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 Infrastructure
1.2 Telecoms market overview
1.3 Telecommunications infrastructure
1.4 Fixed-line service
2. NEXT GENERATION NETWORKS (NGNS)
2.1 Overview
2.1.1 Brunei
2.1.2 Singapore
2.1.3 Other markets in Asia
3. BRUNEI
3.1 Overview of Brunei’s telecommunications market
3.2 Fixed network operators
3.2.1 Jabatan Telekom Brunei (JTB)
3.2.2 DST Group
3.3 Telecommunications infrastructure
3.3.1 National
3.3.2 International
3.4 Data market
3.4.1 Overview
3.4.2 SHuTT
3.4.3 Integrated Services Digital Network (ISDN)
4. CAMBODIA
4.1 Overview of Cambodia’s telecommunications market
4.2 Telecommunications infrastructure
4.2.1 National telecom network
4.2.2 International infrastructure
5. EAST TIMOR
5.1 Overview of East Timor’s telecommunications market
5.2 Fixed network voice services
5.2.1 International calls
5.3 Telecommunications infrastructure
5.3.1 Fixed network operators
5.4 Data/Internet market
6. INDONESIA
6.1 Overview of Indonesia’s telecommunications market
6.1.1 Tsunami disaster
6.1.2 Five-year telecommunications plans
6.1.3 Market analysis – 2004/2005
6.2 Fixed network operators
6.2.1 PT Telkom Indonesia
6.2.2 PT Indonesian Satellite Corporation (Indosat)
6.2.3 PT Satelit Palapa Indonesia (SATELINDO)
6.2.4 PT Bakrie Telecom (formerly Ratelindo)
6.3 Telecommunications infrastructure
6.3.1 National infrastructure
6.3.2 International infrastructure
6.4 Data market
6.4.1 Overview
6.4.2 ISDN and IN services
7. LAOS
7.1 Overview of the Laos telecommunications market
7.2 Fixed network operators
7.2.1 Lao Telecommunications Company
7.2.2 Enterprise of Telecommunications Lao
7.3 Telecommunications infrastructure
7.3.1 National telecom network
7.3.2 International infrastructure
8. MALAYSIA
8.1 Overview of Malaysia’s telecommunications market
8.2 Fixed network operators
8.2.1 Overview of operators
8.2.2 Telekom Malaysia
8.2.3 TRI Celcom
8.2.4 Time dotCom
8.2.5 Maxis Communications
8.2.6 DiGi Telecommunications
8.3 Telecommunications infrastructure
8.3.1 Overview
8.3.2 National telecom network
8.3.3 International infrastructure
8.3.4 Voice over Internet Protocol (VoIP)
8.4 Data market
8.4.1 Data infrastructure
9. MYANMAR
9.1 Overview of Myanmar’s telecommunications market
9.1.1 Network expansion
9.2 Telecommunications infrastructure
9.2.1 National infrastructure
9.2.2 International infrastructure
9.2.3 Satellite
9.3 Data market
10. PHILIPPINES
10.1 Overview of the Philippine telecom market
10.1.1 Service Area Scheme (SAS)
10.1.2 Certificates of Public Convenience and Necessity
10.1.3 Domination of mobile telephony
10.2 Fixed network operators
10.2.1 BayanTel
10.2.2 Bell Telecom
10.2.3 Digital Telecommunications Philippines (Digitel)
10.2.4 Eastern Telecommunications Philippines Inc (ETPI)
10.2.5 Globe Telecom
10.2.6 PhilCom
10.2.7 Philippine Long Distance Telephone Company (PLDT)
10.2.8 Philippine Telephone and Telegraph Co (PT&T)
10.2.9 Smart Communications
10.3 Telecommunications infrastructure
10.3.1 Overview
10.3.2 National telecom network
10.3.3 International
10.3.4 Infrastructure developments
10.4 Data market
10.4.1 Overview
10.4.2 ISDN and IN services
11. SINGAPORE
11.1 Overview of Singapore’s telecommunications market
11.1.1 Market liberalisation
11.2 Fixed network operators
11.2.1 Singapore Telecom
11.2.2 StarHub Pte Ltd
11.2.3 Other players
11.3 Telecommunications infrastructure
11.3.1 National telecom network
11.3.2 International infrastructure
11.3.3 Infrastructure developments
11.4 Data market
11.4.1 National
11.4.2 International
12. THAILAND
12.1 Overview of Thailand’s telecommunications market
12.1.1 Information Technology Policy
12.2 Fixed network operators
12.2.1 Major telecom operators by market segment
12.2.2 Telephone Organization of Thailand (TOT)
