Executive Summary

This Asia market report covers 11 countries in the South East 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 countries. The markets covered include:

Brunei continues to be seeking for itself the most modern infrastructure available, although not quite with the same enthusiasm of some ago. The country has been working to support this by restructuring and generally liberalising its telecom industry. However, progress has largely stalled. The local landscape is still dominated by Jabatan Telekom Brunei (JTB), the incumbent telco that also happens to be a division within the Ministry of Communications. An indication of the slowness of change, Brunei has been coy about reporting its progress and it has become a difficult to obtain up to date statistics for the telecommunications sector.

Nevertheless, development has been occurring in the marketplace. Its push into mobile telephony has seen the country achieve a penetration of more than 55% compared with a fixed-line teledensity of just over 22%. By comparison with mobile, the move into Internet has been less impressive so far, despite the government’s strong support for IT and e-commerce. JTB’s BruNet has introduced an Asymmetric Digital Subscriber Line (ADSL)-based broadband Internet access service.

Cambodia's telecom sector is dominated by a flourishing mobile market, which in turn has resulted in a progressively diminishing fixed-line market. An enormous gap has opened up between the number of mobile subscribers compared to fixed-line subscribers, the former totalling more than 900,000 (and growing at 40% per annum), while fixed lines remain at less than 40,000. After years of instability resulting from civil war and the consequent turmoil, the government’s major challenge has been to attract more foreign investors, particularly in the telecom sector, into the country.

Whilst the mobile market rushes forward, the development of Internet in Cambodia has been constrained by the country’s poor infrastructure. For a basic dial up service, the cost to the consumer continues to be high. Despite such problems, a broadband service was first offered in September 2003, when local ISP Online announced that it had installed ADSL equipment. A number of WiFi hotspots have started to appear in Phnom Penh and other locations.

East Timor has been continuing the daunting task of rebuilding its telecommunications infrastructure after the turbulence that ensued following the referendum of 1999. The United Nations Transitional Administration in East Timor (UNTAET) provided overall administrative and financial assistance during the transition period until elections were held in April 2002. Australia’s Telstra operated telecommunications services until Timor Telecom took over in March 2003.

In March 2003, taking over the infrastructure that had been managed by Telstra under the UNTAET mandate, the newly licensed Timor Telecom started out by offering a mobile service. Mobile coverage initially only extended to Dili, but it has been quickly expanded to a number of other centres. By April 2003, there were about 14,000 subscribers connected to the mobile network. Areas beyond the mobile coverage still need to use satellite phones.

Indonesia, with its distinctively challenging geographical character, has been struggling for years to put its national telecommunications infrastructure in place. When the Indonesia government launched its Joint Operating Service (KSO) strategy in 1994, it hoped that this would be the main driver for the development of the fixed-line telephone network in the country. The KSO program fell well short of expectations, having to contend with the devastating impact of the Asian economic crisis of 1997/98. The country’s telecom sector has, however, started to pick up momentum again.

The Indonesian mobile telephone market survived the economic crisis of the late 1990s. As arguably the hardest hit country in the region, the collapse of Indonesia’s economy saw the mobile telephone market temporarily go into reverse. It subsequently rebounded, recording remarkable growth. By March 2005, there were 27 million mobile subscribers in the country. Significantly, new foreign capital has started to enter the Indonesian mobile market.

By end-2004, Indonesia had an estimated 12 million Internet users. This, however, represented only about 6% of the population. Broadband services are in their infancy, with less than 100,000 mainly ADSL subscribers. Problems with inferior telecommunications infrastructure, however, will continue to impede Internet growth. The country is considered to have enormous potential as an online market.

Laos - As one of the world’s poorer countries with very limited financial, technical and human resources, there have been many obstacles to the full development of telecommunications in Laos. Whilst recognising the importance of building its national infrastructure, Laos still needs to find some economic equilibrium. Despite setting up a telecom joint venture company with Thai company, Shinawatra, in 1996 in a move designed to substantially boost its telephone network, fixed-line penetration in Laos has remained low, sitting around 2%.

After a mobile service was first launched in 1995, mobile services have finally taken off and have become a substitution for fixed-lines. The mobile market was opened up to competition in 2003, giving an immediate boost to the market. The market is now growing at an annual rate of more than 80% and by March 2005 there were 350,000 mobile subscribers.

