Introduction
Background information of the industry
The Australian telecommunication industry is expanding very rapidly given that 99% of the population owns a mobile handset. Over 25 million Australians have subscribed to one of the major mobile phone operators.
With the advancement in technology, the industry has seen major changes and new entrants in the industry. However, the major key players of the mobile Australian telecommunication industry include Telstra, Optus, Vodaphone, and Virgin Mobile. The service providers have a market share in the same order as they appear.
With the introduction of new hardware like the Smartphones, iPhones and other applications, mobile broadband has become popular. The mobile services have so far increased far compared to SMS and voice usage. The Australian Communications and Media Authority is the major regulator in the industry (Access Economics Pty Limited 2010, p.10). The organization ensures that the market operators comply with the set regulations and requirements.
Some of the ACMA responsibilities include licensing, ensuring that the operators complies with regulations, monitoring performance, and giving reports on matters related to the communication industry (Access Economics Pty Limited 2010, p10). Based on the Access Economics Pty Limited (2010, pii) “mobile telecommunication industry contributed $17.4 billion to the Australian economy” in the financial year 2008-2009.
History of the service provider
The leading service providers in the Australian mobile communication industry are Telstra, Optus, Vodaphone, and Virgin Mobile.
Telstra
Telstra dominates the Australian telecommunication industry with 99% of the mobile subscribers. The company which was owned by the government before its privatization offers the best network coverage despite its high charge rates. The company also owns and manages the largest share of copper network in Australia (Telstra n.d).
Its services are in broadband, mobile, and landline. The company was founded in 1901 under the name Postmaster-General’s Department (Telstra n.d). It was then operated by the Australian Federation and it managed the postal, telegraph, and domestic telephone services. It was the only company in the telecommunication industry thus enjoying natural monopoly.
Through the telecom, the company established the first mobile based network in Australia in 1981 as the Public Automatic Mobile Telephone System (Telstra n.d). It was later renamed the Australian Telecommunication Corporation. The company underwent several changes such as branding and mergers until it changed its name to Telstra in 1997(Telstra n.d).
Because of the emerging key players in the Australian telecommunication industry the company was privatized in 1997. Currently, the company provides mobile services to an estimated 12.2 million Australians, which is almost 50% of the whole Australian market share. However, because of increased competition from other service providers, the company market share has reduced in recent years compared to the early 2000’s.
Optus
Initially, the company which was founded in 1981 was referred to as Aussat Pty Ltd. It is a subsidiary of the Singapore telecommunication. It is located at Melbourne, Australia with its operations in Adelaide. The company is ranked as the second service provider with interests in broadband, mobile and landline services (Optus n.d).
Although the company owns most of its network infrastructure, it uses the network of other providers especially that of Telstra wholesale. The company has been undergoing numerous branding with the aim of changing its corporate strategy and culture. As of 2008, the company had over 10, 000 employees with a revenue of 8.321 ASD dollars. The network coverage of the Optus covers 97% of the Australian population. The company offers low rates compared to Telstra which makes it affordable and cheaper.
Vodafone
Vodafone, which is a subsidiary of the Vodafone Plc UK, was founded in 1992 and licensed in the same year (Vodafail.com 2011, p3). With regard to the Australian population, the company has coverage of 94 % (Vodafail.com 2011, p3).
It GSM mobile services are provided between 900MHZ and 1800HMZ. In the metropolitan area, the company covers an average of 10% of the regional centers. The company was operating singularly until 2009 when it merged with the Australian based operator Hutchison 3G to form the Vodafone Hutchison Australia Pty Ltd (Bingeman & Lee 2010).
Vodafone mobile has the largest share of the mobile infrastructure in Australia although its coverage is believed to be poor. Generally, Vodafone is ranked as the cheapest service provider in Australia although its coverage is not reliable and coverage is poor (Vodafail.com 2011, p. 3-6).
Virgin mobile Australia
This is the youngest of the other service providers and is ranked fourth in the Australian telecommunication industry. The company was founded in 2000 with its major headquarters in Sidney, Australia. Unlike the other operators, VMA operates under a 50/50 operation where Optus and Virgin Mobile UK owns half of the business. In most case it operates under the Optus network although other operations like billing, customer services, and branding is entire the work of the VMA.
In 2005, the joint venture operations saw Virgin Mobile UK gain 74.15% of the business operations making it the largest shareholder. Although the company operates using the Virgin brand, since 2006, it was wholly owned by Optus (). It now operates as a subsidiary of the second largest service provider Optus. VMA sponsors some local activities in Australia as part of corporate social responsibility.
Current state of the environment
The current mobile telecommunication environment in Australia is competitive and saturated as there have been other new entrants in the market. However, Telstar, Optus, Vodafone, and VMA are the largest services providers dominating the industry. Compared to the last decade, the current environment has developed faster.
The number of mobile telecommunication subscribers has also increased spontaneously. The current financial crises in Europe and the U.S have adversely affected the sector. Currently, it is hard for new entrants to join the market because of high capital requirements for the establishments of network infrastructure (Access Economics Pty Limited 2010, p. 9).
