Issue: 03/08

ACMA Telecommunications Reports: SME and Farm Sectors

January 30, 2008

ATUG Opinion this week is a summary of two reports released by the Australian Communications and Media Authority (ACMA) on the use and provision of telecommunications services in Australia. The SME and Farm sector reports are the second and third respectively in the Telecommunications Today series.

The Reports are available here

The reports show that Australia’s small and medium enterprises (SMEs) and the rural sector are reasonably connected online and on the phone, with 92% of SMEs and 74% of farms having an internet connection, and 93% and 85% respectively reporting the use of a mobile phone.

The research suggests that SMEs and the farm sector are keen adopters of communications technology to assist in managing their businesses. Both sectors also indicated that the internet had a significant impact on transforming their business practices and improving processes.

The reports found that broadband take-up is high especially among SMEs, with 91% of those connected using broadband. For the farm sector, there is a continuing reliance on dial-up internet connections: 53% of respondents with an internet connection reported using dial-up. Satellite connection accounts for almost 50% of those respondents with broadband.

For both sectors, fixed line services are still the main form of voice communications. However, 19% of SMEs now identify their mobile phone as their main form of communication and 85 per cent of the farm sector has access to both a landline and mobile service. 13% of SMEs are also currently using Voice over Internet Protocol (VoIP) services.

SME Report
The significant contribution of SMEs to the economy means that any productivity gains stemming from the effective use of communications services can be important in driving productivity in the greater economy.

This report has found that the fixed-line telephone is still the backbone of SME operations, with 98% of SMEs using fixed-line voice communications.

Mobile phone take-up is high although it has not occurred at the expense of fixed-line telephony, but is complementary.

Today’s SMEs are utilising e-business practices to help them communicate with customers and suppliers, to research markets, products and services, and to conduct online sales and purchases of good and services.

Broadband in particular is playing a key role in enhancing business productivity with 92% of SMEs connected to the internet, of which 91% have a broadband connection.

Voice communication over the internet is also assisting business productivity. Integrated voice and data networks often provide cost savings in addition to per call rates that are typically lower than fixed-line call rates. While only 13% of SMEs currently use VoIP another 14% of SMEs stated that they intend to adopt VoIP in the future.

Among SMEs without broadband, 38% perceived a lack of broadband availability to be the main reason they had not adopted broadband. The most common other reasons for not taking up broadband relate to SMEs’ own perceptions, such as not recognising or understanding the value or benefits of broadband to their business or not seeing a need for broadband in their business.

For SMEs, DSL (61%) is the dominant form of broadband access, followed by cable (18%), wireless (10%) and satellite (1%). Consistent with the findings of other research conducted by ACMA, 10 per cent of respondents were unsure what type of broadband access their business used. Most survey respondents were also unable to accurately specify the speed (data rate) of their broadband service.

Farming Sector Report
Farming has been reported independently as it not possible to separate the personal and business communication needs of this sector. Farms are both the workplace and the home for many farmers and this drives the take-up and use of communications services. They depend on their communications services—particularly mobile and broadband—for business operations, with nearly half using their mobile for both business and personal calls and 84% using the internet for both business and personal purposes.

The type, size and locality of farms also affect the take-up and use of services. Intensive farming such as cotton has led the way in the adoption of technology to help with activities such as water management and crop monitoring. In general, larger farms are better connected than smaller farms.

There is a perception among the farming sector that there is limited availability of mobile coverage and broadband services, with those without broadband indicating services are not available or that they live too far from an exchange. Therefore there is a greater reliance on dial-up in rural areas and satellite connections are the most popular broadband service, with half of farmers indicating they have a satellite connection.

74% of farms are connected to the Internet compared to 77% of households and 90% of small businesses. BUT farm respondents were more likely to have a dial-up connection (39%) than overall household respondents (18%) and less likely to have a broadband connection (35% farm; 58% overall household).

The type of broadband connection differed significantly between the farm sector and overall households, with farm respondents significantly more likely to have satellite connection (49%), ADSL (22%), cable (16%) and wireless (6%).

Of farm respondents with a non-broadband connection, over 80% indicated they would prefer broadband. Of these respondents, the main reason reported for not having the service was that there was a perception it was not available in the area or the consumer lived too far away.

Farmers are increasingly using the internet for business purposes. The most common uses were for weather information and banking followed by agricultural and market information.

Farm respondents were asked about the average monthly cost of their broadband connections. Respondents reported spending less on wireless, broadband cable and ADSL services than on satellite services. Satellite users reported spending an average of $59 a month on their satellite service compared with an average of $36 for cable users, $37 for ADSL users and $33 per month for wireless users.

The research results indicate that overall the landline and mobile phone are regarded as an essential part of farmers’ lives. Almost all respondents had a landline connection and four out of five farm respondents (85%) indicated that they use a mobile phone. The results are similar to overall household take-up figures, which indicate that 87% of respondents use a mobile phone.

Mobile phone use was highest among farmers in Western Australia (91%) and South Australia (89%) and lowest among those in Tasmania (79%) and Queensland (81%). Mobile phone take-up also differed by farm size and sector, with cotton farms (98%), cereal farms (95%) and farms over 800 hectares (91%) more likely to use a mobile phone. Beef and sheep farms (80%) or farms less then 400 hectares (80%) were less likely to have a mobile phone.

Farm respondents were less likely to use mobile phone functions such as watching television and accessing the internet. 53% of farm respondents had used these services in the past year compared with 60% of overall respondents. The most popular services and functions used by both the farm and non-farm respondents were taking photos or videos, instant messaging and gaming.

Respondent attitudes to mobile phone usage differed significantly between farm and non-farm respondents. In general, farm respondents emphasised the importance of their mobile phone for work purposes, as well as highlighting issues with mobile phone network coverage, whereas non-farm respondents indicated a higher degree of dependence on mobile phones for social life and security.

ATUG has been looking at these issues on our Regional Roadshows during 2004-2007 with planning underway for 2008; at our SME Seminars held during 2007 and more planned for 2008 and during our Future Forums. The Regional Telecommunications Inquiry Review Committee is also looking now at the adequacy of services for regional communities.

Areas that need policy focus during 2008 include:
• Mobile coverage on highways
• Withdrawal of ISDN services – even where fixed broadband access is not available
• Extension of ABG full subsidy to wireless providers so that end users have choice between satellite services and the cheaper wireless options

ATUG’s 6th Annual Regional Communications Conference will be in Canberra on 20-21 May.