The Asia-Pacific (APAC) telecoms infrastructure is extremely varied: on the one hand, there are advanced telcom infrastructure markets like South Korea, Singapore, Japan. On the other, there are developing nations including Indonesia, Vietnam, etc. that are only now building out their high-speed network infrastructure. And there is China, which is well on the way to being a world player in network technology.
Virat Patel, Managing Director of Pioneer Consulting Asia describes the broadband market in APAC region as “diverse”, not just in terms of nations, but within the nations themselves. “In Malaysia, for example, the major metros have fibre, but outside the cities, getting to the rural areas is a challenge,” he says.
“Indonesia’s capital Jakarta, there is DSL technology and there is a strong move towards fibre, but penetration rates of broadband is around 10% of all households, In Singapore where household penetration is close to 100% almost all of it is fibre-based.”
Generally speaking though, most APAC nations understand the benefits of high-speed connectivity on their economies and are investing in infrastructure.
Patel explains: “For a long time in developing parts of Asia, the big issue was the availability of investment on a big scale. There have been two recent developments:
The first is the speed at which Asia’s economy is growing. “These countries are getting wealthier. Asian countries have a much faster growth rates than countries in Europe; though of course countries in Europe are on a per capita basis much richer,” Patel says.
The second factor is that the cost of fibre has fallen significantly over the past five years. “These two factors, combined with positive case studies from other markets have driven Asian governments to encourage and investment in infrastructure development,” Patel says.
For Pioneer Consulting Asia, an international management consultancy focused on telecoms, media and digital, one of the major trends now in developing Asia is convergence. “If you take a step back, most of developing Asia is mobile first, with penetration rates of more than 100% for 3G and 4G devices. The take-up of smartphones is very high. Now, there is a real drive to roll out fixed broadband connections to the home based on fibre,” Patel explains.
In essence, this means mobile operators are rolling out fibre infrastructure to deliver fast connections to the home, as well as faster mobile.
“For telcos, it is a crowded market with multiple broadband and mobile providers, so the question is how do you differentiate yourself? Convergence, allows this with operators providing both fixed and mobile connections,” Patel says.
He warns, though, that this creates the same issue you see in Europe and the US, where “convergence destroys value”. “If your incentivization is based solely on price, it will destroy value,” he says. “That’s where we work with our clients to try to preserve value by leveraging content – video, music and gaming.”
“In the short-term, telcos are partnering with content providers to try to get a business model that works. They are also getting the technology right, in terms of making content work on multiple devices in a seamless way.”
“Telcos ask : “what is the right content?” If you think about the customer Journey, there are certain types of video content genres that work for customer acquisition and others that work for retention, so working out exactly what they need in the portfolio is part of the challenge,” he explains.
Looking forward, Patel sees continued growth in Asia pacific, although he thinks there will be some consolidation in the market. “At the moment there are lots of build-outs taking place, so there are lots of players out there. If I look ahead, consolidation is an inevitability.”
He cites the Indian market, which used to have nine or ten telcos, but now only has five.
In terms of technology, 5G is high on the agenda. “We have been talking about 5G for a while now and in a lot of ways 5G is much more of an Asian thing; partly because of the roll-outs in China and Korea.”
Elsewhere, the challenge is around spectrum availability. “If that could be overcome, 5G would be a great way of delivering broadband services, where fibre isn’t available,” Patel says.
By 2025, Patel believes the region will see fewer “parallel competing infrastructures but of a better quality and more shared infrastructure plays”.
“Looking ahead I see a lot of innovation in services/ applications and I see a lot of niche players providing services in Asia. I also see a lot of global giants, principally coming out of America, offering services in Asia. So, I envisage a rich tapestry of service providers.”
For Patel, events like Broadband Forum Asia play a vital part in this mix, both in terms of future infrastructure roll-out, but also in terms of what services will appeal. If there is one lesson he has learnt from these events though, it is “to expect the unexpected and always to focus on what the consumer wants, more than what you wish to offer.”
If you want to know more about Broadband Forum Asia, you can check it out here.