2007 North Asian - Convergence Market

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 digital media and the phenomenon of convergence in these economies.

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

Throughout most of North Asia, there has been an increasing interest in exploiting the potential synergies between the traditionally separate industries of broadcasting and telecommunications. The push towards convergence, using common infrastructure and architecture has gained more momentum with the huge improvements in technology.

Highlights of this convergence push in the individual North Asia markets include:

China

• China has built a substantial nation-wide telecommunications infrastructure with fibre optic cable networks covering the country.
• Encouraged by government policy to find cost-effective communication solutions, China has become the world’s biggest user of VoIP services.
• Convergence in China is clouded by the ongoing struggle between the country’s two regulators.
• The protagonists are the State Administration of Radio, Film and Television (SARFT), which oversees the cable TV industry, and the Ministry of Information Industry (MII), which oversees Internet and other telecom regulations.
• The big telecom operators in China are starting to gear up for IPTV. On the back of a booming broadband market in the country, it was expected that China could see its IPTV user base exceed 500,000 by end-2007. For the country overview, see chapter 2, page 21.

Hong Kong

• Hong Kong is well positioned to pursue the convergence of platforms and services for the benefit of consumers.
• Consistent with its status as one of the leading telecommunications economies in the world, Hong Kong has built itself world-class infrastructure.
• Digitalised since 1995, the Special Administrative Region (SAR) has been wired with almost 400,000km of optical fibre, with the vast majority of households covered by this extensive broadband network.
• Hong Kong is also a key regional telecommunications hub and as such is the landing point for a significant number of strategically important submarine cables.
• Local operators have been busy exploiting the opportunities for convergence, with three operators in particular - PCCW, HKBN and i-Cable - leading the way. For the country overview, see chapter 3, page 52.

Japan

• Japan was an early adopter of convergent technology models, way back in 2000 it was moving in this direction; along with South Korea, Japan has made significant progress down this path.
• With its sophisticated infrastructure, Japan’s telecoms sector has been one of the most active markets in the world in pursuing convergence.
• The development of local infrastructure in Japan has been dominated by the government’s push to have incumbent NTT open up access to the ‘last mile’.
• Although there has been a considerable uptake of broadband Internet services, the market reaction to IPTV has been surprisingly muted coming into 2007. For the country overview, see chapter 4, page 65.

North Korea

Telecommunications in North Korea is seriously impeded by a combination of its generally poor economic state and the government’s widespread repression of communication. The number of fixed-lines and the volume of voice traffic in North Korea has remained minuscule compared with South Korea. Because of its mountainous landscape and the high cost of building fixed-line networks, a mobile telephone network was considered a much more viable option. The country established a joint venture with a Thailand-based company to set up a mobile service in a special economic zone in north eastern North Korea. North Korea remains the only country in the world that had yet to adopt the Internet for public usage. North Korea’s obsession with secrecy has made it extremely difficult to get a clear picture of the country’s telecom sector. For the country overview, see chapter 6, page 84.

South Korea

• South Korea has also been an early adopter of convergent technology models, with the major telcos and ISPs progressively offering double-play and triple-play packages.
• In mid-2004, Hanaro Telecom began selling a service that tied its high-speed Internet and web-based telephony to cable television services.
• The country took an important step along the path to convergence of networks and services, when its Ministry of Information and Communication (MIC) unveiled its Broadband convergence Network (BcN) plan in November 2003.
• The government was aiming to give the Korean network some 50 times faster connection speeds and provide national coverage by 2010.
• With its government adopting a progressive approach to deregulation, liberalisation and privatisation of the local telecom industry, South Korea has become one of the world’s major players in the market.
• The result has been willingness on the part of operators to invest in infrastructure and to be innovative, providing the basis for a booming telecommunications market.
• By early 2007, IPTV had taken off in South Korea. Subscriber numbers had surged and there were all the signs of further growth. Other operators looked set to enter the IPTV market. For the country overview, see chapter 7, page 85.

Taiwan

• Taiwan has adopted a long term approach to significantly upgrading its telecommunications infrastructure, implementing a series of network modernisation programs in the last decade or so.
• Consistent with the performance of Taiwan’s impressive mobile sector, the country has been energetically moving into the ‘next generation’ of mobile services and exploring the options for convergence.
• In 2004, Chunghwa Telecom started offering the Multimedia-on-Demand (MoD) service over its DSL system, making it the first telco in Taiwan to move into the digital broadcasting sector.
• By March 2007, Chunghwa had 270,000 IPTV subscribers and said it was aiming to achieve a total of 580,000 subscribers by the end of 2007. For the country overview, see chapter 8, page 99.

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