Australia's 2G Mobile Era Coming to An End

Despite penetration levels exceeding 100% of the population, Australia's mobile market recoded stronger-than-expected growth in 2007, thanks largely to the substantial 3G progresses made by all four carriers, notably Telstra's Next G. The industry remained one of the very few segments driving the country's telecom connectivity market.

The mobile market was arguably the most exciting, innovative and competitive segment, with important milestones continued to be made last year: the introduction of flat mobile data charges, debut of 3.5G networks across the country, and the introduction of prepaid and MVNO 3G offerings.

Sydney-based telecom market research consultancy Telsyte concludes that Australia had 21.8 million mobile users at year-end 2007, a 104% penetration level and year-on-year growth of nearly 6%. 3G subscribers more than doubled in the past 12 months to constitute 31% of the total user base, while the industry's non-voice revenue mix climbed to 27%. Within the non-voice segment, although SMS still reigned supreme, much of the growth was derived from paid content and mobile broadband.

Australia's 2G mobile era is coming to an end, with revenue from 3G predicted to overtake 2G in 2008, while 3G users will outnumber their 2G counterparts by mid-2009. Telsyte predicts that churn management and customer poaching will intensify, with tactics and incentives, such as exclusive deals with other popular consumer brands and referral programs, becoming common in the next 18 months.

Looking ahead, 3G users are expected to make up nearly 70% of the market in five years' time, whereas non-voice revenue contribution will grow from one-third in 2008 to almost one-half in 2012.

The battle between 3G-based mobile broadband and WiMAX-based wireless broadband in the Australian marklet has been won hands-down in favour of the former. That victory was cemented by the Federal Government's recent cancellation of OPEL's WiMAX contract. Mobile broadband users outstripped wireless broadband users by more than five-to-one by the end of 2007, and that gap is expected to grow dramatically in the next five years.

This year will be yet another eventful year for Australia's mobile industry. Network upgrades by Australian mobile carriers are on-track, with two new nation-wide HSPA networks based on the 900 MHz spectrum expected in 2008. In the next two years, the industry will evolve to HSPA+ and LTE, capable of delivering speeds of up to 100 Mbps.

Other key developments expected in 2008 include the rise of mobile advertising in the consumer market, a burst of enthusiasm in smart phones due to the pent-up anticipation around Apple's iPhone launch, and the introduction of fixed-mobile convergence offerings.

About the Author

Warren Chaisatien is Principal Analyst at Telsyte (http://www.telsyte.com.au), an Australian-based market research and consultancy specialised in the competitive intelligence of the converged communications market. Telsyte's expertise is centred around the three core competency areas of Carrier & Broadband, Mobile & Wireless, and Enterprise Communications. Telsyte provides industry insights through custom research and consulting as well as ongoing research, including market reports and online databases.

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