Broadband A Hit In North Asia

South Korea has been spectaculaly successful, compared to its counterparts in the region, in rolling out broadband services. Could undeveloped Taiwan be next?

by internetnews.com Staff [March 29, 2002]

In 2001, the number of broadband subscribers in South Korea grew by 58.7 percent from 4.1 million subscribers in 2000 to 6.5 million in 2001, said Frost & Sullivan.

According to Manoj Menon, director, technology practice, Asia Pacific, Frost & Sullivan, the key to the popularit of South Korea's broadband is its price. Broadband service providers in the country offer either a flat fee or a marginally higher price than narrowband Internet access.

In addition, service providers have the kind of broadband content that users want.

"Currently, there are more than 70 broadband service providers in Korea who are aggressively permeating business precincts and households with 'killer applications'. Leading South Korean operators such as Korea Telecom and Hanaro Telecom have bundled content along with access in an attempt to reduce churn, increase ARPU (average revenue per user) and increase profitability to thrive in the circuit," said Menon.

Revenues from broadband applications services was worth US$3.5 billion in 2001 and both Korea Telecom and Hanaro Telecom have attained operational break-even, the first in the region to record this feat.

The nine key Internet access applications segments in the country are online gaming, Internet telephony, e-learning, movies-on-demand, online finance, online shopping, online broadcasting, online chatting community market and online music.

E-learning and movie-on-demand are expected to draw significant revenues over the next couple of years. The former segment represents a compound annual growth rate of 138 percent over the period 2000 to 2004 while screening of movies-on-demand on the Internet before their launch in cinemas has also been a very successful strategy for service providers.

Menon commented: "Instead of strategizing solely on price competition, service providers have gone ahead to form partnerships with content providers to serve targeted markets. For instance, online gaming, a market with an estimated value of $176 million in 2001, was so popular among teen users that a three day gaming marathon was held; housewives commonly purchase groceries and free-delivery goods over the Internet."

As for consumer applications such as online finance (including online trading, banking, and insurance) and Internet shopping, more than 65 percent of the total trading volume of South Korea's stock exchange is executed over the Internet.

Frost & Sullivan has also said that there is a considerable demand for a variety of applications as Koreans are now living the 'broadband lifestyle' and spending an average of 13 hours on the Internet each week.

Besides Korea, Japan has also been successful in its broadband rollout as recent tariff reductions and intensified competition are helping to lure i-Mode-hungry users back into the fixed line world, said Pyramid Research.

Next to Korea and Japan, Pyramid Research projects that Taiwan will be the next big market for broadband services. Currently, there are about 1.6 million broadband subscribers in Taiwan, representing approximately 20 percent household penetration. Pyramid Research forecasts that broadband Internet connections in Taiwan will reach 76 percent of households in 2006, with the majority of new subscribers added over the next two years.

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