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Internet economy pervades Australian business

By CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- More than half of Australia's companies now regard themselves as part of the Internet economy, according to a new industry study.

They spend about $14 billion a year on Internet-related business -- equal to 4.3 percent of Australia's gross domestic product.

That figure compares with 5.6 percent of GDP in the United States, the leading nation in the Internet economy.

The study, commissioned by networking giant Cisco Systems, looked at the size, scope, growth and effectiveness of the Internet economy in Australia.

A key finding is that 55 percent of Australian companies already take part in at least one of four layers of the Internet economy, and they foresee much higher growth rates than those companies that are not participants.

Wide participation

At a glance: Australia

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The study showed wide participation by major industries.

Not surprisingly, about 90 percent of communications companies identify themselves as being in the Internet economy. But even agriculture and mining have a 40 percent participation rate.

Cisco Systems Australia New Zealand managing director Terry Walsh said Wednesday that it was clear the Internet was rapidly becoming part of mainstream business.

"The Internet is a comprehensive business tool used by all sectors of industry," he said.

Walsh told CNN that he wanted to see bandwidth costs come down in Australia, and more competition among access providers. But he stressed that bandwidth cost was just one of many Internet factors for business to consider.

"It's more about how it is used," he said.

Four layers of business

Cisco identified the four layers of business as Internet infrastructure providers including hardware and software; applications providers such as web designers; Internet facilitators such as portals; and Internet commerce, covering companies engaged in e-commerce.

The survey by the Allen Consulting Group forecasts that Internet economy revenue in Australia will rise to $25 billion a year by 2003-04, or about 6.7 percent of GDP.

The survey, based on interviews with about 620 senior managers and modelled on a ground-breaking study by the University of Texas, found that Internet economy firms were 50 percent more productive per worker than those outside the Internet economy.

• Allen Consulting Group
• Cisco Systems

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