Japan and Korea currently lead the pack in broadband development across Asia, but developing countries in the region such as Malaysia and China, are stepping up efforts to close the gap.
According to Frost & Sullivan, the Asia-Pacific region is experiencing the most aggressive growth in broadband access services worldwide.
Subscriber base is increasing, and service performance, affordability, and innovations are also improving, the research company noted. In 2004, there were already 65.4 million broadband access services subscribers in the Asia-Pacific region, comprising 13 countries.
Growing at a compound annual growth rate of 28.3 percent, Frost & Sullivan projected that the number of broadband subscribers in the region will top 292 million by 2010.
"The broadband market leaders in the region are primarily Korea and Japan. Following behind are Singapore, Hong Kong, Taiwan and Australia," said Foong King Yew, ICT (infocomm technology) practice program director at Frost & Sullivan Asia-Pacific, during a telephone interview.
However, in developing markets such as India, Thailand and the Philippines, broadband penetration is still low because of poor broadband infrastructure and affordability issues that are hampering adoption rates, he said.
"[These] broadband markets are clearly not moving at the same speed," Foong said. "This is putting a brake on the overall broadband market in the region."
According to Ridhwan Bakar, Frost & Sullivan's Asia-Pacific ICT industry analyst, while broadband subscriber growth has slowed in Korea and Japan--thanks to highly saturated markets--the level of broadband development in those countries is still advanced compared to other Asian nations.
Japan's broadband household penetration rate was 41.7 percent in 2004, and is expected to double by 2010, Bakar said. Korea maintains its reputation as the world's most wired nation, with a household penetration rate of almost 80 percent.
In addition, both countries are already enjoying average broadband access speeds of more than 30 Mbps (megabits per second). Their broadband content industries are also much more developed compared to the rest of the Asia-Pacific region, he added.
Bakar attributed this to the fact that both Korea and Japan have established strong intellectual property protection, which fosters the creation of broadband content.
"In addition, [users in those countries have] low level of English proficiency [which] means they prefer domestic content over foreign ones," he explained. "That's a key driver of the Internet content industry in Korea and Japan."
The development of a strong broadband content industry is important in negating the effects of declining average revenues per user (ARPU), for broadband access, in the fiercely competitive markets of both countries, Bakar noted.
"While ARPU for broadband access in Korea and Japan are declining, total broadband spending is not," he said. "When service providers include revenues from IPTV (Internet Protocol TV) and IP telephony, their overall ARPU will be more substantial in future."
Foong added that in developed markets with high levels of competition, broadband access as a standalone service has become a commodity. "It's difficult to sustain such a business model, and so players in Korea and Japan are trying to build an ecosystem of content providers for IPTV and music downloads," he said.
"They are pitching themselves as lifestyle service providers, like what Softbank is doing in Japan--to provide value-added services on top of basic broadband access," he added.
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