Australia's telecom costs skyrocket: OECD report

Australia's telecom costs skyrocket: OECD report

Summary: Australia's telecoms spend is the second highest in the OECD. In most places, revenue growth is accounted for by higher mobile spend. Here, it seems, the reverse is the case.

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According to the OECD Communications Outlook, published this month, the average telecommunications connection in Australia, be it wireless or fixed line, cost the user US$1,135 in 2011. Across the OECD, only Swiss consumers pay more for their telecommunications, and only just. The typical Aussie customer was paying 73 percent more than the OECD average.

The figure represents a massive spike in revenue in this corner of the world. Between 2009 and 2011, OECD access revenue increased by just 1 percent — in Australia, it rose by almost 50 percent. In 2009, we were in fourth place, and, at just 17 percent above the average, we were close to the middle of the pack.

telecom-revenue-per-access
(Image: Phil Dobbie/ZDNet)

The report puts the 2011 spike down to the strength of the Aussie dollar and our resilience during the global financial crisis. That may be the case, but can that fully account for such a massive increase?

Of course, the cost of connections is meaningless as the only measure. In some countries, it's common for people to have multiple mobile phones — this could bring down the average cost of access.

A more resilient measure is total telecoms revenue per capita, and this paints an equally costly picture for Australia. In 2011, we each spent an average of $160 per month (compared to $140 in the US), 45 percent up on 2009.

Everyone is spending more

Our growth is out of kilter with the rest of the OECD community, even though most countries have seen some growth over recent years. The often-quoted belief that people continue to spend the same amount on telecommunications simply isn't true. It was the case in the '80s, when telecoms revenue as a percentage of GDP hung around the 2 percent mark (OECD average). In the late '90s, that rose sharply to around 3.5 percent, and, though it's fallen a little, it remains at around 3 percent of GDP.

Smartphones, obviously, have a part to play in this. Mobile revenues were 20 percent of revenues in the OECD in 1998, but 48 percent in 2011. Given the rate of growth, it's likely that mobile will have now surpassed fixed-line revenue across the OECD, but probably not in Australia.

In 2011, 58 percent of our telecoms revenue came from fixed lines. And we know from another recent OECD report that mobile plans in Australia are some of the cheapest there are.

That all seems to point to a telecommunications landscape, where high cost continues to be driven by fixed-line connections. And the sad truth is, whilst we pay way more than most, our average broadband speeds still linger close to the bottom of the OECD table.

All this seems to be another indication that regulation in Australia has failed us.

Topics: Australia, Mobility, Telcos

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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3 comments
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  • definitely a combination of factors

    the Aussie dollar being one, the huge spike in electricity costs being another. and I'm sure Telstra's semi-monopoly is a big factor too.
    theoilman
  • It is simple Geography

    Australia is a huge continent with a sparse population by world standards.

    That fact alone adds a cost per connection that most other nations don't have to deal with.
    ITenquirer
  • Missing the point

    The chart presented is revenue per line, this could mean a lot of different things. Of course, everything is more expensive in Australia. In the US (and I presume Australia as well) we run a lot, if not most, phone traffic over data lines . . . does that count? Higher usage will lead to higher revenue, usage is not a bad thing.

    In the US the government interferes a great deal (most cities monopolize internet/cable) that adds a lot to our costs.
    stano360