2010 Broadband Barometer Australia

8/8/2019 2010 Broadband Barometer Australia

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POWERING A CONNECTED ASIA

The 2010 Pacnet

Broadband BarometerA study into the state-of-play of the

Australian SME ICT market


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Australian businesses are going into the

cloud. Hosted data backup and archival

solutions top the list of cloud applications that

Australian businesses intend to adopt in 2011. Over

60% of businesses indicated that they were interested

in such solutions, and over 40% are planning to

adopt virtualisation in a hosted environment

in the same period.65% of businesses are leaving the

door wide open to possible business

loss through internet downtime, as they do

not have a back-up internet

connection.

Most businesses now connect at internet

access speeds up to 20 times faster than in

2006. Today, 43% of Australian businesses connect

to the internet at between 2 and 10Mbps, potentially 20

times faster than the most common connection

speed of up to 512kbps reported in a similar

2006 study.

Three out of five SMEs in Australia

currently use or plan to use

collaboration solutions and Unified

Communications, which were one of the

key drivers for the increasing use of

broadband in the office.

Many businesses remain unconvinced of the business

value the National Broadband Network will bring, with 39%

reporting that they do not believe it will reduce their cost of

access. Overall however, a majority of respondents answered Yesor Maybe when probed about their agreement with various

statements of benefit of the National Broadband Network. These

results indicate businesses want to feel positive about the project

but with such an even spread of responses we can see that in

reality they have no strong opinions.

Key Findings


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The 2010 Pacnet Broadband Barometer

Table of Contents

1. Hosted Applications and Business Continuity

Current use of hosted applications

Business continuity and disaster recovery

Virtualisation

2. Back-up internet access

Adoption rates

Reasons for lack of take up

Possible implications

3. Access technology and speeds

Technology adoption

Technology adoption by company size

MPLS adoption rates

Speed comparison with 2006 results

National Broadband Network

Impact on the economy and business

Outlook for the future

4. Business communication and collaboration

Communication and collaboration solutions

Unified Communications which elements are being used?

VoIP

Video conferencing

Instant messaging consumers now drive business

5. The remote worker

Adoption rates

Technology adoption

Drivers and trends in up take of technology and applications

2

4

7

9

10

6


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The Pacnet Broadband Barometer study aims to assess the

adoption and usage of internet technologies by Small and

Medium Enterprises (companies with 5 to 999 employees)

across the Asia Pacific region. Since its launch in 2003, the

Broadband Barometer (previously also known as the Pacnet

IP Index) has been widely used and referenced by a range of

decision makers and analysts across businesses, government

agencies and the media.

This latest Broadband Barometer study is jointly developed by

Pacnet and AMI-Partners, a leading consulting firm

specialising in IT and telecom sectors. More than 2,000

technology decision-makers across 5 countries (Australia,

China, Hong Kong, India, and Singapore) were interviewed to

provide a deep and comprehensive view of the Asia Pacific

market.

Strategically, by comprehensively and continuously tracking

SME market dynamics and opportunities, the Pacnet

Broadband Barometer confirms Pacnets position as a

thought leader and a key internet player in the Asia Pacific SME

market. Tactically, the study is designed to gain insights in the

internet usage patterns of SMEs to help Pacnet formulate

strategies to meet the ever-changing needs of its customer

base.

About The Pacnet Broadband Barometer

3

Geographic Location of Respondents:

Sydney 90

Melbourne 111

Brisbane 45

Adelaide 29

Perth 31

Hobart 17

Newcastle 20 Canberra 12

Darwin 14

Pacnet Broadband Barometer Sample Distribution:

30-minute phone interviews were conducted withthe person responsible for internet and technology

buying decisions 369 samples were distributed across 8

employee-size segments and 19 vertical industries

50+ samples were allocated for eachemployee-size segment in small business space(59, 1019, 2049, 5999); 30+ samples foreach segment in medium space (100249,250499, 500999)

This allocation gives us a margin of error around13-16% with a confidence level of 95% for eachemployee-size segment

For each distribution cell (industry xemployee-size), the target interviews were 3 orgreater to ensure we do not rely on a singlesample


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1. Hosted Applications and Business Continuity

The Pacnet Broadband Barometer findings validate the

attention cloud computing has been receiving. 90% of

respondents currently deploy a hosted security application

and 66% use hosted email. These technologies are now

considered standard operating tools, mostly due to the

affordability, ease of deployment and maturity of these types

of applications.

