Gartner: mobile phone sales to resist economic downturn

IDC revealed that Telstra’s plans to switch on ADSL2+ in more than 900 exchanges could potentially have significant flow on effects to the greater communications market, in particular Australian regional and rural consumers.

According to the report, there is a “bigger picture” situation evolving. David Cannon, program manager of telecommunications at IDC said: “We believe that the announcement from Telstra to activate its remaining ADSL2+ ready exchanges as a result of ministerial assurance and the government’s requirement to cull more than $10 billion of funding are related. As a result the Opel Pty Ltd funding will potentially be a casualty of larger macro economic inflation management processes.”

Cannon added that the activation of the ADSL2+ exchanges gives regional and rural communities metro-like broadband services that will counterbalance any negative public sentiment should the Opel funding be withdrawn.

IDC predicted far-reaching consequences for the industry if the ‘macro economic inflation management’ assumption is realised. The analyst firm stated that the announced Optus 3G network build to 96 percent of Australians will not go ahead, remaining only in major metro/regional areas. This will effectively provide Telstra with a competitive stay of execution in regional and rural Australia.

The report also stated that Vodafone may need to re-evaluate its plan to build out its own 3G coverage through its network agreement with Optus. In extreme circumstances, the Optus delay could result in Vodafone reassessing its commitment to the Australian 3G mobile market and may trigger another network partnership deal or a possible market exit.

The balance between the ACCC and the government’s relationship will be increasingly strained, according to IDC. Consequently, the analyst firm claimed the government’s decision to provide assurances to Telstra may be interpreted as a backdown, encouraging Telstra to ignore the regulator and engage in legal battles for extended periods of time while Telstra enjoys market share monopoly and profits.

From a consumer perspective, the ‘macro economic inflation management’ assumption will affect fixed and mobile broadband customers in regional and rural areas, the report stated. These consumers will apparently continue to pay higher fees than those enjoyed by their metro counterparts for an extended period of time as a result of lack of competition.