Given that an organization can contain all the initial costs requirements, it still remains hard for it to penetrate the industry. This is as a result of the high dominance in the Australian Mobile telecommunication industry by the four major players. The day to data technological change acts a barrier to new entrants (Access Economics Pty Limited 2010, p.9).
For instance, a mobile telecommunication company may find the technology they are adopting for operations is phased out before the launch process is completed. Lastly, the merger between Vodafone and Hutchison in 2009 is believed to have a major impact on the industry. Economies of scale are expected to increase which is an economic barrier to entry in a new market.
Reason for research
The purpose of the research is to carry out an extensive research on the Australian mobile telecommunication providers. This will give a better understanding of the market, environment, and industry, how the operators compete and the various products available in the market. The information will form the basis for a strategic plan that new market entrants can use. It will offer insights for the realization of the business objective of the Loud and Clear Mobile Telecommunication.
Overall goals
In undertaking this research study, the following have been identified as the major goals.
- To determine the major mobile telecommunication operators or service providers in Australia.
- To be able to offer recommendations on Loud and Clear Telecommunication a new entrant in the market.
- To analyse the Australian mobile telecommunication industry in the following dimensions: pricing, network coverage and reliability, pricing policies, and the pricing models used by the services providers.
- To provide Loud and Clear Telecommunication with adequate information on the Australian telecommunication industry that could be used for strategic planning.
- To examine the relationship between the different service providers in the Australian Mobile Telecommunication industry.
- To understand the challenges found in the mobile telecommunication industry.
Methodology
The research is both based on qualitative and quantitative research designs. Data and information was collected from the major key players in the mobile telecommunication industry. Quantitative and qualitative methods have been applied to collect data from both primary and secondary data sources. This implies that the data collected is from primary and secondary sources. The collected information has been found be dependable, accurate, up-to-date, and reliable.
The gathered information and data aligns with the goals of the organization as well as its business and research objectives. The information and data has been presented in the form of table, charts, and graphs. The data and information presented was used for interpretation and the analysis of the research findings.
In one way, the four companies were used as case studies for the study. The findings were used to draw conclusions which were used as the basis for providing the required recommendations. Comparison analysis has been employed where aspects like pricing, coverage, trends, reliability, and costs have been determined.
Lastly, the results findings were applied for interpretation purposes. Discussion of the findings relies heavily on the presented data. This has been used as the basis for the research. Based the findings recommendations have been made that can be applied by the Loud and Clear Mobile Telecommunication. The recommendations are viable, feasible and applicable in designing a strategic plan.
Findings and conclusions
This section of the research study provides the research findings which have been generated from both primary and secondary sources. The findings have been used to make the research conclusions.
Table 1: Ranking of the 4 service providers based on customer satisfaction
Based on figure above, Virgin mobile was ranked as the leader in customer satisfaction because of its lower charge rates. This makes the provider the leader with over 70% the satisfaction average. The Virgin Mobile is followed closely by Vodafone and Optus with 72% of customer satisfaction compared to Telstra which has 63%.
The conclusion made is that Virgin mobile satisfies most of the subscribers in Australia while Telstra has the lowest ranking. This makes Virgin Mobile the best while Telstra the worst in terms of charges and reliability. Based on the data, Virgin offers the best value for money and service to customers.
Table 2: Charges offered by the providers
Source: Connectus Pty Ltd (2012,)
Telstra is ranked as the leader in terms of charge rates while Vodafone is ranked as the cheapest in both SMS and unlimited calls. However, Virgin Mobile offers the least charges on broadband at $5 for 5GB while Telstra offers highest at charges at $29.95 per month. It should be noted that the charges are at the lowest prices.
Table: 3 Market leaders
Telstra is the market leader in the Australian mobile telecommunication industry with a market share of 60%. This is followed by Optus whose market share is 20-23%. The rankings are based revenue, reliability, coverage, and the number of subscribers. For Vodafone since its merger with Hutchison its market share has reduced and currently it is not known although it is ranked third.
Table 5: Network coverage, by carrier, end 2008‐09 financial year
Source: Access Economics Pty Limited (2010)
Based on the statistics in table 5, Telstar has the highest coverage of 99% on W-CMDA but third in GSM as Optus is the leader with 96% and Vodafone 95%. However, it is the overall provider in the market. Other players follow behind with Optus being second followed by Vodafone and Virgin Mobile. In terms of subscribers Telstar has a subscriber of 42.5%, Optus 32.1%, Vodafone 17.7% and the rest which is 7.7% is awarded to Virgin Mobile.
Table 6: Popular Phones in Australia and their prices
Source: WhistleOut Pty Ltd (2012)
The table below presents the most popular phone in Australia. Based on the table, blackberry and Samsung galaxy are highly priced compared to other phones in the market. The phones are available to the major mobile telecommunication providers at subsidized prices.
