Ongoing deregulation in Asia is set to shake up the ISP (Internet service provider) market, with regional players taking a bigger role.
Several ISPs in Asia are angling for a regional presence, as deregulation of telecommunications markets enables them to compete as full-network service providers, according to Pete Hitchen, senior Internet analyst at market researcher IDC.
This week's deregulation of the IIXSP (international Internet exchange service provider) market in Singapore is expected to encourage other ISPs to set up their own physical Internet access mechanisms without needing to rely on connections built by national carrier Singapore Telecommunications (SingTel). The liberalisation of markets all over Asia has encouraged several takeovers, joint ventures and new points of presence in the ISP market over the past few months.
A typical ISP strategy will be to set up regional hubs in Hong Kong for the China market, in Singapore to cover Southeast Asia, plus a direct presence in Australia, to offer corporate customers region-wide IP (Internet protocol)-based VPNs (virtual private networks), Hitchen said.
"The greater the range of an ISP's coverage, the more attractive it is to business users, consumers and investors," he said. "These companies will have regional muscle as well as expertise in local languages."
The Asia-Pacific region (excluding Japan) has around 13 million Internet users now, a figure set to rise to 57.5 million by 2003, and the market is still wide open for vendors to establish a leading presence here, Hitchen said. The electronic commerce market in the region will be worth $US32.59 billion in 2003, up from $723.4 million today, according to IDC figures.
As full-service providers, regional ISPs will be able to compete successfully against global network service providers such as America Online's Compuserve operation, MCI WorldCom, AT&T, GTE and IBM's Global Services, Hitchen said.
Singapore-based Pacific Internet is among the first ISPs to have gone regional, buying local ISPs in Hong Kong, the Philippines, and Australia, and unifying the look and feel of the ISPs' sites.
Hong Kong-based Cable & Wireless HKT Ltd (C&W HKT) is expected to apply for both ISP and IIXSP licences in Singapore within the next few weeks, and already has a major presence in Australia through its wholly-owned subsidiary Cable & Wireless Optus (C&W Optus). In March, C&W HKT acquired an 85 per cent stake in Taiwanese ISP FIC Network Service. C&W entered the Japanese market last week with the purchase of network service provider International Digital Communications.
Australian national carrier Telstra, expected to raise $A16 billion from a partial privatisation soon, and Internet Initiative Japan Inc are other big players that could seek a regional Internet presence, Hitchen said.
Telstra Asia-Pacific president Daryll Smith said yesterday that the company has set up points of presence in Hong Kong and Japan to support its corporate and wholesale customers in the region and to link them together into a seamless core network based on IP technology. Further initiatives would be announced soon, Smith said.