Is Australia's Home Broadband Market Saturated?

Is home broadband in Australia close to complete saturation? If so, that implies the home broadband business in Australia now is virtually a zero-sum game. What one internet service provider gains is offset by an equivalent loss by some other contestant.

In such markets, it is not only tough for internet service providers to grow revenue by adding subscribers, but the revenue growth model has to be based on the ability to increase the revenue each provider gets from its customers.

Typically, that involves getting customers to buy more-expensive plans, almost always based primarily on higher speeds, though the value of bundled features often is hard to separate from higher-speed access.

New data from the Australian wholesale connectivity provider NBN shows a slight dip in wholesale accounts supported by the network. For some observers, that is the key statistic. It might indicate that demand for home broadband is nearly saturated, or is saturated. 

Assume the NBN represents the whole home broadband universe, representing 8.7 million accounts. There are some satellite accounts, but too few to affect the analysis (fewer than 21,000 total accounts nationally). 

If there were some 10.9 million dwelling units in Australia in 2021, and about 178,000 new units are added each year, then in 2023 there are about 11.3 million dwellings in early 2023. 

source: id.com 

That implies a take rate of about 77 percent. The slight dip in current subscriptions suggests that demand is about as high as it can get. 

source: ACCC 

Some see a market share shift from larger internet service providers using the NBN (Telstra, TPG, Optus) to smaller ISPs, a trend that was consistent in 2022 and 2021. 

It appears that the smaller ISPs are succeeding in the ways smaller providers often do. Anna Brakey, commissioner of the Australian Competition and Consumer Commission. “Some smaller providers are offering consumers different options to meet their specific needs, such as tailored plans and discounted pricing options, network performance graphs, Australia-only call centers and gamer-optimized plans,” she said. 

But the main observation might be the drop in total subscriptions in a developed country market, which is unusual.