2006 North Asian Mobile Communications and Mobile Data Markets

This annual report offers a wealth of information on the Mobile market in China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea, Taiwan. Subjects covered include:

Overview, Regional Characteristics, Growth and Market Structure
Mobile Technologies - GSM, CDMA, PCN/PCS
Mobile Services - Prepaid, fixed-mobile convergence, gaming
Mobile Data - Market Overview, SMS, MMS, PoC, GPRS, WAP
Overview on 3G
Mobile Satellite Services

This Asia market report covers 8 economies in the North Asia sub-region. It takes an overall look at the mobile communication and mobile data markets in each of the countries. 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. China is also the largest mobile communications market in the world. By March 2006, China had almost 400 million mobile subscribers or around 30 for every 100 people. At the same time, China Mobile is the world�s largest mobile operator by subscribers (261 million in March 2006). The remarkable growth in the mobile sector has been boosted by increased competition, lower terminal prices and the rapid rise of prepaid services. 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.

On the Third Generation (3G) mobile front, China remained poised to become one of the world�s major players. But what shape its role would take was not yet clear. The development of its local Time Division Synchronous Code Division Multiple Access (TD-SCDMA) platform and its acceptance as one of three international 3G standards had been controversial, but had shown a fierce commitment on the part of China to becoming a significant global player. In early 2006, the government was steering the local industry through the technology adoption phase for TD-SCDMA and appeared to be readying for the awarding of licences later in 2006.

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. Whilst the fixed-line market has flattened out, the mobile market has continued to boom. At the beginning of 2006, based on Office of the Telecommunications Authority (OFTA) data, there were an amazing 8.7 million mobile subscribers, representing an impressive penetration of 125%. (Keep in mind that Hong Kong has an adult population of only 5.9 million.) Not surprisingly, in such a booming market, new generation mobile services have started reshaping the mobile market.

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.

Although Japan�s 2G mobile telephone sector has entered a maturing market phase, the overall Japanese mobile market remains dynamic. By March 2006, Japan had almost 92 million mobile subscribers, with over 49 million subscribers signed up for 3G services. Wireless Internet and mobile services have helped to keep the mobile market stimulated. Into 2006, Japan continued to lead the world in wireless Internet users with 70 million subscribers.

DoCoMo laid claim to over 50% of Japan�s mobile market into 2006 and was consequently maintaining a comfortable lead over its rivals KDDI and Vodafone K.K. At the same time, KDDI was hanging on to the lead in the all-important 3G market by a reasonable margin, but NTT DoCoMo�s FOMA service was starting to catch up. Meanwhile Vodafone K.K. (formerly J-Phone) continued to struggle in the 3G arena, despite some earlier successes. It came as no surprise when Softbank acquired the Vodafone K.K. business in early 2006. The market was threatening to become even busier after Softbank, NTT Com and eAccess were each awarded a 3G licence in November 2005.

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. 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. Competition is now in place for both fixed and mobile telephony. While the fixed-line network has been expanding slowly, the mobile phone market has undergone a remarkable boom. The number of subscribers has been growing at an average rate of over 100% year-on-year. By early 2006, there were 550,000 mobile subscribers in the country, representing a penetration of around 20%, up from less than 2% penetration at the end of 2000. Several failed attempts have been made to issue a third mobile licence.

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's mobile market, which had been looking like it had reached a point of saturation, some how found a way to grow by a further 5% in 2005. Mobile penetration was around 80% in early 2006, the majority of the 39 million services being new generation. 3G phones and advanced mobile services such as mobile gaming, m-banking and m-commerce have also helped keep the mobile market invigorated. Not surprisingly, the country continued to be considered a leader in all aspects of 3G mobile technology. Wideband Code Division Multiple Access (WCDMA), the second 3G standard to enter the South Korean market after CMDA 2000, became commercially available in December 2003, though the service was failing to attract a significant number of subscribers. There is increasing interest in the task of upgrading the 3G networks using High-Speed Downlink Packet Access (HSDPA) technology, sometimes described in the industry as 3.5G

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, mobile penetration was 99%. The mobile figure had fallen from a peak of more than 111% in 2003. Coming into 2006, the highly penetrated mobile market was experiencing some volatility. The launch of 3G services by the three major operators was certainly presenting a healthy challenge to the market and the take up of new generation services will be watched with great interest.