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MARCH 2000
This document has been prepared by:
Jim Claven
Industrial Research Officer
CEPU Divisional Office
1.1 HOW MANY INTERNET SUBSCRIBERS ARE THERE IN YOUR COUNTRY NOW?
While the actual number of Internet subscribers in Australia can not be verified at this stage, the number of Australians accessing the Internet is expanding at a rapid rate, with an estimated 1.7 million Australian households accessing the Internet. Commercial access to the Internet in Australia reveals that 43% of all businesses are currently on-line, however only 6% operate their own websites or home pages.
Household Access
The Australian Bureau of Statistics (ABS) reported on 1 March 2000 (see Attachment 1 & 2) that half of all Australian households (3.5 million households had a home computer and one quarter (1.7 million households had home internet access in November 1999. This represents an increase since November 1998 from 47% of households (3.2 million) with a home computer, while 19% (1.3 million) had internet access. This 40% increase in the number of households with home internet access (476,000) was more than double the increase in the number of households with home computers (229,000) over the 12 months to November 1999. It should be note that a further 704,000 households with a computer reported intending to acquire home Internet access in the next 12 months.
This ABS survey also revealed that nearly 6% of Australian adults (803,000) used the internet to purchase or order goods or services for their own private use in the 12 months to November 1999. This is a significant rise from 2% of adults (286,000) in the previous twelve months.
With regard to overall Internet access in Australia, the ABS reported in the same survey that an estimated 6 million adults (or 44% of Australia's adult population) accessed the Internet at some time during the 12 months to November 1999. In comparison, nearly 4.2 million adults (or 31% of Australia's adult population)accessed the internet at some time during the 12 months to November 1998. With regard to places of Internet access, the ABS study reported:
2.8 million adults access the Internet from home;
2.8 million adults access the Internet from work;
2.1 million access the Internet from a friends or neighbors house;
1.2 million access the Internet from TAFE's or tertiary institutions;
0.8 million access the Internet from public libraries;
0.3 million access the Internet from shops, stores and telecafes
0.2 million access the Internet from schools; and,
0.2 million access the Internet from government agencies or departments.
Commercial Access
With regard to commercial access to the Internet, the ABS reported in October 1999 that this has been rapidly expanding (Attachment 3 & 4). At June 1999, 43% of Australian employing businesses had access to the Internet and 6% had a website or home page. This Internet access has expanded from only 16% in 1997.
The Australian Telecommunications Industry Ombudsman's Office - a Federal government agency with industry representation - has reported that there are currently approximately 700 Internet Service Providers (ISP) registered and operative in Australia (Attachment 5). This is a massive increase since June 1997 when the ABS reported in its survey of Telecommunications Services that there were at that time only 306 Internet Service Providers (Attachment 6).
It should be noted that the TIO has reported that the ABS will be conducting a comprehensive quarterly survey of the Australian ISP Industry commencing in June 2000. This will provide data on Internet usage, particularly by businesses. It will include supply aspects, such as geographic coverage, and information on subscriber demand such as types and numbers of subscribers, churn rate, volumes of transactions and type of access.
With respect of ISP's, the ABS Telecommunications Services survey (Attachment 6) also revealed that as at June 1997 the reported 306 ISP's operating in Australia employed 1,646 (up from 1,058 in 1996), of which 1,355 were full-time and 291 were part-time. While this data is relatively old, it reveals a significant increase in employment by ISP's year to year, an over 55% increase.
The best current estimate of the scale of e-commerce transactions is AUD$920 million (or US$598 million). However this figure is only an estimate, with estimates being affected by the definition of e-commerce and the rapidly changing nature of the market.
