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2006 North Asian Telecoms Statistics and Market Overview

Attention: There is an updated edition available for this report.

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:

Infrastructure Issues
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%.

1.1 Key developments
1.1.1 General
1.1.2 Regulatory
1.1.3 Infrastructure
2.1 Overview
2.2 Telecommunications infrastructure
2.3 Regulatory
2.3.1 Market deregulation
2.4 Fixed-line services
3.1 Overview of China’s telecom market
3.1.1 Analysis - Will China’s economic boom last?
3.1.2 Fixed-line and mobile phones in China
3.1.3 China’s Tenth Five Year Plan
3.1.4 Budget for information and communications technology (ICT)
3.1.5 Preparations for the 2008 Beijing Summer Olympics
3.1.6 Market highlights - 2006
3.1.7 Market highlights - 2005
3.1.8 Market highlights - 2004
3.1.9 Market highlights - 2003
3.2 Major Telcos
3.2.1 Overview of major players
3.2.2 China Mobile
3.2.3 China Netcom
3.2.4 China Netcom IPO
3.2.5 Jitong Corporation
3.2.6 China Satcom
3.2.7 China Telecom
3.2.8 China Tietong (formerly China Railcom)
3.2.9 China Unicom
3.3 Telecommunications Infrastructure
3.3.1 National telecom network
3.3.2 Next generation networks (NGNs)
3.3.3 China Railway fibre network
3.3.4 High-speed network technologies
3.3.5 Data and Multi-Media Communications Network
3.3.6 Regulatory issues
3.3.7 Backbone Internet networks
3.3.8 Fibre-to-the-Home (FttH)
3.3.9 Broadband over Powerline (BPL) / powerline communications (PLC)
3.3.10 International submarine cable infrastructure
3.3.11 International satellite infrastructure
3.3.12 Data communications
3.3.13 IP-Virtual Private Network (IP-VPN)
3.3.14 Growth of IP-VPN in China
3.3.15 Peer-to-Peer (P2P) streaming
3.3.16 IP telephony / Voice over Internet Protocol (VoIP)
3.3.17 Equipment developments
3.3.18 Major VoIP networks
4.1 Overview of Hong Kong’s telecom market
4.1.1 Fixed Telecommunications Network Services (FTNS)
4.1.2 International telecommunications services
4.2 Fixed network operators in Hong Kong
4.2.1 Mainland connection
4.2.2 Full liberalisation of FTNS market
4.2.3 Fixed network development
4.2.4 Major players in the market
4.3 Telecommunications infrastructure
4.3.1 Overview
4.3.2 National
4.3.3 International
4.3.4 Satellite networks
5.1 Overview of Japan’s telecom market
5.1.1 Fixed-line and mobile phones in Japan
5.1.2 Telecommunications carriers
5.1.3 Market highlights and analysis - 2005
5.1.4 Market highlights and analysis - 2004
5.2 Major telcos - overview & statistics
5.2.1 Market developments
5.2.2 Overview of major players
5.3 Telecommunications infrastructure
5.3.1 Overview of infrastructure developments in Japan
5.3.2 Major national infrastructure players
5.3.3 National Telecom Network
5.3.4 International infrastructure
5.3.5 Infrastructure developments
5.3.6 Voice over Internet Protocol (VoIP)
5.3.7 Data communications
5.3.8 Regulatory issues
6.1 Overview of Macau’s telecom market
6.2 Fixed network operator in Macau
6.2.1 Compahnia de Telecomunicações de Macau (CTM)
6.3 Telecommunications infrastructure
6.3.1 Domestic and international
6.4 Data market
6.4.1 Data network
6.4.2 Macaupac
6.4.3 ISDN
7.1 Overview of Mongolia’s telecom market
7.2 Fixed network operators in Mongolia
7.2.1 Mongolia Telecom
7.2.2 Mongolian Railways Communications
7.3 Telecommunications infrastructure
7.3.1 National telecom network
7.3.2 International infrastructure
8.1 Overview of North Korea’s telecom market
8.1.1 Market analysis
8.1.2 Relationship with South Korea and the world
8.2 Fixed network operators in North Korea
8.2.1 Lancelot Holdings
8.2.2 Loxley Pacific (Loxpac)
8.2.3 KT Corporation
8.2.4 Shin Satellite Corp
8.3 Telecommunications infrastructure
8.3.1 National telecom network
8.3.2 International
9.1 Overview of South Korea’s telecom market
9.1.1 Competitive market
9.1.2 Fixed-line and mobile phones in South Korea
9.1.3 Telecommunications service markets
9.1.4 Market highlights and analysis - 2006
9.1.5 Market highlights and analysis - 2005
9.1.6 Market highlights and analysis - 2004
9.1.7 Market highlights and analysis - 2003
9.2 Fixed network operators in South Korea
9.2.1 Overview
9.2.2 KT Corp
9.2.3 Dacom Corporation
9.2.4 Hanaro Telecom
9.2.5 Onse Telecom
9.3 Telecommunications Infrastructure
9.3.1 Overview of infrastructure developments in South Korea
9.3.2 National telecom network
9.3.3 International infrastructure
9.3.4 Infrastructure developments
9.3.5 Data communications
9.3.6 Regulatory issues
10.1 Overview of Taiwan’s telecom market
10.2 Fixed network operators in Taiwan
10.2.1 Fixed network voice services
10.2.2 Chunghwa Telecom Co Ltd
10.2.3 Eastern Broadband Telecom
10.2.4 New Century InfoComm Tech Co Ltd (Sparq)
10.2.5 Taiwan Fixed Network Telecom
10.3 Telecommunications infrastructure
10.3.1 National
10.3.2 International
10.4 Data market
10.4.1 Data infrastructure
10.4.2 Data services
Exhibit 1 - Restructuring Scenario 1
Exhibit 2 - Restructuring Scenario 2
Exhibit 3 - China Satcom satellite fleet
Exhibit 4 - Fixed Telecommunications Network Services (FTNS) licensees - August 2005
Exhibit 5 - International calling card service operators - 2006
Exhibit 6 - The original PCCW deal
Exhibit 7 - Capex commitments of new wireless local FTNS licensees
Exhibit 8 - NTT corporate structure
Exhibit 9 - Major members of MYLINE Carriers Association - April 2006
Exhibit 10 - Classification of service providers
Exhibit 11 - Overview of KT subsidiaries
Exhibit 12 - National submarine fibre optic cables
Exhibit 13 - International submarine fibre optic cables

