This annual report offers a wealth of information on the overall Infrastructure development, Fixed and Mobile services, as well as Data and Internet markets in: China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea and Taiwan. Subjects covered include:
Regulatory issues and government policies re infrastructure
Mobile networks, including Value Added and Next Generation Services
Development of Internet services and the growth of broadband access
Leased Lines, ISDN, Frame Relay, ATM
Brief overview of the major telecommunications carriers and service providers
This Asia market report covers 8 economies in the North Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the broadband Internet and mobile segments in each of the economies. The markets covered include:
China The powerhouse that is the telecommunications market in China continues to generate great interest worldwide. There is no doubting its substantial growth momentum and potential. Nevertheless the market presents many contradictions. Telecommunications in China can be characterised by creativity and daring one minute, and by caution and dithering the next. In fact, it is often out of step with what is happening in other parts of the world. With the Beijing Olympics coming up in 2008, telecommunications development has been figuring prominently in the nation’s priority scheme as China prepares to showcase itself.
The popularity of the Personal Access System (PAS), known as Little Smart and being offered by the fixed line operators, has also boosted the market. In the meantime, China has also become the world’s biggest user of Voice over Internet Protocol (VoIP) services.
Hong Kong - is seen as one of the most sophisticated and dynamic telecommunications markets in the world. A Special Administrative Region (SAR) of China, it has built itself a world-class telecoms infrastructure, which supports one of the world’s highest penetrations of mobile phones and telephone services generally. At the start of 2006, the territory had almost 3.8 million fixed telephone lines in service, giving a teledensity of around 54%, amongst the highest in Asia as well as in the world. Whilst the fixed-line market has flattened out, the mobile market has continued to boom.
Digitalised since 1995, the territory has been wired with 400,000km of optical fibre. This extensive broadband network covers the vast majority of households and provides the basis for a wide range of existing and future telecommunications services.
The government in Hong Kong has adopted a strongly proactive attitude to telecommunications since 1998 and has taken some specific steps aimed at turning the territory into a regional technology hub. OFTA, Hong Kong’s regulatory body, has been keen to promote the idea that the successful Hong Kong telecoms market has been due to positive action in respect of licensing procedures and an absence of restrictions on foreign investment. The government’s ‘open sky’ policy has been an example of this proactive approach.
Japan - With its sophisticated infrastructure, Japan’s telecommunications sector is one of the most active markets in the world. Its telecommunications sector has continued to witness strong growth into 2006, with the rapid expansion of 3G mobile services and the uptake of Fibre-to-the-Home (FttH) being especially noteworthy. There have also been big strides in digital and mobile broadcasting. At the same time, VoIP and triple play services are continuing to make their mark.
Whilst enthusiasm for DSL appears to be waning, Fibre-to-the-Home (FttH) Internet access has been making impressive progress in the Japanese market with 5.4 million FttH subscribers signed up by early 2006. As Japan runs hot in the IP telephony market, it has been predicted that the country will have 28 million Internet phone lines operating by end-2007. There were around nine million VoIP subscribers in the country by end-2005.
In one of the biggest challenges for the telecom industry in Japan, the government wants to see the domestic fixed-line telephone network completely replaced with a fully integrated IP system. This could possibly happen by as early as 2010. KDDI has announced that it plans to replace its fixed-line services with the IP system by the start of 2008, while NTT Corp has plans to replace part of its fixed-line services with the IP system by 2010. With NTT still dominating Japanese telecoms infrastructure, KDDI and Softbank have been busily working to bypass NTT’s system in whatever way possible. This sets the scene for some interesting investment moves.
Macau, like Hong Kong, a Special Administrative Region (SAR) of China, has remained comparatively low profile in the development of its telecommunications market. Macau has systematically gone about building itself a strong modern telecommunications infrastructure and lays claim to a highly penetrated telecom market. Fixed lines reached a saturation point at 40% teledensity a few years ago. Now attention is focused on the mobile market, where by early 2006 there were 563,000 mobile subscribers, a remarkable penetration of 113%. Rapid growth in the Macau mobile sector can be attributed to the opening up of the mobile market in August 2001 to two new operators, which began competing strongly with Macau Telecom. The incumbent’s market share had dropped to about 46% by April 2006.
Mongolia has demonstrated its commitment to developing a more efficient telecommunications network as an integral part of its push towards a market economy. Since the mid-1990s, the Mongolian Government has carried out a series of telecom reforms leading to effective liberalisation of all market segments, partial privatisation of the fixed-line incumbent operator, Mongolia Telecom, and establishment of an independent regulatory authority. Competition is now in place for both fixed and mobile telephony, including local, long-distance, and international, Internet, VoIP, and VSATs. While the fixed-line network has been expanding slowly, the mobile phone market has undergone a remarkable boom.
North Korea - The development of the telecommunications sector in the Democratic People’s Republic of Korea (DPRK) is seriously impeded by the country’s parlous economic state and government repression of communication. It has been a difficult journey indeed for telecommunications in the DPRK. Though mobile services finally began in the capital Pyongyang in 2002 on a limited scale, North Korean citizens were banned from using mobile phones as of May 2004. The Chosun Ilbo newspaper has suggested that the ban might have been imposed following the oil train explosion at Ryongchon in April 2004. It has been suggested that the blast was triggered using mobile phones in an attempt to assassinate North Korean leader Kim Jong Il.
North Korea’s obsession with secrecy has made it extremely difficult to get a clear picture of the sector. [In the absence of official statistics, we have made estimates in our report.] The country looks like remaining isolated form the rest of the world for some years to come.
South Korea - has one of the most interesting and innovative telecommunications markets in the world. The Republic of Korea is a leader in many facets of the telecommunications industry. Supported by a visionary government, a creative and energetic private sector and a technology savvy population, the country continues to push ahead. The government support extends to serious levels of funding for development initiatives and R&D projects. The country’s fixed-line telephone market in South Korea continues to be dominated by the incumbent KT, formerly known as Korea Telecom. This is despite the market having been opened up to competition since 1997.
Taiwan With its strong focus on the role of technology, and telecommunications in particular, throughout its economy, it is not surprising that Taiwan has one of the most advanced telecommunications networks in Asia. With excellent telecommunications infrastructure in place and the innovative use of breakthrough information technologies, the country continues to be well placed to drive both mobile and data communications services. There has been a real boom in telecom development. Annual telecommunications service revenues have been running at around US$10 billion and investment in telecoms infrastructure is of the same order. By end-2005, fixed-line telephone penetration was around 60% and mobile penetration was 99%.