While a survey of 1,200 consumers by Sydney-based social forecaster Pophouse suggests there is going to be plenty of business on offer, with more than 80% expecting to buy CD's and books on-line in the future, estimates from analysts www.consult reveal that only 7% of Australians will shop on-line this year, generating AUD$920 million worth of sales (or approximately US$598 million) (see Attachment 7 - Connors article)
Australian Bureau of Statistics Surveys
The ABS study cited above (Attachment 1 & 2) reveals that of the 803,000 Internet shoppers, 19% spent up to AUD$50 on Internet purchases in the last 12 months, 14% spent $51-100, 23% spent $101-250, 9% spent $251-500 and 34% spent more than $500. The ABS Telecommunications Services survey (Attachment 6) also revealed that as at June 1997 (almost three years ago) Internet services generated $183.5 million in revenue for the various services providers (i.e. carriers).
The ABS study cited above (Attachment 1 & 2) reveals that nearly 6% of Australia adults (803,000) used the Internet to purchase or order goods or services for their own private use in the 12 months to November 1999, compared to only 2.7% (286,000) in the 12 months to November 1998. 74% of Internet shoppers in the 12 months to November 1999 paid for their purchases on-line. With regard to frequency, the ABS study cited above (Attachment 1 & 2) revealed that of the 803,000 Internet shoppers, 36% made one purchase or order via the Internet, 14% made two, 13% made three, 10% made four and 24% made five or more.
Andersen Consulting Survey
In 1998 Andersen Consulting conducted its Australian People Metre Study of 150 CEO's of large corporations, 60 representatives of the Information Technology industry 40 policy makers, 20 heads of government departments (Attachment 8 - Craven article). While this major study does not detail the value of e-commerce transactions (current or anticipated), it seeks to assess business and policy maker perceptions regarding the future role and importance of e-commerce in Australia. The results were:
42% strongly agreed that e-commerce would revolutionize Australian business; ( with a further 38% slightly agreeing);
87% agreed that e-commerce is inevitable;
64% agreed that e-commerce would offer a real competitive advantage to business;
14% of companies surveyed had developed an e-commerce plan for their business, 64% were developing a plan and 22% were not;
of the 14% with an e-commerce plan, only 19% sought to lead the market and 59% considered their plan an experiment;
67% of CEO's stated that they would delay entry to e-commerce until customer demand for it increased;
Most CEO's considered security (71%) and privacy (67%) issues were limiting consumer acceptance of e-commerce. 66% stated the lack of an e-commerce business culture and 57% lack of customer knowledge;
74% wanted government to develop a vision for e-commerce in Australia;
92% believed that Australia already has the telecommunications infrastructure to support e-commerce;
with regard to investment, 14% stated their willingness to invest and lead, 41% experiment and selectively invest, 7% would watch other businesses, 12% limited exposure and 26% no response;
A national comparison was made on a scale comparing four major factors to asses the national potential for e-commerce take-up (the size of the domestic market and the use of technology, educational standards, the business e-commerce environment, venture capital market, research and development spending, government, legal and regulatory framework and information and communications infrastructure). Overall, this comparison placed Australia fifth On the consumer scale Australia came fourth after the United States, Japan and Norway, with Australia ahead of the United Kingdom, Singapore, Malaysia and Thailand. On the business environment scale, Australia was sixth, following the US, Sweden, Norway, Japan and the UK. On the government, legal and regulatory factor, Australia came fifth, ahead of the US but behind Malaysia, Sweden, the UK and Norway. On the infrastructure factor, Australia was fourth, behind the US, Norway and Sweden;
Comparisons with similar studies conducted in Europe and the United States, reveals that Australian business are more enthusiastic regarding e-commerce.
All relevant materials and references are attached for your information.
In response to question 2A.3 below, I have detailed the range of e-commerce activities and services currently being planned or offered by Australia Post. These include an Internet Fulfillment Service, KeyPost Server Certificates E-Stamps (PC Postage and Internet-based secure postage), On-Line Stamps, Internet E-mail Service, Electronic Financial Services, and EDI Post Service. I have also detailed some planned Internet services by Australia Post's competitors.
