2004 North Asian Infrastructure, Fixed Voice and Data Market

Report Description

This annual report offers a wealth of information on the Infrastructure Fixed Voice and Data markets in China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea, Taiwan.
Subjects covered include:
Infrastructure Issues
Regulatory issues and government policies re infrastructure
Datacomms Infrastructure, Leased Lines, ISDN
Public and Value Added Data Services
Leased Lines, ISDN, Frame Relay, ATM
Brief overviews on all of the major telecommunications carriers and service providers in the region

Category
Telecoms & Computing Annual Research

Executive Summary

Key Highlights
China has built a substantial nation-wide telecommunications infrastructure. Fibre optic cable networks criss-cross the country. More cable is being laid as broadband growth continues to escalate into 2004. Based on a government policy to find cost-effective communication solutions, China has become the world’s biggest user of Voice over Internet Protocol (VoIP) services.

China is also the largest mobile communications market in the world. Although sales declined in early 2003 due to the SARS outbreak, the Chinese mobile market has rebounded. By October 2003, the number of mobile subscribers surpassed the number of fixed-line subscribers. As it entered 2004, China had around 265 million mobile subscribers, or about 20 for every 100 people, nearly double the penetration rate from 2001. The remarkable growth in the mobile sector has been boosted by increased competition, lower terminal prices and the rapid rise of prepaid services. Even more competition came with the popularity of the Personal Access System (PAS) known as Little Smart, a fixed-line service with limited roaming that began in rural regions but has since entered the urban areas.

China is the fastest growing Internet market in Asia, overtaking Japan as the world’s second largest Web population after the US in 2002. By early 2004, the number of Internet subscribers in China had grown to 80 million. The government remains well aware of the enormous social and economic value of Internet and its importance in creating a prosperous nation. At the same time, however, it is concerned by the perceived risk to cultural heritage and to political stability.
China is also emerging as a broadband superpower, showing strong growth into 2004 and ending the year 2003 with over 12 million broadband subscribers, though penetration remains comparatively low, meaning there is still much room for growth. Wi-Fi is also starting to appear in the market, though local regulations are upsetting foreign technologies companies.

Hong Kong Consistent with its status as one of the leading telecommunications economies in the world, Hong Kong has built itself world-class infrastructure. Digitalised since 1995, the Special Administrative Region (SAR) has been wired with almost 400,000km of optical fibre, with the vast majority of households covered by this extensive broadband network. The roll out has been characterised by the utilisation of practically every type of technology. Hong Kong is also a key regional telecommunications hub and as such is the landing point for a significant number of strategically important submarine cables.

Growth in Hong Kong’s booming mobile phone market jumped in 2003. By year’s end, penetration had reached 100%. This penetration level put Hong Kong into second place in the Asian mobile market (behind Taiwan). Competition in the mobile sector was given a real boost with the introduction of mobile number portability in 1999. With an adult population of 5.9 million, the market has moved closer to saturation and the opportunities for further significant growth may be starting to shrink.

Hong Kong has also been experiencing rapid growth in its Internet market. The speed of its expansion was highlighted in the first half of 2001, when Hong Kong had the highest rate of growth in the world for household Internet penetration. There were an estimated 3.5 million Internet subscribers in the territory, gaining access using either dial up and broadband. Internet subscriptions were almost evenly divided between dial-up and broadband by end-2003. From just one ISP in 1990, there were around 200 by end-2003, with a big jump in issued licences occurring in 2000, in particular.

Japan’s telecommunications sector is one of the most active markets in the world. It goes without saying that Japan has a sophisticated telecommunications infrastructure. The development of local infrastructure in Japan has been dominated by the Telecommunications Council’s push to have incumbent NTT open up access to the lines connecting households and businesses to local switching centres, or, in other words, opening up access to the ‘last mile’. Although fixed-line services remain important, since the number of mobile subscribers passed the number of fixed-line users in April 2000, fixed-line subscriptions have begun to decline.