Conclusions
Telstra is the leading market shareholder in Australia followed by Optus, Vodafone, and Virgin Mobile. It also has the largest network coverage of 99% with Optus following with 96% followed by Vodafone with 94% and Virgin Mobile with 94%. Virgin Mobile provides the better services based on the consumer satisfaction survey.
Telstra, Optus, and Vodafone are mobile telecommunication providers that have GSM networks which are individually owned. Virgin Mobile is a reseller of the Optus networks. Vodafone has the lowest call, SMS charges while Virgin has the lowest broadband charges. Lastly, major phones found in the market are Nokia models, Samsung, Apple, HTC, and Sony Erickson.
Discussion (interpretations of findings)
From the findings presented above, Telstra is the largest shareholder in the Australia mobile telecommunication industry. The organization has over 10 million subscribers. It also covers 99% of the population.
According to Telstra (n.d), the organization’s network is the leading one in Australia with 99% coverage of the population. However, the market share and the coverage is deemed to have reduced after the merger of Vodafone and Hutchison which is believed to increase the market share to over 30% of the total industry (Access Economics Pty Limited 2010, p7).
Bigpond which provides the company’s broadband is also the leading compared with the other providers (Tetra n.d). However, compared to Optus, Vodafone, and Virgin Mobile, the company has the highest charges on broadband. In terms of value for customers’ money, Virgin Mobile is the leading provider.
This is based on a customer satisfaction study carried out where it had a score of 83%. This was just above the average customer’s satisfaction of 70%. Compared to 2010, the Virgin Mobile had a satisfaction increase of 10.7% (Corner 2010). This was a result of the Telstra sinking to a satisfaction of 63%. Although the company has the highest coverage and the strongest network which is reliable, its charges are high above the other market share holders.
The survey which was based on the subscribers inclined to either of the mobile operators can be used to mean that Telstra is losing its consumers to other providers’ especially Virgin Mobile. According to (Corner 2010), Virgin Mobile has been ranked as the company offering highest satisfaction because of its cheaper rates, capped plans, and steady network coverage.
Although Vodafone used to be the second leader it has been surpassed by Optus. This makes it the third company after Optus. The reasons behind its poor performance and loose of market share has been because of its poor network coverage (Vodafail.com 201, p.4).
However, its merger with Hutchison is believed to have appositive effect on the market. Before the merger the company had a population of 96% but as a result of merger, the population coverage has reduced to 94% (Vodafail.com 2011, p.3). Some of the complaints that were posted include poor coverage, incorrect charges; delay is SMS and voice mails, incompetent customer service, and calls dropping (Vodafail.com 2011, p.3).
It can be concluded that the other operators (Optus and Virgin Mobile) have used these weaknesses to capitalize on the market share. According to Bingeman and Lee (2010) the mistake that was made upon the merger was to publicly declare competition on the other providers by claiming that it would become the second service provider after Telstra.
The major mobile phones available in Australia are from Apple, Samsung, Nokia, HTC, Blackberry, and Sony Erickson. However, these phones have different pricing as applied by the sellers of the phones. Samsung phones have the highest prices compared to Apple iPhones and Nokia phones.
This could be as a result of the manufacturer, durability, and hardware. All these phones are based on the latest mobile phone hardware like Smartphones and Androids. These are the latest trends in the mobile communication. The platform has changed from where the mobile telecommunication operators operate from.
Weaknesses of the study
The only weakness of the study is that it has only been based on the major four players without putting into consideration other players. Future research should be diverse and cover more companies in Australian telecommunication industry.
Recommendations
Based on the study, the following are the recommendation for Loud and Clear Mobile Communications that could be applied in designing a strategic plan.
- The company has to have adequate capital and be ready to receive competition while entering the industry.
- It has to lay down marketing strategies that would persuade the people it will offer better and reliable services than Optus, Virgin Mobile and Vodafone.
- Because of the rapid technological changes, the company should have research and development team that would forecast on the required networks that would be in use by the time it completes its launch.
- Have coverage of over 98%, satisfy customers through low charges, reliable network, and capped deals.
- The company should be ready to face resistance while entering the Australian market and become one of the top three. To remain at the top requires multiple research as the environment is changing.
Reference List
Access Economics Pty Limited 2010, Economic contribution of mobile telecommunications in Australia. Web.
Bingeman, M & Lee, T 2010, Phoney forecasts: Vodafone fights to stay in the mobile race as Telstra, Optus tear away. Web.
Connectus Pty Ltd 2012, Australian broadband providers – Which ISP?. Web.
Corner, S 2010, Telstra Mobile still ranked worst for customer service. Web.
Optus n.d, Optus mobile network coverage. Web.
Telstra n.d, About Telstra: Fast facts. Web.
Vodafail.com 2011, Vodafone’s situation: Yesterday, today and tomorrow. Web.
WhistleOut Pty Ltd 2012, Most Popular Mobile Phones – Compare Plans & Deals. Web.