While business continuity and disaster recovery are

hotly-discussed topics, of the businesses surveyed only 8%

have hosted data backup, storage and archival solutions inplace. This area is set for rapid growth in the next 12 months,

with 60% of businesses indicating they will adopt hosted data

backup and archival applications in 2011. With modern

Australian businesses generating such large volumes of data,

there needs to be options for storage archival and backup and

Australian businesses are embracing hosted solutions as the

most efficient way of achieving this goal.

Hosted solutions also provide great protection for businesses

in the unfortunate event that a head office link is affected by an

incident, such as a natural disaster. In situations like these,

secondary business sites or teleworkers can enjoyuninterrupted access to corporate data and daily operations

need not be interrupted. This set up protects the intellectual

property of company data as well as ensuring efficiency of the

business. These benefits, along with the flexibility, scalability

and minimal upfront investments make hosted solutions very

appealing for SMEs.

The next predicted area to experience an explosion in growth

is hosted server virtualisation. Only a tiny 1% of our SME

respondents currently use this leading-edge technology, but

with over 40% planning to adopt in the next 12 months there

is a clear trend that the industry must start makingpreparations for the next wave of technology implementation.

Historically, medium and larger-sized businesses

have virtualised with the implementation of

software solutions to consolidate a number oflarger server boxes into a compact blade server.

For enhanced protection, they would typically

co-locate these servers in an offsite data centre.

The Pacnet Broadband Barometer findings show

that SMEs are embracing the benefits of managed

virtualised environments. Through virtualisation,

SMEs can now co-locate their data and

applications onto a shared server that is not owned

or maintained by them at all, but managed by a

service provider.

4

Top 5 reasons to use hosted applications

No upfront investment

Pay by usage

Cost saving

Access from anywhere anytime

Scalability

Top 5 hosted applications

1. Hosted security 90%

2. Hosted email 66%

3. Hosted business applications 40%

4. Web hosting 21%

5. Business continuity 8%


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5

90%

66%

40%

21%

8%

1%

1%

71%

2%

23%

23%

60%

41%

28%

Hosted security-Firewall, Intrusion Detection,

Application Firewall, Unified Threat Management,

Denial of Service Prevention, Content Filtering

Hosted email

Hosted business applications (e.g., Saleforce.com,

ERP, CRM, Payroll, Accounting, HR)

Web hosting

Business continuity Regular data backup

(e.g., external network backup or pay per

use hosted and storage), long-term data archival

Server Virtualisation

Co-location (servers located at

an offsite 3rd party data centre)

2010

2011

Hosted Applications

This begs the question: Why invest in expensive hardware and

time consuming application roll outs and upgrades, when a

virtualised environment eliminates the pressure on IT resources

and the bottom line budget? When a business expands, their

growth is catered for seamlessly and almost instantly from the

cloud.

The tradition of having consumer premise equipment

consisting of racks and servers which expand over time as the

business and applications grow is definitely being challenged

with the emergence of cloud computing. Over a third of

respondents (39%) opted for a pay-per-use model as their

preferred way of setting up a hosted application framework.

Commenting on these findings Deborah Homewood, Chief

Executive Officer of Pacnet, Australia and New Zealand says:

SMEs are seeing the advantages of hosted services as they

allow them to outsource the management of their

mission-critical data and applications and free up valuable

resources to spend time on activities that contribute to their

core business.


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An alarming discovery from the Pacnet Broadband

Barometer is that despite the growing reliance upon internet

access for their business, few companies have a back-up

internet connection. The study revealed only 35% of

surveyed businesses had a back-up internet service and

just an additional 23% considering obtaining one in 2011.

This leaves the remaining 43% of

businesses indicating that they

have no plans to obtain a

connection for redundancy in the

next 12 months.

