Publication Overview

This annual report offers a wealth of information on the Mobile Communications and Mobile Data market in China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea and Taiwan. Subjects covered include:

• Overview, Regional Characteristics, Growth and Market Structure
• Mobile Technologies - GSM, CDMA, PCN/PCS
• Mobile Services - Prepaid, fixed-mobile convergence, gaming
• Mobile Data - Market Overview, SMS, MMS, GPRS, WAP, Mobile TV
• Overview on 3G
• Mobile Satellite Services

Executive Summary

This Asia market annual report covers the eight economies in the North Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the mobile communications and data markets in each of the economies.

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

After a period in which Asia’s mobile industry has been one of the largest and fastest-growing markets in the world, in relative terms a slowdown has occurred, especially in many of the leading national markets in the region. By March 2007, the region had amassed 1.1 billion mobile subscribers. Of these, a total of 645 million were to be found in North Asia. Of course, China dominates the North Asia figures, with its 465 million mobile subscribers.

North Asia mobile markets - subscribers, penetration and annual change - March 2007

Highlights in the individual mobile markets of North Asia include:

China

• China is by far the largest mobile communications market in the world.
• By March 2007, China had more than 465 million mobile subscribers or around 35 for every 100 people. At the same time, China Mobile is the world’s largest mobile operator by subscribers (316 million by March 2007).
• The remarkable growth in the mobile sector has been boosted by increased competition, lower terminal prices and the rapid rise of prepaid services.
• The popularity of the Personal Access System, known as Little Smart and offered by the fixed line operators, has also provided a surprising boost to the market.
• While its mobile market is booming, China has been equivocating on the 3G mobile front.
• In an apparent effort to promote its local TD-SCDMA platform, it has delayed the awarding of 3G licences. For the country overview, see chapter 1, page 13.

Hong Kong

• Hong Kong is seen as one of the most sophisticated and dynamic telecommunications markets in the world.
• A Special Administrative Region (SAR) of China, it has built itself a world-class telecoms infrastructure, which supports one of the world’s highest penetrations of mobile phones and telephone services generally.
• While the fixed-line market has flattened out, the mobile market has continued to boom.
• At the beginning of 2006, based on Office of the Telecommunications Authority data, there were an amazing 8.7 million mobile subscribers, representing an impressive penetration of 125%. (Keep in mind that Hong Kong has an adult population of only 5.9 million.)
• Not surprisingly, in such a boom environment, new generation mobile services have started reshaping the mobile market. For the country overview, see chapter 2, page 58.

Japan

• With its sophisticated infrastructure, Japan’s telecommunications sector is one of the most active markets in the world.
• Although Japan’s 2G mobile telephone sector has entered a maturing market phase, the overall Japanese mobile market remains dynamic.
• Its mobile sector has continued to witness strong growth into 2007, with the rapid expansion of 3G mobile services.
• By March 2007, Japan had almost 97 million mobile subscribers, with almost 70 million subscribers signed up for 3G services.
• Wireless Internet and mobile services have helped to keep the mobile market stimulated.
• Japan continued to lead the world in wireless Internet with 85 million subscribers by May 2007.
• NTT DoCoMo laid claim to more than 50% of Japan’s mobile market into 2007, maintaining a comfortable lead over its rivals KDDI and SoftBank (formerly Vodafone K.K.).
• DoCoMo had also grabbed the lead from KDDI in the all-important 3G market. For the country overview, see chapter 3, page 89.

Macau

• Macau, like Hong Kong, a Special Administrative Region (SAR) of China, has remained comparatively low profile in the development of its telecommunications market.
• The SAR has systematically gone about building itself a strong modern telecommunications infrastructure and can now lay claim to a highly penetrated telecom market.
• Growth in the mobile sector was boosted by the opening up of the mobile market to competition in 2001. With the arrival of two new operators, Macau Telecom’s market share had dropped to about 46% by 2006.
• Attention has become focused on Macau’s mobile market, where by early 2007 there were 663,000 mobile subscribers, a remarkable penetration of 145%. For the country overview, see chapter 4, page 125.

Mongolia

• Mongolia has demonstrated its commitment to developing a more efficient telecommunications network as an integral part of its push towards a market economy.
• A competitive market has been put in place for both fixed and mobile telephony.
• While the fixed-line network has been expanding slowly, the mobile phone market has undergone a remarkable boom.
• The number of subscribers had been growing at an average rate of over 100% year-on-year until 2006; during 2006, growth eased to around 50%.
• By early 2007, there were 784,000 mobile subscribers in the country, representing a penetration of around 27%, up from less than 2% penetration at the end of 2000.
• Several failed attempts had been made to issue a third mobile licence.
• However, in June 2006, a third mobile operator, Unitel, was awarded a GSM licence. For the country overview, see chapter 5, page 129.

North Korea

The development of the telecommunications sector in the Democratic People’s Republic of Korea (DPRK) is seriously impeded by the country’s parlous economic state and government repression of communication. It has been a difficult journey indeed for telecommunications in the DPRK. Though mobile services were finally launched on a limited scale in the capital Pyongyang in 2002, North Korean citizens were banned from using mobile phones as of May 2004. It has been suggested that the ban was imposed following the oil train explosion at Ryongchon in April 2004. It was further suggested that the blast was triggered using mobile phones in an attempt to assassinate North Korean leader Kim Jong Il. North Korea’s obsession with secrecy continues to make it extremely difficult to get a clear picture of the country’s telecoms sector. For the country overview, see chapter 6, page 132.

South Korea

• South Korea’s mobile market, which had been looking like it had reached a point of saturation, somehow found a way to grow by a further 6% in 2006.
• Mobile penetration was around 85% by March 2007, the majority of the 41 million services being new generation.
• 2.5G and 3G mobile services and advanced data services such as mobile gaming, m-banking and m-commerce have helped keep the mobile market invigorated.
• WCDMA, having entered the South Korean market in December 2003, some time after CDMA2000, initially failed to attract subscribers.
• However, the upgrading of the WCDMA 3G networks with HSDPA technology gave these services a major boost. For the country overview, see chapter 7, page 134.

Taiwan

• With its strong focus on the role of technology, and telecommunications in particular, throughout its economy, it is not surprising that Taiwan has one of the most advanced telecommunications networks in Asia.
• On the back of its excellent telecommunications infrastructure and the innovative use of breakthrough information technologies, the country has been driving the development of both mobile and data communications services.
• By early 2007, mobile penetration was 96%, the penetration figure having fallen from a peak of more than 111% in 2003.
• The launch of WCDMA 3G services by the three major operators in 2005 certainly presented a challenge to the market; the take up of new generation services will be watched with interest. For the country overview, see chapter 8, page 173.

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