The country’s political structure, widespread poverty, a general lack of adequate telecom infrastructure, poor English skills and a low level of PC penetration have all contributed to the slow development of Internet in Laos. ISPs in Laos initially moved cautiously into offering limited broadband Internet access. In mid-2003, ETL launched a broadband Internet service based on ADSL under a Japanese grant aid project. Lao Telecom then entered the broadband market in early 2004.

Malaysia has continued to find capital to invest in information technology and telecommunications infrastructure. The building of its telecommunications infrastructure has seen extensive fibre optic networks installed across the length and breadth of the country.

There has been strong growth in the mobile sector in Malaysia. More than 65% of the 25 million people in Malaysia have a mobile telephone service. This means Malaysia has the second highest mobile penetration in South East Asia after Singapore. Malaysia’s mobile market has made a remarkable recovery after suffering a serious setback with the economic crisis of the late 1990s. Behind the recent strong growth activity, there has been serious restructuring of the industry. The remarkable growth in the mobile sector did not hide the fact that the mobile industry was overcrowded. The country is looking to continue on its strong growth path in the mobile sector and beyond.

Malaysia has been heavily promoting itself as an IT hub in the Asia region. On the back of the Multimedia Super Corridor (MSC) Project, high tech companies have been setting up in Malaysia. But efforts by the government at encouraging the wider community to embrace technology have so far met with limited success. The level of interest in broadband Internet has been surprisingly low. One bright spot in this market has been WiFi, as the service providers start to rollout WiFi hotspots.

Myanmar's telecommunications sector is dominated by the state-owned monopoly telephone service provider, Myanmar Posts and Telecommunications (MPT). The country continues to battle with grave economic problems and its troubled political climate. Myanmar’s telecommunications sector is indicative of the overall state of the nation’s economy. Fixed telephone line penetration is less than 1%; mobile services are prohibitively expensive and therefore limited; Internet access remains highly restricted. And there does not appear to be relief in sight.

It has been hard to get any reliable statistics for Myanmar. By March 2002, there were reported to be only 4,000 people with access to the Internet in a country of 50 million. These ‘subscribers’ were carefully selected by the military regime. According to the ITU, the number of Internet users in 2002 more than doubled compared to the figure a year earlier and by 2003 the number had risen to 28,000.

The MPT has prepared a master plan for the period 1990 to 2010, covering the upgrade of the national telecommunication infrastructure. However, such a plan depends on being able to access the necessary capital and technological skills. The government has been considering allowing direct foreign participation in the telecommunication sector.

The Philippines telecommunications sector has witnessed substantial investment in infrastructure, driven initially by the Service Area Scheme (SAS) for fixed-line development in the 1990s and, more recently, by the burgeoning mobile telephony market. The fixed-line strategy, however, has seen the massive under-utilisation of infrastructure. The effectiveness of the SAS process and other policy decisions was brought into serious question as a result.

The Philippines mobile market took off in 2000. Since the end of 1999, when there were only 2.7 million mobile subscribers in the country, the number of subscribers in the Philippines has grown more than ten-fold, racing past the number of fixed-line telephone subscribers in the process, to reach the 35 million mark by early 2005. The population of the country is 85 million. The mobile market in the Philippines has also seen a related phenomenon – the performance of Short Message Service (SMS). Around 200 million text messages are sent every day. Much of the recent growth in the mobile sector had started to come from outside the main city of Manila, with the big operators vying for lower income segments of the population by offering a range of cheap prepaid products.

Compared with many of its Asian neighbours, the Philippines has been moving slowly on the adoption of Internet. Of the estimated 6% of the population who are Internet users, only a small fraction use a broadband connection to go online. Nevertheless, the data and Internet markets are well positioned for growth. Future growth will depend on the provision of reliable infrastructure, especially in the area of broadband Internet.

Singapore - Whilst the Singapore’s geographical situation has been of considerable advantage in putting its infrastructure in place, other factors, including the government’s strong commitment to developing telecommunications, have certainly helped. The country’s reputation for a truly progressive telecommunications market over the past three decades has been built on its excellent infrastructure. Singapore was one of the first countries in the world to have a fully digital telephone network.