With respect to the broader market, the ABS survey cited above (Attachment 1 & 2) reveals that for the estimated 803,000 Australian internet shoppers, books or magazines and computer software or equipment were the two most common (27% and 19% respectively) types of goods or services purchased for private use in the 12 months to November 1999 (Attachment 1 & 2). It reveals that of the 803,000 Internet shoppers, 27% reported purchasing books or magazines, 19% reported purchasing computer software or equipment, 14% reported clothing or shoes, 13% reported purchasing music, 12% reported purchasing tickets to entertainment events, 9% reported purchasing sporting equipment, 7% reported purchasing holidays and 7% reported purchasing alcohol.
With regard to financial transactions, in the three months to November 1999, 4% of adults (503,000) used the Internet to paybills or transfer funds, 2% (227,000) used an electronic information kiosk to pay bills, 41% (5.6 million) used a telephone to pay bills. 62% (8.5 million) used electronic funds transfer facilities or EFTPOS and 72% of all adults (9.8 million) used an ATM. With regard to the source of goods, the ABS study cited above (Attachment 1 & 2) reveals that nearly 70% of Internet shoppers (559,000) purchased or ordered via the Internet from home. 54% of Internet shoppers made their purchases only from Australia, 33% made them only from overseas and 13% from both Australia and overseas (Attachment 1 & 2).
With regard to commercial use of the Internet, the ABS report that business use of the Internet for e-commerce purposes remains relatively low (Attachment 3 & 4). This report reveals that as at June 1998, only
The Pophouse survey cited above (see Attachment 7 - Connors article) revealed that of those 1,200 consumers surveyed:
Australia Post sees entering the e-commerce market as a key element of its strategy to position itself successfully in the communications world into the foreseeable future. They are aware that the growing e-commerce market provides opportunities to build on Australia Post's strong tradition of delivering communications via the electronic environment. Australia Post also argue that this market will require the modernization of its network technology - which they have implemented through their AUD$500 million FuturePOST network technology investment program.. Management's stated aim is to be "the lowest cost provider of deliveries to households in Australia." The continuing growth in the number of postal items carried by Australia Post - growing by 3.4% last year from 4.3 to 4.5 billion - underlines the relevance of physical delivery, with e-commerce being expected to encourage this growth. However they are also aware that e-Commerce may pose a potential threat to Australia Post's over 4,000 retail outlets to the extent that customers will opt for the Internet over a Post retail outlet (see Attachment 7 - Connors article, Attachment 9 - Linda Nicholls article, Attachment 10 - Dasey article, Attachment 11 - Linda Nicholls article).
Yes.
There are a number of major products that Australia Post is developing or implementing as part of its E-Commerce market agenda. This information has been sourced from recent Australia Post Annual Reports, its Post Journal and newspaper reports. Extracts of many of these are attached. These initiatives are:
Internet Fulfillment Services (IFS)
In March 2000, Australia Post launched this pilot service which will combine delivery with warehousing, distribution and track and trace capabilities for on-line retailers. This builds on Australia Post's current arrangements to deliver on-line orders for Amazon.com (over 22,000 items per months) and the major retailer, Coles Myer. The latter consisted of a successful trial concerning the home delivery of Coles Myer's supermarket products ordered on-line by domestic customers after-hours. Australia Post's massive AUD$500 million FuturePOST program is a key element in this market, overhauling its addressing and sorting infrastructure and processes (Attachment 12 & 13).
KeyPost Server Certificates
In late 1998, Australia Post has released this product which provides digital signatures to consumers, role-based certificates for organizations and server certificates for webservers. With regard to the latter, KeyPost offers a secure tool for authenticating Australian organizations selling services and products on the Internet. It allows customers to authenticate the merchant that they are dealing with, certifying who they are and that they own the website. This product basically certifies the authenticity of commercial websites and is competitively priced at AUD$500, less than similar services overseas (Attachment 14).
E-Stamps - PC Postage and Internet-based secure postage
Australia Post is studying the feasibility of two major technology-based activities - PC Postage and Internet-based secure postage. The former concerns printing postage on envelopes directly using a basic personal computer and printer and transmitting and printing postage via Internet connections. Substantial progress has been made with Internet-based secure postage by the United States Postal Service and several large ISP's. These initiatives aim to provide convenient postage access for businesses and private customers (Attachment 12).
