‘India, Indonesia, Phillippines to be future hub for Internet revenues in Asia Pacific’: Study

‘India, Indonesia, Phillippines to be future hub for Internet revenues in Asia Pacific’: Study

Author | exchange4media News Service | Wednesday, Nov 01,2006 8:00 AM

‘India, Indonesia, Phillippines to be future hub for Internet revenues in Asia Pacific’: Study

Internet access services in the Asia Pacific continue to see aggressive revenue growth, mainly as a result of the growing migration to broadband services. Internet access, especially broadband, is crucial for fixed line service providers to reclaim lost fixed lines and maintain core revenues.

The overall Asia-Pac Internet subscriber base grew 5.9 per cent, reaching 161.8 million as at end-2005. Future Internet revenues are expected to largely emanate from the continuous migration to broadband services, and the explosive growth in first-time user markets, particularly in India, Indonesia and the Philippines.

New analysis from growth consulting company, Frost & Sullivan, ‘Asia Pacific Fixed Communications Outlook – Internet Access Services Market’, reveals that revenues in this market – covering 13 major Asia-Pac economies – totalled $24.6 billion in 2005 and could reach an estimated $40.3 billion by end-2012.

As a result of the rapid end-user migration, broadband has now surpassed the narrowband subscriber base, accounting for 53.3 per cent of total Internet subscribers in 2005. The broadband subscriber base is forecast to further grow at a CAGR (compound annual growth rate) of 12.7 per cent from 2005 to 2012. By the end of 2012, broadband subscribers are expected to account for more than 80 per cent of the total Internet subscriber base in the region, with much of this growth stemming from Southeast Asia, China and India. China alone is expected to account for more than 45 per cent of the region’s broadband subscribers in 2012.

“xDSL (x digital subscriber line) continues to be the predominant access technology, which accounted for 67.2 per cent of the total subscriber base in 2005,” notes Frost & Sullivan industry analyst Krishna Baidya, adding, “Although FTTx (fibre-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.”

Notwithstanding the favourable outlook, broadband home penetration in Asia Pacific is still low at only 9.8 per cent in 2005. Low PC literacy and Internet usage along with affordability issues and the slow unbundling of the local loop and poor broadband infrastructure have restrained growth to a large extent beyond the Tier I markets (Japan, South Korea, Hong Kong and Singapore).

“As the broadband access services market develops and matures, market forces are likely to lower the prices for broadband access services. This will mean lower profit margins, necessitating service providers to create new revenue streams by expanding their range of services,” Baidya further said.

Although much of the subscriber growth in the Asia Pacific Internet access services market is expected to come from the developing markets, it is the developed markets that are likely to have a greater influence on revenue growth. While increasing bandwidth presents opportunities for services providers to introduce services such as VoIP (voice over Internet Protocol), IPTV (Internet Protocol television), video communications and home networking, it is important for service providers to introduce these services in a timely manner to avoid user frustration, which could raise scepticism on broadband.

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