Asia-Pacific Online

Asia-Paciﬁc Online December 2003

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Table of Contents 3 Methodology 7

The eMarketer Difference 8

The Beneﬁts of eMarketer’s Aggregation Approach 9

“Benchmarking” and Projections 9 I Introduction 11 II Asia-Paciﬁc Overview 13

A. Population and Economy 14

B. Population 16

C. PCs 17

D. Internet Users 21

Internet User Forecasts 25

E. Broadband 28

Broadband Users 28

Broadband Forecast 31

Broadband Access Technologies 33

F.Internet Usage 35

G. Wireless and Mobile Content 39

H. Digital TV 44 III Australia 47

A. Internet Users 48

B. Broadband 52

Broadband Access Technologies 56

C. Internet Usage 58

D. Wireless 66 IV China 69

A. Broadband 73

B. Internet Usage 80

C. Wireless 82

D. Digital TV 88 V Hong Kong 89

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A. Broadband 92

B. Internet Usage 97

SARS 101

Wireless 104 VI India 107

A. Internet Users 108

B. Broadband 110

C. Wireless 113 VII Japan 115

A. Internet Users 116

B. Broadband 120

DSL 124

C. Wireless 126

D. Digital Television 134 VIII Singapore 135

A. Broadband 140

B. Internet Usage 145

C. Wireless 147 IX South Korea 151

A. Broadband 155

DSL 162

B. Internet Usage 165

C. Wireless 167

D. Digital TV 172 X Taiwan 173

A. Broadband 176

Broadband Access Technologies 178

B. Wireless 181 Index of Charts 183

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December 2003

Welcome to eMarketer

Dear Reader:

Ross Rubin Senior Analyst, eMarketer eMarketer’s Asia-Pacific Online reportTM offers a comprehensive analysis of Internet users in the [email protected] populous Asia-Pacific region, with a focus on eight countries eMarketer considers “core” to the eMarketer, inc. 75 Broad Street region’s online market. The report provides easily accessible answers to the following key questions: New York, NY 10004 How many people in Asia-Pacific are online today, and what are the growth trends in the T: 212.763.6010 F: 212.763.6020 user population? What devices and technologies are Internet users employing to get online? What are the demographic characteristics of Asia-Pacific’s online population? What are the most popular online activities of Internet users in this technology-savvy region? To prepare this report, eMarketer has developed original forecasts based on established benchmarks and has drawn upon on the latest research from government and international statistical agencies and dozens of leading firms, including Morgan Stanley, Gartner, Point Topic, IDC and the Yankee Group. Combined with eMarketer’s latest projections and analysis, this report will provide readers with the necessary information to make informed decisions about Asia-Pacific’s large and growing online population. If you have any questions or comments concerning eMarketer or any of the material in this report, please call, fax or e-mail us.

Ross Rubin Senior Analyst

Written by Ross Rubin

Also contributing to this report: Reuse of information in this document, without prior authorization, Ben Macklin, senior analyst is prohibited. If you would like to license this report for your Yael Marmon, director of research organization, please contact David Iankelevich at Krikor Daglian, researcher [email protected], or 212.763.6037. Tracy Tang, researcher David Berkowitz, senior editor Cerelle Centeno, senior editor Kwanza Osajyefo Johnson, data entry associate Dana Hill, production artist

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Asia-Paciﬁc Online

Methodology 7 The eMarketer Difference 8 The Beneﬁts of eMarketer’s Aggregation Approach 9 “Benchmarking” and Projections 9

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

7 ©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. Methodology eMarketer’s approach to market research is founded on a philosophy of Introduction aggregating data from as many different sources as possible. Why? Because Asia-Paciﬁc Overview there is no such thing as a perfect research study and no single research Australia

China source can have all the answers. Moreover, a careful evaluation and Hong Kong weighting of multiple sources will inevitably yield a more accurate picture India than any single source could possibly provide. Japan

Singapore

South Korea

Taiwan The eMarketer Difference Index of Charts eMarketer does not conduct primary research, it therefore has no testing technique to defend, no research bias and no client contracts to protect. eMarketer prepares each market report using a four-step process of aggregating, ﬁltering, organizing and analyzing data from leading research sources worldwide.

Aggregate

Analyze Filter

Organize

Using the Internet and accessing a library of electronically-filed research reports and studies, the eMarketer research team first aggregates e-business data from hundreds of global research and consultancy firms. This comparative source information is then filtered and organized into tables, charts and graphs. Finally, eMarketer analysts provide concise and insightful analysis of the facts and figures along with their own estimates and projections. As a result, each set of findings reflects the collected wisdom of numerous research firms and industry analysts.

“I think eMarketer reports are extremely useful and set the highest standards for high quality, objective compilation of often wildly disparate sources of data. I rely on eMarketer’s research reports as a solid and trusted source.” — Professor Donna L. Hoffman, Co-Director, eLab, Vanderbilt University

8 ©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. Methodology The Beneﬁts of eMarketer’s Aggregation Introduction

Asia-Paciﬁc Overview Approach Australia Objective: information is more objective than that provided by any single China research source Hong Kong

India Comprehensive: gathered from the world’s leading research ﬁrms,

Japan consultancies and news organizations Singapore Authoritative: quoted in leading news publications, academic studies and South Korea government reports Taiwan All in one place: easy to locate, evaluate and compare Index of Charts Readily accessible: so you can make quick, better-informed business decisions Above the hype: accurate projections that business people can use with conﬁdence Time saving: there’s no faster way to ﬁnd Internet and e-business stats, online or off Money saving: more information, for less, than any other source in the world

“Benchmarking” and Projections Until recently, anyone trying to determine which researcher was most accurate in predicting the future of any particular aspect of the Internet did not have a definitive source with which to do this. For instance, over 10 firms predicted e-commerce revenues for the fourth quarter 1998 online holiday shopping season, and yet no single source could be identified after the fact as having the “correct” number. In the Spring of 1999, however, the US Commerce Department finally began measuring e-commerce B2C activity so business people and others could have a benchmark with which they could compare and evaluate projections. eMarketer has adapted its methodology to recognize that certain government and other respected, impartial sources are beginning to provide reliable numbers that can be consistently tracked over time. Most of these established sources, however, only measure past results; typically, they do not make predictions.

9 ©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. Methodology Today, eMarketer formulates its essential e-business numbers by first Introduction identifying the most established, reputable source for a given sector being Asia-Pacific Overview measured and then adopting that organization’s figures as benchmarks for Australia

China the historical/current period. For instance, eMarketer’s US Internet user Hong Kong ﬁgures will be based on a combination of the most recent data from the US India Census Bureau and the International Telecommunication Union. Using this Japan data as the benchmark for 2000 and 2001, eMarketer will make projections Singapore for subsequent years based on the following factors: South Korea

Taiwan a comparative analysis of user growth rates compiled from other Index of Charts research ﬁrms additional benchmark data from Internet rating ﬁrms, e.g., Nielsen//NetRatings, comScore Media Metrix, which use panels to measure Internet user activity on a weekly and monthly basis an analysis of broader economic, cultural and technological trends in the US Similarly, US e-commerce revenues are being “benchmarked” using historical data from the US Department of Commerce, and broadband household and penetration rate forecasts are being built off baseline data from the Organization for Economic Cooperation and Development (OECD). Through this benchmarking process, eMarketer will be holding itself – and its projections – accountable.

“When I need the latest trends and stats on e-business, I turn to eMarketer. eMarketer cuts through the hype and turns an overabundance of data into concise information that is sound and dependable.” — Mark Selleck, Business Unit Executive, DISU e-business Solutions, IBM

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Methodology 7 I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69 I V Hong Kong 89 VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology Asia-Paciﬁc’s online population continues to expand and mature, reaching Introduction new national and demographic segments. The region constitutes the Asia-Paciﬁc Overview world’s largest geographic Internet market, ahead of both Europe and North Australia

China America. In China, by far the world’s most populous country, adoption of Hong Kong the Internet is proceeding at a rapid pace, such that it is conceivable that India China could be the world’s largest Internet market in just a few years. Japan Many countries in the region enjoy advanced telecommunications Singapore

South Korea infrastructures, with high broadband and wireless penetration. In

Taiwan addition, leading countries, including Hong Kong, Taiwan, South Korea, Index of Charts and Japan, have relatively high population densities and liberal competitive telecom environments, which has aided the rollout of broadband. Generally, these countries also saw mobile phone penetration growth peak in the late 90s, and are now moving to data services to increase revenue from a saturated population. South Korea, the world’s leader in broadband connectivity, with over 50% of households linked to high-speed networks, was also among the first nations to successfully deploy a third-generation wireless network, following close on the heels of Japan. The availability and adoption of broadband is increasing rapidly in these countries, and the use of DSL is expected to outpace that of cable modem access (and often dial-up) across most of the region. On the other hand, there are the sleeping giants of the region, China and India, the combined population of which totals over a staggering 2.3 billion, representing over one-third of the world’s population. Both are wielding their influence on the global stage of information and communication technology in a unique way. China leverages the power of its controlled market to attract investment. In India, Internet penetration will remain very low for the next several years. However, the country’s increasingly highly educated, English-speaking population is poised to capitalize on its recent popularity as a development and customer service outsourcing destination. This report analyzes Internet usage trends and access preferences and demographics of Internet users in the Asia-Pacific region, with particular attention to the following eight “core” countries: Australia, China, Hong Kong, India, Japan, Singapore, South Korea and Taiwan. Specifically, this report will outline the following: Which Asia-Pacific countries are leading in terms of online users? What will be the mix of broadband technologies and how are they expected to grow? Which countries have the highest penetration of wireless technology? What are popular online activities in leading Asia-Pacific countries?

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Methodology 7

I Introduction 11 II Asia-Paciﬁc Overview 13 A. Population and Economy 14 B. Population 16 C. PCs 17 II D. Internet Users 21 E. Broadband 28 F.Internet Usage 35 G. Wireless and Mobile Content 39 H. Digital TV 44

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology A. Population and Economy Introduction Asia-Paciﬁc Overview This report analyzes Internet usage trends and access preferences and Australia demographics of Internet users in the Asia-Paciﬁc region, with particular China attention to the eight “core” countries of Australia, China, Hong Kong, Hong Kong

India India, Japan, Singapore, South Korea and Taiwan. Other developing

Japan economies in the region, notably Malaysia and Thailand, as well more Singapore established ones like New Zealand, have sizable and growing Internet user South Korea populations, but eMarketer considers the eight countries in the chart below Taiwan to be the most critical markets in the region. Index of Charts

Internet Users in Select Countries in the Asia-Pacific Region, 2000-2002 (in thousands) 2000 2001 2002 Australia 6,600 7,200 8,400 China 22,500 33,700 59,100 Hong Kong 1,855 2,601 2,918 India 5,500 7,000 16,580 Japan 38,000 48,900 57,200 Singapore 1,300 1,700 2,247 South Korea 19,040 24,380 26,270 Taiwan 6,260 7,820 8,590 Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days Source: International Telecommunication Union (ITU), October 2003 049363 ©2003 eMarketer, Inc. www.eMarketer.com

These countries represent a mix of steadily growing Internet populations, such as those in Taiwan and Australia, as well as those that are rapidly growing such as China and India. In the aggregate, however, eMarketer defines the Asia-Pacific region more broadly than these eight core countries. In the analysis that follows, Asia-Pacific encompasses all of Southern and Southeast Asia, as well as the Pacific Island nations and Oceania. All told, the population of Asia-Pacific, broadly defined, is more than 3.56 billion. Significant disparities in economic and technological development exist across Asia, from the highly advanced Japan, South Korea, Singapore and Hong Kong to China and India, which are beginning to emerge as major regional and world economic powers, in terms of both consumption and production. These disparities, combined with the linguistic, cultural and political differences that characterize Asia-Pacific, have resulted in tremendous variations in the level of Internet adoption and usage across the region.

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Methodology China, already home to the world’s second largest Internet user population, Introduction still has a long way to go before the Internet touches the majority of its Asia-Paciﬁc Overview nearly 1.3 billion people. In India, whose population is not far behind that Australia

China of China, the Internet is even less well developed, despite the presence of Hong Kong advanced software production and call center facilities in and around India Bangalore. Poor economic health will keep information and Japan communication technology from reaching much of this vast region, but the Singapore

South Korea rapid strides even developing countries have made in recent years are proof

Taiwan that the Internet has become an increasingly indispensable part of life and Index of Charts work in Asia-Paciﬁc.

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Methodology B. Population Introduction Asia-Pacific Overview The demographic figures in Asia-Pacific are staggering. All told, the Australia region’s 3.56 billion inhabitants represent more than half the world’s total China population. China and India alone account for more than a third, and both Hong Kong

India of their populations are expected to grow over the next several years.

Japan India’s population, in fact, is expected to overtake China’s by 2050.

Singapore South Korea Population in Select Countries in the Asia-Pacific Taiwan Region, 2003 & 2010 (in thousands) Index of Charts 2003 Expected Population 2010 population Australia 19,732 20,925 China 1,286,975 1,342,783 Hong Kong 7,394 7,981 India 1,049,700 1,155,011 Japan 127,214 127,195 Singapore 4,609 5,776 South Korea 48,289 50,180 Taiwan 22,603 23,562 Source: US Census Bureau, July 2003 054013 ©2003 eMarketer, Inc. www.eMarketer.com

As a potential market, Asia-Paciﬁc is formidable in sheer size if not necessarily in economic strength. eMarketer’s core Asia-Paciﬁc countries account for 2.43 billion people, representing two-thirds of the region’s total population.

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Methodology C. PCs Introduction

Asia-Pacific Overview Australia “The Asia-Pacific [PC] market’s growth rate was a China significant contributor to the worldwide industry Hong Kong

India returning to positive growth in 2002. Much of the

Japan growth came from the home and the small and Singapore medium enterprise market, as well as demand for South Korea mobile PCs.” Taiwan — Lillian Tay, senior analyst for Gartner Dataquest’s Computing Platforms Index of Charts Asia-Paciﬁc group.

