Broadband penetration increases in Southeast Asia-
With the voice market saturating, data has emerged as the new focal point in most countries and for operators in the Southeast Asian region. Further, the increasing share of data services in overall revenues has forced operators to accelerate the roll-out of high speed long term evolution (LTE) services. Operators have also started focusing on their enterprise businesses, owing to the large-scale growth of next-generation technologies such as cloud computing, virtualisation, internet of things (IoT) and machine-to-machine (M2M).
Southeast Asia Infrastructure takes stock of the current state of broadband penetration in the region, and other emerging trends in the telecom space…
Current status
By end-2013, only 8 per cent of the population in the Southeast Asian region accessed internet through a fixed broadband connection and 22 per cent through the wireless route. Broadband penetration still continues to be low. Moreover, the penetration has also been highly uneven. While Brunei and Singapore had an internet penetration rate of 81 per cent as of March 2015, in Myanmar, only 5 per cent of the population has access to the internet. Further, there are wide variations in the pricing and speed parameters. In Singapore, for instance, the average price of fixed broadband is about 0.44 per cent of gross national income per capita and the average broadband speed is about 12.2 Mbps. The corresponding figures in Indonesia are 6.87 per cent and 3.7 Mbps.
LTE in Southeast Asia: A slow but steady start
Telecom operators in Southeast Asia have started expanding the coverage of LTE services in their countries. However, as in the case of broadband penetration, the countries in the region exhibit significant levels of disparity in terms of speed and the coverage of LTE services.
Singapore: Singapore was the first country in Southeast Asia to have a nationwide LTE service. The service was first brought to the country by SingTel, followed by M1 and StarHub. According to the “State of the LTE” report by OpenSignal, StarHub provides the highest LTE speed in the world (38 Mbps). Moreover, the average user in the country is connected to LTE 84 per cent of the time, a figure much higher than that in other countries.
Philippines: Smart Communications rolled out the country’s first LTE network in April 2011, with Globe Telecom following in September 2012. However, operators have been experiencing slow LTE uptake. This can be attributed to the fact that the LTE speed and the network coverage offered by operators are dismally low. According to OpenSignal, the average LTE speed in the country is 8 Mbps, with an average user in the country having LTE access only 39 per cent of the time. With no new spectrum bands expected for LTE in the near future, LTE coverage in the country is expected to remain low.
Malaysia: All major telecom operators in Malaysia have launched LTE services in the country. The uptake has been swift in the country due to the large existing mobile data subscriber base. According to OpenSignal, the average download speed of LTE networks provided by Malaysian operators Celcom and Maxis is 12 Mbps, which is faster than in more established countries such as the US (10 Mbps). However, LTE network coverage still lags behind a number of countries with users being connected to LTE just 48 per cent of the time. The current LTE landscape in the country is expected to continue for the next few years. However, further refarming of 2G spectrum is expected as more users migrate to LTE.
Thailand: Thailand at present has around 3.6 million 4G subscribers. The country’s first LTE network was launched by TrueMove H in 2014, followed by Total Access Communication in 2015. Both operators use the 2100 MHz band for providing 4G services. While initially the adoption of LTE services in the country was slow, uptake is expected to accelerate after the government’s recently conducted spectrum auctions in the 1800 MHz band. Advanced Info Service, the country’s largest telecom operator, has acquired 15 MHz of spectrum in the 1800 MHz band and is planning to launch commercial services in the country soon. True has also won spectrum in the 1800 MHz band, which is expected to further strengthen its position in the 4G market.
Indonesia: LTE services in Indonesia were launched later than in other countries. Commercial 4G services were launched in November 2013, when internet service provider Bolt launched a 4G fixed service. The three major telecom operators – Telkomsel, Indosat and XL Axiata – rolled out wireless 4G services in December 2014 in the 900 MHz band. 4G coverage is still limited to major cities. However, the adoption is expected to increase in the near future, with the government completing the refarming of 1800 MHz spectrum for providing 4G services.
Vietnam: Telecom operators in Vietnam are expected to launch 4G services in 2016. To this end, the government will auction spectrum in the 2300 MHz and 2600 MHz bands and will refarm the 900 MHz band for 4G use.
Increased focus on the enterprise segment
In Indonesia, Malaysia, Singapore, and the Philippines, almost all major operators offer a host of M2M and IoT solutions. This can be attributed to the fact that M2M services offer long-term revenue potential, combined with additional benefits such as negligible additional investments and churn reductions. According to Deloitte’s Technology, Media and Telecommunications Predictions 2015, M2M services are likely to be the third key driver of growth for mobile operators after voice and data in the Southeast Asian telecom market. IoT adoption in the Asia-Pacific, which includes the Southeast Asian region, is expected to reach $58 billion by 2020 from $10 billion in 2014, representing a compound annual growth rate of 34 per cent.
Although in the short term the share of stand-alone M2M revenue in the overall revenue of telecom operators in Southeast Asia is likely to be around 1 per cent with average revenue per user estimated to be around one-tenth from that of a cellular subscription, Deloitte expects that M2M will gradually assume much greater significance in the operators’ total revenues.
In Southeast Asia, regulation and select government-led initiatives are likely to be the major growth drivers of M2M, cloud computing, and virtualisation. For instance, Indonesia has introduced a convergence law on data privacy and security that requires all customer-sensitive data to be stored in servers locally. The conducive policy environment is being supported by other factors such as the rising number of connected devices, faster and improved networks, and global roaming capabilities that have been strengthened by partnerships between telecom operators such as Bridge Alliance, M2M World Alliance, and Global M2M Association.
