The Asia-Pacific region (excluding Japan) will have 37.8 million broadband Internet subscribers by 2005 predicts Gartner’s Dataquest Inc.
At the end of 2000, the region had 6.1 million subscribers accessing the Internet through broadband connections. By the end of 2001, Dataquest predicts that number will nearly double to 11.4 million broadband subscribers.
This increase in broadband subscribers will be accompanied by an increase in broadband access revenue, which is expected to grow roughly in line with subscriber growth and hit $5.8 billion in 2005, up from $732 million at the end of 2000. But revenue from offering services other than Internet access via broadband remain tiny and are not expected to be a major contributor to revenue in the near term; however, longer term there are services such as voice over broadband that will offer the chance to bring in significant new streams of revenue, according to Dataquest.
“With some of the cheapest prices for broadband services anywhere in the world encouraging take-up, Asia-Pacific is fast becoming a global broadband leader,” said Andrew Chetham, senior analyst for Gartner Dataquest’s Asia/Pacific Telecommunications and Networking group. “The tremendous growth initially experienced in South Korea is now beginning to be seen in markets such as Taiwan and Hong Kong. We expect other developed markets such as Singapore and Australia, which made a slow start, to begin making up ground in the next 18 months.”
Outside the developed countries in the region, affordability and a lack of competing infrastructure will hold back growth in countries such as the Philippines, Indonesia and Thailand for another two to three years.
The majority of broadband services to the home, and increasingly to the office, are delivered using DSL technologies over the existing telephone infrastructure. This means that the largest providers of broadband access will be monopoly or former monopoly telephone carriers. By 2005, Dataquest predicts there will be 24.3 million DSL subscribers across the Asia-Pacific region. Other key access technologies will be cable modem and Ethernet.
Despite the upbeat environment for broadband, operators face many challenges. In the developed markets, simply providing Internet access is rapidly becoming a commodity-type business, offering the potential of slim margins. This isn’t helped by the difficult funding environment and the pressure from the financial markets for quick payback on investments.
“As a result, operators need to find services and applications to help them climb the value chain allowing them to add new revenue streams to plain access,” Chetham said. “While some applications are proving successful in certain markets — like online games in Korea and Taiwan — a broadband ‘killer app’ is yet to emerge.”
Part of the reason that consumers and business will be in a position to upgrade to broadband will be an increase in the wholesale bandwidth in the region. According to research from Ovum, the regional broadband market in Asia-Pacific will grow by almost 600 percent to reach $15.9 billion by 2006, thanks to an explosion in intra-regional submarine bandwidth supply, which will explode to reach 17Tbit/s at the end of 2001, and more than 23Tbit/s in 2002. Ovum expects this expansion in broadband supply to have a profound impact on how bandwidth is provisioned and purchased in the Asia-Pacific market, which will become highly competitive in a very short timeframe.
“New entrants and incumbent carriers are jostling for position to capture market share in the emerging market for pan-regional broadband services”, said Sue Uglow, research director for Ovum. “Owners of broadband products and services are installing infrastructure that will be available for sale on the open market. This will completely change the way wholesale bandwidth is provisioned in the region, enabling bandwidth purchasers to pick and choose from a multitude of suppliers.”
Demand for intra-regional bandwidth is also set to increase rapidly. With liberalization in most Asia-Pacific countries well under way, the number of new entrants, ISPs, ASPs and global operators is increasing. All of these companies are potential customers for wholesale intra-regional bandwidth, as they seek to reduce their costs and keep U.S. transit traffic to a minimum.
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