 | Issue: | Asia-Pacific II 2001 |
| Article no.: | 4 | |
| Topic: | Building Out the Telecommunications Infrastructure in Asia | |
| Author: | David Bealby | |
| Title: | Vice-President and General Manager | |
| Organisation: | Compaq, Telecommunications Division | |
| PDF size: | 40KB |
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Article abstract
The pace of Asian telecommunications’ progress varies widely by country. The more developed nations are competing fiercely for differentiation in a deregulated environment. Developing countries are starting to open their markets to foreign operators. China is promoting domestic competition in preparation for World Trade Organisation (WTO) accession. The entire Asian theatre represents a high-growth market for carriers, equipment manufacturers, and information technology vendors and the region’s peoples will benefit from this broad-based telecommunications infrastructure expansion.
Full Article
Asia. There’s something faintly ludicrous about using this short, four-letter word to describe the kaleidoscopic diversity of cultures, geographies and economies that comprise the most populous region of the globe. But the reference is apt when it comes to the dazzling opportunity for telecommunications expansion-and the economic growth and prosperity that this expansion will drive. Asia is one of the fastest-growing telecommunications markets in the world. The accelerating development of the telecommunications infrastructure across the region will ensure greater prominence in the global economy of the future and growing prosperity for the citizens of all Asian countries. Moving at different speeds From a telecommunications perspective, Asia can be divided into three distinct segments: o The most developed countries, including Australia, Japan, Hong Kong, Korea, Taiwan and Singapore, which have relatively high regional telecom penetration and modernisation. o The developing countries, in which the per capita telecom penetration is relatively low. o China, which is arguably a dimension in its own right based on population, market behaviour, economic development and a highly industrialised telecommunications infrastructure. The most developed countries have reached the saturation point in terms of telecom penetration. Mergers and acquisitions are increasing in number and scope. Network infrastructures are fully digitised, and customers can obtain virtually any telecom service they desire. As a result, there is intense competition to attract and retain customers by offering innovative services and technologies. Revenue is derived less from connecting subscribers to the network than from delivering new applications. So, for example, the iMode service in Japan has enjoyed huge success. In Hong Kong, customers can use wireless access devices to conduct online betting and follow race results as the race is in progress. In Singapore, wireless handsets are an essential part of a teenager’s kit, allowing them to chat with one another-and, incidentally, allowing their parents to keep track of their whereabouts. In the developing economies, the take-up of new telecom services has been relatively slow; the real challenge lies in providing telephone access to subscribers who badly want it. In these economies, wireless technology is starting to over-take wireline technology in delivering basic services to consumers, due largely to the fact that modernisation and expansion of the wireline infrastructure would be prohibitively costly and time-consuming. Therefore, the penetration and availability of mobile services is increasing rapidly. China is a hybrid of the two. Based on compelling economic factors-specifically, the country’s massive population and the associated buying power-China is building out its networks to provide basic connectivity. But these networks will also be capable of delivering enhanced, state-of-the-art services and applications to the consumers who can afford them. Deregulation a key factor Every country in Asia has deregulated its telecommunications infrastructure to some extent. The process is virtually complete in the most industrialised nations, with foreign concerns allowed to operate in-country networks. Japan and Singapore eliminated the last vestiges of protectionism by deregulating last year. (Of course, the NTT breakup and the establishment of an independent telecom regulatory authority in Japan continues to be the subject of heated discussion.) As a result, consumers in these countries enjoy lower costs and a proliferation of fixed-line and mobile services that, in many instances, set the benchmark for the rest of the world to emulate. The developing countries have also started the deregulation process, making good progress in mobile services, but remaining regulations continue to limit competition to some extent. Costs have therefore stayed high, and the speed of deployment of new services is not increasing as rapidly as it could. Monopolistic behaviour is understandable-it seeks to protect local economies, jobs, and government-backed utilities-but in the long run, it impedes quality of service, socio-economic development, and national competitiveness in the global economy. China is deregulated on paper, but in reality it is still very much a ‘closed shop’. Foreign companies are not yet able to set up operations in China. In preparation for World Trade Organisation (WTO) accession, however, China is building domestic competition through cooperation-for example, allowing China Railway Telecom (CRT), a unit of the Railway Ministry, to commence commercial operations as an independent entity-in accordance with the country’s five-year plan. China has also slashed telecom rates, lowering long-distance charges, leased-line charges, and Internet service provider fees by as much as 95 per cent. Clear leadership in wireless While telecom penetration and deregulation across Asia continue to progress at varying rates, there is already significant parity across the region in terms of wireless infrastructure and services. Whether you’re in Indonesia, Singapore, Japan, Hong Kong, China, Malaysia or Thailand wireless access and basic services are generally available. Wireless carriers are enhancing their infrastructures in response to competition and user demand. In most cases, available services are on a par with Europe and well ahead of North America. The Asian market is growing rapidly, embracing new wireless data technologies and 2.5G and 3G implementations. Asian markets have also taken leadership in mobile commerce (m-commerce), with the degree varying considerably