Asia poised for broadband boom

January 8, 2001
Web posted at: 1:16 PM HKT (0516 GMT)

By Nic Hopkins
CNN Interactive Writer

Hong Kong (CNN) - Asia is within sight of overtaking the United States as the world’s biggest market for high-speed Internet connections, with analysts and industry players predicting as many as 11 million subscribers will have switched to broadband across the region by the end of 2001.

Research released this week from Internet think-tank Gartner Group predicts a massive 34 million fixed-line subscribers by 2004, with the vast majority living in South Korea, Japan and China.

Overall South Korea is the global trailblazer in the high-speed Internet market, with most users able to choose between two digital subscriber line (DSL) services and one cable operator for broadband connection.

"Much of the growth in the past 12 months has come from Korea which is experiencing nothing short of a broadband phenomenon, with more than three million users now signed up," says Gartner regional analyst Andrew Chetham.

"The lesson from Korea is that once the basic infrastructure is in place and competition drives down prices, dial-up users switch to broadband in droves.”

"While no other market in Asia Pacific can currently match Korea for the level of competition, several countries have multiple broadband operators and look ready to enjoy a period of strong take-up on high-speed services.”

Other local analysts backed the Gartner research, suggesting such a figure would be easily attainable.

“It sounds like a more than reasonable target,” said Greg Feldberg, analyst at Indosuez WI Carr Securities in Hong Kong. “Korea is by far the leader thanks to the multiple choices consumers have in finding a high-speed connection, and three years should be plenty of time for countries such as China and Japan to catch up with them.”

Some industry forecasts predict a high-speed subscriber base of 11 million across Asia by the end of this year, putting the region ahead of the US.

The fastest growth is expected to emerge in China, where DSL over existing telephone cables is being rolled out in major cities and cable is becoming increasingly widespread.

'Mad about speed'

“In three years, China would have to be almost 20 million subscribers, and then you add to that Korea, where they are mad about speed, and almost between them you could reach 35 million,” says one industry expert.

Internet services abound in China, a key Asian market for broadband

Gartner is more conservative, predicting 7.6 million broadband subscribers by the year’s end.

In the US, about 4 million people subscribe to broadband services.

That figure is forecast by Forrester Research to rise towards 16 million by 2002 while Texas-based technology researchers Parks Associates predict 24 million US-based broadband subscribers by the end of 2004.

Observers believe a short-term stumbling block for broadband Internet is the lack of compelling content and services available to a mass market at low cost.

Video conferencing is one feature touted by budding broadband providers, but at present it is costly and cumbersome, having to be booked days in advance.

Market appeal

Gartner says that despite the ongoing enthusiasm for high-speed access, a 'killer application' has yet to emerge and captivate the mass market. Many consumers believe they can get all the speed they need to access the Internet from their 56K modems.

By 2004, Gartner predicts that there will be 20 million DSL subscribers throughout the Asia-Pacific region, with Korea alone accounting for a massive 14 million users.

It says cable modem services, the main alternative to DSL, will also grow strongly, but its progress will be hindered by the fragmented structure of the region's cable television industry.

Nonetheless Gartner forecasts around 14 million broadband subscribers using cable modems in Asia-Pacific by 2004, with Japan tipped to be the only country where cable will dominate over DSL for the foreseeable future.

"For technical and business reasons DSL has not been promoted in Japan," says Yuko Adachi, a Gartner telecoms analyst based in Tokyo.

"As a result cable modem services have quickly emerged as the preferred way to access high-speed services, especially to the home user."

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Gartner Group

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