On-Line Stamp Sales
The introduction of international on-line stamps sales to enable overseas collectors to make philatelic purchases via the internet has proven successful (Attachment 12).
Internet E-Mail Service
Another reportedly successful trial being undertaken by Australia Post is allowing travelers to use kiosks at participating postal outlets to access Internet mail (Attachment 12).
Electronic Financial Services
Australia Post has provide substantial electronic third-party financial services to its customers. these concern electronic personal banking retail services through its giroPost service and Internet bill payment. in June 1999 the former performed transactions on behalf of 24 banks and financial institutions, and was available through over 2,700 postal outlets. this market is growing, with a further 17 financial institutions joining the giroPost network in 1999. Internet bill payment is a new service (additional to Australia Post's traditional third-party bill payment service) that will enable customers to pay bills from a range of companies at one central internet site. It is expected that more than 370 billing companies will progressively take advantage of the Post internet bill pay service when it become fully operational in September 2000. A trial of this service will be conducted in April 2000 allowing approximately 2000 customers to access 4-5 billing companies. details of this service are contained on Australia Post's Internet bill pay website - http;//www.postbillpay.com.au. (Attachment 12 & 13).
EDI Post Service
This service provides electronic acceptance, preparation and printing of high-volume mail from major mailers. Database techniques within EDI Post have been upgrade to enable greater targeting through direct marketing campaigns, information technology and operating systems were prepared for bar-coding and the Archive and Retrieval and Direct Fax options were extended to increase delivery methods. Australia Post report that this product experienced steady growth, with a 15% revenue gain in 1999. A trial also began during 1998-99, known as Australia Post's PCePost, to enable customers to electronically lodge small mail volumes direct to EDI Post via PC's (Attachment 12).
Australia Post's E-Commerce Competitors
It should be noted that one of Australia Post's e-commerce activities will face competition from private sector competitors, such as the US-based Federal Express and internet start-up, TheSpot (Attachment 7 - Connors article).
Federal Express is directing its Internet fulfillment service to on-line retailers in partnership with the UUNET-owned internet service provider, Ozemail. The shortage of existing warehousing and distribution structures has resulted in the latter building its own warehousing and distribution facility, managed by a separate company - e-DC. E-DC also aims to include Australia Post competitors, Mayne Nickless and TNT, in its distribution plans. It should be noted Andersen Consulting regard Federal Express as one of the leaders in e-commerce (Attachment 8 - Craven article). The Spot is now marketing this service to other electronic retailers (or e-tailers), including those targeting by Australia Post fro its IFS service (Attachment 7 - Connors article).
Yes. Given that one of Australia Post's key e-commerce activities is Internet Fulfillment Services, it can be anticipated that this will bring an increase in the transportation of physical goods. This is especially the case with respect to a whole range of retail Internet transactions which would not previously have been accessed by Australia Post, such as supermarket products.
There is currently only extremely limited access to computers for customers (see reference to Internet E-mail Services above) at Australia Post outlets. However as 2,724 out of 4,425 Australia Post postal outlets currently have electronic financial facilities. this would suggest a capability to deliver computer services to customers, should the hardware be provided.
No. E-commerce operations are undertaken by the particular Australia Post internal line management area concerned, such as delivery or retail.
The explosion of new communications media in recent years has expanded the options available to potential customers of the physical mail market. Since 1960 the letter market share of the total Australian communications market has declined from 50% to 19% in 1999. This is anticipated to accelerate as consumers increasingly take up alternative electronic communications mediums (such as the Internet) to meet their needs.
However it is also true that physical mail continues to grow. In 1999 the amount of articles rose by 3.6% to over 4.5 billion items delivered. Australia Post reports growth in all mail sectors, especially letters and parcels. with respect to parcels Australia Post remains the market leader in the home market, small parcel delivery and business to home delivery market. Australia Post believe that this demonstrates that mail continues to underpin business and social communications.
Nevertheless, we would expect that Australia Post will need to expand its operations into the e-commerce market, as well as improve the efficiency of its technology if it is to continue to be the market leader in communications into the future.
