ASIA: High-speed superhighway sets the tone

Video-on-demand, multi-player online games, video content sharing and social networking sites drive demand for broadband services

Bangkok Post
Saturday, July 19, 2008

Local entrepreneurs who seek opportunities in other regional markets but want to continue to enjoy the predictability of home turf can do so by selling their products online.

In tapping the hottest marketing channel, they remain pretty much assured that there would be sales because the number of households with broadband connections in Asia is growing at a phenomenal annual pace of more than 31%.

According to the latest data available, Asia Pacific's broadband subscriber base is expected to reach 171 million by the end of this year, representing a year-on-year growth of 31.5% and a household broadband penetration rate of only 19.70%.

The surge in demand for broadband is driven by the growing popularity of video-on-demand, multi-player online games, video content sharing and social networking services such as YouTube and Facebook, as well as the aggressive push by operators to offer innovative bundled triple- and quadruple-play services.

New analysis from Frost & Sullivan, entitled Asia Pacific Broadband Access Technology and Market Comparison, reveals that the broadband subscriber base in the region -- covering 13 Asia-Pacific countries -- reached 129.7 million in 2007 and estimates this to reach 321.8 million by end-2013, at a CAGR (compounded annual growth rate) of 19.90% (2008-13).

The total broadband revenues in Asia-Pacific stood at US$28.1 billion in 2007. This is projected to reach a market size of $42 billion by end-2013, growing at CAGR of 7.10% (2008-13).

Total number of broadband subscribers grew 19.2% in 2007 and household penetration rate stood at 15.2%. By 2013, the household broadband penetration rate is forecasted to hit 33.7%.

The top five Asia-Pacific countries with the highest household broadband penetration rates in 2007 are South Korea (90.8%), Hong Kong (83.8%), Taiwan (76.8%), Singapore (73.1%), and Australia (63.2%). Japan has a 57.8% penetration rate, while the remaining seven markets have household broadband penetration rates of less than 50%. India and Indonesia registered the lowest penetration rates at 1.4% and 0.57% respectively.

All this along with the growing market offers entrepreneurs an opportunity to tap into the regional market without having to leave their homes, although product differentiation would be the key to success. Apart from that, the trend of growing use of credit cards would likely help, although major countries such as China and India still are lagging behind.

"As fixed-line substitution and voice migration to mobile continues, broadband value-added services (VAS) become critical drivers for fixed-line service providers," notes Frost & Sullivan senior industry analyst Yong Lih Khoo.

"Operators are as such aggressively promoting attractive bundled and discounted price plans, encouraging migration from narrowband, introducing local content and innovative services such as IPTV, as well as overall improving service levels and affordability," he adds.

The various governments, particularly in the more developed nations, are also providing the impetus for the deployment of wider network infrastructure and coverage, and the development of local broadband content and applications, thus driving broadband uptake.

In terms of broadband access technology, Mr Khoo believes that a wide range of access technologies -- FTTH (fibre-to-the-home), FTTN (fibre-to-the-node), FTTB (fibre-to-the-building), DSL (digital subscriber line), WiMAX and other wireless technologies -- would continue to co-exist depending on the strategic outlook of the operators, existing infrastructure and price points in a given country.

He says: "FTTx in its various forms -- FTTH, FTTB, FTTN -- would play a significant role in the next three to four years due to its potential of providing greater bandwidth to the premise, compared to copper wires. Some countries like Hong Kong are already providing speeds up to 1Gbps, while other countries like Singapore are following suit.

"Deploying fibre as close to the home as possible enables operators to be future-ready for the bandwidth explosion that new services like multi-screen IPTV with recording and the concurrent high-speed internet needs," Mr Khoo adds.

In most of the developing markets however, Mr Khoo believes that basic DSL-based services would continue to drive the bulk of deployments, but is expected to face some competition from the various forms of wireless broadband technologies.