This report provides an overview of the trends and developments in the telecommunications markets in the Asian region. Subjects covered include:
· Market statistics on the Asian telecommunication sectors;
· Industry and market overviews;
· Infrastructure developments, including submarine networks, IP and NGNs;
· Mobile voice and data markets;
· Internet, including VoIP;
· Broadband (DSL, FttH, cable modem and wireless);
· Digital media and convergence, including triple and quadruple play models.
Researcher:- Peter Evans, Lisa Hulme-Jones
Current publication date:-October 2008 (14th Edition)
Next publication date:- October 2009
We continued to see a generally strong run of economic growth throughout the Asian region in 2007 and into 2008. This was despite some anxiety resulting from the uncertainty surrounding oil prices and the impact of this on the global economy. On a positive note, the giant growth engine that is China continued to provide a sustained lift to the economies of its neighbours. However, it was recognised that if China’s economy started to show signs of stalling, the impact would certainly be felt right across Asia.
In the second half of 2008, Asia was bracing itself for the snowball effect of the global credit crisis that started in the US and spread to Europe. Although the future remained uncertain, looking back there was clear evidence that the region’s telecommunications sector had clearly been benefiting from a period of healthy economic growth.
Highlights in the telecoms sector coming into 2008 include:
· Asia’s mobile markets continued to grow strongly; having passed the one billion subscriber milestone in late 2006, the market was expanding at an annual rate of almost 30% and had reached 1.5 billion by mid-2008.
· 3G mobile services continued to be rolled out in the major markets, with the developed markets taking a strong lead.
· Broadband access continues to become more sophisticated, with the developed markets moving to FttH.
· The developed economies of Asia were also leading the way in the building of powerful NGNs in the region.
In looking at the Asian telecom market, it is impossible to avoid the impact of China and, to some extent, India. With its huge population and strongly developing economy, China is a real presence in the region. Having become the single biggest mobile market in the world, China continued to expand its mobile subscriber base at a rate of 20% per annum into 2008; as a consequence, it claimed 560 million mobile subscribers by March 2008. Over the same period, India’s mobile subscriber base was growing at an annual rate of almost 60% and had reached 245 million by March 2008. The two markets between them claimed more than 50% of the total regional mobile market.
In the meantime, while China and India had been attracting the publicity, a long-time global and regional telecoms giant in the shape of Japan had been keenly maintaining its reputation for innovation by regularly adding value to the telecom market. Its industry leadership has embraced the application of wireless Internet access, with over 87 million mobile subscribers using either NTT DoCoMo’s i-mode (48 million) or one of the other proprietary products by early 2008. And even more significantly Japan mobile operators had signed up 68 million 3G subscribers by March 2008. Its promotion of FttH as a broadband platform has been a crucial factor in its continuing leadership role.
Asia continues to claim the rank of world’s largest regional Internet market. With an estimated 580 million Internet users (a user penetration of 16%) by early 2008, Asia was extending its lead over Europe (385 million) and North America (250 million). It comes as no surprise that Internet applications in Asia are being led by the developed economies of the region - Japan, Hong Kong, South Korea, Singapore and Taiwan. This group has been joined by China, with its user penetration of 16%, and a massive 210 million Internet users by the start of 2008, according to ITU estimates. Although the published statistics varied, one source had China with 253 million Internet subscribers by June 2008; this compared with 248 million in the US.
South Korea continues to dominate the area of broadband Internet access, leading the world and the region with 90% of its households having a broadband connection by early 2008. The two major technologies supporting broadband in Asia are DSL and cable modem, with DSL having the ascendancy. For the time being, DSL dominates by a factor of 2:1. The market is changing, however, with the rapid roll-out of FttH in a number of the more highly developed markets.
As the local economies across Asia gained traction and national regulators continue to restructure their markets, telcos have been facing increasingly competitive markets. Price cutting has been widespread, the offering of value-added services has been expanding and innovative product promotion and packaging remain popular. Working in such highly competitive markets, ARPU across the product range has experienced strong downward pressure, but some equilibrium was achieved over the 2007/08. In the meantime, with the introduction of 3G services and other VAS platforms, some operators have seized the opportunity to grow their ARPU again. Nevertheless, profit margins have been falling and operators need to be flexible to stay competitive in a quickly changing market. More significantly, the increased likelihood of a global recession will present even greater challenges.
For the last decade, investment strategies adopted by telcos in Asia have remained relatively cautious. While obviously still keen to find new markets, operators, often with the support of equipment suppliers, have been building fresh business plans to suit the changing market. The Asian Economic Crisis of the late 1990s followed by the dotcom crash had taught operators some powerful lessons on investment in the telecom sector. A case in point was the oversupply of submarine cable capacity that became apparent four or five years ago. This had a particularly severe impact on investment plans – and on the financial viability – of companies. As the submarine cable market started to rebound in 2007, it once again needed an injection of capital. With the availability of credit being much tighter, the players involved are expected to adopt a much more circumspect approach to funding these projects. At the same time, after a period of sluggish growth, the satellite segment has also seen a series of new launches and there are signs that this will continue, at least at a modest pace.
The region has a wide spectrum of telecommunications and IT development. Countries can be found at both ends of this development spectrum. Some of the world’s leading developers and implementers of technology are to be found in Asia, but many countries in the region remain in the early stages of their IT and telecommunications adoption. There is, nevertheless, a consistently strong awareness of the importance of telecommunications and information being demonstrated right across the region. The commercial significance of telecommunications is well recognised and, at the same time, the potential contribution to the social and cultural wellbeing of nations is also well appreciated. As a consequence, growth potential in the Asian market remains extremely high; the big new drivers are broadband and IP services, as well as ongoing growth in the mobile sector, particularly as more and more VAS come into play. NGNs are also being rolled out by the regional heavyweights.
Data in this report is the latest available at the time of preparation and may not be for the current year.