PC shipments in Asia-Pacific countries reached 5.4 million units in the first quarter of 2003, a 5% increase from the same period in 2002, according to Gartner Dataquest. Typically, IT spending is slow in this region during the first quarter due the Chinese New Year holidays celebrated throughout Asia – so the uptick in spending was an encouraging sign to market analysts. However, the PC market experienced a significant decline in demand from South Korea, which is the second largest market in the Asia-Pacific region. South Korea’s PC shipments were down 22% over the first quarter in 2002. Researchers attributed South Korea’s sharp decline in PC shipments to political events affecting the local economy, including the North Korean nuclear threat and the impact of the war in Iraq.

PC Shipments in the Asia-Pacific Region, by Country, Q1 2002 & Q1 2003 (in units, % market share and as a % increase/decrease vs. prior year) Q1 Q1 Q1 Q1 % change 2002 2002 2003 2003 ship- market ship- market ments share ments share China 2,002,662 39.0% 2,173,468 40.2% 8.5% South 920,939 17.9% 716,267 13.3% -22.2% Korea India 529,308 10.3% 615,466 11.4% 16.3% Australia 497,531 9.7% 578,844 10.7% 16.3% Taiwan 252,174 4.9 292,905 5.4% 16.2% Thailand 169,527 3.3 202,789 3.8% 19.6% Malaysia 173,310 3.4% 192,864 3.6% 11.3% Hong 128,523 2.5% 135,004 2.5% 5.0 % Kong Indonesia 114,411 2.2% 128,670 2.4% 12.5% Singapore 122,679 2.4% 121,450 2.2% -1.0% Other 222,947 4.3% 243,945 4.5% 9.4% countries Total 5,134,011 100.0% 5,401,672 100.0% 5.2% Note: includes desk-based PCs, mobile PCs and IA32 servers Source: Gartner Dataquest, May 2003 049540 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology China’s computer giant, Legend, was the leading PC vendor in the ﬁrst Introduction quarter of 2003 – continuing its lead from recent years – but rival HP has Asia-Paciﬁc Overview become a close second-place contender. Dell showed the most substantial Australia

China growth rate among the leading PC vendors. Samsung, which had Hong Kong previously appeared on the top-5 vendor rankings for PC sales in the Asia- India Paciﬁc region, was missing from the ﬁrst quarter 2003 rankings. This was Japan attributed to the decline in South Korean PC sales. Singapore

South Korea PC Shipments in the Asia-Pacific Region, by Industry, Taiwan Q1 2002 & Q1 2003 (in units, % market share and as a Index of Charts % increase/decrease vs. prior year) Q1 Q1 Q1 Q1 % change 2002 2002 2003 2003 ship- market ship- market ments share ments share Legend 567,390 11.1% 627,346 11.6% 10.6% Hewlett- 552,516 10.8% 596,801 11.0% 8.0% Packard IBM 330,100 6.4% 424,260 7.9% 28.5% Dell 258,227 5.0% 350,815 6.5% 35.9% Acer 229,362 4.5% 257,520 4.8% 12.3% Others 3,196,416 62.3% 3,144,930 58.2% -1.6% Total 5,134,011 100.0% 5,401,672 100.0% 5.2% Note: includes desk-based PCs, mobile PCs and IA32 servers Source: Gartner Dataquest, May 2003 049541 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Earlier this year, Gartner Dataquest reported that PC shipments in the Asia- Introduction Paciﬁc region totaled nearly 21.7 million units in 2002, an 8.6% increase Asia-Paciﬁc Overview over 2001. By comparison, growth for the worldwide PC market in 2002 Australia

China was only 3%. Thailand experienced the most signiﬁcant growth, by a Hong Kong substantial margin, at 39.8%. The countries with the next highest India percentage of growth included Vietnam, Malaysia, New Zealand, Taiwan, Japan India and Indonesia. All these countries had double-digit percentage Singapore

South Korea growth rates in 2002.

Taiwan

Index of Charts PC Shipments in the Asia-Pacific Region, by Country, 2001-2002 (in thousands of units and as a % change from previous year) 2001 2001 2002 2002 % change ship- market ship- market ments share ments share Australia 1,924 9.6% 2,107 9.7% 9.5% China 8,552 42.9% 9,292 42.9% 8.7% Hong Kong 591 3.0% 567 2.6% -4.0% India 1,838 9.2% 2,055 9.5% 11.8% Indonesia 445 2.2% 495 2.3% 11.3% Malaysia 670 3.4% 775 3.6% 15.8% New Zealand 305 1.5% 349 1.6% 14.5% Philippines 248 1.2% 265 1.2% 6.5% Singapore 484 2.4% 482 2.2% -0.3% South Korea 2,964 14.9% 2,983 13.8% 0.6% Taiwan 1,113 5.6% 1,251 5.8% 12.4% Thailand 514 2.6% 718 3.3% 39.8% Vietnam 148 0.7% 177 0.8% 19.8% Others 146 0.7% 148 0.7% 1.7% Total 19,942 21,665 8.6% Source: Gartner Dataquest, February 2003 047039 ©2003 eMarketer, Inc. www.eMarketer.com

Dataquest attributed much of the overall growth of the Asia-Paciﬁc PC market in 2002 to the active involvement of vendors in these countries. Typically, these initiatives included aggressive installment schemes and bundling programs. The research ﬁrm noted that vendors also typically introduced CRT monitor and PC trade in programs to encourage PC replacement over time.

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Methodology The market leader in the Asia-Paciﬁc region in 2002 was the incumbent Introduction Legend, pursued by Hewlett-Packard and IBM. Dell was the only major Asia-Paciﬁc Overview vendor to enjoy double-digit growth in the region in 2002, where Australia

China shipments increased 23%. Dataquest attributed Dell’s success to both Hong Kong focusing on building up its base in countries such as China as well as India actively supporting their existing market share in countries such as Japan Australia, Malaysia and Singapore. Singapore

South Korea PC Shipments in the Asia-Pacific Region, by Vendor, Taiwan 2001-2002 (in thousands of units and as a % change Index of Charts from previous year) 2001 2001 2002 2002 % change ship- market ship- market ments share ments share Legend 2,301 11.5% 2,464 11.4% 7.1% Hewlett-Packard* 2,187 11.0% 2,252 10.4% 3.0% IBM 1,458 7.3% 1,547 7.1% 6.1% Dell 996 5.0% 1,225 5.7% 23.0% Samsung Electronics 1,221 6.1% 1,211 5.6% -0.8% Others 11,778 59.1% 12,966 59.8% 10.1% Total 19,942 21,665 8.6% Note: *Hewlett-Packard and Compaq are reported as one company Source: Gartner Dataquest, February 2003 047037 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology D. Internet Users Introduction Asia-Paciﬁc Overview In November 2003, the ITU published a list of 178 countries and their Australia ranking according to its Digital Access Index. The index attempts to rate China the digital “standard of living” for different countries and contained some Hong Kong

India surprises. For one, the United States had fallen out of the top 10 of

Japan prominent online countries. However, the list showed South Korea in Singapore fourth place, with Hong Kong ranking seventh and Taiwan ninth. South Korea Taiwan Top Five Countries in International Index of Charts Telecommunication Union (ITU)'s Digital Access Index, 2002 (rating on a scale of 0-1*) Rank/country Rating 1. Sweden 0.85 2. Denmark 0.83 3. Iceland 0.82 4. South Korea 0.82 5. Norway 0.79 Note: *1= highest access; digital access index values are shown to hundreds of a decimal point and countries with same value are ranked by thousands of a decimal point Source: International Telecommunication Union (ITU) Digital Access Index, November 2003 054014 ©2003 eMarketer, Inc. www.eMarketer.com

Many of the countries in the top 10 had made significant gains in the past five years. Indeed, the four nations that had made the most dramatic leaps were all from the Asia-Pacific region. The country that had made the greatest gain was South Korea, which had jumped 20 points in the rankings to claim the #4 spot after being ranked 24th in 1998. Taiwan had also broken into the top 10 after jumping more than 13 places in the ranking.

Top Five Fastest Growing Countries in International Telecommunication Union (ITU)'s Digital Access Index, 1998 & 2002 (according to change in index ranking) Rank 1998 Rank 2002 Country Change 24 4 South Korea 4 22 9 Taiwan, China 13 20 14 Singapore 6 13 7 Hong Kong, China 6 7 2 Denmark 5 Note: based on 40 economies for which data was available in 1998 Source: International Telecommunication Union (ITU) Digital Access Index, November 2003 054015 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology “Until now, limited infrastructure has often been Introduction regarded as the main barrier to bridging the Asia-Paciﬁc Overview

Australia Digital Divide. Our research, however, suggests China that affordability and education are equally Hong Kong important factors.” India — Michael Minges, Market, Economics and Finance Unit, ITU Japan

Singapore

South Korea Among developing Asia-Paciﬁc countries, the ITU cited Malaysia as leader Taiwan with a DAI rating of .57, good enough for a ranking of 46 overall. There Index of Charts were signiﬁcant ranking differences between Malaysia and other Asian economies such as Thailand, which placed 68th overall, and China, which placed 84th overall.

Top Five Developing Asia-Pacific Countries in International Telecommunication Union (ITU)'s Digital Access Index, 2002 (rating on a scale of 0-1*) Country Overall rank Rating in digital access index 1. Malaysia 46 0.57 2. Brunei Durussalam 49 0.55 3. Thailand 68 0.48 4. China 84 0.43 5. Fiji 85 0.43 Note: *1= highest access; digital access index values are shown to hundreds of a decimal point and countries with same value are ranked by thousands of a decimal point Source: International Telecommunication Union (ITU) Digital Access Index, November 2003 054016 ©2003 eMarketer, Inc. www.eMarketer.com

“The race is on across Asia-Paciﬁc to develop Internet societies. Inherent in this growth is integrating the Internet throughout business processes and within the daily lives of citizens.” — Nathan Midler, senior analyst, IDC Asia-Paciﬁc, Internet and eBusiness Research.

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Methodology In 2002, China overtook Japan to become the Asian country with the Introduction largest number of Internet users, according to the ITU. This gave China the Asia-Paciﬁc Overview world’s second-largest Internet population, trailing the US. However, even Australia

China with 59.1 million Internet users in 2002, China’s Internet penetration Hong Kong remains extremely low in terms of its overall population. India Japan Internet Users in Select Countries in the Asia-Pacific Singapore Region, 2000-2002 (in thousands) South Korea 2000 2001 2002 Taiwan

Index of Charts Australia 6,600 7,200 8,400 China 22,500 33,700 59,100 Hong Kong 1,855 2,601 2,918 India 5,500 7,000 16,580 Japan 38,000 48,900 57,200 Singapore 1,300 1,700 2,247 South Korea 19,040 24,380 26,270 Taiwan 6,260 7,820 8,590 Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days Source: International Telecommunication Union (ITU), October 2003 049363 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology South Korea is the regional leader in terms of Internet penetration, Introduction according to the ITU. Wide diffusion of telecommunications, a near- Asia-Paciﬁc Overview ubiquitous broadband infrastructure and a fairly urbanized population has Australia

China produced an Internet penetration rate of 55.2%. By contrast, China, Hong Kong Indonesia, and India are population giants in the region that all continue to India suffer from relatively low Internet penetration rates. Japan Singapore Internet Users’ Penetration Rate in the Asia-Pacific South Korea Region, by Country, 2002 (per 100 inhabitants) Taiwan Index of Charts Australia 42.7

China 4.6

Hong Kong 43.1

India 1.6

Indonesia 1.9

Japan 44.9

South Korea 55.2

Malaysia 27.3

New Zealand 48.4

Philippines 25.6

Singapore 54.0

Taiwan 38.3

Thailand 7.8

Vietnam 1.8

Asia average* 5.6

Note: *based on continental Asia plus Southeast Asia, which includes Middle East and Central Asian states Source: International Telecommunication Union (ITU)/Yankee Group, May 2003 050284 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Internet User Forecasts Introduction Computer Industry Almanac and World Bank appear to be extremely Asia-Paciﬁc Overview

Australia optimistic about growth in Internet use and the total number of users in the China region by 2004, as the following comparative estimate chart shows. Hong Kong India Comparative Estimates: At-Home and At-Work Japan Internet Users in the Asia-Pacific Region, 2001-2007 (in Singapore millions) South Korea 2001 2002 2003 2004 2005 2006 2007 Taiwan

Index of Charts Computer Economics, June – 151.3 203.6 238.0 273.0 313.4 – 2002 (1) Computer Industry Almanac 115.0 – – 357.0 – – 612.0 (CIA), March 2002 IDATE, January 2003 123.0 180.0 – – – 375.0 – International Data Corpora- 94.0 – – – – – – tion (IDC), July 2002 (2) Morgan Stanley, September 100.0 141.0 187.0 217.0 246.0 – – 2003 PricewaterhouseCoopers 168.7 209.8 253.9 293.1 333.1 371.9 – (PwC), May 2002 (3) World Bank, March 2003 (4) 133.1* 209.0 275.8 355.4 442.6 531.4 631.0 Note: (1) Internet users are defined as individuals who consistently use the Internet with access from either work, school, home or multiple locations; (2) excludes Japan; (3) in conjunction with Wilkofsky Gruen Associates; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, January 2003 054081 ©2003 eMarketer, Inc. www.eMarketer.com

Research firm iDATE concurs with other research firms’ conclusions that the Asia-Pacific region will also continue to see impressive expansion of Internet penetration. At the same time, slowing growth in Internet penetration in North America and Western Europe and Scandinavia indicates those areas will approach saturation in the next several years.