Australia Post, with the active support and involvement of the CEPU, has therefore introduced a major revamp of its mail sorting technology, encompassing bar-coding on mail, state of the art optical readers (MLOCR) and a computer-driven load forecasting, handling, control and operating systems in two new major facilities. They have also introduced VSORT (or vertical sorting frames) into the delivery area to improve delivery rates. These measures are principally directed at reducing mail costs, while ensuring an improved capacity to handle future mail volumes with high levels of reliability.
In addition, Australia Post has established a range of e-commerce services, possibly the most important of which is its Internet Fulfillment Service. This has the potential to bring a whole new delivery market into Australia Post's revenue stream, such as supermarket deliveries. To the extent that these services are currently provided, they are done so by competitor logistics companies who are seeking to enter the physical postal market themselves. E-commerce services therefore provide the potential for the Australian national postal administration to enter competitor markets.
Yes. The union is consulted by Australia Post directly on any major new business initiative. This also includes participation in joint working parties on specific areas, such as retail matters including e-commerce. Out current national industrial agreement - Enterprise Bargaining Agreement (EBA4) - provided for the establishment of a national consultative forum to notify the union of any new directions, products and services, including e-commerce initiatives.
Principles for the provision of training and retraining (including competency based standards) are included within major industrial agreements between Australia Post and the CEPU. These principles set out the basis under which training is provided and the training standards to be met. There are two principle agreements in this regard - a redundancy, redeployment and retraining agreement (or Triple R Agreement) and our latest enterprise bargaining agreement (EBA4).
All retail staff are provided with appropriate software and computer hardware training to operate the screen-based Electronic Point of Sale (or EPOS) equipment within Australia Post's counter network. Other staff would be provided with appropriate computer training consistent with their responsibilities.
The union is fully supportive of Australia Post pursuing commercial initiatives to expand the market share of the corporation and to secure our members jobs into the future. However the union acts to ensure that such initiatives take into consideration the needs of the workforce, such as employment impacts, job security and job training requirements.
-, "Good things come in ParcelPost packages", Priority (Australia Post Business Customer magazine), No. 7 (1999)
Australian Bureau of Statistics (ABS), Australia Now - A Statistical Profile. Communications and Information Technology. Special Article - The Information Society and the Information Economy in Australia (Year Book Australia, 1999), ABS Catalogue 1301.01
-, Business Use of Information Technology, Australia 1997-98, ABS, ABS Catalogue 8129.0
-, "Commercial Business Use of the Internet Technology Low - ABS", Media Release, October 5th, 1999
-, "Continued Growth in Australian Internet Access - ABS", Media Release, March 1st, 2000, 22/2000
-, Government Use of Information Technology, Australia 1997-98, ABS Catalogue 8119.0
-, "Half a Million PC's in Australian Government", Media Release, December 14th, 1999
-, Telecommunications Services, 1996-97, ABS Catalogue 8145.0
-, Use of the Internet by Householders, Australia November 1999, ABS Catalogue No. 8147.0
Australia Post, "Australia Post Increases Trust in Internet E-Commerce", Media Release, 10th September 1998
-, "Internet billpay is on the way", Post Journal, December 1999
-, "Post's Internet Fulfillment Service due early next year", Post Journal, December 1999
Connors, E., "Rain, sleet or cyberspace, Australia Post will deliver", Australian Financial Review, 5th October 1999
Dasey, D., "Revolution in the Mail", Herald Sun, 1999
Nichols, L., "Electronic commerce and the need to lead", Priority (Australia Post Business Customer magazine), No. 6 (1999)
Telecommunications Industry Ombudsman (TIO), Internet Users, http://www.tio.com.au/ content_internet.html
Telstra Corporation of Australia, Enabling Australia Summit, 16th-17th April 1998. Excerpted addresses by John Craven (Anderson Consulting), Linda Nicholls (Australia Post) and Peter Shore (Telstra), http://www.enablingaustralia.telstra.com.au
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