Australia: broadband backwater or trailblazer?

In the eyes of the Australian Telecommunications Users Group (ATUG), Australians are not getting a fair broadband deal when compared with other countries.

According to the International Telecommunications Users Group (INTUG), Organisation for Economic Co-operation and Development (OECD) member discussions are now focusing more on price and service packages rather than broadband services availability and penetration.

"There is enormous variation between countries on speed, with offers ranging from 256kbps to 100mbps all being described as broadband. Price packages range from a fixed monthly charge to fixed plus a metered usage component," INTUG said in a release.

ATUG said the 300MB to 500MB monthly download limits for entry-level packages compare "unfavourably to the OECD leaders who are offering Gigabyte and more download caps."

Australians users are also faced with charges for use beyond the 300MB cap "ranging from 6 to 10 US cents per megabyte compared to less than one cent in many countries beyond their gigabyte caps."

In an International Data Corp. report, research director for telecommunications, Landry Fevre predicted that Australia would remain a "broadband backwater" when compared with other developing countries.

IDC predicts that broadband in Australia will reach a maximum penetration of 13 percent in the next four years, equating to around 2.8 million broadband subscribers in 2008, up from 727,440 in 2003, with the residential market leading the growth.

The report said that majority of Australian subscribers operate on a download speed of 256 or 512Kbps, which "significantly limits the delivery of content and hinders potential initiatives for high-content value proposition such as TVoVDSL and VoIP services."

Fevre's findings are similar to that of ATUG, saying that the "international broadband market has exhibited attractive triple-play bundles of high-bandwidth services offering voice, broadband and TV services through the same network."

"For example, France's second-largest broadband service providers, Iliad, offers free national phone calls, 2Mpbs ADSL and 100+ TV channels for about a third of the price for what you would get in Australia. There is still a long way to go for Australian consumers to get a decent deal," said Fevre.

Fevre points the lack of competition amongst providers as the major inhibitor to broadband penetration in Australia.

BigPond, on the other hand, recently announced its 150,000th cable broadband customer, claiming that broadband cable customer numbers "had doubled over the past two years and the growing demand for fast Internet was set to continue."

BigPond managing director Justin Milne pointed out to a Nielsen/NetRatings report showing more than 2 million people now have broadband Internet access from home and "new broadband residential subscribers have trebled since Telstra introduced new prices in February this year."

However, according to the latest Australian Competition and Consumer Commission Snapshot of Broadband Deployment, Australians are slowing down in their take up of broadband services.

The report said the growth rate "slowed over the last three quarters of 2003." ACCC, however, said the growth figures pre-date the changes in pricing structures for broadband services that began in February 2004 and that "the impact of the price reductions will not become evident until take-up figures become available for the March 2004 and June 2004 quarters."

ATUG said user demand is not the issue. "Speed and price are major determinant of whether users are really experiencing broadband or just fast Internet. For example, a download cap of 300MB per month would cover a video replay of just one football match per month delivered via video streaming. Not very exciting for the average football fan!"

ATUG believes one of the hindrances is the price of international Internet connectivity which have reduced over the last couple of years but have "not been passed on to consumers."

"The ACCC should use its information powers to track and publicly disclose wholesale and retail rate reductions. It seems to ATUG that Australian users are missing out - speeds are too low, download limits are too low and excess usage charges are too high. These factors combine to mean Australian users are not experiencing the really distinctive characteristics of broadband - speed at a price that encourages usage of new services and applications."

"As well as work on Internet interconnection charges at international and domestic level, the Federal Government's National Broadband Strategy and its associated Higher Bandwidth Incentive Scheme must focus on accelerating the rollout of these new services by new players so that Australian users experience true broadband at the speeds and prices on offer to users in other countries," ATUG said.