Internet Penetration Worldwide, by Region, 2001, 2002 & 2006 2001 2002 2006 Western Europe (1) 31.2% 37.9% 51.4% North America 62.3% 66.7% 81.0% Latin America 3.1% 5.4% 9.1% Asia-Pacific 3.5% 6.4% 13.3% Eastern Europe (2) 5.7% 7.0% 15.4% Africa/Middle East (3) 0.8% 1.1% 3.1% Worldwide 7.9% 9.8% 15.8% Note: (1) includes Scandinavia; (2) includes Russia; (3) includes Turkey and South Africa Source: IDATE, January 2003 046503 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The increasing prevalence of Asians online has had a profound impact on Introduction the composition of the Web. According to the World Almanac, English has Asia-Paciﬁc Overview emerged as an intermediate language particularly in the business world, Australia

China and is now routinely taught in the schools of countries with other native Hong Kong languages. However, Mandarin is currently the leading language in the India world by a considerable margin. Japan Singapore Most Spoken Languages Worldwide, by Number of South Korea Speakers, 2003 (in millions) Taiwan Index of Charts Mandarin 874

Hindi 366

English 341

Spanish 322

Arabic 207

Bengali 207

Portuguese 176

Russian 167

Japanese 125

German 100

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Methodology As a result, a large consultancy emphasizing global change had featured an Introduction ad predicting that Chinese would become the Web’s dominant language. Asia-Paciﬁc Overview Global Reach’s examination of online language population reveals that Australia

China that prediction may come true one day. The marketing communications Hong Kong ﬁrm found that Asian languages such as Chinese, Japanese and Korean India now constitute more than a quarter of languages spoken by Web users Japan worldwide, although English still dominates with more than 35% of the Singapore

South Korea online population using it as its native language.

Taiwan

Index of Charts Internet Users Worldwide, by Languages Spoken, September 2003 (as a % of Internet users worldwide*)

English 35.6%

Chinese 12.2%

Japanese 9.5%

Spanish 8.0%

German 7.0%

Korean 4.0%

French 3.7%

Italian 3.3%

Portuguese 2.6%

Russian 2.5%

Dutch 1.8%

Other 9.8%

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Methodology E. Broadband Introduction

Asia-Paciﬁc Overview Australia “Broadband is increasingly becoming the standard China means of Internet access in countries such as Hong Kong

India Korea, Taiwan and Hong Kong. However, while it is

Japan becoming more pervasive in Australia and Singapore Singapore, high pricing is slowing adoption in South Korea these two countries.” Taiwan — Renee Gamble, Program Manager, IP Communications and Broadband Index of Charts Markets and Technologies Research, IDC Asia-Paciﬁc

Broadband Users According to the ITU, South Korea leads all nations worldwide in terms of broadband penetration, with an incredible 94% of all Internet subscribers having access to a fast connection. The ITU describes South Korea’s broadband market as around three years ahead of the global average in terms of converting Internet users to broadband. Hong Kong was the second-highest country in the region for broadband adoption, with 42.5% of its Internet users taking advantage of high-speed connections. The ITU study attributed user demand for greater speed – both to play online games and to download digital media – as the driving force behind the region’s broadband growth. Indeed, a connection between the high accessibility of broadband in South Korea and the widely reported online gaming culture in that country can readily be seen.

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Methodology

Introduction Broadband and Internet Subscribers Worldwide, by

Asia-Paciﬁc Overview Country, 2002 (total subscribers, % of the population

Australia and % of all Internet subscribers) China Broadband Broadband Internet Broadband Hong Kong subscribers penetration subscribers as % of all

India Internet subscribers Japan

Singapore US 19,881,549 6.9% 70,000,000 18.3% South Korea South Korea 10,128,000 21.3% 10,784,678 93.9% Taiwan Japan 9,092,039 7.1% 29,562,509 30.8% Index of Charts Canada 3,515,000 11.2% 5,624,000 50.4% Germany 3,240,000 3.9% 15,000,000 14.0% Taiwan 2,100,000 9.4% 7,441,994 28.2% France 1,456,000 2.4% 8,925,000 16.3% UK 1,370,000 2.3% 13,100,000 10.5% Netherlands 1,170,000 7.2% 4,500,000 26.0% Spain 1,077,405 2.6% 3,673,959 11.7% Hong Kong 1,009,426 14.9% 2,374,332 42.5% Belgium 870,000 8.4% 1,694,384 51.3% Italy 850,000 1.5% 5,800,000 – Sweden 700,000 7.8% 2,849,000 12.5% Austria 539,500 6.6% 1,200,000 45.0% Denmark 462,000 8.6% 2,441,044 18.9% Switzerland 460,000 6.3% 2,550,000 18.0% Australia 283,600 1.4% 4,600,000 6.2% Finland 273,500 5.3% 950,000 5.5% Portugal 259,491 2.5% 5,165,057 5.0% Singapore 230,357 5.5% 927,000 16.3% Israel 135,000 2.0% 956,000 4.2% Norway 88,541 1.9% 1,235,596 7.2% Slovenia 56,735 2.8% 280,000 2.0% Estonia 45,700 3.4% 121,000 37.8% New Zealand 43,500 1.1% 660,000 2.6% Iceland 24,270 8.4% 50,000 20.8% Malta 17,679 4.5% 60,000 15.3% Macao 16,954 3.9% 47,016 36.1% St. Kitts and Nevis 1,700 3.6% 4,600 37.0% Source: International Telecommunication Union (ITU), September 2003 052272 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology South Korea is also the world’s leading country in terms of broadband Introduction penetration, with nearly 22% of its total population connected to the Asia-Paciﬁc Overview broadband, particularly DSL. However, Hong Kong and Taiwan also rank Australia

China among the top ﬁve in broadband penetration. Canada, which ranked third, Hong Kong was the only North American country to penetrate the ITU’s top 10 list India ranked according to its own Digital Access Index. Japan Singapore Top Five Countries in International South Korea Telecommunication Union (ITU)’s Digital Access Index Taiwan with Highest Number of Broadband Subscribers per Index of Charts 100 Inhabitants, 2003

1. South Korea 21.9

2. Hong Kong, China 14.6

3. Canada 11.1

4. Taiwan, China 9.4

5. Belgium 8.4

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Methodology Broadband Forecast Introduction By 2005, China, Japan and South Korea will be the leading broadband Asia-Paciﬁc Overview

Australia countries in Asia-Paciﬁc in terms of sheer numbers of broadband China households. While information is difﬁcult to come by regarding China’s Hong Kong broadband sector, there are indications to suggest that China is creating an India environment that will support tens of millions of broadband subscribers in Japan

Singapore the next few years. eMarketer estimates that by 2005, China will have 23.5

South Korea million broadband households and lead Asia-Paciﬁc with Japan in terms of Taiwan share of broadband subscribers across the region. Index of Charts Leading Broadband Markets in the Asia-Pacific Region, 2002 & 2005 (as a % of total broadband households in region) Rest of Asia-Pacific Taiwan Taiwan 4.5% 8.6% 7.6% Rest of Asia- Korea Pacific 18.0% 5.5% China 15.6% China 34.9% Japan Korea 35.0% Japan 41.6% 28.7%

“Broadband is increasingly becoming the standard means of Internet access in countries such as Korea, Taiwan and Hong Kong. However, while it is becoming more pervasive in Australia and Singapore, high pricing is slowing adoption in these two countries.” — Renee Gamble, Program Manager, IP Communications and Broadband Markets and Technologies Research, IDC Asia-Paciﬁc

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Methodology eMarketer forecasts a compound annual growth rate (CAGR) of 41% Introduction between 2002 and 2005. This equates to broadband households numbering Asia-Paciﬁc Overview 67.4 million in 2005, up from 24.2 million at the end of 2002. Australia

China

Hong Kong Broadband Households in Select Countries in the

India Asia-Pacific Region, 2000-2005 (in thousands)

Japan 2000 2001 2002 2003 2004 2005 Singapore Australia 75 179 275 422 682 1,026 South Korea China 103 390 3,790 8,645 14,700 23,510 Taiwan

Index of Charts Hong Kong 342 545 808 1,001 1,157 1,322 India 0 25 45 63 87 122 Japan 635 2,570 6,960 12,069 17,282 23,510 South Korea 4,350 7,500 10,075 10,931 11,640 12,109 Singapore 93 135 198 313 425 594 Taiwan 224 1,125 2,075 3,247 4,515 5,092 Total 5,822 12,469 24,226 36,691 50,488 67,355 Source: eMarketer, March 2003 048261 ©2003 eMarketer, Inc. www.eMarketer.com

Morgan Stanley estimates that total residential broadband subscribers in Asia-Paciﬁc will grow 26%, from 14 million subscribers in 2002 to 18 million in 2003. Like IDC’s estimates, this estimate probably does not include Japan. South Korea will likely maintain its control over the Asia- Paciﬁc broadband market, accounting for 60% to 65% of total subscribers in the region. Morgan Stanley further notes that VDSL will be the key driver in 2003 for South Korea.

Broadband Households in the Asia-Pacific Region, 2002 & 2003 (in millions and as a % increase vs. prior year)

2002 14

2003 18 (26%)

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Methodology Broadband Access Technologies Introduction Like the diversity of the Asia-Paciﬁc market itself, the full array of Asia-Paciﬁc Overview

Australia broadband technologies offered in the region include ADSL, cable Internet, China VDSL, fixed-wireless, satellite, Ethernet LAN, fiber-to-the-home, fiber-to- Hong Kong the-curb, residential Wi-Fi, 3G for mobile devices and a LAN variation India from Korea Telecom. This has made the Asia-Pacific broadband Japan

Singapore marketplace the most vibrant and innovative in the world.

South Korea Five Asia-Paciﬁc telecom carriers recently formed a memorandum of Taiwan understanding to link thousands of the region’s Wi-Fi hotspots by the end Index of Charts of 2003. South Korea’s Korea Telecom, China Telecom, Malaysia’s Maxis, Singapore-based StarHub and Telstra of Australia have set the goal of activating 20,000 Wi-Fi hotspots in business hubs, hotels, airports and cafes by that time. This may have the effect of driving the adoption of wireless broadband within the region. Korea Telecom already has over 150,000 Wi-Fi subscribers with more than half of them residential subscribers. In addition, the UN has sought ways to leverage Wi-Fi to bring Internet access to developing countries. eMarketer expects DSL subscribers to grow to 41.2 million in 2005, up from 15 million in 2002. Cable Internet subscribers will not grow as strongly as DSL, but eMarketer forecasts 12.4 million subscribers in 2005. Alternative broadband technologies, particularly LAN-type technologies that can service high-density apartment buildings, will grow particularly strongly in China and to a lesser extent South Korea and FTTH in Japan will attract many subscribers in the next three years.

Broadband Households in the Asia-Pacific* Region, by Access Technology, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 DSL 3,301 7,397 14,970 23,192 32,087 41,227 Cable Internet 2,465 4,743 6,537 8,117 9,750 12,427 Other** 56 329 2,719 5,382 8,651 13,701 Total 5,822 12,469 24,226 36,691 50,488 67,355 Note: *includes Australia, China, Hong Kong, India, Japan, South Korea, Singapore and Taiwan; **Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048302 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer’s estimates of the growth of DSL in Asia-Paciﬁc show South Introduction Korea’s present lead well overtaken by both Japan and China in 2005. Asia-Paciﬁc Overview Australia DSL Households in Select Countries in the Asia-Pacific China Region, 2000-2005 (in thousands) Hong Kong

India 2000 2001 2002 2003 2004 2005 Japan Australia 10 65 90 150 324 565 Singapore China 83 150 1,900 4,600 8,500 13,450 South Korea

Taiwan Hong Kong 200 310 395 442 485 529

Index of Charts India 0 12 25 37 52 75 Japan 12 1,250 4,820 8,654 11,768 14,926 South Korea 2,840 4,650 5,930 6,402 6,880 7,065 Singapore 40 50 90 155 225 301 Taiwan 116 910 1,720 2,752 3,853 4,316 Total 3,301 7,397 14,970 23,192 32,087 41,227 Source: eMarketer, March 2003 048289 ©2003 eMarketer, Inc. www.eMarketer.com

While South Korea will maintain its frontrunner position in terms of cable Internet subscribers, Japan will be nearly on par as of 2005. China is expected to undergo substantial growth in order to achieve third-place status in 2005 with 2.1 million cable Internet subscribers.

Cable Internet Households in Select Countries in the Asia-Pacific Region, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 Australia 64 110 161 233 306 394 China 20 40 90 295 750 2,100 Hong Kong 100 170 278 358 402 448 India 0 13 20 26 35 46 Japan 620 1,300 1,940 2,660 3,365 4,209 South Korea 1,500 2,815 3,600 3,925 4,082 4,245 Singapore 53 80 98 140 175 255 Taiwan 108 215 350 480 635 730 Total 2,465 4,743 6,537 8,117 9,750 12,427 Source: eMarketer, March 2003 048296 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology F.Internet Usage Introduction Asia-Paciﬁc Overview Consumers are drawn to the Internet because of the functionality it Australia provides. As such, a number of compelling content and application China offerings have begun to gain popularity around the continent. Hong Kong

India Unfortunately, little publicly available data exists in terms of general

Japan activities or time spent online across the Asia-Pacific region. However, data Singapore is available regarding some specific activities, such as online gaming, South Korea shopping, travel and e-government potential. Taiwan The online gaming market in Asia-Pacific totaled $533 million in Index of Charts subscription fees in 2002, according to IDC, with Korea and Taiwan constituting two of the world’s largest online gaming markets. The research firm’s study of seven Asia-Pacific countries identifies Korea as the single largest online gaming market in Asia-Pacific with 54% market share, followed by Taiwan at 26% market share. Countries in the North Asia market – consisting of China, Taiwan and Hong Kong –snared 45% of the total market share in the IDC survey. North Asia has also developed into a profitable market for Korean online gaming service providers seeking to expand into foreign markets. One interesting survey result was that a majority of the reported online gaming revenues came from gamers who participate in Chinese and Korean-based multiplayer online role-playing games, rather than games from the US.

Online Gaming Market Share in the Asia-Pacific Region, by Country, 2003 Hong Kong 2.5% Singapore 0.1% PR China 16.8% Australia 0.2% Malaysia 0.2% Taiwan 25.9% South Korea 54.3%

Searching for travel information, products and services will become one of the most popular online activities as an increased array of services becomes available to the Asia-Paciﬁc consumer. This would be in keeping with trends in Europe and North America, whose Internet users have made travel sites among the most successful e-commerce ventures.

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Methodology With more and more Internet users in the Asia-Pacific region flocking to Introduction travel sites and global travel companies expanding to fill the niche, the Asia-Pacific Overview future looks bright on the revenue front. PhoCusWright estimates that 1% Australia

China to 3% of all leisure travel bookings were made online in 2002 (versus a Hong Kong range of 9% to 15% in the US), but as the chart below demonstrates, the India research ﬁrm expects online leisure travel bookings to triple from 2002 to Japan 2004, with airlines (many of which already sell 10% of 15% of their Singapore

South Korea inventory online, according to PhoCusWright) garnering the majority of

Taiwan spending, especially as the majors face competition from discount carriers Index of Charts with lower-cost distribution channels.