Many SMEs are relying on the

internet for critical daily

communications. Increasingly,

their day-to-day activities also

depend on internet-based

business applications. Therefore,

it is very risky to put all your eggs

in one internet basket. Businesses

would be in a much safer position

to have two separate internetconnections connected through a

simple solution like dual WAN

router, says Dr. Vu-Thanh

Nguyen, Research Analyst at

AMI-Parners.

2. Back-up Internet Access: No Back-up Plans, Businesses Putting Themselves At Risk

As application adoption grows

the reliance placed upon a

companys network connection

is much more critical. Data

availability is key for the efficient

operation of a business and an

interruption to a companys

network can be very costly. If

customers and staff cant access

information or business tools,

productivity comes to a standstill

which has an enormous impact

on the bottom line.

For the SME market, one reasonfor the shortfall in back-up

internet is the lack of technology

options. For businesses

accessing the internet using

ADSL, until very recently the only

option for back-up was dial-up. With

the implementation and improvement of 3G networks in

Australia, a mobile broadband connection with comparable

access speeds to ADSL, can be now implemented easily

and with minimal time and investment.

While Australia has yet to experience a hugely disruptive

event that affects its broadband network, businesses here

must not be lulled into a false sense of security or

complacency, especially as internet access has now

become a mission-critical part of their operations. Given the

wide range of cost-effective internet connectivity options

available today, no business should be without a back-up

internet connection.

Back-up Internet Access

Currently in place

35%

Plan to implement

in 2011

23%

No plans

43%


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The internet is ubiquitous among SMEs with 99% of

businesses with 5 to 999 employees having access.

However, the drive for content and applications has

influenced the type of access technology businesses use.

DSL (both ADSL and SHDSL) was the most popular

primary internet access technology accounting for 68% of

the businesses surveyed, with 24% relying on a fixed-line,

point-to-point technology such as Ethernet over fibre or

copper or leased lines. 7% have been reported as

connecting via ISDN and only 1% using wireless.

The marketplace has been continuously evolving and

adopting better, faster and more reliable technologies like

DSL. However, technology adoption differs depending on

the size of the company. 83% of businesses with 5 to 19

3. Access Technology and Speeds

staff connect via DSL, while 58% of businesses with more

than 50 staff had utilised DSL while a comparatively more

significant portion, almost 40%, used point-to-point

technologies.

Traditionally, only larger companies have adopted secure

high-performance Virtual Private Network (VPN) solutions

using technologies such as Multiprotocol Label Switching

(MPLS). However, it is evident this technology has reached

a level of maturity and is now also deployed at a price to

match SME budgets. Among SMEs with Wide Area

Networks (WANs) in place, more than 50% based their

communications infrastructure on a secure MPLS platform.

As cloud computing gathers momentum the 26% of

internet VPN-based businesses are tipped to move from an

unstable platform towards a more to a reliable and secure

MPLS private network.

Not surprisingly, speed has increased dramatically when

compared to 2006 data. The most common connection

speed is now between 2 and 10Mbps which equates to43% of businesses. In a similar study in 2006, 56% of

respondents were running primary connections of

512Kbps or less. Price and availability of content has put

pressure on the industry to increase the speed at which

information is delivered to the end user. ADSL2+ is a prime

example of this phenomenon, the introduction of a

high-speed business-grade access technology has

allowed companies to experience a whole new world of

connectivity at a price they would never have dreamed of

four years ago. This trend is further fuelled by the fact that

newer technologies are making high speed access more

and more affordable.

Again it comes back to businesses doing more with their

network and demanding greater speed and a reliable

connection between offices, other companies and their

customers.

WAN Technology

VPN over

the public Internet

26%

Layer 2 MPLS VPN

38%

Layer 3 MPLS VPN

12%

VPLS (Virtual Private

LAN Service)

14%

IPL (International

Private Line )

9%

EIPL (Metro Ethernet)

1%


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AMI Partners forecasts the spending by Australian SMEs (5 to 999

employees) on broadband to reach AU$618mil in 2010, and grow to $660mil

by 2014. At an annual growth rate of around only 2% it is obvious that

bandwidth is in a mature stage, almost a commodity. The real ICT growth in

the coming years will be in innovative applications and value-added services.

