Finance

Australian broadband among worst in developed world… Dollar breaks 18-year high… SME floats surge… Tax office bungling… Search engine wars…

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Australian internet, phone services lagging the world: OECD

Australian SMEs and consumers are paying more for phone and broadband services that are inferior to those available in most other developed countries, according to a new report on the state of telecommunications around the world.

Only the former Soviet republic of Slovakia’s top speed broadband offering is slower than Australia’s, out of the 26 countries in Europe, North America and the Asia Pacific surveyed for the report by the Organisation for Economic Co-operation and Development.

This result will come as no surprise to many Australian SMEs. According to the SME Opinion Leaders poll conducted by SmartCompany in conjunction with Roy Morgan Research and Dun & Bradstreet in May 2007, 64% of companies said they could innovate more with faster internet speeds and 58% of companies to offer new services or products.

And it is not just speed that it is a problem – broadband in Australia is also expensive. According to the OECD report, Australians pay between $21.10 and $98.62 per month for broadband services, placing Australia 14 of the 26 OECD countries.

The poor quality of broadband offerings in Australia is reflected in the fact that although Australia has one of the highest rates of broadband subscriptions pre head in the world, a very high proportion of those continue to be dial-up subscriptions.

For SMEs, fixed phone costs are also well above the international average. An averaged bundle of fixed line services that costs $US11,000 in Australia would cost $US5385 in Hungary or $US5310 in the United States.

David Kennedy, head of research at telecommunication consultancy Ovum, says Australia’s large territory and relatively small population is only part of the explanation for Australia’s poor performance.

“There are standard commercial offerings in places like Hong Kong or the US that package IPTV, broadband and phone access that require about 20mbps. We won’t get anywhere near that until we have more of a fibre network in place, and that is when costs relative to services will come down,” Kennedy says.

Labor telecommunications spokesman Stephen Conroy says the report demonstrates that “the lack of decent broadband services in Australia is throttling small and medium business”.

Telecommunications Minister Helen Coonan was not able to comment before the publication of this story.

– Mike Preston

 

Australian dollar tops US87c

The Australian dollar leaped past the US87c mark in overnight trading and at 12.40pm had reached a new 18-year high of US87.13c.

The strength of Australian commodities and poor retail sales data and concerns over the US sub-prime mortgage market are behind the ever-strengthening performance of the Australian dollar.

– Mike Preston

 

SME sharemarket floats surge in 2006/07

SMEs were more likely to raise funds by an initial public offering on the ASX and to outperform the larger business in the year after listing, according to the KPMG Australian Capital Markets Survey for 2006/07.

The survey found that companies worth less than $10 million comprised the majority of floats that took place in 2006/07, with 87 companies valued at less than $5 million and 59 companies worth between $5 million and $10 million raising funds through an IPO.

Part of the explanation for the large number of small floats is in their success – shares placed through IPOs worth less than $5 million increased in value by an average 117% on their price at offering, a much better return than achieved by larger IPOs.

A big jump in floats by SMEs in the commodities sector, where 102 companies with an average value of $5 million floated, was the reason for the increase of smaller floats.

The large number of small IPOs meant the average IPO value dropped from $72 million in 2005/06 to $47 million in 2006/07, in a year in which the level of equity raising in Australia more than doubled, to $65 billion.

The record $65 billion in funds raised by private equity and the easy availability of relatively cheap bank debt were key drivers behind the large amount of equity raised on Australian capital markets.

– Mike Preston

 

SMEs use AWAs to save on wages

SMEs are using AWAs to cut employee wages more aggressively than big businesses, according to a new report by the Victorian Workplace Advocate.

Employees on AWAs in workplaces with less than 500 workers were on average paid $4 less than those on collective agreements, the report found. By contrast, employees of business with more than 500 workers were paid an average of 30.8% more than their colleagues on collective agreements.

The report’s authors, Griffith University’s David Peetz and Curtin University’s Alison Preston, theorise that this is because larger workplaces are prepared to pay a wage premium to diminish union influence in their workplaces. Big businesses are much more likely to have a union presence than SMEs.

The report, a snapshot of AWAs in force in May 2006, does not look at whether workers received improvements in non-wage conditions in exchange for pay cuts.

– Mike Preston

 

Tax office bureaucratic bungling

Service levels are the tax office are under pressure, with The Australian Financial Review reporting this morning that a leaked internal memo reveals the tax office has received hundreds of complaints from taxpayers and its own staff over administrative bungling, delays and poor communication.

The big problems identified include:

  • Waiting list of 70,000 income tax return amendments.
  • “Frustrating” Child Support Agency demands.
  • Tax office telephone services diverting to suburban shopping centres and private mobile numbers (tax agents trying to contact the ATO’s small business section were ending up talking to the Westfield Shopping Centre in Penrith).

– Jacqui Walker

 

Search engine wars

In any new market it is the generalist who succeeds first before the specialist sneaks in behind to nibble away at the advantage. So too internet search engines. This new innovation dominated by Google and Yahoo is beginning to feel the challenge from specialist or vertical sites.

Vertical sites serve up search results from a carefully selected group of topic-specific websites and can target advertising at particular audiences. The Economist reports that sites such as Globalspec.com, a profitable search engine for engineers, has 3.5 million registered users and signs another 200,000 every week. What sets it apart? Knowledge about the needs of its customers.

But will vertical search sites ever make much of an impact against the Googles of the world, which is the way most of the population will start a search? The jury is out.

The Economist predicts the strongest may be successful enough to dominate a specific category while the weakest will be picked off with their specialist features being added to a generalist search engine. Or third, that niche players will be snapped up by the general search engines. Microsoft, which lags behind Google and Yahoo! in generalist search, has bought several vertical sites recently.

– Amanda Gome

 

PM hints on his approach to carbon emissions

Prime Minister John Howard said that Australia could become a regional carbon-trading hub and more resources may be devoted to the development of low-emission coal technology as part of the Federal Government’s response to the report of its emission trading task group, according to The Australian Financial Review.

Howard said the Government’s response will be delivered “shortly”.

– Jacqui Walker

 

Are technical colleges the answer to the skills shortage

Are the new technical collages a duplication of TAFE or a great way to tackle skill shortages, allowing students to start apprenticeships while in Year 11 and 12?

Well, TAFE Directors Australia executive director Martin Riordan believes the former, and has called for the Federal Government to reopen the tenders for the 28 technical colleges to allow TAFE to propose better alternatives. The fuel for his claims is that only two of the 20 colleges now open met enrolment targets for 2007. Costs had also blown out. But the Government maintains the figures will be boosted by mid-year enrolments.

– Amanda Gome

 

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