“The trend is people are showing more conﬁdence in online booking. Online booking systems are using local languages not just English. There is a big market in Asia as people have more disposable income and they see travel as an extension of their lifestyle and as a right.” — Ken Scott, managing director for communications at the Bangkok-based Paciﬁc Asia Travel Association (PATA)

Online Travel Revenues in the Asia-Pacific Region, 2002-2004 (in billions)

2002 $4.78

2003 $8.07

2004 $13.30

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Methodology Among some of the more highly penetrated Internet economies in the Introduction region, e-commerce has begun to emerge as an online activity. In some Asia-Paciﬁc Overview categories, the percentage of online purchases in many categories has been Australia

China close to or above the global average in selected countries. For example, a Hong Kong similar or higher percentage of online shoppers in Australia, Hong Kong India and Singapore have purchased books online. Furthermore, a far higher Japan percentage of users in those three countries purchased movie or theater Singapore

South Korea tickets online. PC-related purchases, electronics, and travel were generally

Taiwan purchased by a lower percentage in the countries, although South Korea Index of Charts proved a strong market for such goods.

Leading Online Purchases by Internet Users in Selected Countries in the Asia-Pacific Region, 2002 (as a % of internet users who have shopped online) Australia Global Hong Singapore South Taiwan average Kong Korea Books 23% 23% 28% 23% 17% 39% Business travel 5% 4% – 6% – – Car – 1% – – – – Clothes 7% 13% 2% 6% 25% 2% Electronics/electrical 6% 13% 7% 4% 20% 16% goods Furniture/household 4% 4% – – 15% 2% furnishings Groceries/food 14% 7% 7% 10% 7% 13% Holidays/leisure 21% 11% 4% 6% 2% – travel Jewelry/fashion 5% 3% 2% 2% 9% 10% accessories Movie/theatre 14% 8% 29% 33% 7% 10% tickets Music/CDs 11% 15% 9% 15% 12% 6% PC hardware 4% 10% 5% 2% 14% 5% PC software 6% 8% 2% 10% 8% 5% Sports equipment 8% 4% 2% – 7% – Stocks/shares/ 9% 2% – 2% 3% 5% mutual funds Toiletries/cosmetics 2% 4% 6% 4% 21% 10% Toys/games 7% 4% 5% – 7% – Videos 4% 5% 5% 6% – 5% Other 28% 19% – – 9% 2% Note: multiple responses allowed; numbers bolded in red indicate most popular category in each country Source: Taylor Nelson Sofres (TNS), June 2002 042824 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology In developing the capacity of e-government, the United Nations has Introduction developed an e-government rating that is based on the willingness, Asia-Paciﬁc Overview capacity, and aptitude of governments to provide high-quality information Australia

China on the Web. Several Asian countries ranked within the top 25, led by Hong Kong Australia at #3. As the study tended to favor advanced countries, India Singapore, Korea, New Zealand and Japan also ranked in the top 20. Japan Singapore Top 25 E-Government Countries, 2003 (by South Korea E-Government Readiness Ranking*) Taiwan Index of Charts 1. US 0.927

2. Sweden 0.840

3. Australia 0.831

4. Denmark 0.820

5. UK 0.814

6. Canada 0.806

7. Norway 0.778

8. Switzerland 0.764

9. Germany 0.762

10. Finland 0.761

11. Netherlands 0.746

12. Singapore 0.746

13. South Korea 0.737

14. New Zealand 0.718

15. Iceland 0.702

16. Estonia 0.697

17. Ireland 0.697

18. Japan 0.693

19. France 0.690

20. Italy 0.685

21. Austria 0.676

22. Chile 0.671

23. Belgium 0.670

24. Israel 0.663

25. Luxembourg 0.656

Note: *The E-Govenment Readiness Index is based on three factors: the Web Measure Index, the Telecommunication Infrastructure Index and the Human Capital Index; countries are all UN Member States and compare to a global average of 0.402 Source: United Nations World Public Sector Report, October 2003 054021 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology G. Wireless and Mobile Content Introduction Asia-Paciﬁc Overview The Asia-Paciﬁc region has proven to be an exception to the global trend of Australia declining telecom growth over the past few years. As the Yankee Group China reports, both mobile user and mobile service revenue growth have Hong Kong

India maintained steady progress. The research ﬁrm projects the base of mobile

Japan users in the region will grow from 436 million in 2002 to 773 million in Singapore 2007, at a CAGR of 12.2%. South Korea Yankee Group attributes much of this growth to emerging markets and Taiwan the rising popularity of pre-paid subscriptions across Asia. Service revenue Index of Charts is expected to grow from $121 billion in 2002 to $227 billion in 2007, at a CAGR of 13.4%. The opportunities for growth in Asia continue to be driven by new network deployments in emerging markets, especially predicted for China and India. However, operators and regulators in the Asia-Paciﬁc region will remain cautious as long as unfavorable economic conditions persist. Any momentum toward 3G in Asia has stalled or is being reassessed, the research ﬁrm reports.

Mobile Subscribers in the Asia-Pacific Region, 2002-2007 (in millions and % of the population)

2002 435.5 (12.4%)

2003 505.5 (14.3%)

2004 573.9 (16.1%)

2005 642.4 (17.9%)

2006 711.7 (19.6%)

2007 773.4 (21.1%)

The growth in mobile phone subscribers in China over the last few years has been staggering. Approximately 50% of the entire Asian mobile phone market is claimed by China. At the end of 2002, China comprised 18.1% of the world’s mobile phone market, up from 11.5% in 2000, according to ﬁgures from the ITU.

Largest Mobile Data Subscriber Markets Worldwide, 2007 (in millions)

China 256

US 211

Japan 102

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Methodology Japan, South Korea and Hong Kong are three of the most advanced mobile Introduction markets in the world. The Electronic Commerce Promotion Council of Japan Asia-Paciﬁc Overview (ECOM) conducted a survey between June and September 2002 of Australia

China approximately 12,000 mobile Internet users in Japan, South Korea and Hong Kong Hong Kong. One of their ﬁndings showed that Japanese and Hong Kong India mobile Internet users regard communication as the most important function Japan of a mobile phone, whereas in South Korea, mobile entertainment services Singapore

South Korea were regarded as more important than communication. Interestingly, this

Taiwan ﬁnding was true across all age groups that were measured.

Index of Charts Importance of Select Mobile Services among Mobile Phone Users in Japan, South Korea and Hong Kong, 2002 (on a scale from 1-7*)

Japan 4.00 5.31 4.74 4.04

South Korea 4.37 4.86 4.80 5.09

Hong Kong 4.10 4.77 4.56 4.41

Commerce Communication Information Entertainment Note: Japan (n=4,440); South Korea (n=3,315); Hong Kong (n=3,906); *1=least important service, 7=most important service Source: Electronic Commerce Promotion Council of Japan (ECOM) and InfoCom Research, Inc., March 2003 052611 ©2003 eMarketer, Inc. www.eMarketer.com

Location and trafﬁc information were among the most popular content services available. Directory content also proved popular. Games, character and ring tone downloads, reading e-books and cartoons and news and sports info were also cited.

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Methodology “The developing nations of Asia represent the real Introduction test of the potential of mobile communications Asia-Paciﬁc Overview

Australia to extend access to telecommunication services. China We know mobile phones are popular among the Hong Kong urban rich; but will they also change the lives of India the rural poor?” Japan — Tim Kelly, Head, Strategy and Policy Unit, International Singapore

South Korea Telecommunication Union

Taiwan

Index of Charts Content Services that Mobile Internet Users in Japan, South Korea and Hong Kong Are Most Willing to Purchase in the Future, 2002 (as a % of respondents) Japan South Korea Hong Kong Location infor- 26.9% Location infor- 25.1% Location infor- 17.9% mation (locating mation (locating mation (locating a person, traffic a person, traffic a person, traffic information information information Reading (e-book, 10.0% Game 14.6% Game 17.4% cartoon) News/sports 9.3% Reading (e-book, 13.2% Download ser- 13.7% cartoon) vice (cartoon character, bell sound) Source: Electronic Commerce Promotion Council of Japan (ECOM) and InfoCom Research, Inc., March 2003 052615 ©2003 eMarketer, Inc. www.eMarketer.com

Despite mobile Internet services being well established in these three countries, mobile commerce is still an activity conducted by a minority of mobile Internet users. Survey respondents cited small screens, the inability to see the tangible item and information privacy and security as major problems with mobile commerce.

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Methodology In Japan, the product/service most often purchased via a mobile device is Introduction travel services such as hotel or airline reservations, followed by movie and Asia-Paciﬁc Overview concert reservations. In South Korea, 12% of respondents indicated they Australia

China purchased delivery services such as gift cards and ﬂowers and in Hong Hong Kong Kong 22.6% of survey respondents indicated they purchased movie or India concert tickets. Movie and concert ticket reservations and purchases were Japan cited within the top three responses of all countries. Singapore

South Korea Product/Service that Mobile Internet Users Users in Taiwan Japan, South Korea and Hong Kong Purchase Most Index of Charts Often, 2002 (as a % of respondents) Japan South Korea Hong Kong Travel reserva- 5.9% Delivery service 12.0% Movie/concert 22.6% tion (hotel, (gift cards, flowers) ticket purchase airline, package Movie/concert 5.3% Movie/concert 7.8% Movie/concert 11.5% ticket reser- ticket purchase ticket reservation vation Finance/banking/ 5.2% Movie/concert 7.8% Finance/banking/ 10.3% insurance goods ticket reservation insurance goods Source: Electronic Commerce Promotion Council of Japan (ECOM) and InfoCom Research, Inc., March 2003 052614 ©2003 eMarketer, Inc. www.eMarketer.com

Not surprisingly, games were found to be the mobile content category that those under 20 were most willing to use in the future. However, other services were close behind in each country. In South Korea, young users were nearly as likely to purchase location information. In Hong Kong, nearly as many would download a cartoon character or ring tone, and in Japan, reading an e-book was cited by nearly one out of ﬁve.

Content Services that Mobile Internet Users* in Japan, South Korea and Hong Kong Are Most Willing to Purchase in the Future, 2002 (as a % of respondents) Japan South Korea Hong Kong Game 21.1% Game 21.9% Game 22.7% Reading (e-book, 19.3% Location infor- 21.3% Download ser- 20.7% cartoon) mation (locating vice (cartoon a person, traffic character, bell information sound) Location infor- 15.7% Reading (e-book, 14.8% Reading (e-book, 13.7% mation (locating cartoon) cartoon) a person, traffic information Note: *under age 20 Source: Electronic Commerce Promotion Council of Japan (ECOM) and InfoCom Research, Inc., March 2003 052616 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The survey reveals that even within advanced mobile markets such as Introduction these, mobile commerce has limited appeal and only non-tangible items Asia-Paciﬁc Overview such as movie and concert tickets, travel services and ﬁnancial services Australia

China have gained any sort of popularity. Respondents desire location-based Hong Kong information, which takes advantage of the time and place of the user, India across all countries and new GPS handsets are beginning to service some of Japan these needs. Entertainment-based services have now moved beyond just Singapore

South Korea mobile phone add-ons and are now becoming as an important component

Taiwan of a mobile device as its communication functions. In South Korea, it Index of Charts seems, they are more important.

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Methodology H. Digital TV Introduction Asia-Paciﬁc Overview Nearly 7.9 million homes in the Asia-Paciﬁc region were estimated to Australia receive digital TV at the end of 2002, according to the Informa Media China Group. This represents a jump of nearly 3 million more than at the end of Hong Kong

India 2001, which the research ﬁrm sees as an early indicator of substantial

Japan growth to come. The number of households with digital televisions in the Singapore region will more than quadruple by 2005, reaching 157 million by 2010. South Korea While Japan currently leads the pack in terms of digital television in the Taiwan home, China is expected to become the market leader by 2010. Through its Index of Charts enormous market potential, China in expected to provide nearly half the region’s digital TV homes by 2010. In that timeframe, India is expected to grow from a nonexistent market in 2002 to closely trail Japan’s second- place position by 2010.

Digital TV Households in the Asia-Pacific Region, by Country, 2001-2010 (in thousands) 2001 2002 2005 2010 Australia 737 807 1,646 4,126 China 0 69 11,886 78,112 Hong Kong 30 5 205 1,164 India 0 0 3,301 22,528 Indonesia 30 31 149 430 Japan* 2,770 4,032 10,164 25,514 Malaysia 740 833 1,144 2,228 New Zealand 303 409 546 933 Philippines 8 27 285 1,943 Singapore 35 49 231 736 South Korea 26 1,138 5,074 10,996 Taiwan 79 133 1,355 4,055 Thailand 255 285 399 3,445 Total 5,013 7,851 36,385 156,854 Note: *does not include broadcast satellite homes Source: Informa Media Group, December 2002 045387 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Informa further reports that 28% of the region’s households will receive Introduction digital TV by 2010, which will still leave a significant untapped market for Asia-Pacific Overview potential future expansion throughout Asia-Pacific. Overall, the market Australia

China will be led by digital cable with 14% of households with televisions, Hong Kong although in some markets, such as New Zealand and Malaysia, satellite will India have a signiﬁcant lead. While some local governments have announced Japan conditional dates to switch off their analog signal and transmit television Singapore

South Korea and radio programming entirely digitally, Informa reports that these dates

Taiwan are generally considered too optimistic.