Deborah Homewood,

Chief Executive Officer of Pacnet,

Australia and New Zealand

2010 Speed

Top 3 reasons to increase speed

1. Plan to buy a bundled solution with higher

bandwidth and offers greater value

2. To take advantage of faster speeds now available

3. Price of bandwidth is more affordable

The National Broadband Network

When questioned about the effects of the NBN, 39% of

businesses surveyed did not feel that it would decrease

the cost of access. Respondents felt that the top three

benefits provided by the NBN would relate to access to

public information, global competitiveness and business

productivity.

Overall however, a majority of respondents answered

Yes or Maybe when probed about their agreement with

various statements of benefit of the NBN. These results

indicate businesses want to feel positive about the project

but with such an even spread of responses we can see

that in reality they have no strong opinions. Its clear that

businesses need greater information and transparency

about the network and how it will impact their business

before the true benefits can be appreciated.

The Government is projecting large investments of tax

payer funds so there remains considerable education and

communications about the real impacts of the NBN to

truly inform all consumers and businesses of the benefits.

37%

35%

34%

33%

31%

30%

30%

30%

30%

31%

38%

28%

37%

36%

32%

35%

33%

34%

28%

39%

32%

34%

39%

36%

Provide better access topublic information

Business Increase global competitivenessof businesses in Australia

Business Increase businessproductivity

Improve education services

Business Minimal impact

Improving healthcare services

Business Lower cost ofInternet access for businesses

Business Enable businesses todeploy more applications

Yes Maybe No

2006 Speed

0 0.512 Mbps

0.513 Mbps 2 Mbps

2.1 Mbps 10 Mbps

10.1 Mbps 25 Mbps

25.1 Mbps 100 Mbps

Above 100 Mbps

0.3%

4.0%

5.0%

43.0%

8.0%

30.0%

Less than 64 Kbps

256 Kbps

512 Kbps

1.5 Mbps

2 Mbps

4 Mbps

8 Mbps

More than 12 Mbps

23.0%

8.0%

2.0% 2.0%

17.0%

8.0%

31.0%


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9

A total of 61% of SMEs in Australia currently use, or plan to use in

2011, collaboration solutions which could all be grouped under

the Unified Communications (UC) banner. 34% of respondents are

currently using this type of collaborative technology but this is set

to skyrocket, almost doubling with a further 27% planning to

adopt these technologies in the next 12 months.

This makes technologies like unified messaging, presence,

integrated directories and a single communications client some of

the most common communication and collaboration tools used

by the respondents in the Pacnet Broadband Barometer. These

developments are driven in two ways. Firstly major software

vendors are launching updates to their existing communication

suites and including UC elements, so businesses are increasingly

familiar with these technologies. From the PBX and hardware

vendors, we are seeing traditional communications products

developed with inbuilt UC features that come as a standard

plug-and-play offering, ready to be deployed as the business

requires. These options have facilitated businesses to easily make

UC part of their technology solution.

Interestingly VoIP or IP telephony is commonly linked with a UC

suite, but in the Pacnet Broadband Barometer it is not showing

the growth curve of the other UC tools. With all the hype about

VoIP over the past five-plus years the industry predicted an

avalanche that would have gained momentum. However, thereport shows that in reality the take up rate is only 17%, predicted

to grow by just 9% more by 2011, commented Ms Homewood,

The majority of SMEs surveyed (74%) have no plans to adopt this

often widely publicised technology.

4. Business Applications Drivers For Increasing The Use Of Broadband

A similar question was posed in the 2006 Pacnet Broadband

Barometer, which found that 19% of respondents were using

some type of VoIP solution for business purposes including free

services like Skype. Clearly, since then businesses have not

perceived the value of VoIP and hence have not adopted the

technology.

On the other hand, Video Conferencing (VC) has an adoption rate

of just 9%, with a further 22% of surveyed SMEs planning to begin

using it in 2011. VC take up was strongest amongst SMEs with

100-199 employees, with 27% planning to adopt this technology

in 2011. This communication platform allows for greater

communication between offices and has the potential to

significantly reduce the corporate travel budget.

Traditionally the flow of technology adoption has been from large

corporations, down through to mid-sized and small businesses

and then into the home. This is usually due to the expense and

resource required to implement emerging technologies. However,

with internet technologies transforming traditional

communications, we are seeing this trend reversed.

