The communications sector is bundling of voice and content services, increasing data quotas to encourage consumption of content and developing mobile applications. The media sector is developing internet-based distribution channels, pay-per view and subscription services, internet-based ‘catch-up’ viewing formats and new content for the wireless devices. This detailed in the media release "Media and telcos adapting business to the new digital economy" and the 31 page "Report 4—Changing business models in the Australian communication and media sectors: Challenges and response strategies". (MS Word, 425 kb).
Fixed-line service providers: Challenges and responses 5
Overview of challenges 5
Other factors affecting PSTN revenue 6
Emerging voice service providers 7
Strategies in defence of voice revenue 7
Mobile service providers: Challenges and responses 9
Overview of challenges 9
Increasing use of data services 9
Mobile applications 11
Internet service providers: Challenges and responses 13
Overview of challenges 13
Service bundling 13
Television broadcasters: Challenges and responses 15
Overview of challenges 15
Increase in digital television content 15
New content delivery platforms 16
ISP content service offerings 17
Radio broadcasters: Challenges and responses 19
Overview of challenges 19
New distribution formats for radio content 19
Digital radio 20
Print news media: Challenges and responses 22
Overview of challenges 22
Trends in online and offline newspaper readership 23
Strategies to increase revenues from online newspaper readership 25
Consumer willingness to pay 26
This report is the last in a series of four research reports to be published under the ACMA’s communications report series. Other reports in this series include:
Report 1—Australia in the digital economy: The shift to the online environment
Report 2—Take-up and use of voice services by Australian consumers
Report 3—Australian consumer satisfaction with communications services.
This suite of reports is designed to complement the ACMA Communications report 2009–10 which is produced in fulfilment of reporting obligations under section 105 of the Telecommunications Act 1997 (the Act). The Act requires the ACMA to report on the performance of carriers and carriage service providers with particular reference to consumer benefits, consumer satisfaction and quality of service.
These four reports also form part of the ACMA’s ongoing research and reporting program (Research at the ACMA: research program overview 2010–11), which is available on the ACMA website.
The communications report series seeks to inform ACMA stakeholders about convergence and the digital economy and their impact on communications and media services.
The term ‘digital economy’ covers the global network of economic and social activities that are enabled by digital information and communications technologies such as the internet, mobile and sensor networks.1
As an evidence-based regulator, the ACMA has an interest in monitoring and understanding the developing digital economy and its impact on the industries that it regulates, particularly in relation to:
regulating for the citizen in an IP-based media and communications environment where usage of voice over internet protocol (VoIP), mobile communications and the internet continues to grow, which in turn provides challenges for safeguards, such as access to the emergency call service and online security
voice regulation, where continued growth in VoIP usage and the number of people identifying mobile phones as their main form of communication poses challenges when it comes to applying regulatory requirements that are based on traditional fixed-line voice services
supporting consumers making informed decisions in an environment of ongoing network, device and service innovation
regulating content in an environment where content is increasingly available on multiple platforms including the internet, mobile and traditional broadcasting networks.
This report presents an overview of some of the major challenges confronting the communications and media sector in Australia arising from the emerging digital economy and ongoing convergence of networks, services and consumer access devices.
This report also examines industry responses to these challenges both here in Australia and overseas.
The ACMA has prepared this report using a range of information and data including:
ACMA data including the ACMA annual industry data request
publicly available industry reports and media coverage of industry developments
consumer survey data including Nielsen Online (relating to web traffic trends in Australia) and Roy Morgan Single Source in relation to changing newspaper readership.
The internet and digital communications more broadly, have empowered citizens and consumers by providing them with more flexibility in their use of voice and media services, enabling people to ‘mix and match’ services to suit their lifestyle needs.
The internet in particular has changed the way Australians communicate and access content, removing geographical barriers and allowing new forms of communications and information sharing to emerge, such as social networking and user generated content.
The internet has also presented challenges for many businesses in the traditional communications and media sectors because consumers can now access cheaper communications alternatives and more diverse content.
Challenges to established market operators have also emerged as a result of network and device convergence, which has facilitated the blurring of boundaries between communications and media services, allowing increasing cross-sectoral forays in terms of service provision.
In meeting these challenges, communications and media providers within Australia and globally are adopting a number of initiatives which seek to protect existing revenue streams and also enable diversification into other services.
Within the communications sector, these response strategies have typically tended to include:
bundling of voice and content services, such as IPTV, to existing broadband subscribers
expansion of data download quotas to broadband subscribers to facilitate increased consumption of data services
more generous mobile caps and pricing packages to facilitate the development of the mobile content service market
handset and handset application innovations, as evidenced by the emergence of the next generation of wireless devices such as smartphones
offering further incentives to customers on the condition of retaining existing traditional fixed-line telephone service.
Within the broadcasting and print newspaper sectors—both faced with increased audience and readership fragmentation—these strategies have tended to focus on a number of initiatives including:
development of online distribution channels to increase the profile of content and services in the face of growing online participation
attempting to monetise content on the internet, through the introduction of pay-per view or subscription services to select ‘premium’ content
meeting audience demand for flexibility in content viewing and content format—typified by the emergence of catch-up viewing formats
development of video content specifically for the next generation of new consumer tools, such as smartphones and other wireless devices
development of new content sources, where consumers are able to access a greater variety of content nationally and globally, such as with digital television, digital radio, IPTV and internet radio.
In addition, established communications and media players today are increasingly faced with new market entrants, which are able to draw on their market presence in a particular sector to move into areas not traditionally in their domain. Companies such as Google are utilising market presence in their traditional areas of operation to package and provide a broader suite of services to customers. Voice and content services, for example, are an increasing part of these new service offerings. As consumers are presented with opportunities to bypass traditional communications and media options, additional pressure is likely to be placed on established revenue streams.
1 Department of Broadband, Communications and the Digital Economy, Australia’s Digital Economy: Future Direction, 14 July 2009.