Index of Charts Digital TV Penetration of TV Households in the Asia-Pacific Region, by Platform, 2010 Cable Satellite DSL entertainment DTT Total Australia 11% 16% 10% 17% 54% China 12% 1% 1% 11% 25% Hong Kong 23% 5% 13% 10% 50% India 17% 2% 0% 5% 24% Indonesia 1% 1% 0% 2% 3% Japan* 31% 12% 9% 5% 57% Malaysia 2% 34% 4% 15% 55% New Zealand 6% 40% 10% 10% 65% Philippines 9% 1% 1% 7% 18% Singapore 37% 0% 14% 15% 66% South Korea 40% 20% 9% 2% 70% Taiwan 49% 1% 9% 3% 63% Thailand 0% 3% 1% 15% 19% Total 14% 3% 2% 9% 28% Note: *class satellite subscribers only for DTH Source: Informa Media Group, December 2002 045388 ©2002 eMarketer, Inc. www.eMarketer.com

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Asia-Paciﬁc Online

Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13 III Australia 47 A. Internet Users 48 B. Broadband 52 C. Internet Usage 58 III D. Wireless 66 IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology “While [broadband] is becoming more pervasive in Introduction Australia and Singapore, high pricing is slowing Asia-Paciﬁc Overview

Australia adoption in these two countries.”

China — Renee Gamble, Program Manager, IP Communications and Broadband Hong Kong Markets and Technologies Research, IDC Asia-Paciﬁc India

Japan

Singapore

South Korea A. Internet Users Taiwan Internet adoption Australia has accelerated in the past several years, Index of Charts picking up 1.2 million users in 2002 and 600,000 in 2001. The ITU estimates that the total number of Internet users in Australia grew by more than 25% between 2000 and 2002, and now stands at 8.4 million users. Penetration has grown from just 34% in 2000 to nearly 43% in 2002.

Internet Users in Australia, 2000-2002 (in thousands and as % penetration)

2000 6,600 (34.4%)

2001 7,200 (37.2%)

2002 8,400 (43.0%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 19.2 million for 2000, 19.4 million for 2001 and 19.5 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049351 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology PricewaterhouseCoopers has forecast that the number of Internet users will Introduction reach 7.4 million in 2006, but even this amount is below the 8.4 million Asia-Paciﬁc Overview user mark that the ITU estimated for 2002 and which eMarketer uses as a Australia

China benchmark. Nielsen/NetRatings sees the Internet population of Australia Hong Kong reaching the ITU mark at the end of 2003. India Japan Comparative Estimates: Total At-Work and At-Home Singapore Internet Users in Australia, 2000-2006 (in millions) South Korea 2000 2001 2002 2003 2004 2005 2006 Taiwan

Index of Charts Computer Industry Almanac (CIA), – – 10.5 – – – – December 2002 International Telecommunication 6.6 7.2 8.4 – – – – Union (ITU), October 2003 (1) Morgan Stanley, May 2002 7.4 8.5 – – – – – Nielsen/NetRatings, May 2003 (2) – – – 8.4 – – – (3) PricewaterhouseCoopers (PwC), – 6.4 6.5 6.6 6.9 7.2 7.4 May 2002 (4) Note: (1) Internet users ages 2+ who have accessed the Internet in the past 30 days; (2) for the month of April 2003; (3) Active digital media universe represents persons who actively used a computer connected to the Internet and either generated Web-traffic, or launched and brought into focus any computer application tracked by the Nielsen//NetRatings meter, or both; (4) in conjunction with Wilkofsky Gruen Associates Source: various as noted, 2003 054024 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology According to Roy Morgan Research, Australians aged 14 to 24 are the most Introduction likely to access the Internet in general, and more than twice as likely to Asia-Paciﬁc Overview access the Internet while at a friend’s home than the population as a whole. Australia

China Given that many in this age group are in school, it was not surprising that Hong Kong work was the only place they accessed the Internet less. India Japan Internet Access Locations Used in the Past Three Singapore Months in Australia, by Age, January-December 2002 South Korea

Taiwan Home

Index of Charts 53% 64%

Work 28% 22%

Friend’s place 11% 29%

Educational institution 10% 35%

Library 8% 21%

Internet cafe 3% 6%

Other 3% 7%

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Methodology As English is the first language for the vast majority of Australians, one Introduction might expect Internet usage to be higher there than in other parts of the Asia-Pacific Overview Asia-Pacific region. But eMarketer estimates just over 55% of the 7.5 million Australia

China households in Australia had access to the Internet at the end of 2002, which Hong Kong is similar to Internet household penetration in Japan and the US. India Japan Australia: Internet Access Summary, End of 2002 (in Singapore thousands and as a % of total households and South Korea population) Taiwan Online % of total Index of Charts households households** Dial-up* 3,901 52.0% DSL 90 1.2% Cable Internet 161 2.1% Other 24 0.3% Total broadband households 275 3.7% Total online households 4,176 55.7% Internet users 8,400 50.3%*** Note: *includes ISDN; **based on 7.5 million households; ***based on population of 19.7 million Source: eMarketer, March 2003 048165 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology B. Broadband Introduction Asia-Paciﬁc Overview With just 7% broadband penetration at the end of 2002, Australia remains Australia a predominantly dial-up nation. However, broadband usage was up from China 2001’s total of fewer than 5%. Such low penetration, while limiting the Hong Kong

India potential of an enhanced Internet experience in the country, signals that

Japan there is much room for growth in the coming years.

Singapore South Korea Online Households in Australia: Dial-Up vs. Taiwan Broadband, 2001 & 2002 (as a % of online households) Index of Charts 2001 4.7% 95.3%

2002 6.6% 93.4%

Despite the current disparity between dial-up and broadband usage in Australia, eMarketer expects broadband to make signiﬁcant gains in the next few years. As the chart below illustrates, broadband should reach just over 13% of total households. While that ﬁgure is low compared to other countries, Australia does not have the high population density of its northern neighbors South Korea and Japan.

Broadband Penetration in Australia, 2000-2005 (as a % of total households)

2000 1.1%

2001 2.0%

2002 3.7%

2003 5.6%

2004 8.9%

2005 13.2%

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Methodology eMarketer expects DSL to overtake cable as the access technology of choice Introduction among broadband households in Australia by the end of 2004. This trend Asia-Paciﬁc Overview will continue through 2005 when eMarketer predicts there will be Australia

China approximately 171,000 more DSL than cable households. Other broadband Hong Kong technologies, which include fixed wireless, satellite, fiber, Ethernet LAN India and powerline technology, are not expected to have a significant impact. Japan Singapore Broadband Households in Australia, by Access South Korea Technology, 2000-2005 (in thousands) Taiwan Index of Charts 2000 10 64 1 75

2001 65 110 4 179

2002 90 161 24 275

2003 150 233 39 422

2004 324 306 52 682

2005 565 394 67 1,026

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048163 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Broadband households are expected to more than double between 2003 Introduction and 2005. eMarketer’s estimate, which uses ﬁgures from the Organization Asia-Paciﬁc Overview of Economic Cooperation and Development (OECD) as a baseline, puts the Australia

China number of broadband households in Australia at just over one million by Hong Kong the end of 2005. This estimate, while taking into account recent DSL India growth, is signiﬁcantly more conservative than estimates by Informa Japan Media Group and is much less than IDC’s ﬁgure. Singapore

South Korea Comparative Estimates: Broadband Households in Taiwan Australia, 2000-2007 (in millions) Index of Charts 2001 2002 2003 2004 2005 2006 2007 Australian Competition & – 0.2 – – – – – Consumer Commission, March 2003 eMarketer, March 2003 0.2 0.3 0.4 0.7 1.0 – – (1) Informa Media Group, May 0.2 0.3 0.6 0.9 1.5 2.2 3.1 2002 (2) International Data Corpora- – – – – 4.4 – – tion (IDC), January 2002 OECD, December 2002 0.2 0.3 (3) – – – – – Note: (1) eMarketer's year 200 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD); (2) Broadband Internet includes DSL, cable modem, satellite-to-PC, fixed wireless, FTTH/FTTC and powerline of more than 200kbps; (3) as of 30 June 2002 Source: various as noted, 2003 054025 ©2003 eMarketer, Inc. www.eMarketer.com As with overall broadband growth, eMarketer’s estimates for DSL growth in Australia are more moderate than either Informa’s or IDC’s. Using OECD ﬁgures as a baseline, eMarketer expects DSL use in Australia to more than triple between 2003 and 2005.

Comparative Estimates: DSL Households in Australia, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 Australian Competition & Consumer – 40 84 – – – Commission, March 2002 eMarketer, March 2003 10 65 90 150 324 565 International Data Corporation (IDC), 15 – – – – 3,600 2002 Informa Media Group, May 2002 – – 130 260 468 796 OECD, December 2002 – – 112* – – – Point-Topic, March 2003 – 31 108 – – – Note: eMarketer’s year 2000 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD); *subscribers as of 30 June 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048160 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Except for a big jump in the second quarter of 2002, businesses in Australia Introduction have been slower to adopt broadband than residential customers have. A Asia-Paciﬁc Overview study released in October 2003 by the Australian Competition & Consumer Australia

China Commission revealed that quarterly growth remained steady for residential Hong Kong accounts while business broadband growth dropped off in the fourth India quarter of 2002. It had not returned to 2002 growth levels by the second Japan quarter of 2003. Singapore

South Korea Growth in Residential and Business Broadband Taiwan Customers in Australia, by Quarter, Q2 2002-Q2 2003 Index of Charts Q2 2002 15.4% 62.4%

Q3 2002 20.3% 15.8%

Q4 2002 12.0% 5.9%

Q1 2003 13.2% 7.5%

Q2 2003 14.5% 11.3%

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Methodology Broadband Access Technologies Introduction The number of cable Internet households will not grow at the explosive rate Asia-Paciﬁc Overview

Australia of DSL households in Australia. Nevertheless, eMarketer estimates the China number of Australian households there that access the Internet through Hong Kong cable technology will increase by 75% between 2003 and 2005. India Japan Comparative Estimates: Cable Internet Households in Singapore Australia, 2000-2005 (in thousands) South Korea

Taiwan 2000 2001 2002 2003 2004 2005

Index of Charts Australian Competition & Consumer – 86 158 – – – Commission, March 2002 eMarketer, March 2003 64 110 161 233 306 394 International Data Corporation (IDC), 56 – – – – 803 2002 Informa Media Group, May 2002 – – 160 240 348 487 OECD, December 2002 – – 141* – – – Note: eMarketer’s year 2000 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD); *subscribers as of 30 June 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048161 ©2003 eMarketer, Inc. www.eMarketer.com

According to the Australian Competition & Consumer Commission, businesses subscribing to broadband prefer to access the Internet via ADSL. The survey, which concluded in June 2003 and was released in October, also showed that residential broadband customers prefer their bandwidth to come through cable. Interestingly, broadband users deﬁned in the study as neither business nor residential users, such as schools, outnumber the businesses using broadband to access the Internet.

Number of Residential and Business Broadband Customers in Australia, by Access Method, 30 June 2003 Cable Satel- ADSL Other Other Total lite DSL Residential customers 198,000 8,300 83,600 13,100 0 303,000 Business customers 17,400 3,200 57,600 5,800 300 84,300 Other – 1,500 52,300 75,700 – 129,500 Total 215,400 13,000 193,500 94,600 300 516,800 Note: Figures are approximate to the nearest hundred; not all broadband providers included Source: Australian Competition & Consumer Commission, October 2003 052873 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Optus (SingTel) and Telstra are the leading broadband access providers in Introduction Australia. Company reports reveal that both companies more than doubled Asia-Paciﬁc Overview their subscription rates between 2001 and 2002. By offering both DSL and Australia

China cable, Telstra boasts nearly three times the number of subscribers of Optus, Hong Kong which offers only the slower growing cable technology. India Japan Leading Broadband Access Providers in Australia, Singapore 2001 & 2002 (in thousands) South Korea Technology End of 2001 End of 2002 Taiwan

As in many other parts of the region, DSL in Australia continues to grow, but not as quickly as in other parts of Asia-Paciﬁc. A study conducted by Point Topic revealed an increase in DSL subscribers of over 500% in just 18 months. Point Topic’s research, which included both residences and businesses, found that 259,000 Australians were connecting to the Internet via DSL in June of 2003.

DSL Subscribers in Australia, 2001-2003 (in thousands)

December 2001 51.0

June 2002 100.0

December 2002 170.5

June 2003 259.0

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Methodology C. Internet Usage Introduction Asia-Paciﬁc Overview While there is evidence that e-commerce is growing in popularity, fewer Australia than half of Internet users in Australia have ever purchased anything China online, and a mere 3.6% have ever bid or sold anything at an online Hong Kong

India auction site according to Forrester Research. However, nearly 28% of the

Japan respondents in the study report they made an online purchase, and paid for Singapore it online, in the past three months. Furthermore, respondents reported that South Korea they engaged in such transactions more often than they visited government Taiwan Web sites or visited adult entertainment sites. Index of Charts

Online Activities in Australia, 2003 (as a % of respondents)

Made online purchase and paid online, ever 40.3%

Made online purchase and paid offline, ever 31.9%

Made online purchase and paid online in the past three months 27.4%

Visit daily newspaper sites 22.5%

Visit magazine sites 8.4%

Visit government agency sites 7.1%

Visit adult entertainment sites 5.3%

Bid or sell at online auction sites 3.6%

In a study of Australian home broadband users, ACNielson has found that broadband users are more likely to visit content sites than narrowband users are. For some media-intensive sites, broadband users were more than twice as likely to visit. For example, only 14% of narrowband users reported visiting music sites, but 29% of broadband users did. Other site categories that attracted broadband users included videos and movies, arts and graphics, and research tools.

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Methodology

Introduction Top 10 Content Categories for Broadband vs.

