Asian SMB broadband penetration to surge

More small and midsize businesses in Southeast Asia are opting for high-speed access, due partly to falling broadband prices, analyst says.

Small and midsize businesses (SMBs) in Southeast Asia are projected to spend more than US$2 billion in broadband services by 2010.

According to a new study by New York-based AMI-Partners, emerging countries such as Indonesia, Thailand and Vietnam will fuel this broadband growth. SMBs with high-speed Internet access in those countries will account for over 55 percent of the total number of SMBs with broadband in Southeast Asia.

The number of SMBs using broadband in Southeast Asia is expected to exceed 1.6 million by 2010, registering a compound annual growth rate (CAGR) of 22 percent between 2005 to 2010. Last year, SMBs in the region spent just over US$850 million on broadband, according to Cindy Sim, a Singapore-based analyst at AMI-Partners.

These findings are based on surveys conducted in over 15 countries in the Asia-Pacific region, examining emerging trends, adoption, and usage of infocomm technologies by SMBs.

"Within the Southeast Asia region, Singapore stands out from the rest of its neighbors with its impressive broadband penetration rate, which is forecasted to exceed 75 percent by 2010," Sim said in a statement last week.

She added: "This growth will be spurred by continued positive government intervention, dropping access prices, growing exposure to the Web, and increasing importance and necessity of the Internet to SMBs in terms of brand establishment, e-commerce and communication with suppliers and customers."

According to Sim, Malaysia and Thailand were ranked second and third, respectively, in SMB broadband penetration in 2005, and will continue to retain their positions in 2010. "Vietnam, which was ranked lowest in terms of SMB broadband penetration, will bring up the rear," she added.

Although PC penetration rates in the large Southeast Asian economies like Thailand and Indonesia are lower than tiny Singapore's, the huge number of SMBs in those countries means they will contribute the lion's share of broadband spending in the region, Sim told ZDNet Asia.

For instance, in 2005, the number of Indonesian small businesses with broadband access was almost twice the number in Singapore, she noted.

Not surprisingly, AMI-Partners also noted a decline in narrowband, or dial-up Internet access.

In 2010, narrowband penetration is expected to comprise less than one quarter of SMBs in Southeast Asia, down from 50 percent in 2005. This will be driven by falling broadband prices, coupled with the increasing use of Net telephony and hosted applications that drive the need for speed and bandwidth.

For midsize businesses in the region, leased lines will continue to be popular, with an expected CAGR exceeding 45 percent between 2005 and 2010.

According to AMI-Partners, leased lines will have the highest penetration in Singapore, followed by Malaysia. This will be largely bolstered by the need for scalable bandwidth as well as consistent and reliable quality of service.

Wireless broadband is also expected to take off by 2010, with service providers in most countries in the region already rolling out or planning to roll out HSDPA (high speed downlink packet access), 3G cellular networks and WiMax.

The increased adoption of broadband will also spur the growth of related applications such as on-demand software, and managed security, AMI-Partners said.