In the face of declining narrowband services, decelerating revenue growth and ADSL customer saturation, ISPs need to strike now or risk losing out, according to a recent research report.
Market Clarity's report, The Australian Internet Market Tracker: History and Forecast 2000-2011, predicts that although broadband revenue pushed past the $2 billion mark in 2006, the next five years will see a gradual slow down in revenue growth as customer numbers peak.
It also predicts broadband service penetration will grow from the 3.52 million users recorded in June to more than 6.8 million by June 2011.
Market Clarity CEO, Shara Evans, said the next two years would see peak growth in the number of addressable customers and subsequent broadband service opportunities for providers. ISPs needed to strike while the iron was hot.
"The opportunity is there for the picking right now and if companies don't get involved now, they will lose that chance," she said.
Evans said opportunities loomed for ISPs that focused on the projected saturation of the residential market. In particular, she noted ample opportunity for those with their own infrastructure or quality of service (QOS) capabilities to supply smart services, such as prioritised treatment of real-time traffic.
"Providers who can genuinely differentiate their services will have the best chance of growth," Evans said. "In the consumer market, this may mean offering the best performance for rich content like music and videos, or it may be through services such as VoIP."
However, she warned ISPs to take heed of the demands residential services may place on broadband networks.
Internode is one such ISP to take caution with the recent introduction of its ADSL2+ Annex M protocol by restricting use to business and SOHO customers only. Annex M allows upload speeds of 2.5 megabits per second; an understandably attractive offering for peer-to-peer download users.
"Annex M is a great differentiator in both consumer and residential markets," Evans said. "But like Internode, ISPs should carefully consider whether they open up the floodgates of faster uploads to all and sundry, or whether they should restrict customers to the service."