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Asia Pacific pins mobile growth on emerging markets

Posted: 03 Apr 2007 ?? ?Print Version ?Bookmark and Share

Keywords:mobile sector Asia Pacific? WiMAX? Mobile Communications?

Asia Pacific will remain a high-growth sector in the global mobile communications arena with its subscriber base projected to hit 1.14 billion by end of 2007. According to Frost & Sullivan's Asia Pacific Mobile Communications Outlook 2007, the region posted a CAGR of 24 percent from 2002 to 2006, reaching a subscriber base of almost 1 billion and mobile phone penetration rate of 30.9 percent last year.

Apart from huge subscriber base, other factors that will drive growth include drastically reduced calling rates, decline in handset prices and the expansion of network infrastructure in emerging markets such as India and Indonesia.

"The impact of the 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," said Frost & Sullivan Industry Manager Janice Chong. "Of the expected 190 million net subscriber additions in 2007, 90.8 percent is likely to stem from the emerging markets."

As of June 2006, India has overtaken Japan as the second largest mobile services market in Asia Pacific in terms of subscribers. With 142.7 million subscribers in 2006 and a mobile phone penetration rate of only 13 percent, the market in India still remains largely untapped.

As major cities in emerging markets reach high mobile phone saturation, the focus rests on increasing mobile penetration in rural areas and the lower-end segments in the next three to five years. Making the services more affordable for the massesvia price cuts in voice minutes and the introduction of low-entry one-nation call rate plans in 2006enabled the technology to penetrate into the lower-end market, which holds strong growth potential for Asia's cellular industry, said the report.

Next killer app
Mobile broadband is likely to be the next killer application in Asia's promising mobile landscape. However, given its limited bandwidth, the existing 3G network may not necessarily be the ideal technology for mobile broadband. The business case for 3G may not lie in 3G itself, but in 3.5G or high speed downlink packet access (HSDPA), as 3G ultimately provides a platform for enabling 3.5G.

"HSDPA and WiMAX are expected to play a prominent role in 2007, given the number of trials that have taken place in 2006," said Chong. "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 the launch of HSDPA has taken precedence in certain countries, WiMAX is likely to be the focus in emerging markets such as India and Indonesia, which lack telecommunications infrastructure.

In other regions, WiMAX is expected to remain a niche technology, functioning as a backhaul infrastructure to complement existing Wi-Fi networks, and as an alternative wireless broadband access targeting higher ARPU enterprise segments. This is due to costly customer premise equipment and the limited availability of WiMAX-enabled handsets and laptop devices, which are expected to be the biggest market restraints until 2009.

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