Asia-Paciﬁc Overview Narrowband Users in Australia, 2002 (as a % of

Australia respondents)

China Multi category computers and consumer electronics Hong Kong 32.88% India

Japan 16.21% Singapore Special interest news South Korea 28.83% Taiwan

Index of Charts 15.26% Music 28.82% 13.75%

Classified/auctions 27.90% 13.72%

Videos/movies 24.70% 11.89%

Shopping directories and guides 17.17% 9.04%

Online gaming 14.93% 6.31%

Arts/graphics 14.08% 6.49%

Research tools 12.45% 6.65%

Personals 10.66% 5.70%

Narrowband users visiting Broadband users visiting the the category category Note: Nielsen//NetRatings measures the number of users connecting to the Internet from home via broadband. This is not a measure of the number of subscribers Source: ACNielsen, September 2002 043456 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology According to Jupiter Research, broadband users in Australia are more likely Introduction to pay for online content that dial-up users are. However, no type of Asia-Paciﬁc Overview content was likely to garner interest from more than 12% of dial-up Australia

China customers, and only newspaper archives were found likely to appeal to Hong Kong even 20% of broadband users. India Japan Type of Content Internet Users in Australia Would Singapore Most Likely Pay For, by Access Type, 2003 (as a % of South Korea respondents) Taiwan

Index of Charts Digital music 16% 12%

Business/finance news 17% 12%

Newspaper archives 20% 12%

Digital photos 12% 6%

Online video 11% 6%

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Methodology According to RedSheriff, trafﬁc for the top Web sites in Australia remained Introduction relatively steady from May through June of 2003. MSN took a slight lead Asia-Paciﬁc Overview over its sister site microsoft.com by increasing unique visitors from May by Australia

China 3.3%. eBay was the only big mover, increasing its number of unique Hong Kong visitors in June by 33.5% to crack the top 10 at 2.4 million uniques. India Japan Top Web Sites in Australia, June 2003 (unique visitors Singapore and % change from May) South Korea Publisher Unique % change Taiwan visitors from May Index of Charts 1. ninemsn.com.au Ninemsn 5,960,000 3.3% 2. microsoft.com Microsoft (Int.) 5,710,000 0.4% 3. yahoo.com Yahoo (Int.) 4,550,000 0.7% 4. hotmail.com Hotmail 4,100,000 -2.8% 5. google.com.au Google (AU) 3,900,000 3.2% 6. google.com Google (Int.) 3,050,000 9.7% 7.msn.com MSN 3,040,000 5.2% 8. yahoo.com.au Yahoo (AU) 2,840,000 3.6% 9. telstra.com.au Telstra.com 2,460,000 -4.3% 10. ebay.com.au eBay (AU) 2,430,000 33.5% Source: RedSheriff, July 2003 051190 ©2003 eMarketer, Inc. www.eMarketer.com

According to RedSheriff, June 2003 traffic to the Australian Taxation Website, ato.gov.au, increased by more than 100% over May. More than half of all Australian taxpayers file their tax returns online. This illustrates the seasonal nature of traffic to some types of Web sites.

Top Business and Finance Web Sites in Australia, June 2003 (unique visitors and % change from May) Publisher Unique % change visitors from May 1. commbank.com.au CommBank 2,140,000 -2.3% 2. anz.com.au ANZ 1,710,000 19.6% 3. westpac.com.au Westpac 1,580,000 4.6% 4. national.com.au National Australia Bank 1,110,000 0.0% 5. ato.gov.au Australian Taxation Office 762,000 101.1% 6. comsec.com.au CommBank 708,000 5.2% 7.ingdirect.com.au ING Bank (AU) 607,000 1.0% 8. stgeorge.com.au St George 575,000 0.5% 9. asx.com.au ASX 331,744 -13.5% 10. citibank.com.au Citibank Australia 319,000 -0.9% Source: RedSheriff, July 2003 051193 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology RedSheriff’s September ranking of the top Web sites in Australia during Introduction August 2003 bears witness to the repercussions of cyber-vandalism on Asia-Paciﬁc Overview Internet businesses. The Blaster worm, which wreaked havoc on Windows Australia

China operating systems during August of 2003, made its presence felt in the loss Hong Kong of unique visitors during that month to Google, Hotmail and Yahoo. All India three of these sites experienced more than 5% decreases in visitors to their Japan sites during this time. Not surprisingly, microsoft.com experienced a large Singapore

South Korea increase in trafﬁc during August of 2003 as it struggled to eliminate the

Taiwan worm’s grip on customers’ operating systems.

Index of Charts Top 10 Web Sites in Australia, August 2003 (ranked by unique visitors and % change from July) Publisher Unique % change visitors from July 1. microsoft.comMicrosoft (International) 6,910,000 14.0% 2. ninemsn.com.auNinemsn 6,070,000 -2.4% 3. yahoo.comYahoo (Int.ernational) 4,470,000 0% 4. google.com.auGoogle (AU) 4,380,000 -6.0% 5. hotmail.comHotmail 4,130,000 -8.0% 6. msn.comMSN 4,010,000 11.1% 7. google.comGoogle (Internation) 3,130,000 2.3% 8. news.com.auNews Interactive 2,751,003 9.1% 9. yahoo.com.auYahoo (AU) 2,650,000 -6.4% 10. smh.com.au f2 2,373,968 4.1% Source: RedSheriff, September 2003 052651 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology In March of 2003, Australian media sites – including those of international Introduction media company News Corp. — vied for leadership with the BBC and Asia-Paciﬁc Overview American media companies such as ABC and CNET. According to Australia

China RedSheriff, smh.com.au, the Web site of the Sydney Morning Herald, led Hong Kong the pack of news sites in Australia. Publisher f2 also runs the third most India popular news site with theage.com.au. Japan Singapore Top 10 News Web Sites in Australia, March 2003 South Korea Publisher Unique % change Taiwan visitors from Index of Charts February 1. smh.com.au f2 2,923,880 42.2% 2. news.com.au News Interactive 2,444,835 25.1% 3. theage.com.au f2 1,703,296 35.9% 4. news.ninemsn.com.au Ninemsn 1,309,034 20.0% 5. bom.gov.au Bureau of Meteorology 1,130,000 25.4% 6. bbc.co.uk BBC 876,000 39.5% 7. cnn.com AOL Time Warner 682,000 125.1% 8. abc.net.au/news ABC (AU) 670,000 28.1% 9. news.com CNET (Int) 586,000 14.2% 10. members.iinet.net.au iinet 399,000 38.5% Source: RedSheriff, April 2003 049077 ©2003 eMarketer, Inc. www.eMarketer.com As the research from RedSheriff into the top health Web sites shows, big shifts in unique visitors can occur month to month at many sites. The huge spike in trafﬁc to the federal government’s Web site was likely due to citizens seeking information about the Asian SARS crisis.

Top 10 Health Web Sites in Australia, April 2003 Publisher Unique % change visitors from March 1. health.gov.au Federal Government 419,000 110.6% 2. goodmedicine.ninemsn. Ninemsn 181,566 15.2% com.au 3. mbf.com.au MBF 122,000 11.9% 4. essentialbaby.com.au Essential Baby 103,000 23.1% 5. betterhealth.vic.gov.au Victorian Government 90,200 -17.2% 6. hic.gov.au Health Insurance 83,800 -18.6% Commission 7. medibank.com.au Medibank Private 77,300 -42.7% 8. medscape.com Medscape 77,300 140.1% 9. aihw.com.au Aust. Inst. of Health & 70,900 37.7% Welfare 10. health.nsw.gov.au NSW Health 70,900 -31.2% Source: RedSheriff, May 2003 049632 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology One bright spot in Australian Internet usage is in the online banking area. Introduction In a study conducted by ACNielsen and ZDNet Australia, 96% of Asia-Paciﬁc Overview respondents said they used the Internet to check account balances, and a Australia

China full 88% reported they transferred funds online. Online bill payments was Hong Kong also popular; more than three-quarters of respondents said they had paid a India bill via the Internet. Japan Singapore Online Banking Activities in Australia, Q4 2002 (as a % South Korea of respondents) Taiwan

Index of Charts Checked account balance 96%

Transferred funds 88%

Online bill payment 77%

Viewed or downloaded online statements 64%

Checked the balance on a credit card 63%

Reviewed the status of their mortgage or personal loan 36%

Applied for a credit card 13%

Opened a savings, checking or transaction account 8%

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Methodology As Australians discover the beneﬁts of online banking, the news gets better Introduction for credit card and utility companies as well. ACNielsen and ZDNet Asia-Paciﬁc Overview Australia research indicated that 80% of respondents in the study would Australia

China like to be able to pay their utility bills online with a credit card. Electronic Hong Kong statements and e-mail alerts, and due date alerts, were also popular wish India list items. Japan Singapore Wish List of Online Banking Users in Australia, 2002 South Korea (as a % of respondents) Taiwan

Index of Charts Pay utility bills with credit card 80%

E-Mailed electronic statements instead of a paper one 53%

E-Mail or SMS alerts (such as “hit credit line” or “payment due”) 47%

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Methodology D. Wireless Introduction Asia-Paciﬁc Overview While mobile phone penetration in Australia isn’t as high as European Australia countries such as the UK or Sweden, it is still about 2.5 years ahead of the China US and continues showing strong growth. The ITU estimated that mobile Hong Kong

India penetration reached 64% in 2002, a jump of 20 percentage points from

Japan 2000 and an increase of 11% from the previous year.

Singapore South Korea Mobile Phone Subscribers in Australia per 100 Taiwan Inhabitants, 2000-2002

Index of Charts 2000 44.69

2001 57.42

2002 63.97

“With the market approaching saturation, Australian mobile phone operators will ﬁnd themselves focusing on selling high-margin data services, keeping their subscribers happy and acquisition costs low, and pursuing customer segment-based strategies.” — Warren Chaisatien, Senior Analyst, Telecommunications, IDC Australia

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Methodology Like many parts of Europe with which it arguably has more in common Introduction with culturally, wireless usage in Australia has been growing for over a Asia-Paciﬁc Overview decade. The Research Room projects that 13.7 million Australians will have Australia

China access by the end of 2003, accounting for nearly 70% of the population. In Hong Kong the coming years, the market is expected to reach saturation. For example, India the forecasting group expects a change of less than one percentage point Japan between 2006 and 2007. Singapore

South Korea Mobile Phone Subscribers in Australia, 1991-2007 (in Taiwan thousands and % penetration) Index of Charts

1991 363

1992 440

1993 903

1994 1,697

1995 3,174

1996 4,303

1997 5,117

1998 5,993

1999 7,562

2000 10,212

2001 11,987 (61.9%)

2002 13,040 (66.7%)

2003 13,762 (69.7%)

2004 14,297 (71.7%)

2005 14,946 (74.2%)

2006 15,606 (76.7%)

2007 15,898 (77.4%)

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Asia-Paciﬁc Online

Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47 IV China 69 A. Broadband 73 B. Internet Usage 80 C. Wireless 82 IV D. Digital TV 88 V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology With the world’s largest population, many believe that China represents an Introduction incredible market for companies to tap. At a recent presentation by Asia-Paciﬁc Overview handheld software maker PalmSource, CEO David Nagel referred to the Australia

China broad use of electronic handheld dictionaries by Chinese who are learning

Hong Kong English. In addition, a government that has been steadily moving to India include elements of free markets has opened the door to investment. Japan However, the Chinese government has been accused of playing both sides Singapore of the fence by, for example, inviting investment by Microsoft while South Korea working on its own version of the Linux alternative to Windows. It has also Taiwan

Index of Charts tried to wield its control over standards by seeking to create its own alternative to the DVD in order to circumvent patents. China is also doing more to encourage its own technology companies to compete on the global scale. Konka, a television manufacturer, has been seeking distribution in the West, while Legend, the country’s largest PC company, has also expanded its scope as it has changed its name to Lenovo, participating with many Western PC companies in deﬁning standards for home networking.

“Asia’s Internet economy, with Greater China leading the growth, will expand rapidly during the next ﬁve years. Vendors tracking regional hotspots will be poised to take advantage of growth opportunities.” — Nathan Midler, senior analyst, IDC Asia-Paciﬁc, Internet and eBusiness Research.

Legend Group leads the Chinese market in PC market share through its offering of a wide range of computers for various target markets and aggressive pricing strategies. Founder Computer is second in market share strength due to its strong ties in the education industry and popularity with students. Major US corporations such as Dell and IBM both increased their market share in 2002, but the market is widely fragmented by a number of vendors representing less than 10%.

PC Market Share in China, by Vendor, 1999-2002 1999 2000 2001 2002 Legend Group 19.4% 27.5% 26.9% 26.5% Founder Computer 5.6% 5.3% 8.8% 8.4% Tsinghua Tonfang 0.0% 0.0% 8.1% 6.4% Dell Computer 1.6% 3.2% 4.4% 6.0% IBM 6.7% 5.6 4.7% 5.5% Hewlett-Packard 10.5% 7.9% 4.3% 3.9% LangChao 2.6% 2.5% 3.1% 2.1% Source: Gartner Dataquest, 2002; Electronic Business, May 2003 049936 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The ITU estimates that the percentage of Chinese Internet users who have Introduction accessed the Internet within the last 30 days is estimated to be 59 million. Asia-Paciﬁc Overview Activities are beginning to mirror mature Internet markets as users go Australia

China online to read the news, access e-mail, seek music and chat with friends Hong Kong over instant messenger. Transaction-based activity remains low in China, India but as the government seeks to ensure and promote online security, the use Japan of sites offering shopping, travel, and ﬁnancial services should increase. Singapore

South Korea Internet Users in China, 2000-2002 (in thousands and Taiwan as % penetration) Index of Charts

2000 22,500 (1.8%)

2001 33,700 (2.7%)

2002 59,100 (4.6%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 1,262.5 million for 2000, 1,271.1 million for 2001 and 1,279.2 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049352 ©2003 eMarketer, Inc. www.eMarketer.com

In addition to shared accounts, usage from Internet cafes is also common, despite the government’s attempts to close many of them down in larger cities. The cafes have been able to continue operating in many of the smaller cities and provinces in China. eMarketer estimates that there will be 250 million Internet users in China by 2005, accounting for 19.2% of the population. While that penetration level still ranks far below that of other countries, its online population will approach the total US population; China will have added more than 135 million Internet users since 2003, a number greater than the population of Japan.