The mobile market in Singapore is characterised by its energy and innovation. Even as the growth appeared to have slowed somewhat, there was still considerable effort going into value-added products and services. At the same time, the market is approaching the future cautiously. The planning for 3G is a case in point. Some of the major operators and, to some extent, the government have been circumspect about the next generation of mobile telephony and the benefits it will bring. Despite this caution, all three mobile operators had launched 3G services by early 2005.

Singapore has built strong national Internet awareness through the early adoption of a range of innovative data technologies and platforms. Whilst the rate of development of online commerce in Singapore has been somewhat erratic over the last few years, the country continues to systematically promote the ever wider application of Internet within the community.

In the application of broadband Internet, Singapore was the first country in the world to deploy ADSL commercially when SingTel launched its Magix service in November 1997. However, broadband access did not really take off in Singapore as expected after such an early start. Despite having lost the broadband lead to South Korea and Japan, the last few years have seen Singapore starting to rapidly build its broadband base. The number of broadband subscribers was approaching 500,000 by mid-2005.

Thailand has dedicated a considerable amount of its resources to the building of a national telecommunications infrastructure over the last decade. The Thai mobile market has been particularly energetic. The number of subscribers had jumped to almost 30 million by April 2005. With the arrival of TA-Orange and Hutchison CAT, the powerful duopoly of AIS and DTAC finally looked like being challenged.

Thailand is also now enthusiastically embracing Internet - after a slow start. The estimated number of Internet users in Thailand has jumped enormously in recent years. Most Internet subscribers are dial up, however. The ISP market is also set to be opened up following the establishment of a new regulator. Fixed-line services remain an integral part of telecommunications in the country, especially as the Ministry’s promotion of ADSL broadband services in 2004 is certain to see an enhanced role for the copper network.

Vietnam continues to grapple with the transition from a centrally planned economy to an economy based on the open market model. Its effort to preserve a substantial the role for the state in telecommunications sector has been seriously holding back progress towards deregulation. Vietnam is not as attractive to foreign investors as it could be. This, in turn, has a negative impact on its ability to develop its infrastructure.

On a positive note, however, Vietnam’s mobile market has been growing strongly. This would suggest that the government’s limited competition model is working, at least in the mobile sector. The government has started to open the market up to new players, including some with no VNPT involvement. As with most other Asian mobile markets, growth in Vietnam was substantially boosted since the introduction of prepaid mobile services.

After a late start with Internet, Vietnam is only now starting to explore the possibilities to be found in higher access speeds. The initial roll-out of some broadband services has finally starting to happen. Incumbent VNPT has moved on the development of an ADSL infrastructure and by end-2004 there were 60,000 broadband subscribers in the country. This was out of a total of around 2 million Internet subscribers. Into 2005, the broadband market was expanding at an annual rate of around 100%.

