The Asian Century Is Built On Broadband


Asia Pacific countries have the world’s fastest average internet speeds and the highest penetration of broadband access.

In South Korea, 49 per cent of the population is connected to broadband at speeds faster than 10 megabits per second (Mbps) – that’s the highest percentage of any country in the world. Japan comes second, with 39 per cent and Hong Kong is third with 28 per cent. Australia is in 37th position at 3.8 per cent, according to the Akami State of the Internet report.

While there are substantial differences in the size and population density of Australia’s Asian neighbours, there is one factor that is the same: governments across the region are pursuing policies to deliver fibre broadband to people’s homes.

A recent study by Point Topic (subscriber-only) has found that fibre broadband is cheaper than both copper and cable connections for fast broadband. On a per megabit basis, the study found that the cost of a fibre service averages at US$1.14/Mbps. Cable came in at $1.53/Mbps and copper at US$5.57/Mbps.

The Asia Pacific region is so far ahead of the rest of the world in broadband services specifically because of government policy, according to telco regulatory specialist Rob Nicholls.

“The general approach of Asian governments has been to assume that ubiquitous access to fast broadband is good,” he says. Though it’s expensive, it’s all part of the cost of building a digital economy, which gives countries a comparative, if not an absolute, advantage.

“The Asian approach is: ‘Why wouldn’t you provide access to fast broadband?’ As opposed to ‘Why would you?’” says Nicholls.

“What characterises Asia is something that’s completely different to Europe or North America: there is a primary expectation of government involvement in broadband services.”

In South Korea and Japan, governments have encouraged the rollout of fibre people’s homes, and the expectation of fast broadband is reinforced by other policies.

“In Korea, it is a requirement of real estate agents, when they’re letting apartments, to specify what grade of broadband service you get,” says Nicholls.

“The rent reflects the quality of the broadband service. It’s a utility.”

The South Korean government offers programs to teach traditionally unconnected people how to use internet services and offers subsidies for low income families to connect. This enables the widespread adoption of online government services, such as e-learning and e-health, which require fast broadband. The average Korean can connect to fast broadband for under $30 a month.

“Japan had the world’s original optical fibre network. They’ve had dense fibre penetration for 10 to 15 years,” explains Ric Clark, an Alcatel-Lucent executive based in Shanghai. The national carrier, Nippon Telephone and Telegraph (NTT), led the charge to fibre, says Clark. In Japan today, there are several competitive carriers.

Households can already access fibre speeds of up to 2 gigabits per second (Gbps) in their homes for about $50 a month. More than 25 per cent of Japanese households are already connected to fast broadband via fibre, and access to 1Gbsp services is now common and relatively cheap.

But is this speed necessary? “This is a question that comes up every time I do an interview,” says Bernard Lee, a former Telekom Malaysia executive and board member of the FTTH Council. “I always use the Henry Ford quote: ‘If I had asked my customers what they wanted, they would have said a faster horse.’”

“High speed internet is not really about what we need,” says Lee, “it’s about opening up possibilities.”

“It’s with FTTH that you’re going to have 3D printing, 4G television, high speed teleconferencing, virtual presence and so on. It’s really not a question of what we need, but what we intend to do with it.”

In Singapore, which has an area of just 700 square kilometers, the government’s plan to deliver fibre optic cable to households has involved direct government investment as well as incentives for private investment.

The government has linked its investment in fibre to expected GDP growth outcomes, such as increases in productivity, tax revenues and exports. Subscriptions for residential broadband services offering 100Mbps grew steadily throughout 2012, while subscriptions accessing lower speeds have decreased in the same period. Household subscriptions for 100Mbps fibre broadband services start at $39 Singapore dollars (A$30) a month.

In China, the government has announced a plan to connect 100 million people to internet speeds of 100Mbps by 2015.

“China absolutely sees fibre as the way forward,” says Clark.

China Telecom, China Unicom and China Mobile are the three government-controlled carriers that are building the network. While some fibre-to-the-node is being built in large apartment buildings that have good existing copper networks, the government is concentrated on a fibre-to-the-home policy. It has already mandated that all new homes must be built with fibre-to-the-home connections where a public optical fibre network exists.

China Unicom, the second largest carrier, connected a massive 10 million Chinese households to high speed broadband via fibre-to-the-home technology in 2012.

The Fibre To The Home Council, which collects data on fast broadband services, predicts that by 2016, 145 million people in Asia Pacific countries will be subscribed to high speed internet via a fibre-to-the-home connection.

With most Asia Pacific governments now having a policy to deliver fast broadband via fibre-to-the-home, Bernard Lee has a final message, “Do not view FTTH as a product, but as an enabler that allows you to move forward, to be more competitive in the future, and on a global scale”.

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