2012 Asia Fixed Broadband and Internet Market and Forecasts

Fixed broadband in Asia still dominated by the North Asia players as the other markets try hard to close the ‘digital gap’

The energetic expansion of broadband was for a long time a phenomenon limited to the developed economies, with narrowband dial-up access being the norm in the majority of the poorer developing countries of the region. This has been changing rapidly of late, but nonetheless there remains a ‘digital gap’. In those economies where there is extensive access to broadband, both DSL and cable modem platforms have both proved popular, with DSL establishing a clear advantage. In fact Asia has become the leading region in the world for DSL, with close to 40% of the global DSL subscribers to be found in the region. More recently, we have seen the arrival of FttX as an alternative platform for broadband access in Asia. FttX already comprises over 50% of the high speed internet access connections in the leading technology markets of Japan and South Korea. And in Japan, as FttX grows DSL has been in decline.

As broadband internet continues to extend its presence across Asia, the region’s broadband market finds itself dominated by six ‘high flyers.’ These ‘High’ ranked markets comprise five economies of North Asia plus Singapore. South Korea, Hong Kong, Singapore, Macau, Taiwan and Japan, for the moment at least, have been well and truly leading the way in terms of both penetration and sophistication of their broadband services and infrastructure. Their fixed broadband penetration rates by population are in excess of 20%; this sees fixed broadband household penetrations of between 90% and 100%. The penetration gap to the next level is clearly seen in the Exhibit below.

Asia - Fixed (wired) broadband markets ranked by population penetration − June 2012

(Source: BuddeComm, estimates)

South Korea has been the most remarkable example of the Asian broadband revolution to be found in the leading markets of the region. By mid-2012 fixed broadband subscriber penetration had reached 37% and over 95% of households in the country had very high speed broadband internet connections.

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. The Infocomm Development Authority (IDA), Singapore’s telecom regulator, has begun reporting what it referrs to as the ‘Residential Wired Broadband Household Penetration Rate’. This measures the total number of residential wired broadband subscriptions per household, and excludes all wireless access plans (3G, 3.5G/HSDPA, WiMAX and WiFi hotspots). Singapore’s Residential Wired Broadband Household Penetration Rate was 105% as of March 2012, with 1.24 million wired broadband households.

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 trebled household penetration to over 15% and implemented numerous e-government initiatives. China, with over 160 million broadband subscribers is still undergoing broadband subscriber growth in excess of 15% per annum despite already being the largest broadband internet market in the world.

For the economies that fall outside the High band of Asian internet markets already noted, two distinct groupings appear in terms of population penetration. The countries in the ‘Medium’ band – with fixed broadband penetration by population of between 1% and 12% – are busily expanding their broadband capability. Whilst the countries in this second group are gradually closing in on the top six, for the time being there remains a clear gap of 8% population penetration (equivalent to around 35% of household penetration) to be bridged before a position can be claimed in the top grouping.

Of the larger markets in this group, Malaysia is playing a significant role; 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, Azerbaijan and Georgia being examples of recent rapid growth. Although a clear leader with the number of broadband lines deployed, China remains in this Medium grouping (at the top of the group) due to its huge population.

In the ‘Low’ grouping – countries with fixed broadband penetration below 1% of population - 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. In the last year or so, Sri Lanka, recovering from its long-running civil war, managed to lift itself out of the Low group; similarly, India which, like China, has been struggling with servicing its huge population, has moved from the Low to Medium grouping in the last 12 months. Some economies in the Low category have been plainly dysfunctional, with poor telecom infrastructure and generally underdeveloped regulatory regimes combined with low GDP per capita.

Some highlights of the fixed (wired) broadband market in Asia in 2011:

• Of the 590 million fixed (wired) broadband subscriptions worldwide at end-2011, around 250 million were to be found in Asia;
• Just over 30 million fixed (wired) broadband subscriptions were added in China during the year, this being about half of the total subscriptions added worldwide;
• Fixed (wired) broadband penetration in China reached a formidable 12%;
• By end-2011, 70% of the total households in developed countries had internet access, whereas only 20% of households in developing countries had access. One of the outstanding exceptions was Malaysia with 61% of its households with internet.

Mobile data and third generation (3G) mobile broadband services are covered in a separate report: Asia - Mobile Data, Wireless Broadband Market and Forecasts

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