Asia Pacific could emerge as wireless broadband kingpin

By Tony Brown

Asia Pacific is fast becoming a powerhouse of wireless-broadband take-up, with cheap HSPA services spurring growth in subscription counts across the region. And the growth looks likely to only increase, given the nature of the market.

In developed fixed-line-broadband markets, such as Australia, Singapore and Hong Kong, mobile operators are selling wireless-broadband services as “personalized” broadband services. Many users are taking on wireless-broadband subscriptions even though they already have access to a fixed-line residential connection.

Mobile operators have been able to sell wireless-broadband services as an individualized, universally accessible service to both corporate and residential subscribers, and they have found wireless broadband to be useful in preventing churn.

In developing markets with low broadband take-up and poor broadband infrastructure, such as the Philippines and Indonesia, mobile operators have been able to use HSPA to offer cheap, reliable broadband services – often in areas where no other broadband services are available, or where those that are available are expensive and unreliable.

Previously unconnected subscribers in these developing countries have leapt at the chance to get broadband access, and take-up has been strong in countries including the Philippines and Indonesia. And there’s the prospect of even stronger growth in the region once 3G services launch in the megamarkets of India and China next year.

HSPA take-up is likely to accelerate across the region, because of falling tariffs and hardware costs, as economies of scale begin to seriously take effect.

Global industry body the GSM Association is predicting that HSPA tariffs and the cost of consumer hardware will fall by more than half in the next three years.

The GSMA is forecasting that the price cuts will drive the global HSPA-subscription count – including voice and data subs – from end-November’s 67 million to more than 1 billion in 2012.

Asia Pacific’s mobile operators already offer the second-cheapest wireless-broadband services in the world in terms of monthly rates, charging subs an average of about US$42 a month in 3Q08, behind only Western European operators, which charged an average of about US$35 a month.

Future reductions in wireless-broadband tariffs are set to bring on board both unconnected lower-income subscribers in developing markets and fixed-line broadband subscribers in developed markets, such as Australia.

Wireless-broadband prices in Australia, which fell over 60% between July 2007 and October 2008, are expected to fall even more in the next year as Optus’ new Yes G HSPA network challenges the dominance of Telstra’s Next G network with cut-price wireless-broadband plans.

Optus’ current cheapest wireless-broadband plan costs A$29.99 (US$19) a month for a meager 1GB data allowance, but the firm is likely to launch much cheaper plans when it rolls out the Yes G network, to bring itself in line with Telstra and other operators.

Rival 3, which was the first mover in the local wireless-broadband market, already offers a 1GB service for just A$15 a month. Vodafone charges A$19.95 for its cheapest service, which includes just 100MB of data.

Australia’s mobile operators, which had already attracted about 1 million broadband subs as of end-October, are being presented with a golden opportunity to lure subscribers away from fixed-line services, because of the unique nature of the country’s broadband market.

Analysts estimate that nearly half of Australia’s 5.5 million broadband subs are on services with speeds below 1.5Mbps and are downloading little more than 3MB of data a month, meaning that they can easily be served by HSPA services and do not really need the higher speeds and greater data allowances offered by fixed-line networks.

The potential opportunities for wireless-broadband operators in developed markets, such as Australia, are perhaps best demonstrated by operators in the advanced HSPA markets of South Korea and Japan.

South Korean mobile market leader SK Telecom has built up an HSPA-subscription count of 2.8 million since launching HSPA services in March 2007, and the firm is generating nearly 30% of its revenues from mobile Internet services.

Japanese HSPA operator eMobile entered the market in May 2007, amid much skepticism that it could compete with the market power of the big three operators – DoCoMo, KDDI and SoftBank – but the firm is already carving out a strong niche in wireless broadband. The operator is fast closing in on 1 million subscriptions and in October took an impressive 37% of all new mobile subs, second only to SoftBank.

EMobile offers speeds of up to 7.2Mbps and offers flat-rate plans as cheap as US$10 a month, considerably less than its rivals’ wireless-broadband offerings.

Mobile giant DoCoMo’s unlimited wireless-broadband plan costs a whopping US$80 a month, and SoftBank, which prides itself on offering cut-price services, has the country’s cheapest price, at US$54 a month.

Elsewhere in the region, Malaysian mobile market leader Maxis is having considerable success winning HSPA subscriptions, charging as little as US$18 a month for a generous 3GB of data.

Maxis’ cut-rate pricing is winning favor with a large number of broadband subscribers, who are discouraged by the pricing and mediocre performance of broadband monopolist Telekom Malaysia’s DSL service, which costs US$21 a month for just a 512Kbps connection.