According to the audit, the growth in the direct economic contribution (DEC) of telecoms services will be driven by a range of increase new digital activities in areas such as IoT, M2M communication, social media and telecommuting.
The expected DEC in 2031 by state is graphed as follows:
The report states that:
Demand for telecommunications services will continue to grow at a rapid rate over coming years, driven by increasing connectivity, the growth of new services and the cultural changes associated with increased use of social media. A broad range of services and processes are now being delivered online, and are dependent on telecommunications infrastructure.
The number of internet-connected devices is projected to increase exponentially over the medium-term. Advances in machine-to-machine (M2M) communication, involving collection of data through digital sensors, is creating the so-called ‘internet of things’. Always-on/always-connected access to communication infrastructure will enable these technologies to grow – potentially generating cost savings and productivity gains across industries and households.
As a result of these trends, the value-add of the telecommunications sector is expected to grow faster than GDP. The DEC of telecommunications services across Australia in 2031 is projected to be approximately $42 billion, an increase of 101 per cent from 2011. The vast majority of the DEC of telecommunications infrastructure is accounted for in the capital cities.
Growth in demand is already occurring. There is likely to be a continued increase in demand for high-capacity broadband infrastructure over the next five years, reflecting a growing demand for data that includes video content. Cisco Systems forecasts that video traffic will account for 79 per cent of all global consumer internet traffic in 2018, up from 66 per cent in 2013. Streaming entertainment content, such as Internet Protocol Television, accounted for 67 per cent of peak period downloads in North America in September 2014. One content provider, Netflix, accounted for over half of the streaming content downloads, and also represented 34.9 per cent of all peak period download traffic. The download traffic generated by Internet Protocol Television may expose the limitations of the current broadband network in some areas, although development of the NBN should help mitigate this.
Mobile data usage in Australia is projected to increase almost four-fold from 2013 to 2017. Total cellular data usage is projected to grow at an annual rate of 38 per cent, from an estimated monthly average of 22.2 petabytes in 2013 to 81.1 petabytes in 2017, constituting a 265 per cent increase over this period. 4G data traffic is expected to account for most of the growth in overall data usage, with an annual growth rate of 76 per cent between 2013 and 2017.
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Rolling out an open access, wholesale-only fixed line broadband network in a cost-effective manner is a key telecommunications infrastructure challenge facing government and private sector providers over the next five years. High capacity fixed line services are vital to deliver high bandwidth services in themselves, but they are also essential to the operation of mobile services.
Australia needs to improve the current speeds of fixed line broadband access to maintain international competitiveness, and this is one of the objectives of the NBN.
A key challenge will be the efficient rolling-out of an open access, wholesale only fixed-line broadband network.
The NBN offers the potential for major economic and social benefits across the country. This is reflected in the multi-billion-dollar investment in the NBN by the Australian Government over the next 5 to 10 years.
Efforts are being made to realise the potential social benefits from this investment, such as developments in tele-medicine and online delivery of education.
Considerable attention should be directed towards maximising the benefits of the NBN. An example lies in the area of telecommuting. Australia’s take-up of telecommuting appears to be relatively low compared to other countries, although there is recent evidence suggesting the rate of telecommuting may be growing. This may be as much a function of workplace and cultural issues as of any shortcomings in the telecommunications services themselves.
As noted elsewhere in this report, the economic cost of transport network congestion is already a serious problem and projected to get significantly worse. It is a serious drain on the nation’s productivity. By enabling some people to avoid having to physically travel, telecommuting has the potential to:
• raise productivity; and
• moderate the demand for infrastructure, thereby deferring the need to fund new infrastructure.
Governments and the private sector will need to focus on making the best use of the NBN, thereby delivering the expected economic and social benefits to the country.
The Australian Government’s December 2014 statement on regulatory and structural reform in the telecommunications sector adopts the following overarching regulatory policy principles:
• regulation should allow competition at both the retail and wholesale/infrastructure levels;
• to the greatest extent possible industry players should be treated consistently under the regulatory framework; and
• new high-speed broadband access networks (which control ‘last mile’ connections to consumers) should be vertically separated.
Competition in the telecommunications sector has driven productivity improvements and raised service standards for the majority of consumers.
Ongoing competition in the sector, including in the delivery of broadband services, is to be encouraged.
The telecommunications sector’s economic contribution will be best served by continuing support for effective competition.
Market forces and the private sector will continue to respond to demand in urban areas where a commercial rate of return can be achieved.
However, parts of rural and remote Australia will require continued government assistance to access services similar to those available in the rest of the country. In the absence of a significant technological breakthrough, this is unlikely to change during the 15-year horizon of the Australian Infrastructure Plan.
The full report can be downloaded from the Infrastructure Australia site here.