By end-2003, Japan had more than 13 million broadband lines in place, making it the second largest broadband country in the world. Much of the success of broadband in Japan is owed to the stunning growth in 2003 of ADSL broadband services. Japan is at last living up to earlier expectations of becoming a dominant player in broadband use; only the US has more broadband lines than Japan.

Japan has the second largest number of Internet users in the world after the US, if wireless Internet access is included in the tally. Broadband services made up much of the recent increase while dial-up growth has slowed. By early 2003, Japan had finally overtaken South Korea in number of broadband users, though China will no doubt pass Japan in 2004. Fibre-to-the-Home (FTTH) Internet access has been making impressive strides into the Japanese market.

Although Japan’s 2G mobile telephone sector has entered a maturing market phase, the overall Japanese mobile market is in a dynamic period of growth, given the popularity of built-in camera mobile phones and 3G services. There has been strong growth in customers upgrading to wireless Internet access services, with the total number of such users reaching almost 52 million. By March 2004, Japan had almost 82 million mobile subscribers, with over 16.5 subscribers signed up for 3G services.

Macau, a Special Administrative Region (SAR) of China, remains very low profile compared with its bustling sister SAR, Hong Kong. The territory has quietly built itself a strong modern telecommunications infrastructure, equal in standard to that of any other country in the region, with significant penetration of telecom services. The fixed-line network having reached a saturation point a few years ago, the country’s mobile market is now growing strongly, probably also nearing saturation. Macau has been busy adopting Internet in its various forms and the administration appears keen to encourage this. broadband Internet, using ADSL, has started to develop. By March 2004, almost half of all Internet subscriptions in Macau were broadband based.
Mongolia, as it steadily moves towards a market economy, is committed to developing a more efficient telecommunications network. Despite the country having confirmed this commitment by implementing reforms to encourage growth in the telecom industry, its telecommunications infrastructure continues to remain a hindrance to economic growth. A more efficient telecom network is a key element in Mongolia’s economic development. An explosion in the mobile market in the period since 2001 has seen a big jump in the subscribers. By late 2003, the boom market was showing signs of softening.

Mongolia has made early moves into broadband Internet. In early 2001, Mongolia Telecom entered and agreement with Korea Telecom to set up a pilot Asymmetric Digital Subscriber Line (ADSL) service in the country. Korea Telecom had expanded its customer base to several thousand by end-2002. The main users of the service reside in the capital Ulaanbaatar and are mostly government ministries and foreign companies.

Telecommunications in North Korea is seriously impeded by a combination of its parlous economic state and government repression of communication. The number of fixed-lines and the volume of voice traffic in North Korea are minuscule compared with South Korea. Because of its mountainous landscape and the high cost of building fixed-line networks, a mobile telephone network is a much more viable option. Very limited mobile services began in late 2002. The country originally sought assistance from South Korea to set up this mobile service but was refused. It subsequently established a joint venture with a Thailand-based company in a special economic zone in north eastern North Korea. North Korea remains the only country in the world that had yet to adopt the Internet for public usage.

South Korea has become one of the world’s major players in the telecommunications and IT market. The South Korean government has adopted a very progressive approach to deregulation, liberalisation and privatisation of the local telecom industry. The result has been willingness on the part of operators to invest in infrastructure and to be innovative, providing the basis for a booming telecommunications market.

Despite being opened up to competition in 1997, the fixed-line telephone market in South Korea continues to be dominated by the incumbent KT, formerly known as Korea Telecom.

South Korea is the third largest mobile market in Asia, topping the 35 million subscriber mark in March 2004. The market was reaching a point of saturation, with approximately 75% of the population carrying at least one mobile phone. With mobile TV broadcasting expected to be available by mid-2004, South Korea continues to push the boundaries of mobile communications. South Korea’s development as a leading mobile market has been boosted low tariffs and terminal costs, the introduction of competition in 1996, the nationwide roll out of Code Division Multiple Access (CDMA) technology and the arrival of camera-equipped mobile phones. Third Generation (3G) phones and advanced mobile services such as mobile gaming, m-banking and m-commerce have also kept the mobile market invigorated.