12.2.3 Communications Authority of Thailand (CAT)
12.2.4 Proposed CAT/TOT merger
12.2.5 TelecomAsia/True Corp
12.2.6 Thai Telephone &Telecommunications (TT&T)
12.2.7 Loxley
12.2.8 Shin Corporation
12.2.9 United Communication Industry Group
12.2.10 Jasmine International
12.3 Fixed network voice services
12.3.1 Market overview
12.3.2 National networks
12.3.3 International Networks
12.3.4 Voice over Internet Protocol (VoIP)
12.4 Data market
12.4.1 Overview
12.4.2 Data infrastructure
12.4.3 Data services
13. VIETNAM
13.1 Overview of Vietnam’s telecommunications market
13.1.2 Future plans
13.2 Fixed network operators
13.2.1 Vietnam Post & Telecommunications (VNPT)
13.2.2 Saigon Postel
13.2.3 Viettel
13.3 Telecommunications infrastructure
13.3.1 National telecom network
13.3.2 Wireless Local Loop (WLL)
13.3.3 International
13.4 Data market
13.4.1 Multi Service Digital Data Network
13.4.2 VSAT networks
13.4.3 ISDN
13.4.4 Frame relay
13.4.5 Vietpac
13.4.6 Data centres
13.4.7 Vietnam Datacommunications Company (VDC)
14. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – Overview of telecom service and operators – 2005
Exhibit 2 – Original consortia operating in each geographical zone
Exhibit 3 – Indonesian satellites – 2004
Exhibit 4 – Major operators by market segment
Exhibit 5 – Overview of telecommunications development in Vietnam – 1993 - 2004




Table 1 – Fixed-line subscribers (selected markets) – 2004, 2005
Table 2 – Telephone network statistics Brunei – 2004
Table 3 – Fixed lines in service – 1990 - 2004
Table 4 – Telecom revenue and investment statistics Cambodia – 2004
Table 5 – Telephone network statistics – 2004
Table 6 – Fixed lines in service – 1995 - 2004
Table 7 – Telecom revenue and investment statistics East Timor – 2003
Table 8 – Telephone network statistics – 2003
Table 9 – Fixed lines in service – 1995 - 2000, 2003
Table 10 – Telephone network statistics Indonesia – September 2004
Table 11 – National network statistics – September 2004
Table 12 – Fixed lines in service and teledensity – 1995 - 2004
Table 13 – Total fixed-line services by region – September 2004
Table 14 – Fixed lines* in Telkom and KSO regions – September 2004
Table 15 – TelkomFlexi WLL service – September 2004
Table 16 – Telecom revenue and investment statistics Laos – 2004
Table 17 – Telephone network statistics – 2004
Table 18 – Fixed lines in service – 1995 - 2005
Table 19 – Telephone network statistics Malaysia – 2004
Table 20 – Fixed lines in service and teledensity – 1995 - 2004
Table 21 – Telecom revenue and investment statistics Myanmar – 2003
Table 22 – Telephone network statistics – 2003
Table 23 – Fixed lines in service – 1990, 1995 - 2003
Table 24 – Telecom revenue and investment statistics Philippines – 2004
Table 25 – Telephone network statistics – 2003
Table 26 – Fixed lines installed versus lines in operation and penetration – 1995 - 2003
Table 27 – Fixed lines in service and teledensity – 1994 - 2003
Table 28 – Total SAS lines installed by operators*
Table 29 – Fixed-line versus mobile growth and penetration in Singapore – 1998 - 2005
Table 30 – Telephone network statistics – April 2005
Table 31 - Fixed lines in service and teledensity - 1998 - 2005
Table 32 – SingTel’s direct exchange lines – 1995 - 2004
Table 33 – Telecom revenue and investment statistics Thailand – 2004
Table 34 – Telephone network statistics – January 2005
Table 35 – Fixed-line services – January 2005
Table 36 – Public payphones – January 2005
Table 37 – Number of subscribed ISDN circuits – 1994 - 2003
Table 38 – Telecom revenue and investment statistics Vietnam – 2004
Table 39 – Telephone network statistics – 2004
Table 40 – Teledensity forecasts – 2005, 2010, 2020
Table 41 – Fixed lines in service – 1990 - 2004