Regional Focus: Asia Pacifics broadband growth boosts consumption of digital services and activities

Article | 01 Oct 2010 Driven by strong broadband growth, the number of Internet subscribers in Asia Pacific continues to rise, as well as regional consumption of digital services and activities. Mobile broadband usage in Asia Pacific will continue to drive forward the digital uptake, but emerging online security threats and the capping of wireless broadband plans may be obstacles to sustaining such varied digital engagement from consumers. Key Points Asia Pacific leads global broadband growth in Q1 2010, accounting for 53.0% of broadband lines added in Q1 2010. In 2009, 19.0% of households in Asia Pacific had an Internet enabled computer, up from 10.8% of households in 2004; Despite the high growth, there exists a relatively wide digital divide in terms of broadband Internet access between developed and developing countries within the region. For example, in 2009, 97.8% of South Korean households were connected to broadband Internet, compared to 2.8% in India and only 0.8% in Pakistan; Digital sources are the media channel of choice in the region, highlighting the marketing and ecommerce potential from the rise of consuming information daily via the Internet. Rapid broadband growth is also driving forward IPTV (Internet protocol television) subscriptions in the region. Asia Pacific represents 32.4% of the global IPTV market in Q1 2010; Facebook reigns as the top social networking site across Asia Pacific but in February 2010, its reach was only 14.9% of the regional Internet population, indicating that there is room in the social networking market for competitors, such as ones that already appeal to individual country markets in the region; The growth of mobile phone subscriptions, driven by next-generation technologies such as 3G and 4G, will help to promote mobile Internet access and the uptake of digital activities and services. Revenue from mobile broadband in developed markets in Asia Pacific is forecast to reach US$7.1 billion by 2015, with mobile broadband connections in developed Asia Pacific to increase from 6.2 million in 2009 to 27.2 million in 2015. Rapid growth in fixed and mobile broadband Globally, Asia Pacific accounts for 53.0% of the broadband lines added in Q1 2010, leading the global broadband growth. China alone accounts for 45.0% of total broadband lines added worldwide in Q1 2010; Household Internet penetration (i.e. the percentage of households with an Internet connection) has continued to grow. In 2009, 19.0% of households in Asia Pacific had an Internet-enabled computer, compared to 10.8% of households in 2004. As of 2009, there were 177 million broadband subscribers in the region, up from 63 million in 2004; Number of broadband subscribers in selected regions: 2004-2009

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Number of broadband subscribers in selected regions: 2004-2009

The number of mobile broadband subscribers is also on the rise in Asia Pacific, surpassing North America as the region with the largest number of 4G broadband wireless subscriptions, accounting for 29.0% of the 5.7 million worldwide subscriptions as of March 2010; Asia Pacific is the largest mobile phone regional market. In particular, the growth of next-generation (i.e. 3G, 3.5G and 4G) mobile phone subscriptions will help to promote mobile Internet access use. In 2009, the region had 2.1 billion mobile phone subscriptions, or 46.1% of total subscriptions globally; Consumer expenditure in the region on telecommunication services shows a strong and growing trend of interest in the ICT market. During 2004-2009, Asia Pacific's consumer expenditure on telecommunications services rose by 24.5% in real terms to US$200 billion; Despite the high growth, there exists a relatively wide digital divide in terms of broadband Internet access between developed and developing countries within the region. For example, in 2009, 97.8% of South Korean households were connected to broadband Internet, compared to 2.8% in India and only 0.8% in Pakistan.

Embracing digital media and e-government

Rapid broadband growth in the region encourages uptake of new digital services: As of October 2010, 61.0% of the global online population access the Internet as their mediachannel of choice, compared to 54.0% for TV, 36.0% for radio and 32.0% for newspapers. For Developed Asia (South Korea, Japan, Hong Kong, Singapore and Australia) and Emerging Asia (Indonesia, Thailand, Malaysia, Philippines and Vietnam), 57.0% and 42.0% respectively of online users access the Internet daily. The rise of daily information consumption via the Internet provides marketing and e-commerce potential; Rapid broadband growth is driving forward IPTV subscriptions in the region. IPTV consumers in Asia Pacific increased by 1.2 million in Q1 2010, resulting in Asia Pacific representing 32.4% of the global IPTV market. The increasing uptake of IPTV subscriptions for Asia Pacific provides room for new competitors to enter the market to develop competing services, which will in turn offer more choice and stronger products for consumers; Efficient delivery of, and access to, services such as e-government, telemedicine and e-learning, will continue to be enhanced for the region as Asia Pacific consumers become more digitally engaged with broadband rollout. South Korea tops the 2010 UN e-government survey that rates countries for their egovernment performance, with Singapore coming in the 11th place and Japan in 17th.