South Korea leads the world in the commercial application of broadband Internet technologies, with the highest number of broadband connections per capita. The country’s impressive broadband progress began in the late 1990s when the government issued a policy mandating that operators provide a 2Mb/s connection for every citizen. This broadband policy, combined with a competitive market and a densely populated and computer literate society, laid the foundations for Korea’s burgeoning broadband market. Korea has become the most penetrated broadband market in the world, with over 80% of all homes with Internet accessing the network via a high-speed connection.
Starting in the early 1990s, Taiwan has been significantly upgrading its telecommunications infrastructure, undergoing a series of network modernisation projects in the last decade or so. Consistent with the performance of Taiwan’s impressive mobile sector – the highest penetrated mobile market in the world – the country has been energetically moving into the ‘next generation’ of mobile services. In early 2002, Taiwan awarded five licences for Third Generation (3G) services and, in so doing, was the first market in Asia to hold a 3G auction in which there were more bidders than licences.

In a short space of time, Taiwan has also become a significant player in broadband Internet access. The government has been actively promoting broadband and the government has committed itself to the country being on a par with the US by 2010. By September 2003, the country was ranked fourth in the world in terms of broadband penetration (behind South Korea, Hong Kong and Canada) with 13%, up from 4% just two years earlier.

Table of Contents

1. OVERVIEW OF FIXED VOICE, INFRASTRUCTURE AND DATA MARKET
1.1 Key developments
1.1.1 General
1.1.2 Infrastructure
1.2 Market overview
1.3 Telecommunications infrastructure
1.3.1 Overview
1.3.2 International infrastructure
1.3.3 Satellite networks
1.4 Data market
1.4.1 Overview
1.4.2 ISDN
1.4.3 Frame Relay and Leased Circuit
1.4.4 ATM
1.4.5 Value Added Networks (VANs)
1.4.6 VSAT networks

2. CHINA
2.1 Telecommunications market
2.1.1 Overview of China’s telecom market
2.1.2 China’s Tenth Five Year Plan
2.1.3 Budget for information and communications technology (ICT)
2.1.4 Year 2001 highlights
2.1.5 Year 2002 highlights
2.1.6 Market highlights and analysis – 2003
2.1.7 Market highlights and analysis – 2004
2.2 Fixed Network Operators
2.2.1 Overview of major players
2.2.2 China Mobile
2.2.3 China Netcom
2.2.4 China Railcom
2.2.5 ChinaSat
2.2.6 China Telecom
2.2.7 China Unicom
2.3 Telecommunications infrastructure
2.3.1 The public network
2.3.2 National networks
2.3.3 International networks
2.3.4 Infrastructure developments
2.3.5 Satellite networks and operators
2.4 Data market
2.4.1 Public data networks
2.4.2 Data and multi-media communications network
2.4.3 Network developments
2.4.4 Public telephone data access
2.4.5 Integrated Services Digital Network (ISDN)
2.4.6 Asynchronous Transfer Mode (ATM)
2.4.7 Dense Wavelength Division Multiplexing (DWDM)
2.4.8 IP-Virtual Private Network (IP-VPN)
2.4.9 The Golden Projects / value-added networks (VANs)
2.4.10 Very Small Aperture Terminals (VSATs)

3. HONG KONG
3.1 Telecommunications market
3.1.1 Local fixed telecommunications network services
3.1.2 International telecommunications services
3.2 Fixed network operators
3.2.1 Pacific Century CyberWorks
3.2.2 City Telecom (HK) Ltd
3.2.3 Hutchison Whampoa Ltd
3.2.4 Wharf New T&T Hong Kong
3.2.5 New World Telephone
3.2.6 China Motion
3.3 Fixed networks
3.3.1 Mainland connection
3.3.2 Full liberalisation of FTNS market
3.3.3 Fixed network development
3.4 Telecommunications infrastructure
3.4.1 Overview
3.4.2 National
3.4.3 International
3.4.4 Satellite networks