Population, Internet Users and Internet Penetration in China, 2000-2005 (in millions) Population Internet users Internet penetration 2000 1,262.5 22.5 1.8% 2001 1,271.1 33.7 2.7% 2002 1,279.2 59.1 4.6% 2003 1,287.0 114.5 8.9% 2004 1,294.6 176.0 13.6% 2005 1,302.2 250.0 19.2% Note: population figures are US Census Bureau; Internet user figures are ITU through 2002 and eMarketer projections for 2003-2006; Internet penetration figures are eMarketer projections based on the previous data Source: US Census Bureau, International Telecommunication Union (ITU), eMarketer, November 2003 054027 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer estimates that 2003 will be a year of strong growth for China. Introduction The Internet population is expected to nearly double. With over 114 million Asia-Paciﬁc Overview people online, eMarketer’s estimate is more aggressive than Australia

China PricewaterhouseCoopers’ estimate, but not as high as that of the World Hong Kong Bank. However, eMarketer sees slightly over 250 million Chinese accessing India the Net in 2005, a ﬁgure that is higher than the World Bank’s estimate for Japan that year. Singapore South Korea Comparative Estimates: Total At-Work and At-Home Taiwan Internet Users in China, 2001-2007 (in millions) Index of Charts 2001 2002 2003 2004 2005 2006 2007 China Internet Network Infor- – – 59.1 – – – – mation Center, January 2003 (1) Computer Industry Almanac – 54.5 – – – – – (CIA), December 2002 eMarketer, November 2003 33.7 59.1 114.5 176.1 250.1 – – International Telecommunica- 33.7 59.1 – – – – – tion Union (ITU), November 2003 (2) Morgan Stanley, May 2002 30.0 – – – – – – PricewaterhouseCoopers 34.0 50.0 70.0 90.0 110.0 130.0 – (PwC), May 2002 (3) World Bank, March 2003 (4) 32.8* 82.5 124.7 177.5 230.5 284.0 343.6 Note: * Actual; (1) Chinese citizens who use the Internet at least one hour per week; includes users who use leased lines, dial-up and other equipment ; (2) Internet users ages 2+ who have accessed the Internet in the past 30 days ; (3) in conjunction with Wilkofsky Gruen Associates; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, January 2003 054083 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology A. Broadband Introduction Asia-Paciﬁc Overview At the end of 2002, dial-up remained the most common method of Internet Australia access in China, with 25.3 million or 7.1% of households. Broadband China penetration is very low, reaching only 1.1% of households. Large Hong Kong

India opportunities exist for the Internet market in China, as penetration has only

Japan hit 8.2% of the 355 million households. The dial-up service providers, Singapore which still account for the majority of the Internet access market in China, South Korea have been reducing their service fees to counter the price cuts by Taiwan broadband providers, mainly China Telecommunications Corp (China Index of Charts Telecom) and China Network Communications Group Corp (China Netcom).

China: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) Online % of total households households** Dial-up* 25,300 7.1% DSL 1,900 0.5% Cable Internet 90 0.0% Other 1,800 0.5% Total broadband households 3,890 1.1% Total online households 29,190 8.2% Internet users 59,100 4.1%*** Note: *includes ISDN; **based on 355.0 million households; ***based on population of 1,280.7 million Source: eMarketer, March 2003 048332 ©2003 eMarketer, Inc. www.eMarketer.com

Broadband penetration appears much higher when considered as a percentage of online households. eMarketer estimates that in 2002, 13.3% of online households have a broadband connection, up from only 2.2% the previous year. The vast majority of households were using dial-up in 2002, before price slashing for both dial-up and broadband services became common. Broadband operators must develop value-added services and launch specialized services to promote the continuous development of the broadband business, encouraging online consumers to pay the additional service costs of broadband over dial-up.

“The Chinese must, in effect, build a Philadelphia or Houston per month, to meet the needs of the people leaving the farms and moving into the cities.” — Ed Yardeni, analyst, Prudential Equity Group

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Methodology

Introduction Online Households in China: Dial-Up vs. Broadband,

Asia-Paciﬁc Overview 2001 & 2002 (as a % of online households)

Australia 2001 2.2% China 97.8% Hong Kong India 2002 Japan 86.7% 13.3% Singapore South Korea Dial-up* Broadband Taiwan Note: *includes ISDN Index of Charts Source: eMarketer, March 2003 048333 ©2003 eMarketer, Inc. www.eMarketer.com

Broadband penetration has been low in China at 2.4 % in 2003 and is expected to grow to only 6.4% of total households in 2005. Sluggish growth can be partially attributed to state control of the telecom market until recently. Previously, the state opted for investments in mobile and ﬁxed line networks rather than Internet access. Now that many of China’s carriers are publicly traded, they must be more cautious with spending, which may impact future broadband infrastructure. However, the leading carriers, China Telecom and China Netcom, are continuing to make investments to continue to roll out DSL to the masses in China.

Broadband Penetration in China, 2000-2005 (as a % of total households)

2000 0.0%

2001 0.1%

2002 1.1%

2003 2.4%

2004 4.0%

2005 6.4%

Cable modem access lags in China due to previous government bans on cable operators from providing telecommunications services over their cable networks. Still, growth in cable access will be slow, with only 2.1 million households in 2005 representing less than 10% of the total broadband market. Despite now being allowed to offer Internet access, many of the cable networks will need substantial costly upgrades for bi- directional transmission before starting to roll out services. DSL access is projected to reach 13.45 million households in China in 2005, dominating the broadband market.

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Methodology

Introduction Broadband Households in China, by Access

Asia-Paciﬁc Overview Technology, 2000-2005 (in thousands)

Australia 2000 China 83 Hong Kong

India 20

Japan 0 Singapore 103 South Korea

Taiwan 2001

Index of Charts 150 40 200 390

2002 1,900 90 1,800 3,790

2003 4,600 295 3,750 8,645

2004 8,500 750 5,450 14,700

2005 13,450 2,100 7,960 23,510

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048330 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer estimates for growth in broadband are more conservative than Introduction those of BDA, but are convergent with Strategy Analytics in 2003. Asia-Paciﬁc Overview Regardless of the measures, the growth will be steep in the coming years Australia

China with the number of broadband households tripling from 2002 to 2004.

Hong Kong

India Comparative Estimates: Broadband Households in

Japan China, 2000-2005 (in thousands) Singapore 2000 2001 2002 2003 2004 2005 South Korea BDA, 2001 – 2,000 4,500 10,100 18,100 – Taiwan

Index of Charts CNNIC, July 2002 – – 2,000* – – – eMarketer, March 2003 103 390 3,790 8.645 14.700 23,510 International Data 68 437 – – – 8,300 Corporation (IDC), 2001 Norson Telecom Consulting, – 670 1,030** – – – 2002 Strategy Analytics, 2002 – 500 2,900 8,400 – – Yankee Group, 2002 – 323 – – – – Note: *subscribers as of July 2002; **subscribers as of 30 March 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048323 ©2003 eMarketer, Inc. www.eMarketer.com

Broadband growth in China is projected to reach 36.7 million households in 2008, according to Strategy Analytics. Despite the strong momentum, the broadband market still faces serious impediments, including the lack of content and specialized broadband Web sites. Government restrictions and copyright issues hinder the number of movies and songs that can be offered via broadband, which may create a problem for industry growth as users seek entertainment online. High tariffs charged by the government to content providers may also slow broadband content development, although competition is helping to drive the costs of the tariffs down.

“The atmosphere is changing. People have forgotten Mao. It’s a totally different generation. They never look back.” — Li Qiang, dean of the school of social sciences, Tsinghua University

Broadband* Households in China, 2001-2003 & 2008 (in millions)

2001 0.5

2002 2.9

2003 8.4

2008 36.7

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Methodology eMarketer projects the number of households with DSL access in China to Introduction reach 13.45 million in 2005, a sizeable increase from 1.9 million Asia-Paciﬁc Overview subscribers in 2002. The earliest DSL services could only be found in Australia

China Guangdong and a few small areas of large cities until the start of 2002, Hong Kong explaining the low number of households in 2000 and 2001. The ﬁrst India subscribers enjoyed some of the lowest pricing for DSL services, but prices Japan are decreasing on larger cities and provinces to increase adoption. Singapore

South Korea Comparative Estimates: DSL Households in China, Taiwan 2000-2005 (in thousands) Index of Charts 2000 2001 2002 2003 2004 2005 CCID, 2002 ––1,200* –– – eMarketer, March 2003 83 150 1,900 4,600 8,500 13,450 Frost & Sullivan, 2002 – 250 1,100* –– – Norson Telecom Consulting, 2002 – 600 940** –– – Point-Topic, March 2003 – 141 2,109 –– – Note: *subscribers as of July 2002; **subscribers as of 30 March 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048326 ©2003 eMarketer, Inc. www.eMarketer.com

“China won’t repeat the European experience of years ago – rather than users switching from narrowband, there’ll be a high proportion of people experiencing the Internet for the ﬁrst time using broadband.” — Mike Philpott, analyst, Ovum

In Asia, where household incomes are signiﬁcantly lower, the sign-up rate for broadband services remains rapid, although from a much lower base. At the end of 2002, DSL subscriptions reached 2.2 million in China, mainly due to residential subscribers, which represent 95% of the market.

DSL Subscribers in China, Business and Residential, End of 2002 (in thousands)

Business 111.0

Residential 2,109.0

Total 2,220.0

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Methodology After a slow start, DSL access is starting to rise in China with exponential Introduction growth in subscribers. Adoption grew 845% from December 2001 through Asia-Paciﬁc Overview December 2002.China Telecom is a major provider of DSL services, after Australia

China rolling out ASDL lines in several large cities, including Beijing, Shanghai Hong Kong and Guangdong. Price has been a major barrier to DSL adoption, but India several providers have started to lower the monthly fees to increase the Japan subscriber base. The SARS outbreak was also suspected to be a major driver Singapore

South Korea for broadband subscriber growth.

Taiwan

Index of Charts Broadband Subscribers in China, by Access Technology, 2002 & 2003 (in thousands)

DSL 2,220.0 4,100.0

Cable modem, etc.* 2,050.0 2,241.0

Total broadband 4,270.0 6,314.0

December 2002 June 2003 Note: includes both residential and business connections; numbers may not add up to total due to rounding; *includes services called broadband Internet, high-speed Internet and cable Internet, in some countries may include Ethernet networks Source: Point Topic, September 2003 052534 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology In China, DSL has emerged as the technology of choice for broadband Introduction access as it allows operators to leverage the existing extensive copper wire Asia-Paciﬁc Overview infrastructure. The current market focus is upon urban areas. In an attempt Australia

China to increase the user base, DSL providers have worked to revise the current Hong Kong DSL tariff structure to create a cheaper alternative to dial-up based upon India the level of usage — both for heavy as well as low users. Providers hope Japan that this strategy will attract a number of lower Internet usage subscribers Singapore

South Korea that will later trade up for additional usage packages as broadband services

Taiwan and content improve.

Index of Charts DSL Subscribers in China, 2001-2003 (in thousands)

December 2001 234.8

June 2002 706.9

December 2002 2,220.0

June 2003 4,100.0

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Methodology B. Internet Usage Introduction

Asia-Paciﬁc Overview Australia “The online search market in China is growing China rapidly and will be worth billions of dollars over Hong Kong

India the next few years.”

Japan — Cui Xiaobo, senior Internet analyst, MFC Insight

Singapore South Korea According to the China Internet Network Information Center, about three in Taiwan ﬁve Internet users have visited online shopping sites. IDC and Visa show Index of Charts B2C e-commerce revenues increasing at a fast pace year over year, tripling from $5 million in 2003 to $15 million in 2005. In 2003, fears stemming from the SARS outbreak drove many to the Internet for shopping needs. Sohu.com anticipates strong e-commerce growth as customers have moved beyond purchasing just buying books and movies and begun behaving more like those in more mature markets. American e-commerce companies are looking to proﬁt from this nascent market as popular sites such as eBay.com move into China.

B2C E-Commerce Revenues in China, 2000-2005 (in millions)

2000 $0

2001 $1

2002 $2

2003 $5

2004 $9

2005 $15

Online gaming is a popular pastime in China and poised for large growth, offering a revenue opportunity for content providers if they can offer features such as short message service (SMS) and avoid regulation. NetEase anticipates online gaming to become its main driver of growth, with 95% of the company’s gaming revenues coming from in-house titles, which they plan to continue rolling out. Recently, Chinese portal Sohu.com acquired 17173.com, China’s largest online gaming information and community Web site, to help boost its range of online services. 17173.com claims over 100 game zones and 4.3 million registered users.

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Methodology “Why have companies like AOL and Yahoo! not Introduction succeeded in China? The simple answer is that the Asia-Paciﬁc Overview

Australia barrier to entry is pretty signiﬁcant.” China — Nathan Midler, senior analyst, IDC

Hong Kong

India Japan Online Gamers in China, 2001-2006 (in thousands and Singapore % growth) South Korea Taiwan 2001 397.5 Index of Charts 2002 807.4 (103.1%)

2003 1,495.3 (85.2%)

2004 2,347.7 (57.0%)

2005 3,310.2 (41.0%)

2006 4,490.6 (35.7%)

The growing penetration of broadband networks, mobile communication use, and growing number of online gamers are driving the development of game subscription revenues in China, creating a market of $1.2 billion in 2004. Many Chinese companies are counting on online gaming revenues as a growth strategy and are seeing signs of success. For example, Shanghai-based the9.com introduced the game ‘MU’ into China in 2002 and started charging players in February of 2003. So far, MU already has more than 25 million players, citing the majority of players are in Guangdong, Guangxi, Shanghai, Zhejiang and Jiangsu. However, barriers do exist in the gaming market, with improvements in product quality and technical development needed.

Online Gamers with Paid Subscriptions in China, 2001-2006 (in millions and % growth)

2001 168.1

2002 401.3 (138.7%)

2003 767.1 (91.2%)

2004 1,190.3 (55.2%)

2005 1,631.9 (37.1%)

2006 2,227.3 (36.5%)

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Methodology C. Wireless Introduction Asia-Paciﬁc Overview Mobile phone subscriptions have risen dramatically in China. China Australia Telecom leads the market, growing from 7 million subscribers in 1996 to China 185 million in 2003. To boost its service offerings to subscribers, China Hong Kong

India Telecom has recently announced plans to deploy Wi-Fi solutions in more

Japan than 10 Chinese cities and provinces, including Beijing, Chongqing, Singapore Shandong, and Yunnan. Broadband and mobile services are an South Korea increasingly important revenue source for China Telecom, as China’s ﬁxed- Taiwan line telephone market will become saturated by 2005. Index of Charts However, there have been setbacks to growth in the Chinese mobile market. In October 2003, the Ministry of Information Industry announced that they would not license any 3G networks until well into 2004 as they wait for the technology to be tested globally.

