I have always been a big believer that understanding the changes to telecommunications usage patterns and costs is the critical first step that can separate the winners from the losers in the telco sector.
A clear picture of events at both a macro and micro level not only allows a telco to place itself in the optimal position to take advantage of emerging trends but also avoid potential cost blowouts.
What’s equally important is to ensure that the existing theories on what’s happening to Australian telco spend is backed up with factual evidence. To that effect, we at Full Circle recently put our purpose-built software to work and mine hundreds of millions of dollars of telecommunications spend.
Apart from just crunching the numbers, I have to say we were pretty thrilled to play the role of a myth buster and decipher if the recently touted telco trends are fact or pure fiction.
We took data from all of 2010 to 2011, tracking the usage and spending changes across: Mobile Roaming, SMS, Mobile Data and fixed lines. This is what we found:
- Global Roaming costs are increasing. We polled over 5,000 mobile devices with over $1.5 million of global roaming spend. We found that spend levels increased annually by 10%. The annual average annual device spend on global roaming is now $330.68. In normalising the data, we only polled devices that demonstrated global roaming during the survey period.
- SMS is dying. We constantly hear about the death of SMS and this is one of those cases where the reality is certainly matching the hype. The demise of SMS is playing out in front of our eyes and at a cost of $1,000,000 per GB, why wouldn’t it? We looked at 120,000 mobile phones and found that in 2010, 41 per cent of all mobile phones sent SMS and in 2011 that number had fallen to 32 per cent. We also found that the average number of messages sent per device in 2010 was 57 per month and in 2011 it was 54 SMS – this is a decrease of five per cent. It’s not dead yet, but the writing is on the wall.
- Mobile data use is increasing due to smart phones. It has long been suggested that mobile data usage is on the up and up due to smart phones. We noted that the average cost of data plans had not changed at all from 2010 to 2011, but usage had gone up significantly. We studied over 25,000 mobile data devices and saw that monthly usage had increased from 93.8MB / Month in 2010 to 273MB / month. This is almost a three-fold increase.
- The copper network is decaying, but who cares, its being substituted for mobility. Our research showed that across 2010 and 2011, looking at almost 100,000 fixed lines, that 21 per cent of these fixed lines had no call traffic at all. Can you blame Telstra for offloading its copper network? Imagine if users cottoned on to the fact that almost 20 per cent of fixed lines were redundant!
- People are mobile and using their mobile. Fixed line call spend is decreasing while the number of fixed lines is staying stable. This fact, on a per business level, leads to poorly optimised and expensive telco set-ups for businesses. In 2010, line rental (and service and equipment charges) accounted for 42.8 per cent of fixed line spend whilst the remaining 57.2 per cent was fixed line calls. In 2011, the ration has changes to 48.13 per cent of costs were devoted to line rental whilst only 51.8 per cent was for calls. Traditionally, a good split of line rental to calls was 35/65 . So we really are seeing more substitution for fixed line calls to mobile, but with no commensurate decrease in network size, shape capacity or configuration. This is a great savings opportunity for businesses.
So there you have it the jury is in and so far the data is certainly matching the hype. We are moving into a mobile world where the fixed line is going the way of dinosaurs and the smartphone invasion is in full swing. Which makes you wonder whether the government’s decision to pour $37 billion into a fixed fibre network is a good investment after all?
Tony Simmons is the managing director and founder of The Full Circle Group, an independent telecommunications consultancy firm focused on telco expense costs and management.