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Broadband in the Asia–Pacific: How partnerships and policy are driving a global success story

"Data services and broadband in particular are rapidly replacing more traditional telecoms services such as telephony as a driver of revenue for telecoms operators."

The Asia–Pacific region is often regarded as one of the most dynamic broadband Internet ecosystems in the world. Internet markets in the Asia–Pacific region have grown rapidly and consistently, with annual growth of 28% for take-up since 2005 and swift yearly growth of 28% in usage of apps and consumption of online content since 2012. 

Telecoms operators are benefiting from the progressive transformation of their businesses to become broadband-focused and offer innovative services

Data services and broadband in particular are rapidly replacing more traditional telecoms services such as telephony as a driver of revenue for telecoms operators who act as Internet access providers (IAPs). In markets including Australia, New Zealand, Japan, Hong Kong, Singapore, South Korea and Taiwan (referred to as ‘connected’ markets), data now drives 60% of telco revenues. Markets including Malaysia, Thailand, the Philippines, Indonesia, Brunei, Vietnam, Cambodia and Sri Lanka (referred to as ‘connecting’ markets) are catching up rapidly, as illustrated in Figure 1.

Figure 1: Proportion of total service revenue from data and internet services [Source: GSMA, company data, ITU, TeleGeography, Analysys Mason, 2015]

Figure 1: Proportion of total service revenue from data and internet services

This shift in revenue is accompanied by a shift in profits, which have remained steady despite rapidly maturing markets and competition.

Building on their networks and existing customer relationships as a platform, IAPs are increasingly exploring ways to offer more services to their customers. In developed markets, this takes the form of partnerships between IAPs and content and application providers (CAPs), for example deep caching and content delivery network integration, to offer the best possible experience to end users. In emerging markets, IAPs are in a privileged position when it comes to marketing, billing and customer care, and are positioning themselves as CAPs.

CAPs are key drivers of value for telecoms operators and consumers alike

Consumers are taking up broadband services, and upgrading to ever faster speeds, primarily because of the rich content and services offered by CAPs. For example, primary research commissioned as part of our report shows that the majority of broadband users make extensive use of online video services, including most of those who are upgrading to faster services (74% of upgraders compared to 63% of non-upgraders).

People are keen to consume richer online services, a key driver of interest in upgraded broadband connections (at the right price), and of significant willingness to pay for broadband services, over and above current prices. This has been to the benefit of telecoms operators selling more advanced broadband packages, as well as helping CAPs and consumers.

Barriers remain, however: over 75% of people who do not currently have broadband access are not aware of the benefits of broadband access and rich online services. Other people find it difficult to connect to broadband because of illiteracy, the lack of a connected device and the lack of availability of relevant content, as illustrated in Figure 2.

Figure 2: Reasons cited for non-adoption or non-usage of Internet services as stated by the interviewees in all countries [Source: Analysys Mason, 2015]

Reasons cited for non-adoption or non-usage of Internet services as stated by the interviewees in all countries

Clearly, many of those who claim not to be aware of how broadband could benefit them will also face other constraints, and all these barriers need to be considered holistically.

Finally, in addition to driving demand for broadband and sales of upgraded broadband packages for IAPs, CAPs are also increasingly investing in the very fabric of the broadband ecosystem, from data centres to submarine cables. In a 2014 paper,1  we estimated that CAPs’ investments in network and infrastructure was USD33 billion per annum globally, of which USD7.7 billion was in the Asia–Pacific region.2  This benefits everyone in the value chain by improving the customer experience and creating demand for the services sold by IAPs.

Partnerships and forward-looking policy environments are unlocking the benefits of the Internet

CAPs and IAPs are lowering barriers, expanding supply and driving demand by forming innovative partnerships. For example, Google and Facebook are developing innovative solutions to cover remote areas through balloons (Project Loon), drones (Aquila, Titan) or low-earth orbit satellite (O3b, future high-throughput satellites with Eutelsat).

Broadband take-up and usage are limited by awareness, skills and affordability constraints. Cheaper devices, manufactured throughout the region, many running Android, are enabling more people to use mobile broadband. Experiments are under way to reduce the costs of trying-out services (e.g. Free Basics and zero-rated applications) by bringing together IAPs and CAPs. Many other initiatives are constantly being evaluated or rolled out.

In some cases, proactive policy makers are already implementing innovative policy initiatives to lower barriers to broadband connectivity, often in partnership with IAPs or CAPs. In most cases, policy and regulation plays an essential role in enabling partnerships to emerge and bear fruit. This includes ‘best practices’ that have helped drive the broadband success story we now see in many Asia–Pacific countries: sector liberalisation and the encouragement of sustainable development, effective competition regulation that stimulates investment, attractive business conditions, and carefully balanced data protection and localisation regulations.


1 See http://www.analysysmason.com/Research/Content/Reports/Content-application-provider-Internet-infrastructure-Sept2014/

2 This figure includes the entire Asia–Pacific region