Relocating Internet users favour Telstra & Optus

Stuart Corner
Friday, 11 June 2010 17:32

IT Industry - Market

There are nine million Internet subscribers in Australia and every year 15 percent of them switch providers - with most going back to Telstra or Optus, according to iiNet.

iiNet says relocation is the number one reason for people switching providers and 80 percent of this churn is back to the incumbents - Telstra and Optus.

This, it says, is despite them having higher prices and inferior service than smaller competitors. Despite gaining most of these churning customers, iiNet says they are losing market share. It claimed that most of its new customers are lured away from these incumbents.

In a presentation to Morgan Stanley's Emerging Companies Conference, iiNet segmented the broadband Internet access market into the incumbents, the value leaders (including itself, naturally) and the 'price fighters' focussed on "low price and high bandwidth offerings."

It claimed that the latter attracted unprofitable customers and in any case, said that quota was not a primary motivator for many customers suggesting that those on 100GB $49.95 plans (as offered by TPG) often used less than 20GB.

The company once again flagged further opportunities for growth through acquisition, noting that there are still more than 300 ISPs in Australia. However, according to the Australian Bureau of Statistics, only about 100 of these have more than 1000 subscribers (the eighth largest ISP, Eftel, has 43,000 DSL subscriber, less than 10 percent of iiNet, which is in third position with 531,000.

Overall there were 4.2m DSL subscribers in December 2009, according to the Australian Bureau of Statistics. There were nearly three million mobile broadband users, almost a million on dial-up and about 200,000 on satellite and fixed wireless services.