Lack of infrastructure, excessive regulation and lack of competition are all factors that must be overcome if countries in Asia are to take advantage of broadband communications and related services, according to a report released Friday by Pyramid Research Inc.
According to Pyramid, to see growth in broadband, countries must have all of the following:
-- an environment of competition in traditional telecommunication services-- deregulation of the broadband market to allow alternative operators and technologies-- suitable infrastructure, ranging from the local loop to international gateway capacityIn Singapore and Taiwan, constraints on international communication capacity are slowing growth, while in China the main constraint is slow market liberalization for both broadband and traditional services, Pyramid said.
The three leading broadband markets in Asia are Japan, Korea and Hong Kong, which all meet the three criteria for growth, Pyramid said. Singapore and Taiwan are also counted in the high potential growth category, despite lingering infrastructure constraints.
Malaysia, the Philippines and Thailand fall into the moderate potential growth category. A severe shortage of local loop infrastructure is holding back Malaysia and the Philippines, while Thailand is, in addition, still grappling with regulatory issues, Pyramid said.
India, China and Indonesia are in the low potential growth category. India has competition but poor infrastructure; China has the infrastructure but a poor competitive environment; Indonesia has neither the infrastructure nor the competitive environment and is not addressing those issues, according to Pyramid.
As broadband markets mature, access becomes a commodity item, with prices converging for the three main broadband technologies used in Asia -- cable modem, ADSL (Asymmetric Digital Subscriber Line) and wireless LMDS (Local Multipoint Distribution Service). This has already happened in Japan, Korea and, to a lesser extent, Hong Kong, Pyramid said.
Thus, revenues will have to be generated from value-added services (VAS), which have not yet taken off anywhere in Asia. Video-on-demand failed in Hong Kong and Singapore, as did broadband portals and e-commerce in Korea. Broadband operators were trying to develop content, which fell outside their core competency, instead of leveraging their relationship with their large customer base, according to Pyramid.
According to Pyramid, to develop successful VAS, operators need to:
-- avoid services that can be found free elsewhere on the Internet-- develop services tailored to broadband, to leverage their core asset, which is high-speed access-- adapt services to the delivery platform, as computers and TVs have very different characteristics-- compete where they have an advantage, which lies in their close relationship with their customers, rather than dive into the world of content creation, where a large number of specialists already operate.