin Milne, claimed Telstra’s broadband cable network had achieved a growth rate of 70 per cent in the twelve months from May 2002 to May 2003.

Telstra claimed it had also recently passed the 300,000 mark for subscriptions to its broadband Internet service, leaving the telco on target to reach one million subscribers by 2005.

Milne said in addition to cable and satellite investments, only Telstra was investing more than $1 billion rolling out a national ADSL network and taking on the risk that comes with such a massive commitment.

Bigpond signed up a record 23,000 broadband orders in March 2003.

Speaking at the recent Australia-Korea Broadband Summit, Milne said Australia's broadband rollout was tracking well.

“It is less than three years since Telstra's ADSL rollout started and ADSL is now available to about seven million premises or up to 75 per cent of the population,” he said.

Optus has also reported significant increases in its cable Internet services. More than 100,000 residential customers are now connected to the cable network.

The service grew by 67 per cent over the past year, with sales exceeding 1000 per week.

Managing director of Optus Consumer and Multimedia, Martin Dalgleish, attributed the increased sales of broadband services to a sustained period of record customer growth since the launch of bundled phone and Net packages.

“We [Optus] are also acquiring higher value customers, with about 70 per cent joining the top end plans,” he said.

Of the smaller ISP’s, the number of subscribers to Primus Australia’s broadband DSL has grown by 85 per cent over the last year to more than 8000.

A spokesperson at Primus said the results were a combination of a strong focus on competitive prices and reliable servicing.

“Primus is currently connecting around 1000 broadband subscribers per month. The target is 20,000 customers by the end of the year,” he said.

Managing Director and Chief Operating Officer, Greg Wilson, said Primus was determined to progress with a range of new products and services.

Another ISP with strong results is Pacific Internet: Broadband contributed 36.8 per cent of the group’s revenue and PacNet currently has about 5700 subscribers. At the same time last year to March 2002, it had 1700.

Telecommunications analyst, Paul Budde, has a different view on the results.

He said that broadband uptake was growing but not as fast as in other countries such as the US, Japan, Canada and most of Europe.

Budde said that in Japan the uptake was about 300,000 broadband connections per month. This bore no comparison to Australia.

He attributed this kind of result to competition.

“The best way to move broadband forward is to increase competition,” he said. “If Australia has the right environment, regulation can be successful.”

Budde said that prices on broadband services were so high because they were based on Telstra’s terms and conditions. This left resellers without a viable pricing option to be competitive.

Some hope for increased competition may be on its way with the news that broadband is to be monitored more closely by the Australian Competition and Consumer Commission (ACCC), after the Minister for Communications and IT, Senator Richard Alston, announced new monitoring and reporting arrangements.

The procedures are designed to improve market information available to broadband competitors and to put international broadband take-up statistics into a meaningful context.

The Commonwealth Department of Communications, Information Technology and the Arts claims that Australia will be a world leader in broadband uptake.

Industry research conducted by IDC has predicted that Australia will have 2.7 million subscribers to broadband Internet by the year 2007.

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