Executive SummaryAsia has continued to record strong overall growth right across its telecommunications sector.
This is despite the lingering impact of the global economic downturn and the worldwide telecommunications recession.
At the same time, it can be said that the growth has been somewhat inconsistent around the region and over the various market segments.
Nevertheless, a positive outlook generally pervades the market.
Among the highlights coming into 2005: the mobile market in all its forms continues a strong growth pattern; 3G mobile services have started to gain some momentum in those markets that have launched; Internet is shifting quickly from dial-up to broadband access; Asia is a global leader when it comes to broadband roll-out.The Asian telecom market is increasingly dominated by the energy and size of China.
The significance of China’s contribution to the Asian market cannot be underestimated.
With its huge population and strongly developing economy, it is a powerful presence in the region.
Having rapidly moved to become the biggest mobile market in the world, China’s mobile sector continued to expand.
In 2004, it grew its mobile subscriber base by another 23% and had only slowed slightly coming into 2005.
China could well have 400 million mobile subscribers by end-2005.Japan, a global and regional telecommunications leader of a different kind, has been maintaining its reputation for finding new ways to add value to the mobile market.
It has led the world in the application of wireless Internet access, with over 75 million mobile subscribers using either NTT DoCoMo’s i-mode or one of the other proprietary products by early 2005.Asia has become the world’s largest regional Internet market.
With an estimated 300 million Internet users by end-2004, Asia was maintaining its lead over Europe (259 million) and North America (221 million).
The region was heading for 350 million Internet users and a penetration of almost 10% by end-2005.
Internet growth in Asia continues to be led by the developed economies of the region - Japan, Hong Kong, South Korea, Singapore and Taiwan.
This group has been joined by China.
With a penetration of just over 7%, China has a massive 94 million Internet users.In the area of broadband Internet access, South Korea has continued to be a world and regional leader with 89% of households having a broadband connection by mid-2005.
Japan has been mounting a major challenge, however, with its broadband sector likely to have grown by 100% in the 3 years to December 2005.As the difficult economic environment seemed to be improving, operators were faced with an increasingly competitive market.
Price cutting continues to be widespread, as has innovative product promotion and packaging.
Working in such highly competitive markets, the Average Revenue Per User (ARPU) has been dropping on most services, although some equilibrium is being achieved.
At the same time, profit margins have been falling.
And there has been ongoing rationalisation within the industry as some operators continued to be squeezed financially.Since the economic woes in the region in the late 1990s, both operators and suppliers in the Asian telecom industry have been approaching the preparation of their investment strategies with considerable caution.
Investment in infrastructure in Asia has generally slowed.
The oversupply of undersea cable capacity, in particular, has seen investment plans put on hold.
Whilst the satellite segment has not exactly been booming in Asia, new launches have been continuing at a steady rate in the 2004/2005 period.The Asian region continues to be characterised by a wide spectrum of telecommunications and IT development.
Countries can be found at both ends of this development spectrum.
Whilst some of the world’s leading developers and implementers of technology are to be found in Asia, many countries in the region are still in the early stages of their information technology and telecommunications adoption.
There is certainly a consistently strong awareness of the importance of telecommunications and information being demonstrated right across the region.
The commercial significance of telecommunications is well recognised and, at the same time, the potential contribution to the social and cultural wellbeing of nations is also well appreciated.
As a consequence, the growth potential in the Asian market remains extremely high.The Asian telecommunications market was estimated to be worth around US$270 billion in 2005.
The big drivers are broadband and IP services, as well as ongoing growth in mobile services, particularly as value-added services come into the market.
NGNs are also being rolled out by the regional heavyweights.