|Topic:||Broadband Developmental Disparities in Asia|
Asia’s countries all know that broadband availability translates into economic muscle. Broadband growth, though, is concentrated only in those countries that have the basic infrastructure and competition to drive down prices. In other countries, though, little progress has been made. Where governments encourage competition, liberalize their markets and aggressively push deployment, broadband usage rises significantly. By forcing incumbents to unravel and give competitors access to the “”local loop”” competition increases, access costs drop and services became more attractive to customers.
Overview Concealed by the economic and political ruckus caused by the recent Severe Acute Respiratory Syndromes (SARS) outbreak and war in Iraq, a great international race continues at throttle speed across Asia. China is determined to be a global technological superpower. It is prepared to spend billions of dollars to nurture new technological innovations, including high-speed networks and services. Long-time Asian economic powerhouse, Japan, is growing intelligent, fast, ubiquitous networks, as one of the many strategies, to restart its economic engines. Even international broadband kingpin, Korea is spending heavily to further leverage its high broadband Internet access penetration. The definitive moves by these Asian powers reflect the potential of broadband as a key national economic driver. Yet while broadband success can potentially translate into economic muscle, the growth and developments in this area continue to be dramatically uneven in the region. Less developed Asian countries remain challenged to join the fast-speed developmental race. The possibility of an Asia linked by international broadband networks look bleak as only advanced economies take centre stage. The Issues: At-A-Glance The Asian region outside of certain broadband front-runners, Korea and Japan among them, is seen to be relatively slow in adopting broadband. This is largely due to the high cost of broadband services, a key factor hindering the take-up in the more mature markets such as Singapore. Cost challenges, coupled with the issue of infrastructure availability in some less developed countries and the lack of government or industry initiatives to open up competition in the broadband space has made it difficult for market players to aggressively drive broadband development in countries such as Thailand, Philippines and India. However, recent efforts by governments, regulators and industry communities have resulted in new initiatives being introduced to liberalize markets, alternative access infrastructure being rolled out and greater cooperation amongst market players and incumbent operators in recent times, there is a chance that less advanced countries can play a viable catch up game. It is evident that the demand for broadband in the region is surging as countries with underdeveloped infrastructure work towards enhancing their in-country core infrastructures and find alternative access to broadband connectivity. Businesses today have high data communication requirements and are beginning to see the opportunities of broadband for their business. This has resulted in greater willingness to invest in broadband connectivity as they seek to enhance operational efficiencies and improve corporate wide communication with employees, partners and business associates. Snapshots of Diffused National Broadband Developments While the boom is evident, there will be variations in actual growth due to widely different infrastructure environments among the countries. For a technology that predominates in one market may barely exist in another. Government factor In more technologically advanced countries such as Singapore, Hong Kong and Korea, where local governments are aggressively pushing stimulus programmes to catalyse broadband development and deployment, their success is progressively gaining visibility. There is a significant rise in the adoption of broadband usage in Singapore and the government continues to push for infrastructure projects that accommodate broadband access. Some industry experts had commented that China, where cable-modem-ready systems are more the exception than the norm, is swiftly building broadband networks and is expected to have significant broadband Internet markets within three to five years. This will be true if the Chinese government is committed to continue to focus in this area. In India, the government’s lacklustre approach in the past has caused the country to trail behind other markets in broadband access development. Infrastructure factor Additionally, India’s basic telephone infrastructure is still underdeveloped, such that cable infrastructure delivering cable TV services are more prevalent to homes then traditional telephony and Internet dial-up services. The state of infrastructure readiness is a critical factor for broadband development. Singapore, Taiwan, Hong Kong, and Australia have good telecom and cable infrastructure, and are in better positions for faster broadband Internet growth. The broadband uptake in the Philippines has been hindered by a lack of cost-effective access infrastructure. Unlike more advanced countries such as Hong Kong, where 100 per cent of its commercial buildings are linked by broadband access, not all areas in the Philippines, including central business districts, are well served. The deployment of a reliable telecommunications network infrastructure requires a large capital expenditure and incumbent operators remain highly protective of their market share in traditional services. These two factors have proven to be barriers for a major broadband push by local telecom operators. Levels of In-Country Competition and Cost of Access How quickly broadband is delivered in any market will also depend on local initiatives to encourage competition and liberalize the market. National regulators are increasingly forcing incumbents to unravel and allow competitors to use the “”local loop””. In Australia, Telstra is progressively opening up its access infrastructure to competitors. As the level of competition increases, as access costs become more attractive and services more reliable, broadband services will become a more tangible value proposition to customers. The increasing number of service providers entering the market will change the operating structure and competitive landscape, giving enterprise and residential customers more choices in access speeds and product bundles. Such development provides opportunities for service providers to tailor-make a total solution package for customers, especially for small and medium sized enterprises which may need other value added services such as applications e-mail hosting, virus protection and managed network services on the same access infrastructure. Content and Applications The increase of data communications by businesses and home users have helped to spur the growth of Internet based services and created a greater need for broadband services. Broadband is increasingly recognized as an important access solution for end users working or living in a modern society. The introduction of the Internet and electronic mail has led to a paradigm shift in how people communicate, work and play. The continued development and deployment of content and applications is now a critical factor to drive broadband development in the region. Branding and Marketing – A Neglected Driving Factor While the development of broadband in a country is a combination of multiple factors, many governments and industry players are still ignorant of the importance of branding and marketing in this process. The competition between countries is increasing and achieving a unique position and competitive advantage becomes progressively difficult and expensive. Creating and implementing brand-marketing strategies are inevitable for governments and the industry to support the adoption of broadband. Strong branding enhances the competitive position of the countries and helps attract IT investment from multi-national corporations, boosting the viability of high-speed related services in the country. Malaysia recently emerged the winner in a hard-fought race to host the prestigious World Congress Information Technology (WCIT) in 2008. WCIT is the IT equivalent of the Olympics. Beyond the significance of winning the right to host a major technology event, 2008 should now become the milestone to realise all ambitious technology initiatives in the country. The government of Malaysia should view this as a super-branding exercise for the country. For an international technology congress to be held in Malaysia, it is necessary to give the right impression of the country and its strategy for the future. Branding and marketing are critical elements in this process. For India, it achieved international acknowledgement as a country with a large pool of knowledge workers through the efforts of Nasscomm (The National Association of Software Companies) and its government. This success should serve as a reference case for governments all over. Conclusion Much of the broadband growth in the region has come from more advanced countries such as Korea, Japan, Singapore, Hong Kong and Taiwan. These markets have the basic infrastructure in place and competition drives down prices. Narrowband dial-up users are also migrating to broadband. In many markets, there are also multiple broadband operators. As such, prices will continue to be driven down. Despite the initial enthusiasm among early adopters, there remains the problem that no killer application and content have emerged that will encourage users to switch to broadband other than lure of the additional speed of access. Operators in general are still hesitant about investing in broadband networks. They must first resolve a number of important issues that call for careful consideration, such as when and how to get the payback, how to set the price range and what kind of broadband technologies they should deploy. In the meantime, the traditional factors hindering broadband will continue to exist unless there are sweeping changes in infrastructure, cost and anti-competitive issues across the region. New factors such as international marketing and branding cannot take a backseat. An enhanced brand name for a country, a trade association or a business entity – create inroads for foreign investment, thereby promoting a more conducive environment for broadband adoption/growth. As Asian countries continue to develop their broadband competitiveness – albeit at different paces and success rates – governments and industries will need concerted efforts to leverage a wide range of factors to achieve their economic goals.