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Methodology

Introduction Mobile Phone Subscribers in China, by Operator,

Asia-Paciﬁc Overview 1996-2005 (in millions)

Australia 1996 China 0 Hong Kong

India 7

Japan 1997 Singapore 0 South Korea

Taiwan 13 Index of Charts 1998 1 24

1999 5 38

2000 19 67

2001 38 99

2002 62 146

2003 82 185

2004 101 216

2005 119 243

China Unicom China Mobile Source: Ministry of the Information Industry-People's Republic of China/Communication Consulting Associates, September 2003; Global Information Inc/the-infoshop.com, September 2003 052708 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The number of cellular connections in China is projected to account for Introduction more than half of the entire Asia-Paciﬁc region, according to Gartner and Asia-Paciﬁc Overview Nikkei BP. As with many developing markets, China’s mobile subscribers Australia

China are largely pre-paid connections due to high roaming charges. Pre-paid Hong Kong users are difﬁcult to track, but are major drivers of subscriber growth for India the carriers. Both China Telecom and China Unicom have extended pre- Japan paid service packages and promotions to target budget-minded consumers Singapore

South Korea as well as business travelers. In Shanghai, China Unicom cites that 80% of

Taiwan the mobile phone customers use the pre-paid service.

Index of Charts Cellular Connections in China, 2002 & 2007 (as a % of total connections in the Asia-Pacific region)

2002 47.7%

2007 52.0%

Exchanging messages through mobile devices such as cell phones and handheld devices is a common practice in China. Many users download select content from portals for viewing such as news and games. Carriers like China Mobile have been stricter in regards to adult-related and gambling content, refusing to carry that content, causing portals to lose out on some revenue. Financial service providers are increasingly offering services via mobile devices due to ﬁerce competition, allowing customers to check credit limits, account balances, perform transfers, pay bills and receive notiﬁcations using a palm pilot or mobile phone. Use of these services to date had been slower for adoption in China than other mobile Internet activities.

Mobile Internet (2.5G) Usage in China, by Activity, 2002

Banking Other 6% 7% Shopping 8% Messaging 41% Games 10%

News Stock 12% transactions 16%

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Methodology Mobile phone usage is closely connected with Internet usage as Chinese Introduction mobile phone users form the habits of sending text messages. Therefore, as Asia-Paciﬁc Overview Internet access increases, particularly through broadband for online Australia

China gaming/entertainment and e-commerce transactions, the mobile market Hong Kong will beneﬁt as well. In 2007, Baskerville Communications Corp. projects India 36% of the population to have a mobile subscription, with the number of Japan subscribers continuously growing year over year from 1998. Improvements Singapore

South Korea in infrastructure to improve the quality of voice and data lines, such as

Taiwan plans recently announced by Alcatel and China Mobile, will improve the Index of Charts available capacity and drive new subscriptions.

Mobile Subscribers in China, 1998-2007 (in thousands and % of the population)

1998 24,760 (1.97%)

1999 44,155 (3.48%)

2000 89,760 (7.06%)

2001 144,767 (11.37%)

2002 206,620 (16.09%)

2003 266,295 (19.51%)

2004 320,779 (23.67%)

2005 374,877 (28.65%)

2006 427,194 (32.45%)

2007 466,900 (35.99%)

In China, the growth in mobile subscribers and handset sales is helping to sustain the global marketplace, the world’s top mobile equipment manufacturers. Motorola, Nokia and Ericsson have all increased their reliance on China as a revenue generator over the past few years. Mobile subscriber growth continues in the double-digits through 2006, providing a number of opportunities for both carriers and manufacturers. To ensure additional revenues, carriers are partnering with content providers to increase the mobile user’s spending on services. Japan-based provider Index announced the launch of a Disney Mobile service through China Mobile, set to begin during the fourth quarter of 2004. The service is based upon China Mobile’s Monternet GPRS/WAP mobile platform, and will deliver Disney Mobile content including logos, ring-tones, animated wallpaper screens and games to subscriber handsets.

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Methodology “In most of Southeast Asia and China, SMS (Short Introduction Message Service)-based content downloads have Asia-Paciﬁc Overview

Australia been extremely popular and we expect this China segment of the market to continue growing in the Hong Kong medium term.” India — Connie Hsu, analyst, Pyramid Research Japan

Singapore

South Korea

Taiwan Mobile Subscriber Growth in China, 1998-2007

Index of Charts 1998 82.0%

1999 78.0%

2000 103.3%

2001 61.3%

2002 42.7%

2003 28.9%

2004 20.5%

2005 16.9%

2006 14.0%

2007 9.3%

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Methodology Mobile handset sales are projected to see growth in the coming years, with Introduction a substantial increase of 41% from 2005 to 2006. These numbers will Asia-Paciﬁc Overview largely be driven by next-generation technology, which is scheduled to be Australia

China available for licensing by the 2004-year end. Cellular operators are also Hong Kong beginning to embrace acting as mobile handset distributors. China Unicom India had ﬁrst been allowed to bundle service offerings with handsets to Japan encourage use of newer mobile technologies. Now other carriers are Singapore

South Korea beginning to act as a distribution channel for handsets as well, although

Taiwan subsidies are not as common as in many other countries.

Index of Charts Mobile Handset Sales in China, 2002-2007 (in millions)

2002 63.0

2003 56.1

2004 69.2

2005 81.7

2006 115.2

2007 111.8

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Methodology D. Digital TV Introduction Asia-Paciﬁc Overview China plans to make digital TV available to everyone in the country by Australia 2010 and existing analog broadcasts will be terminated by 2015. According China to Strategy Analytics, digital cable TV households will jump from 600,000 Hong Kong

India in 2003 to 26.7 million in 2008, largely driven by the government’s plans

Japan to have the majority of subscribers shifted from analog cable over to digital Singapore that year. Currently, 25 cities have begun digital cable TV broadcasting on South Korea a trial basis, 19 of which have started digital pay-TV channels. Taiwan Index of Charts Digital TV* Households in China, 2002, 2003 & 2008 (in millions)

2002 0.1

2003 0.6

2008 26.7

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Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69 V Hong Kong 89 A. Broadband 92 B. Internet Usage 97

VI India 107 VVII Japan 115 VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology “The SARS crisis had a profound effect on Internet Introduction audiences in Hong Kong over the period from late Asia-Paciﬁc Overview

Australia March through to May. Trafﬁc to Internet sites China for shopping, banking, news, medical information Hong Kong and education grew to record highs as people India stayed home and looked for ways to continue their Japan

Singapore lives online.”

South Korea — Peter Steyn, Sales and Marketing Director, Nielsen//NetRatings Hong Kong

Taiwan Index of Charts Although the rate of growth has slowed as the number of Internet users approached half of the population, statistics released by the ITU shows that demand continued to rise in 2002. The number of users stood at just under 3 million at the end of 2002, 40% of the Hong Kong’s population of 7.3 million.

Internet Users in Hong Kong, 2000-2002 (in thousands and as % penetration)

2000 1,855 (26.0%)

2001 2,601 (36.1%)

2002 2,918 (40.0%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 7.1 million for 2000, 7.2 million for 2001 and 7.3 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049353 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology In contrast to its forecasts for China, PricewaterhouseCoopers has seen Introduction more aggressive growth in Internet population in Hong Kong than has the Asia-Paciﬁc Overview World Bank. PwC sees Hong Kong reaching the 4 million mark at the end of Australia

China 2003. The World Bank actually sees Hong Kong’s Internet population Hong Kong shrinking by 300,000 in 2003, but then continuing to grow past 3 million India in 2007. Japan Singapore Comparative Estimates: Total At-Work and At-Home South Korea Internet Users in Hong Kong, 2001-2007 Taiwan

Index of Charts 2001 2002 2003 2004 2005 2006 2007 International Telecommunication 2.6 2.9 – – – – – Union (ITU), April 2003 (1) Morgan Stanley, May 2002 2.8 – – – – – – NetValue, June 2002 (2) – 1.4 – – – – – PricewaterhouseCoopers (PwC), 3.3 3.6 4.0 4.3 4.5 4.7 – May 2002 (3) World Bank, March 2003 (4) 2.9* 2.9 2.6 2.6 2.7 2.8 3.1 Note: * Actual; (1) Internet users ages 2+ who have accessed the Internet in the past 30 days ; (2) Internet users who have connected to the Internet at least once in the past month; (3) in conjunction with Wilkofsky Gruen Associates ; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, January 2003 054030 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology A. Broadband Introduction Asia-Paciﬁc Overview Hong Kong’s technical infrastructure and culture continue to promote the Australia advancement of the Internet. With a coverage rate approaching 100%, China Hong Kong’s infrastructure provides Internet access from nearly anywhere Hong Kong

India in the region. Current ﬁgures show that over half of the households

Japan currently online use broadband to access the Internet.

Singapore South Korea Hong Kong: Internet Access Summary, End of 2002 (in Taiwan thousands and as a % of total households and Index of Charts population) Online % of total households households** Dial-up* 586 27.3% DSL 395 18.4% Cable Internet 278 12.9% Other 135 6.3% Total broadband households 808 37.6% Total online households 1,394 64.8% Internet users 2,918 57.4%*** Note: *includes ISDN and does not include those households with both dial-up and broadband connection in the home; **based on 2.2 million households; ***based on population of 6.8 million Source: eMarketer, March 2003 048531 ©2003 eMarketer, Inc. www.eMarketer.com

Figures from the Ofﬁce of the Telecommunications Authority show the dramatic growth of broadband between 2001 and 2002. Although the number of dial-up subscribers in Hong Kong was greater than the number of users with broadband access, the rapid expansion of DSL had signiﬁcantly eclipsed dial-up by the end of 2002.

Internet Subscriptions in Hong Kong: Broadband vs. Dial-Up, 2001 & 2002 (in thousands)

2001 2,018 623

2002 1,361 1,009

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Methodology Since 2000, broadband has experienced strong growth in Hong Kong, with Introduction a current penetration that includes over half the population. A number of Asia-Paciﬁc Overview factors contribute to the exceptionally strong integration of the Internet in Australia

China Hong Kong. In addition to the ubiquitous telecommunications Hong Kong infrastructure and high population density, there is strong government India support as well as broad availability of applications, content, and Web sites Japan translated into Chinese. Singapore

South Korea Broadband Penetration in Hong Kong, 2000-2005 (as a Taiwan % of total households) Index of Charts

2000 16.3%

2001 26.0%

2002 37.6%

2003 45.5%

2004 52.6%

2005 60.1%

The proliferation of broadband in Hong Kong has increased steadily since 2000 and growth remains strong. While, as in many other Asian countries, DSL is poised to remain the dominant form of access, the access market will be more heterogeneous; cable modems will give the phonelline-based technology some competition. eMarketer forecasts that in 2005, DSL will lead cable modems by only 81,000 users.

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Methodology

Introduction Broadband Households in Hong Kong, by Access

Asia-Paciﬁc Overview Technology, 2000-2005 (in thousands)

Australia 2000 China 200 Hong Kong

India 100

Japan 42 Singapore 342 South Korea

Taiwan 2001

Index of Charts 310 170 65 545

2002 395 278 135 808

2003 442 358 201 1,001

2004 485 402 270 1,157

2005 529 448 345 1,322

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048182 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology In the first half of 2002, each of the leading broadband access providers Introduction experienced proportionate growth rates. Pacific Century Cyber Works Asia-Pacific Overview remained the leader, picking up over 70,000 new subscribers in the six- Australia

China month period. However, City Telecom also saw success, acquiring more Hong Kong than 60,000. India Japan Leading Broadband Access Providers in Hong Kong, Singapore 2001 & 2002 (in thousands) South Korea Technology End of 2002 Taiwan 2001 Index of Charts I-Cable Communications Cable Internet 160 192* Pacific Century Cyber Works DSL 311 385* City Telecom (HK Broadband Network) Various 40 100+ Note: *subscribers as of 30 June 2002 Source: eMarketer, March 2003, company reports, 2002 & 2003 048183 ©2003 eMarketer, Inc. www.eMarketer.com

As broadband prices continue to plunge in response to fierce competition among providers, statistics released by Point Topic shows the increasing proliferation of DSL in Hong Kong. The significant increase in DSL subscribers reflects the overwhelming market for this option. While the number of DSL customers continued to increase, cable modem usage declined during the same period.

Broadband Subscribers in Hong Kong, by Access Technology, 2002 & 2003 (in thousands)

DSL 404.0 629.0

Cable modem, etc.* 585.1 478.1

Total broadband 989.1 1,107.1

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Methodology According to ﬁgures by Point Topic, home-based Internet users comprised Introduction the overwhelming majority of DSL subscribers in Hong Kong. In contrast to Asia-Paciﬁc Overview the explosive growth of residential DSL subscribers, businesses have been Australia

China slower to migrate to broadband. A study by the International Hong Kong Telecommunication Union reports that only about half of the businesses with India Internet connectivity use broadband, with most enterprises going online to Japan exchange e-mail and search for information. Findings also reveal a Singapore

South Korea correlation between the size of the company and adoption of IT. The majority

Taiwan of broadband business users are larger companies with over 100 employees.

Index of Charts DSL Subscribers in Hong Kong, Business and Residential, End of 2002 (in thousands)

Business 40.4

Residential 363.6

Total 404.0

With the number of worldwide DSL subscribers surging at an unprecedented rate over the first half of 2003, Hong Kong maintained its dominant position as one of the world’s fastest growing markets. According to figures released by Point Topic, Hong Kong’s DSL penetration is ranked third globally, with an average of 15.8 DSL subscriptions per 100 phone lines. The proliferation of DSL in Hong Kong is driven by a number of factors. The region’s relatively high per capita income as well as fierce competition among service providers minimizes the cost barrier. With 95% of households covered by ADSL, Hong Kong’s densely populated urban geography provides fast and easy connectivity to prospective customers who want to obtain broadband.

DSL Subscribers in Hong Kong, 2001-2003 (in thousands)

December 2001 374.0

June 2002 384.0

December 2002 404.0

June 2003 629.0

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Methodology B. Internet Usage Introduction Asia-Paciