2010 Asian Fixed Broadband and Internet Market

The relentless narrowing of the digital gap in Asia

The energetic expansion of broadband, however, has remained more of a phenomenon limited to the developed economies, with narrowband dial-up access continuing to be the norm in the majority of the poorer developing countries of the region. Of course, this is starting to change, with a number of interesting examples breaking the trend, but for the moment, there remains a ‘digital gap’. In those economies where the broadband market has taken off, both DSL and cable modem platforms have both proved popular, but DSL has established a clear advantage. With DSL dominating the world fixed broadband access market, Asia has become the leading region in the world for DSL, with close to 40% of the global DSL subscribers. More recently, we have seen the advent of FttX as an alternative platform for broadband access in Asia. In the leading technology markets of Japan and South Korea, FttX already comprises over 50% of the high speed Internet access connections.

As broadband Internet continues to extend its presence across Asia, the region’s broadband market finds itself dominated by six players. These ‘High’ ranked markets are predominantly the economies of North Asia. South Korea, Hong Kong, Singapore, Macau, Taiwan and Japan, for the moment at least, have left the rest of the region behind in terms of both penetration and sophistication of their broadband services and infrastructure. The penetration gap is clearly seen in the Exhibit below.

South Korea has been the most remarkable example of the Asian broadband revolution in the leading markets. By mid-2010 broadband subscriber penetration sat close to 35%, and over 85% of households in the country had very high speed broadband Internet connections.

South Korea – broadband subscribers and households – March 2010

(Source: BuddeComm based on industry data)

Another market of special note in the region is Singapore where the government has been implementing broadband Internet access – wired and wireless - for the whole of the island state. According to the Infocomm Development Authority (IDA), Singapore’s telecom regulator, the ‘Household Broadband Penetration Rate’ was 165% in May 2010. The analysis of the Singapore figures is complicated by the fact that the IDA includes wireless access (3.5G/HSDPA and WiMAX) in its household access count. Accordingly, there were 1.18 million fixed broadband services (DSL and cable modem) in Singapore in May 2010. At the same time there were 1.16 million households.

Singapore – broadband subscribers and households – May 2010

(Source: BuddeComm based on industry data)

The regional broadband market in Asia consists of a large number of relatively small countries. There continues to be considerable activity in the Internet and online markets across Asia ranging from China’s impressive progress in terms of sheer scale to Mongolia which has doubled household penetration in the last year to almost 10% and implemented numerous e-government initiatives. China, with over 110 million broadband subscribers is still undergoing broadband subscriber growth in excess of 20% per annum despite already being the largest broadband internet market in the world.

For the economies that fall outside the top band of Asian Internet markets, two distinct groupings appear in terms of broadband household penetration. The countries in the second band – roughly between 5% and 40% household penetration – are found to be busily in expansion mode when it comes to Internet market segments. While the countries in this second group are closing in on the top six, for the time being there remains a clear gap - more than 15% on the household penetration scale - to be bridged before a position can be claimed in the top grouping. Malaysia and Vietnam play significant roles in this middle group and in the last few years both operators and governments in these markets have started to give priority to expanding Internet access and speed. There are a few relative newcomers to this group, too, the standout one being Kazakhstan, where the broadband market has been growing at a rapid rate over the last two years. Although the clear leader with the number of broadband lines deployed, China remains in this middle grouping due to its huge population.

In the third grouping are those countries that, for whatever reason, have not yet ‘got their act together’ when it comes to Internet. Of course, some are performing relatively well under difficult circumstances. Indonesia has major infrastructure challenges to overcome in providing Internet to its citizens across a sprawling archipelago. India, like China, is struggling with its huge population and has focused on mobile telephony services. At the bottom end of the scale, however, a number of countries are simply managing with poor telecom infrastructure and generally underdeveloped regulatory regimes coupled with low GDP per capita. This report does not include information on these low ranking countries.

Asia’s broadband markets ranked by household penetration − June 2010

(Source: BuddeComm, estimates)

Mobile data and third generation (3G) mobile broadband services are covered in a separate report: Asian Mobile Data and the Wireless Broadband Market.

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