Table 1 - Fixed-line subscribers (selected markets) - March 2006
Table 2 - Telecom revenue and investment statistics - 2005
Table 3 - Telephone network statistics - 2005
Table 4 - Fixed-lines, mobile subscriptions and penetrations - 1998 - 2005
Table 5 - Fixed lines in service and penetration - 1998 - 2005, 2010
Table 6 - Distribution of bandwidth (Mb/s) - 2002 - 2005
Table 7 - Overview regional / international fibre optic cable networks
Table 8 - Selected Chinese satellite service providers and satellites
Table 9 - Public data and multimedia users - 1998 - 2000, 2005, 2010
Table 10 - Fixed telephone lines vs mobile subscriptions and penetration - 1998 - 2006
Table 11 - Telephone network statistics - 2006
Table 12 - Fixed-line in service and teledensity - 1994 - 2006
Table 13 - Telecom revenue and investment statistics - 2005
Table 14 - Telephone network statistics - 2005
Table 15 - Subscriber growth and penetration: fixed-line versus mobile - 1993 - 2005
Table 16 - Telecommunications carriers in Japan - February 2006
Table 17 - VoIP subscribers by operator - March 2005
Table 18 - Telephone network statistics - April 2006
Table 19 - Fixed-line growth and teledensity - 1991 - 2006
Table 20 - Telephone network statistics - 2005
Table 21 - Fixed lines in service and teledensity - 1994 - 2005
Table 22 - Telephone network statistics - 2005
Table 23 - Fixed lines in service and teledensity - 1990 - 2005
Table 24 - Telephone network statistics - 2005
Table 25 - Fixed lines in service and teledensity - 1991 - 2006
Table 26 - ISDN subscribers - 1994 - 2006
Table 27 - Telephone network statistics - 2006
Table 28 - Fixed telephone lines v. mobile subscriptions and penetrations - 1997 - 2006
Table 29 - Chunghwa Telecom’s subscriber base - August 2004
Table 30 - Fixed lines in service and teledensity - 1995 - 2006

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