Rapid growth of social networking provides opportunities for ICT competitors

Emerging markets in Asia Pacific take-up digital activities more often than mature ICT markets. For instance, as of October 2010, 88.0% of online users in China have written a blog or entry, compared to 32.0% in the USA. As of October 2010, the number of online users who upload photos to social networks or photo sharing sites is 92.0% in Thailand, 88.0% in Malaysia, 87.0% in Vietnam, compared to 28.0% in Japan or 48.0% in Germany; In a study released February 2010, which excluded China, the Philippines leads the social networking market in Asia Pacific, with 90.3% of Internet users using social networking, followed by Australia with 89.6% and Indonesia at 88.6%. Across the region, 50.8% of Internet users use social networking sites; Social networking reach in Asia Pacific markets: February 2010

% of total Internet users

Source: comScore World Metrix

Drivers of social networking growth include the rapid increase of mobile broadband as well as fixed broadband rollout. Facebook reigns as the top social networking site across Asia Pacific but its reach in February 2010 was only 14.9% of the regional Internet population, indicating that there is room in the social networking market for competitors, such as ones that already appeal to individual country markets. Examples of these individual market leaders include Wretch.cc in Taiwain with 62.5% reach of Internet users, Orkut for India with 46.8% reach, CyWorld for South Korea at 54.2% reach and Mixi.jp in Japan, with 18.9% reach as of February 2010; Malaysians have the most digital friends as well as spend the most time on social networking sites. As of October 2010, Malaysians on average have 233 friends and spend on average 9 hours per week on social networking sites. On average, there are only 29 friends per person in Japan and 68 per person in China. Marketing campaigns may thus be more successful in those social networking markets where Internet users on average have a larger digital network and thus a larger digital reach, such as in Malaysia.

Prospects
As Asia Pacific continues to build its reputation as a fast growing broadband market with digitally connected and engaged consumers, there are positive prospects for the ICT industry's future and for the region's digital consumers: Revenue from mobile broadband usage for the developed Asia Pacific markets is forecast to reach US$7.1 billion by 2015, with mobile broadband connections in developed Asia Pacific to increase from 6.2 million in 2009 to 27.2 million in 2015. This will continue to drive forward the uptake ofdigital activities and services; E-government initiatives in the region will continue to grow in number as demand for digitalservices rise in the region. An e-government plan approved in October 2010 by Vietnam, which will go from 20112015, will result in annual savings of up to US$1.5 billion in public money, allowing governments to spend surplus money saved from e-government on other pressing social concerns, such as education and healthcare; The need for innovative digital services will attract investments into the region, such as in e-learning. For example, US$5.9 million will be invested by private technology firms into Temasek Polytechnic in Singapore over 2011-2015. These plans will connect the school's 15,000 student population with interactive media, such as streaming lessons and e-books; To help bridge the digital divide between developed and developing Asian markets, the Asian Development Bank approved a US$24 million investment package for the South Asia Subregional Economic Cooperation (SASEC) Information Highway Project, which aims to provide services such as affordable broadband, local digital content and e-applications that focus on the needs of the poor. Broadband access will be brought to 110 rural communities in Bangladesh, Bhutan, India and Nepal. It began in July 2009 and is expected to finish in June 2012. There is some uncertainty as to how the ICT market will be shaped by the rapidly expanding broadband consumer base: Wireless broadband plans in the region are being capped by service operators, restricting download limits for subscribers, moving away from unlimited downloading packages to protect the stability of networks. This could mean that, where the choice is available, those who need extra bandwidth for viewing online content or online gaming will choose to subscribe to, or revert to, a fixed-line connection in the DSL market that still allows for all-you-can-use services, rather than to subscribe or switch to wireless broadband services, where data download is beginning to be limited; As 4G technology is being rolled out in Asia Pacific, new threats to cyber security are emerging. In October 2010, Asia Pacific leaders in government and the private sector called for a Pan-Asian response to online security, which will see recruitment for next generation firewall systems and online security experts from the private sector. Keywords Asia Pacific, China, Hong Kong, China, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam | Telecommunications | Technology, communications and media

Source: Euromonitor