1. EXECUTIVE SUMMARY
1.1 Key developments
1.1.1 Internet
1.1.2 Broadband market
1.2 Internet market
1.3 Broadband market
2. OVERVIEW OF THE BROADBAND AND INTERNET MARKETS IN ASIA
2.1 Internet market in Asia
2.1.1 Market overview
2.1.2 Cultural and regulatory issues
2.1.3 Internet advertising
2.1.4 Asian Domain Name Dispute-Resolution Centre
2.1.5 Internet access and infrastructure
2.1.6 ISP market
2.1.7 Intranets and extranets
2.1.8 VoIP
2.1.9 China
2.1.10 Hong Kong
2.1.11 India
2.1.12 Japan
2.1.13 South Korea
2.1.14 Singapore
2.1.15 Taiwan
2.1.16 Other markets in Asia
2.2 Broadband market in Asia
2.2.1 Market overview
2.2.2 Digital Subscriber Line (DSL)
2.2.3 Cable Modem
2.2.4 Fibre-to-the-Home (FttH)
2.2.5 Wireless broadband
2.2.6 Satellite Internet
2.2.7 Powerline Broadband (PLB) / Powerline Communications (PLC)
2.2.8 Major broadband markets in Asia
2.2.9 Fibre-to-the-Home in Asia
3. BRUNEI DARUSSALAM
3.1 Internet market
3.2 Content and e-services
3.2.1 E-commerce
4. CAMBODIA
4.1 Internet market
4.1.1 Internet access locations
5. EAST TIMOR
5.1 Data/Internet market
6. INDONESIA
6.1 Internet market
6.1.1 Internet information control
6.1.2 Cyber laws
6.1.3 Telkom’s national IP backbone
6.1.4 ISP market
6.2 Broadband market
6.2.1 Overview
6.2.2 Broadband network projects
6.2.3 TelkomNet
6.2.4 PT Multipolar Corp’s high-speed Internet
6.2.5 Internet via satellite
6.2.6 Wireless broadband
6.3 Content and e-services
6.3.1 E-commerce
7. LAOS
7.1 Internet market
7.1.1 ISP market
7.1.2 VoIP telephony
8. MALAYSIA
8.1 Internet market
8.1.1 Internet services
8.1.2 ISP market
8.2 Broadband market
8.2.1 Overview
8.2.2 Broadband infrastructure
8.2.3 Broadband Internet
8.2.4 Digital Subscriber Line (DSL)
8.2.5 Wireless broadband
8.2.6 Powerline broadband
8.2.7 Internet via satellite
8.2.8 Triple play services
8.2.9 National IPv6 Council
8.2.10 Intranet hosting services
8.3 Content and e-services
8.3.1 E-commerce
8.3.2 E-government
8.3.3 Telemedicine
9. MYANMAR
9.1 Internet market
10. PHILIPPINES
10.1 Internet market
10.1.1 Internet Exchanges
10.1.2 I-Gate
10.1.3 Internet demographics
10.1.4 Internet regulation
10.1.5 ISP market
10.2 Broadband market
10.2.1 Market overview
10.2.2 Cable modems
10.2.3 ADSL
10.2.4 Wireless broadband
10.2.5 Internet via satellite
10.2.6 VoD
10.2.7 IP networks
10.2.8 Eastern Telecommunications Philippines
10.3 Content and e-services
10.3.1 E-commerce
10.3.2 E-government
10.3.3 Content
11. SINGAPORE
11.1 Internet market
11.1.1 Profile of Internet users
11.1.2 Top level domain name
11.1.3 Regulatory environment
11.1.4 International Internet infrastructure
11.1.5 Internet data centres
11.1.6 Internet security
11.1.7 Internet access locations
11.1.8 International Internet Exchange
11.1.9 ISP market
11.1.10 Internet TV
11.2 Broadband market
11.2.1 Market overview
11.2.2 Market analysis – 2004/2005
11.2.3 Broadband Multimedia Network – Singapore One
11.2.4 Broadband service providers
11.2.5 Cable modems
11.2.6 Asymmetrical Digital Subscriber Line (ADSL)
11.2.7 B-ISDN
11.2.8 Powerline broadband
11.2.9 Internet via satellite
11.2.10 IP-VPN networks
11.2.11 Wireless broadband
11.3 Content and e-services
11.3.1 E-commerce
11.3.2 E-government
11.3.3 E-Citizen
11.3.4 E-portals
12. THAILAND
12.1 Internet market
12.1.1 Thailand proposed as a regional ICT hub
12.1.2 ISP market
12.1.3 Major ISPs
12.1.4 Thailand Internet Exchange
12.1.5 Portal services
12.1.6 Internet charges
12.1.7 Regulatory issues
12.1.8 Internet cafes
12.1.9 Content
12.2 Broadband market
12.2.1 Overview
12.2.2 ADSL
12.2.3 Cable modem
12.2.4 Internet via satellite
12.2.5 Wireless Internet
12.2.6 Major broadband operators
12.3 Content and e-services
12.3.1 E-commerce
12.3.2 E-Government
13. VIETNAM
13.1 Internet market
13.1.1 Internet subscriber projections
13.1.2 International bandwidth
13.1.3 Regulatory environment
13.1.4 Vietnam Internet Network Information Centre (VNNIC)
13.1.5 Internet cafés
13.1.6 ISP market
13.1.7 Voice over Internet Protocol (VoIP)
13.1.8 Satellite Internet
13.1.9 Emerging IT industry
13.2 Broadband market
13.2.1 Asymmetric Digital Subscriber Line (ADSL)
13.2.2 Wireless broadband
13.2.3 Satellite Internet
13.3 Content and e-services
13.3.1 E-commerce
13.3.2 E-government
14. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – ISPs operated by telecom companies and ownership




