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2012 Asia - Fixed Telecommunications Infrastructure

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Last updated: 28 Aug 2012 Update History

Report Status: Archived

Report Pages: 252

Analyst: Peter Evans

Publication Overview

The Asian market has been continuing its long run of overall strong growth and to support this there has obviously been a correspondingly strong development of infrastructure. This report looks at the fixed telecoms infrastructure in a broad selection of markets – both developed and developing – right across the region. Markets covered include:

Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, East Timor, Georgia, Hong Kong, India, Indonesia, Japan, Kazakhstan, Kyrgyzstan, Laos, Macau, Malaysia, Maldives, Mongolia, Myanmar (Burma), Nepal, North Korea, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Tajikistan, Thailand, Turkmenistan, Uzbekistan, Vietnam.

Researcher:- Peter Evans
Current publication date:- August 2012 (16th Edition)

Executive Summary

Asia’s fixed infrastructure underpins its booming mobile and broadband sectors

The governments of Asian nations have long recognised – some earlier than others – that there needed to be some encouragement of private sector investment to meet the demand for the all-important capital needed in the telecom sector. At the same time, it was also generally well recognised that this strategy could not rely on local investment alone, and would inevitably mean a substantial level of foreign investment. Of course, despite this recognition, there has inevitably been some resistance within governments to opening up the telecom sector to foreign investors and as a consequence the level of ‘encouragement’ has been variable.

The changing nature of the telecom market has also had a major impact on the approach to investment in infrastructure. With shifting revenue patterns across the market segments and falling ARPUs on many services, operators have been more selective about what they actually invest in. Telecom operators throughout Asia have been increasing investment levels on the back of carefully considered investment strategies. This has seen companies shifting business focus, looking for new ways to add value to existing revenue streams; it has also seen a strong desire to leverage new value from infrastructure that is already in place. This has especially been the case with mobile network moving increasingly to support mobile broadband services and newer generations of mobile technologies.

The initial round of substantial investment in telecom infrastructure in Asia was in fixed telephone networks. Over a number of decades the regional economies were progressively building their often quite substantial fixed-line national networks. These fixed networks were in time followed by the building of mobile networks. In many of the developing nations of the region, the building of fixed-line infrastructure was not far advanced before it was overwhelmed by the introduction of mobile infrastructure. This created the phenomenon of ‘substitution’ in many of the markets of Asia (where mobile services perform the function of the non-existent fixed services.) Nevertheless, despite the unevenness in disposition, fixed infrastructure remained an important component in the overall development of the region’s telecom sector. Coming into 2012 there were around 580 million fixed-line subscribers in Asia; this compared with close to 3 billion mobile subscribers. Most importantly, the fixed-line numbers have only been increasing marginally in recent years, with a significant number of countries in Asia starting to see a decline in fixed-line numbers.

The focus of infrastructure building has been shifting. There has been a major push to upgrade domestic telecoms networks to Next Generation Networks (NGNs). This process is seeing large scale investment by Asia’s leading telecoms markets in new-generation IP-based telecommunications networks. At the same time there has been a major surge in infrastructure building as mostly developed economies roll out National Broadband Networks (NBNs). These networks come in various ‘shapes and sizes’ as governments work with operators to tackle the strategic challenge of delivering high speed to the nation. Not surprisingly the NBNs rely heavily upon fibre; in some cases it is Fibre to the Premises (FttP), while in others it might be Fibre to the Node (FttN). And the cost varies accordingly. Those countries that have government backing for NBN roll-out are the ones that are setting the pace.

In addition to the national networks, international connectivity remains central to the overall effectiveness of the region’s telecommunications services. Submarine cable routes criss-cross the Asia Pacific area, providing both intra-regional and inter-regional networks. This sector of the market has been characterised by widely fluctuating supply and demand, which in turn has seen somewhat erratic investment strategies. . Submarine projects are subject to this boom and bust market phenomena, with planned projects commonly being delayed or abandoned, consortia being reshaped, etc. In fact, over-supply of capacity has been common in the Asian market. More recently investments have been less speculative and more focused on predicted growth. In the meantime, new submarine cable projects continue being proposed and the cables installed throughout the region. As Asia’s broadband usage surged, a major effort has gone into managing the shortfall in capacity between Asia and the US.

As the demand for wholesale services continues to rise in Asia, still driven in the short term by voice, but in the longer term by data, there has been a boom in IP-based services, with the volume of international Voice over Internet Protocol (VoIP) traffic into and out of Asia having increased at a rapid rate at the expense of the traditional International Direct Dial (IDD) traffic. The industry will watch closely to see how this settles into a pattern of more predictable growth in demand.

Asia – key developments in infrastructure

  • Asia’s networks and infrastructure supported a total of more than 3.5 billion telephone subscribers coming into 2012; of these, an estimated 580 million were fixed-line subscribers and 2.9 billion were mobile subscribers;
  • Asia’s developed markets had built or were building their NGNs, with IP shaping as the primary delivery platform for telecom services across the region;
  • After annual growth of 20%-30% in the region’s mobile market during the 2005/2010 period, 2011 saw growth fall to around 10%, with looking likely to continue for the next few years;
  • Most tellingly, coming into 2012 Asia claimed 49% of the world’s total mobile subscriber base;
  • In the meantime, the operators were expanding infrastructure to support their still growing subscriber bases and usage patterns, and especially the push into mobile broadband;
  • By early 2012 Asia had a mobile broadband penetration of 11%; this represented 460 million mobile broadband subscribers in the region;
  • Two of Asia’s markets – South Korea and Singapore – had more mobile broadband subscribers than population by end 2011; Japan was not far behind on 90% mobile broadband penetration at the time;
  • While mobile broadband was expanding rapidly, fixed (wired) broadband remained a key component of the infrastructure in Asia; in 2011 30 million fixed (wired) broadband subscriptions were added in China alone, this being about half of total such subscribers added worldwide;
  • Asia’s all-important submarine cable market continues to attract interest from investors anticipating an increased demand for bandwidth that will put pressure on capacity;
  • With a series of system outages drawing attention to the highly vulnerable nature of these key systems, redundancy has become a critical issue for submarine cable systems in the region and provides further incentive for investment in this type of infrastructure;
  • The region continues to see a steady run of new satellite launches with further such launches already scheduled for the coming year or two. 

Asia: - Key telecom indicators – 2011 – 2012 

Category

2011

2012 (e)

Fixed-line services:

 

 

Total No. of subscribers

580 million

590 million

Fixed broadband services:

 

 

Total No. of subscribers

270 million

315 million

Mobile services:

   

Total No. of subscribers

2.9 billion

3.2 billion

Mobile broadband services:

 

 

Total No. of subscribers

460 million

550 million

(Source: BuddeComm)

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