In the Pacnet Broadband Barometer we can see business

communication technologies being driven from consumer

behaviour and technology 33% of businesses surveyed use, or

plan to use in the next 12 months, instant messaging as a

business tool.

34%

17%

17%

21%

9%

27%

9%

13%

12%

22%

39%

74%

70%

67%

68%

Unified communication (presence, integrated directory, unifiedmessaging, single communications client)

VoIP (e.g., Skype), IP telephony (IP soft/desk phones,full IP PABX system)

Online collaboration sharing slides,presentations, documents

Instant messaging (public, secure/corporate)

Video conferencing (standard desktop/high definitiondesktop/high definition conference room)

2010 2011 No plan

Communications & Collaboration Solutions


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10

With 71% of surveyed SMEs supporting or planning to

support remote internet access for their staff, it is clear the

employee is demanding connectivity to the office

environment beyond the workplace. Access to the virtual

work place gives employees the freedom to be in contact

with the office but yet not be tied to the office desk.

With the huge growth in the adoption of cloud applications

and technology we have seen in the Pacnet Broadband

Barometer so far, its really no surprise that the support of

businesses for remote workers is so high. Enabling remote

access has also become an integral part of many SMEs

business continuity plans.

Among the countries that the Pacnet Broadband

Barometer survey was conducted in, Australia recorded

one of the highest percentages of SMEs supporting, or

planning to support, remote access.

We think that Australian SMEs have recognised the

benefits of teleworking and the benefits that it brings to

businesses. Many working parents today might need to

remain at home to tend to their families and through the

provisioning of remote access, they are still more thancapable of working and business productivity need not be

lost, said Ms Homewood

5. The Remote Worker

Top 2 methods of accessing data from outside

the office

1. ADSL 63%

2. Wireless 33%

Supporting in

2010, 33%

Plan to support in

2011, 38%

Not supporting

and no plan in

2011, 29%

Remote Access


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About Pacnet

Named Company of the Year for Excellence in Growth by Frost & Sullivan in 2009 and Best Wholesale Carrier at the

Telecom Asia Awards 2009, Pacnet is Asias leading independent telecommunications service provider, formed from the

operational merger of Asia Netcom and Pacific Internet. Pacnet owns and operates EAC-C2C, the regions largest

privately-owned submarine cable network at 36,800 km, with a design capacity of 10.24 Tbps, as well as EAC Pacific,

which spans 9,620 km across the Pacific Ocean and delivers up to 1.92 Tbps of capacity between Asia and North

America. The company offers a comprehensive portfolio of industry leading IP-based solutions for carriers, large

enterprises and SMEs. Pacnet is headquartered in Hong Kong and Singapore, with offices in all key markets in Asia and

North America.

In Australia, Pacnets core network and premium telecommunications solutions are backed by a range of infrastructure

options which provide services customised to the specific needs of individual customers. Pacnet specialises in multi-site

connections and enables hosted solutions with a dedicated local team to connect manage and support business

communication requirements. For more information, please visit: au.pacnet.com.

About AMI-Partners

AMI-Partners specialises in IT, internet, telecommunications and business services strategy, venture capital, and actionable

market intelligence - with a strong focus on global Small and Medium Enterprises (SMEs), and extending into largeenterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest

quality data, business strategy perspectives and go-to-market solutions. Led by Andy Bose, the firm has built a

world-class management team with deep experience cutting across IT, telecommunications and business services sectors

in established and emerging markets.

AMI-Partners has helped shape the go-to-market SME strategies of more than 150 leading IT, internet,

telecommunications and business services companies. The firm is well known for its IT and internet adoption-based

segmentation of the SME markets; its annual retainership services based on global SME tracking surveys in more than 25

countries; and its proprietary database of SMEs and SME channel partners in the Americas, Europe and Asia-Pacific. The

firm invests significantly in collecting survey based information from several thousand SMEs annually, and is considered the

premier source for global SME trends and analysis.

For more information, please contact:

Elissa Ryan

National Marketing Manager

Pacnet

Phone: +61 3 9674 7539

E-mail: [email protected]

2010 Broadband Barometer Australia

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