4. JAPAN
4.1 Telecommunications market
4.1.1 Overview
4.1.2 Telecom reforms
4.1.3 Telecommunications carriers
4.2 Fixed network operators
4.2.1 Cable & Wireless IDC
4.2.2 Crosswave Communications Corp
4.2.3 KDDI Corporation
4.2.4 NTT Corporation
4.2.5 POWEREDCOM / Power Nets Japan (PNJ)
4.2.6 Vodafone Holdings K.K. (Formerly Japan Telecom)
4.3 Fixed Network Voice Services
4.3.1 Market overview
4.3.2 Domestic services
4.3.3 Value-Added Services (VAS)
4.3.4 IP telephony
4.4 Telecommunications infrastructure
4.4.1 Local infrastructure
4.4.2 National infrastructure
4.4.3 International infrastructure
4.4.4 Regional satellite ventures
4.5 Data market
4.5.1 Overview
4.5.2 ISDN
4.5.3 Frame relay
4.5.4 ATM
4.5.5 Value-Added Networks (VANs)
4.5.6 Data centres
4.5.7 Online storage
4.5.8 Content Delivery Networks
4.5.9 VSAT multimedia

5. MACAU
5.1 Telecommunications market
5.1.1 Overview
5.2 Fixed network operator
5.2.1 Compahnia de Telecomunicações de Macau
5.3 Telecommunications infrastructure
5.3.1 Domestic and international
5.4 Data market
5.4.1 Data network
5.4.2 Macaupac
5.4.3 ISDN

6. MONGOLIA
6.1 Telecommunications market
6.1.1 Overview
6.2 Fixed network voice services
6.2.1 Overview
6.2.2 Domestic services
6.2.3 International services
6.3 Telecommunications infrastructure
6.3.1 The network
6.3.2 Rural services
6.3.3 Satellite networks
6.3.4 Future plans and programs
6.4 Data market

7. NORTH KOREA
7.1 Telecommunications market
7.1.1 Overview
7.1.2 Relationship with South Korea and the world
7.2 Fixed network operators
7.2.1 Lancelot Holdings
7.2.2 Loxley Pacific
7.2.3 Shin Satellite Corp
7.3 Telecommunications infrastructure
7.3.1 National telecom network
7.3.2 International

8. SOUTH KOREA
8.1 Telecommunications market
8.1.1 Overview
8.1.2 Telecommunications service markets
8.1.3 Market highlights and analysis – 2003
8.1.4 Market highlights and analysis – 2004
8.2 Fixed network operators
8.2.1 Dacom Corporation
8.2.2 Hanaro Telecom
8.2.3 KT Corp
8.2.4 Onse Telecom
8.2.5 Powercomm
8.3 Fixed network voice services
8.3.1 Local and national
8.3.2 International
8.3.3 IP telephony
8.4 Telecommunications infrastructure
8.4.1 Infrastructure investments
8.4.2 Local and national infrastructure
8.4.3 International infrastructure
8.4.4 Satellite networks
8.5 Data market
8.5.1 KT Hitel (KTH)
8.5.2 Korea Thrunet data services
8.5.3 ISDN
8.5.4 Value-added networks
8.5.5 Very Small Aperture Terminals (VSAT)

9. TAIWAN
9.1 Telecommunications market
9.1.1 Overview
9.2 Fixed network operators
9.2.1 Chunghwa Telecom Co Ltd
9.2.2 Eastern Broadband Telecom
9.2.3 New Century InfoComm Tech Co Ltd (Sparq)
9.2.4 Taiwan Fixed Network Telecom
9.3 Fixed network voice services
9.3.1 Market overview
9.3.2 VoIP services
9.4 Telecommunications infrastructure
9.4.1 National
9.4.2 International
9.5 Data market
9.5.1 Data infrastructure
9.5.2 Data services

