Mobile telecoms industry punches above its weight

3G uptake fueling economic benefits of mobile industry

The Australian Mobile Telecommunications Association this week released an Access Economics report on the impacts of developments in the telecommunications industry on the Australian economy and society.

The report found that the total economic contribution of mobile telecommunications added $14.2 billion to Australia's GDP in 2006-07.

The rising adoption of 3G technologies is driving the economic gains of the mobile industry, with 3G traffic estimated to contribute $2.1 billion in additional GDP by 2010. At the end of financial year 2006-07, mobile penetration in Australia broke 100 percent at 21.1 million subscribers.

Mobile phone ownership levels sit at 81 percent of the population, with rates highest among 18-34 year-olds and lowest among over 65s.

"The economic benefits created by the [mobile telecommunications] industry are far greater than the resources it draws from the economy," the report said.

"This contrasts with many other industries, for which the major component of the economic contribution derives from the industry's own usage of economic resources. In this regard the mobile phone industry is shown to be 'punching above its weight'."

The report attributed the mobile telecoms industry's economic impact to its ability to streamline business processes, reduce costs and increase the productivity of workers no longer chained to fixed environments in order to complete their work.

Direct contribution of mobile telecommunications to the economy in 2006-07 represented 0.62 percent of GDP, at $6.5 billion, a four percent rise, while the indirect benefit to the broader Australian economy was $7.7 billion.

"This means that the total GDP in Australia would have been $14.2 billion lower if mobile telecommunications did not exist" the report said.

Access Economics predicts that indirect benefits from mobile voice and data, as measured by impacts on GDP, are estimated to rise to $8.1 billion in 2008 and $9.3 billion in 2010.

At present Australia's four mobile carriers operate seven mobile networks in Australia, covering 98 percent of the population and approximately 21 percent of the continent's landmass.

AE's report indicates that the variety of competition is good for consumers, but not so good for new providers hoping to break into the industry because of the dominant market share of the "big four".

"Competition in the Australian mobile telecommunications industry is high amongst established firms, both in terms of price and service... the large number of firms offering similar products means price uncompetitive firms will lose customers."

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Andrew Hendry

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