Table 1 – Top 5 Asian Internet markets (by penetration) – March 2005
Table 2 – Top 5 Asian broadband markets ranked by penetration – 2004
Table 3 – Internet growth – 1999 - 2005
Table 4 – Top 10 Asian countries by Internet penetration – March 2005
Table 5 – International Internet bandwidth – 2000 - 2005
Table 6 – *VoIP revenue growth - 2003 - 2006
Table 7 – China’s IP telephony growth estimates – 2005, 2010
Table 8 – Broadband markets – December 2004
Table 9 – Major broadband access types (by subscribers) – December 2004
Table 10 – DSL subscribers – December 2004
Table 11 – Cable modem subscribers – December 2004
Table 12 – No. of WiFi hotspots (selected providers) – 2004
Table 13 – WiFi market forecasts – 2003, 2008
Table 14 – WLAN revenue forecasts – 2004 - 2009
Table 15 – KT’s broadband subscribers – 2002 - 2003
Table 16 – Broadband growth in Taiwan – 1999 - 2005
Table 17 – Broadband market in Singapore – January 2005
Table 18 – FttH growth in Japan – 2001 - 2005
Table 19 – Internet provider statistics – 2004
Table 20 – Internet user growth – 1996 - 2004
Table 21 – Internet host computers – 1996 - 2003
Table 22 – Internet subscriber* growth – 1997 - 2004
Table 23 – Internet provider statistics – 2004
Table 24 – Internet users – 1997 - 2004
Table 25 – Internet host computers – 2000 - 2003
Table 26 – Internet provider statistics – 2003
Table 27 – Internet provider statistics – 2004
Table 28 – Internet users – 1998 - 2004
Table 29 – Internet host computers – 1996 - 2003
Table 30 – Registered domain names – January 2005
Table 31 – ADSL subscribers – 2001 - 2004
Table 32 – Internet provider statistics – 2004
Table 33 – Internet users – 1998 - 2004
Table 34 – Internet host computers - 2000 - 2003
Table 35 – Internet provider statistics – 2004
Table 36 – Internet users – 1995 - 2004
Table 37 – Internet host computers – 1995 - 2003
Table 38 – Dial-up Internet subscribers – 1995 - 2004
Table 39 – TMNet subscribers – 1999 - 2004
Table 40 – Broadband subscribers and households - 2004
Table 41 – Broadband subscriber growth – 2002 - 2004
Table 42 – Broadband access types – 2004
Table 43 – TMNet (Streamyx) subscribers – 2003 - 2004
Table 44 – Hotspots market – 2003
Table 45 – Internet provider statistics – 2003
Table 46 – Internet users – 1999 - 2003
Table 47 – Internet hosts – 1998 - 2003
Table 48 – Internet provider statistics – 2003
Table 49 – Internet users – 1996 - 2004
Table 50 – Internet host computers – 1994 - 2003
Table 51 – Internet subscribers – 1996 - 2004
Table 52 – Broadband subscribers – 2001 - 2004
Table 53 – Internet provider statistics – 2005
Table 54 – Overview of Internet market – April 2005
Table 55 – Internet users – 1996 - 2004
Table 56 – Internet host computers – 1996 - 2003
Table 57 – Registered domain names – September 2004
Table 58 – Broadband subscriber growth – 1999 - 2005
Table 59 – Broadband subscribers and households - April 2005
Table 60 – Broadband market in Singapore - April 2005
Table 61 – Broadband subscribers by provider – March 2004
Table 62 – Cable modem subscribers – 2000 - 2005
Table 63 – ADSL subscribers – 2000 - 2005
Table 64 – E-commerce revenues (S$ billion) - 1999 - 2004
Table 65 – Internet provider statistics – 2004
Table 66 – Internet users and subscribers – 1996 - 2004
Table 67 – Internet host computers – 1996 - 2003
Table 68 – ADSL subscribers – 2002 - 2004
Table 69 – Internet provider statistics – 2004
Table 70 – Internet users – 1998 - 2005
Table 71 – Internet host computers – 1996 - 2003
Table 72 – Internet subscribers – 2000 - 2005
Table 73 – Internet Service Providers by subscribers – April 2005
Table 74 – ADSL subscriber growth – 2003 - 2005
Table 75 – ADSL service providers – April 2005