Broadband Boosts Internet Usage in APAC

by CXOtoday Staff    Oct 31, 2006

Internet access services in the Asia Pacific region will continue to see increasing revenues, with explosive growth in first-time user markets like India, Indonesia and Philippines being a key source, according to Frost & Sullivan.

The analysis - Outlook -Internet Access Services Market - pegs the overall Asia-Pacific Internet subscriber base at 161.8 million (5.9% growth) as of 2005 end. Covering 13 major Asia-Pac countries, it suggests that revenues, amounting to $24.6 billion in 2005, could hit $40.3 billion by 2012 end.

Broadband is crucial to fixed line service providers in reclaiming lost fixed lines. Also, with end users increasingly migrating to broadband, it has already outstripped (at 53.3%) the existing narrowband subscriber base. This number is expected to reach 40% by 2012 end, growing at 12.7% CAGR. Southeast Asia, China and India will stimulate much of this growth, with China alone accounting for more than 45%.

Commenting on access technologies, Frost & Sullivan industry analyst, Krishna Baidya says, “xDSL (x digital subscriber line) continues to be the predominant access technology, which accounted for 67.2% of the total subscriber base in 2005. Although FTTx (fiber-to-the-x) is also gaining popularity in the region, its development (in terms of subscriber base) is likely to pale in comparison to xDSL in the medium term due to the high investment cost.”

However, broadband penetration in homes has not been as favorable in the region. Poor broadband infrastructure, lower PC literacy and Internet usage, affordability issues and slow unbundling of the local loop have inhibited this spread, except in tier-1 markets like Japan, South Korea, Hong Kong and Singapore.

The cost factor will also be affected by this growth. “As the broadband access services market develops and matures, market forces are likely to lower the prices for such services. This will mean lower profit margins, necessitating service providers to create new revenue streams by expanding their range of services,” informs Baidya.

Finally, even though subscriber growth will be driven by the developing markets, revenues will be increasingly influenced by the developed markets.