Asia-Pacific - Broadband market growing, supported by social media and web 2.0

[prlog] The social media revolution and Web 2.0 have enhanced prospects for the Asia Pacific broadband market. More and more consumers are feeling the need to connect online and the Internet has become a highly indispensable tool. Broadband service affordability is increasing with falling prices of devices, such as PCs and net-books as well as broadband subscription pricing. Broadband service is becoming increasingly affordable for consumers.

New analysis from Frost & Sullivan, Asia Pacific Broadband Market, finds that the year-on-year market revenue growth rate declined in 2009. The revenue is expected to grow from USD 41,697.3million in 2009 to USD 62,236.7million in 2015 at a compound annual growth rate (CAGR) of 6.9 percent.

“The Asia Pacific fixed broadband subscriber base grew at an impressive rate of 20.5 percent over the previous year to reach an approximate 187 million base subscriber at the end of 2009,” says Frost & Sullivan Senior Industry Analyst, Adeel Najam.

“The growth in subscribers base is mostly fueled by the emerging markets within Asia Pacific whereby the high level of competition is pushing down the prices of entry level packages” explains Najam.

Governments in the region, such as Australia, Malaysia, and Singapore, are funding roll-outs of fiber-based high-speed broadband networks. Fixed broadband technology is evolving with digital subscriber line (DSL), cable broadband, and passive optical network (PON) being able to support higher throughput service at a lower capital expenditure (CAPEX) per subscriber.

Due to the regional household broadband penetration rate of less than 20 percent, the market is still at its growth stage and the CAGR from 2009 to 2015 is expected to be more than 10 percent. By 2015, subscribers from the emerging markets will account for more than 78 percent of the subscribers in the region.

Although market prospects look upbeat, there are some impediments stalling its momentum. The high CAPEX per subscriber for investment poses a challenge for fixed broadband providers. To build better business cases, providers are offering bundled services and optimizing the potential of the deployed local loop.

In some markets, the high-leased pricing from incumbent fixed operators makes it difficult for alternative ISPs to offer broadband service competitively. In such a scenario, providers must penetrate new market segments and bundle their services to provide enhanced value to their subscribers.

For high-speed broadband access, there have been investments in fiber to the premises (FTTP) and fiber to the home (FTTH) networks in Asia Pacific. Most operators favor DSL, but many in the developed markets are migrating to FTTH/fiber to the building (FTTB) if they are able to find a business case. In the emerging markets, FTTH/FTTB will be confined to the urban areas. Many pay TV providers in the region are also using data over cable service interface specification (DOCSIS) to provide cable broadband service to their consumers.

Faced with average revenue per user (ARPU) decline, operators in the emerging markets are depending on subscriber expansion to grow their revenue streams. Providers in the saturated markets are foraying into the content business with internet protocol TV (IPTV) and some are experiencing success. Broadband providers are experiencing stiff competition from worldwide interoperability for microwave access (WIMAX) and other mobile broadband providers.

“Providers in these markets have had to bring their tariffs down and try to differentiate with a premium service,” says Najam.

Najam further notes, “Many providers now offer both and mobile broadband and fixed broadband service – fixed broadband for high speed service at home and mobile broadband for access on the go.”

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