The Asia-Pacific mobile subscriber base is expected to reach 1.14 billion by the end of this year--thanks to robust growth in the region's emerging markets, according to new research by Frost & Sullivan.
In a statement released Wednesday, the analyst company noted that the Asia-Pacific mobile market grew at a compound annual growth rate of 24 percent between 2002 and 2006. At the end of last year, there were 950 million mobile subscribers across the region, with a mobile penetration rate of 30.9 percent.
Janice Chong, Frost & Sullivan industry manager, said: "The impact of emerging markets on the rest of the region is likely to grow in significance as regional carriers search for sustainable growth, and as economies of scale further drives down 3G handset prices."
Of the expected 190 million net subscriber additions this year, Chong noted that 90.8 percent is likely to stem from emerging markets including Indonesia and India, which have seen expansions in network infrastructure, with "drastically reduced" calling rates and declining handset prices.
As of June 2006, while China remains the market leader in terms of subscriber numbers, India has overtaken Japan as the second largest in the Asia-Pacific mobile market. In fact, with 142.7 million subscribers in 2006 and a mobile penetration rate of only 13 percent, the Indian mobile market still remains largely untapped, according to Chong. With a population of over 1.1 billion, India is the world's second most populous nation.
With most major cities in emerging markets reaching high mobile saturation, Chong said that mobile operators will focus on increasing penetration rates in rural areas and lower-end user segments in the next three to five years.
Already, price cuts in voice call minutes and the introduction of inexpensive one-nation call rate plans last year, indicated that raising mobile service affordability among the masses is increasingly important to penetrate the lower-end market segments, she added. In a one-nation price plan, telcos charge the same rate for calls made across cities in a country--rather than varying price points for different cities.
Mobile broadband is next killer app
Frost & Sullivan also expects mobile broadband to be the next killer application in Asia's promising mobile landscape. However, given its limited bandwidth, current 3G networks may not necessarily be the ideal platform to deliver mobile broadband services, according to the research house.
Chong explained that the business case for 3G may not lie in 3G itself but in high speed downlink packet access (HSDPA), because 3G is ultimately only a platform for providing HSDPA services, Chong said.
HSDPA and WiMax are expected to play a prominent role in 2007, given the number of trials that have taken place in 2006," Chong said. "These, together with pending issues such as fixed-mobile convergence (FMC), mobile number portability and mobile broadband, are believed to be the major factors that can potentially change the competitive landscape of the telecommunications industry."
While HSDPA has been launched in countries such as Singapore and Malaysia, WiMax is likely to be the focus in emerging markets such as India and Indonesia, which lack telecoms infrastructure, according to Frost & Sullivan.
Elsewhere in the region, WiMax is expected to remain a niche technology, serving as backhaul infrastructure to complement existing Wi-Fi networks, and as an alternative wireless broadband access technology targeting the higher ARPU (average revenue per user) enterprise segments.
However, Chong noted that costly WiMax modems and the limited availability of WiMax-enabled handsets and laptop devices are expected to be the biggest market impediments until 2009.