Wireless broadband is booming alongside an explosive growth in sheer download volumes across both fixed and mobile platforms, according to the latest figures from the Australian Bureau of Statistics.

But while ISPs continue to plough both Opex and Capex into the DSL market, the results of the ABS Internet Activity Survey to December 2009 also suggest that the DSL scene has scant room for growth – potentially portending further consolidation or diversification for smaller players, Communications Day reported recently.

The survey covered ISPs with more than 1,000 active subscribers at the end of December, with a 99% response rate, and took a base of 9.1 million internet subscribers in the country. It reported that the total number of DSL connections had crept up to 4.193 million by the end of December, a marginal 0.5% increase on the 4.171 million reported by the ABS at 30 June. Mobile wireless connections, by contrast, shot up to 2.838 million – a 40% surge from 2.024 million reported in June (revised slightly by the ABS from when those figures were first published).

The volume of data downloaded by Australians also rocketed up by almost 37% between the two reports, from 99,240TB to 135,674TB. But, in the first reporting period where the ABS broke down fixed and wireless data consumption, the download figures failed to follow the connection trends; wireless accounted for just 15.5% of total downloads in the period, while fixed line broadband connections (of which DSL accounts for the lion’s share) made up 84.3% with dial-up filling in the remainder.

On these findings, if mobile wireless growth continues at even half of the current rate, it is on course to draw level with DSL penetration by the end of this year. And with the number of cable and fibre subscribers barely shifting between June and December (up from 931,000 to 935,000), some commentators have asked whether the meteoric rise of mobile broadband could even eat into uptake of the planned FTTP NBN.

But the figures raise more immediate questions for DSL players currently in the market. Data released by Ericsson at the start of this year suggests that ISPs are continuing to invest in DSLAMs and other equipment, indeed increasing their hardware spend compared to 2008. And the massive increase in fixed line downloads will also mean ramping Opex on backhaul and IP transit costs.

However, the ABS figures suggest that the available market for DSL customers is flattening out quickly, meaning less available revenue is up for grabs. With ISPs spending more to compete in the DSL market, one possible outcome could be increasing consolidation of smaller players – with iiNet’s recent Netspace acquisition perhaps just the start of a continuing trend.

Ovum analyst Nathan Burley drew a connection between the narrowing DSL field and the ballooning download volumes. “We’ve increased from an average [monthly download] per connection of about 4.7GB in June to 5.8GB per connection in December 09. That is probably the biggest jump we’ve seen... which you’d expect on the more generous data caps becoming available from most providers,” he told Comms Day.

“What’s happening is that the higher unlimited caps are showing that operators are needing to do things in this saturated market. And it’s going to be increasingly difficult to do that; increasing download caps only goes to a certain point, which is obviously when people get to unlimited. Following that, they’re going to have to look at overall price reductions, which are far less attractive.”

Meanwhile, Frost and Sullivan’s Phil Harpur argued that – despite the huge growth in wireless connections – the trend would soon level off, with very limited cannibalisation from the fixed market. “I think the period of that very high growth has peaked and the growth rates are going to plateau out.... although you get some people who’ll totally do away with the fixed line, the problem you’ve got with wireless is that network can only take so much... and it can get overloaded,” he said. “Fixed is always going to be the most cost effective option.”

And Telsyte research director Warren Chaisatien concurred. “Two events are reducing mobile broadband ARPU very quickly. The first is the rise of pre-paid mobile broadband.... people can top up for as little as $10-$15. The second is that carriers are allowing smartphone users to pay just A$10 and use them as a modem...the [smartphone market] is pretty significant as well, and it is taking some of the steam out of mobile broadband,” he said. “The growth in mobile broadband will start to slow down for these reasons.”

Internet connections via mobile handset were included in the scope of the survey but excluded from the published data.