10. GLOSSARY OF ABBREVIATIONS

Exhibit 1 – Major submarine cables in the Asia-Pacific region - 2004
Exhibit 2 – Satellite launches in Asia region – 2003 and beyond
Exhibit 3 – APT satellites in orbit – April 2004
Exhibit 4 – AsiaSat satellites in orbit - 2004
Exhibit 5 – BSAT satellites in orbit - 2004
Exhibit 6 – JSAT satellites in orbit - 2004
Exhibit 7 – New Skies satellites in orbit (Asia footprint) - 2004
Exhibit 8 – PAS footprint
Exhibit 9 – Major national backbones in China
Exhibit 10 – ChinaSat satellite fleet
Exhibit 11 – ChinaDDN
Exhibit 12 – The original PCCW deal
Exhibit 13 – Fixed-line based FTNS licensees – May 2004
Exhibit 14 – International calling card service operators – 2003
Exhibit 15 – Capex commitments of new wireless local FTNS licensees
Exhibit 16 – NTT corporate structure – October 2003
Exhibit 17 – Major members of MYLINE Carriers Association – 2004
Exhibit 18 – Global Multimedia Mobile Satellite Communications (GMMSC)
Exhibit 19 – Major funded development projects planned or under construction
Exhibit 20 – Classification of service providers
Exhibit 21 – Overview of KT subsidiaries – 2004
Exhibit 22 – International submarine fibre optic cables
Exhibit 23 – International submarine fibre optic cables

Table 1 – Top 10 carriers in the Asia Pacific region – July 2002
Table 2 – Total WLAN equipment forecasts for Asia – 2003 - 2007
Table 3 – Asia Pacific ISDN growth – 1998 - 2003
Table 4 – Fixed - line and mobile subscriptions – 1998 - 2003
Table 5 – Telephone network statistics – 2003
Table 6 – Telecom revenue and investment statistics – 2003
Table 7 – Fixed lines in service – 1998 – 2003; 2010
Table 8 – Overview regional/international fibre optic cable networks
Table 9 – IP telephony growth estimates – 2005; 2010
Table 10 – Public data and multimedia users – 1998 – 2000; 2005; 2010
Table 11 – Telephone network statistics – February 2004
Table 12 – Telecom revenue and investment statistics – 2002
Table 13 – Fixed telephone lines vs mobile subscriptions – 1998 - 2004
Table 14 – Fixed-line growth – 1994 – 2004
Table 15 – Telephone network statistics – 2002
Table 16 – Telecom revenue and investment statistics – 2003
Table 17 – Subscriber growth and penetration: fixed-line versus mobile – 1992 - 2003
Table 18 – Telecommunications carriers in Japan – February 2004
Table 19 – Telecommunications carriers in Japan – February 2004
Table 20 – ISDN line growth – 1992 - 2003
Table 21 – Japanese VSAT market forecasts – 2005 and 2010
Table 22 – Telephone network statistics – March 2004
Table 23 – Telecom revenue and investment statistics – 2002
Table 24 – Fixed-line growth – 1991 - 2004
Table 25 – Telephone network statistics – 2002
Table 26 – Telecom revenue and investment statistics – 2002
Table 27 – Fixed lines in service – 1994 - 2002
Table 28 – Telephone network statistics – 2002
Table 29 – Fixed lines in service – 1990 - 2002
Table 30 – Telephone network statistics – 2003
Table 31 – Telecom revenue and investment statistics – 2003
Table 32 – Fixed lines in service– 1991 - 2003
Table 33 – ISDN subscribers – 1994 - 2003
Table 34 – Telephone network statistics – 2004
Table 35 – Telecom revenue and investment statistics – 2002
Table 36 – Chunghwa Telecom’s subscriber base – January 2004
Table 37 – Fixed telephone lines v. mobile subscriptions – 1997 - 2004
Table 38 – Fixed lines in service – 1995 - 2004

Date Published：2004-8-3

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