by country. This acceptance of m-commerce is readily explained by demographic analysis. More than 50 per cent of North American households are connected to the Internet. By contrast, less than 30 per cent of Japanese households have Internet access-but 80 per cent of Japanese wireless users can access the Internet through their wireless phones. As a result, a growing proportion of the Internet access is taking place via wireless handsets rather than by sitting at a computer. The preference for wireless is especially compelling in developing countries, where having a phone line brought to the home can be a daunting task. People in these countries use Short Message Services (SMS) and wireless Internet access as the primary vehicle for e-mail communications and some shopping. So it is not surprising that the speed of adoption of wireless messaging applications-and, to a lesser extent, m-commerce applications-is higher in Asia than in North America. In fact, interest in m-commerce is heating up across the region. Any time a merchant-including the operator-can generate revenue through a transaction that takes place over a mobile phone, it falls into the category of m-commerce. If you place a trade over your mobile phone, somebody makes money on that trade. If you deliver an advertisement on a mobile phone, the operator gets a percentage of the ad revenue. If you download a Pokemon character to a teenager’s iMode phone on request, that would be m-commerce. Clearly, with the explosion of wireless technologies and implementation across Asia, m-commerce represents a potentially huge growth market-particularly once Wireless Application Protocol (WAP) and access device technologies catch up. On the wireline side, it’s a different story. The broad regional parity that characterises wireless implementation is not reflected in the fixed-line arena. In the more developed countries, where network modernisation has kept pace with technology trends, people have access to all the latest multimedia capabilities in their homes. But in the developing countries and China, such services are generally not available to subscribers or consumers. This will change in the future-the operating companies will make the necessary investment to roll out digital wireline access to people’s homes-but progress in building out the fixed-line infrastructure will depend heavily on subscribers’ willingness and ability to pay for the services. A fundamental tenet By and large, all Asian governments recognise that telecommunications growth is a fundamental prerequisite for success in the global economy, and they are doing everything within their means to accelerate the development of their national telecom infrastructures. In some cases, the infrastructure buildout is deliberately phased to support economic priorities. India is a good example of this approach. In India, getting phone lines into remote villages is still a monumental challenge; but in areas like Bangalore, Bombay, and New Delhi-sites of booming software houses and significant industrialisation-multiple providers offer similar wireline and wireless services. Why? Because the government recognised that, in order for India to be a powerhouse in the software business, these centres would need the latest and greatest communications technology and infrastructure. It should be noted that India got into the software business well before the telecommunications infrastructure caught up, but the availability of state-of-the-art services has clearly helped this important segment of the country’s economy. Vietnam is a good example of the opposite situation. The resource pool of software designers in Vietnam is fully equivalent to that in India-highly talented people, hard workers, excellent software developers. But the government failed to recognise the importance of telecommunications as a driver to grow that industry, keeping it regulated to the extent that investment in modernising that infrastructure was severely hampered. As a result, Vietnam never took off as a leader in software development, as India did. Information the key driver As the world moves more and more towards an information-based economy rather than a production-based economy, it will become increasingly critical for Asian countries to upgrade and enhance their information infrastructures. Partner-ships will play a huge role in this ongoing evolutions-strategic partner-ships between carriers, equipment manufacturers, and information techno-logy (IT) vendors. Regulators comprise a critical fourth dimension, because regulations must support the economic development required to grow investment in the telecommunications infrastructure. Each category of partner will contribute significantly to increasing the afford-ability of telecom services, by lowering the costs associated with delivering the necessary infrastructure. Joint application development in areas such as intelligent networks, network management, billing, and customer care will raise the overall quality and efficiency of service. Collaboration in the development of new capabilities-including converged voice, data, and video over high-bandwidth Internet protocol (IP) networks-will improve productivity, thereby enhancing economic value and quality of life for people across the region. By leveraging standardized components and price/ performance advantages, IT vendors will play a critical role in making the telecommunications infrastructure more cost-effective and easier to deploy. Asian equipment manufacturers and carriers are not yet fully cognisant of the cost benefits that close collaboration with IT vendors can offer, but awareness is building rapidly. In conclusion, there’s no question that Asia is too big and too diverse to describe in a single breath, especially when it comes to the availability and deployment of telecommunications services. But the progress in all countries is steady, promising greater economic opportunity and enhanced quality of life for people across the entire region. From Seoul to Bangalore… from Manila to Mandalay… from Shanghai to Osaka… from Singapore to Hong Kong… from Sydney to Bangkok to Kuala Lumpur, Asia is on the move. Asian economies see telecommunications as a critical component of their economic growth strategies. With leadership in wireless applications-and a population that’s hungry for the socio-economic advantages that a robust telecommunications infrastructure can deliver-it is clear that Asia will move rapidly to promote telecommunications development and become an even greater force in the global information-based economy.
