2007 North Asian - Broadband and Internet Markets

This Asia market annual report covers the 8 economies in the North Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the broadband and Internet segments in each of the economies.

The markets covered include: China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea and Taiwan.

In the rush to go online, North Asia is being led by a group of the most highly penetrated Internet markets in the world. With Asia the world’s leading regional Internet market in terms of subscribers, with the region North Asia is the outstanding driving Internet force. Not surprisingly, Internet growth in Asia continues to be dominated by the developed economies of North Asia - Japan, Hong Kong, South Korea and Taiwan. This group has been joined by China, based on its sheer weight of numbers; it was claiming 137 million Internet users by end-2006, a penetration in excess of 10%. South Korea is the top ranked North Asia market in terms of user penetration with 71%; at the other end of the spectrum is Mongolia with 10% and just behind China in user penetration.

A focus on high-speed broadband Internet access in its various forms is also a feature of North Asia’s Internet growth. Again, following the example set by market leader South Korea, the emphasis has been on delivering faster broadband speeds to the customers.

In terms of broadband access, Asia is one region in the world where Fibre-to-the-Home (FttH) has started to emerge as a serious broadband platform. The technology has taken off in a big way in Japan. There were already 10 million FttH subscribers in Japan by mid-2007. Not unexpectedly, the movement towards fibre has been occurring in Asia’s more developed markets, where positive government intervention has been playing an important role.

North Asia - Internet markets - user penetration and subscribers – 2006

Highlights in the individual broadband and Internet markets of North Asia include:

China

• By early 2007, the number of Internet subscribers in China had passed 140 million (11% penetration);
• At the same time, China’s Internet user base represented about 12% of the world’s total users;
• The Chinese government continued to focus on the enormous social and economic value of Internet; however, it remained concerned by the perceived risk to cultural heritage and to political stability, continuing to impose restrictions on Internet access;
• China is the world’s biggest user of VoIP services;
• Though penetration remains comparatively low (4%), by early 2007, broadband in China was growing at an annual rate of 35%;
• With 56.3 million broadband subscribers by March 2007, China had the second most broadband services in the world after the US (60.3 million) and catching up. For the country overview, see chapter 1, page 1.

Hong Kong

• On the back of its quality infrastructure, Hong Kong has quickly reached a high penetration of broadband Internet access;
• It already has more than 90% of households with broadband access;
• This made Hong Kong the second most highly penetrated market in Asia after South Korea;
• Broadband subscribers in Hong Kong had jumped to 1.8 million by March 2007, having added one million broadband subscribers in quick time;
• Broadband household penetration was running at 70% by early 2007 and just over 67% of the total Internet subscriber base had a broadband connection. For the country overview, see chapter 2, page 39.

Japan

• By early 2007, Japan had more than 27 million broadband Internet services in place;
• While much of the success of broadband in Japan was due to the stunning growth in DSL broadband services, this form of access was in decline;
• FttH Internet access had become the most popular form of high speed access;
• There were around 10 million FttH subscribers by mid-2007, up from 2.5 million at end-2004;
• At the same time, Japan was also running hot in the IP telephony market;
• As of March 2007, there were around 14.3 million registered VoIP subscribers in Japan, up from 9 million at end-2005. For the country overview, see chapter 3, page 70.

Macau

• With strong support from the administration, Macau has been quick to adopt Internet in its various forms;
• Broadband Internet access using DSL technology has been the mainstay of access services;
• By April 2007, over 90% of all Internet subscriptions in Macau were broadband based;
• Broadband household penetration was in excess of 60% at the time. For the country overview, see chapter 4, page 95.

Mongolia

• In relative terms, the Internet market in Mongolia remains insignificant;
• With a user base estimated at 380,000, Internet user penetration was just over 10% by end-2006;
• Broadband services were virtually non-existent at the time. For the country overview, see chapter 5, page 99.

North Korea

North Korea is the only country in the world yet to adopt Internet for public usage. A lack of infrastructure coupled with the regime’s anxiety about the free flow of information, means that only a select group of government, educational and research institute officials are authorised to access the Web in the country. Nor are personal computers widely available to the general public. With what little access there is to the Internet, the government maintains strict controls and censorship. At the same time, North Korea’s obsession with secrecy has made it extremely difficult to get a clear picture of the country’s telecom sector. (In the absence of official statistics, we have made estimates in our report.) For the country overview, see chapter 6, page 103.

South Korea

• South Korea has the highest number of broadband connections per capita in the world;
• By early 2007, more than 29% of the population, or 84% of households, were broadband subscribers, as the broadband market in country was reaching near saturation;
• The country’s impressive broadband progress has had enormous and continuing support from the government;
• in the late 1990s the government issued a policy statement mandating that operators provide a 2Mb/s connection for every citizen;
• In June 2006, South Korean operators announced the launch of WiBro services (local equivalent to WiMAX);
• This was the world’s first full wireless broadband service, based on the WiBro/802.16e standard. For the country overview, see chapter 7, page 107.

Taiwan

• The Internet market in Taiwan is also one of the more heavily broadband-penetrated in the world;
• With more than 90% of households having some form of Internet access, by early 2007 about 59% of these households had broadband Internet access;
• DSL has provided the dominant platform for the broadband access in the country;
• There were 4.5 million broadband subscribers in the country by end-2006, of which an estimated 3.9 million were DSL services;
• The government has been active in promoting broadband and has committed the country to being on a par with the US by 2010;
• The government has been particularly strong in promoting the development of WiMAX; in mid-2007, a series of licences were issued to provide island-wide WiMAX coverage. For the country overview, see chapter 8, page 133.

Data in this report is the latest available at the time of preparation and may not be for the current year.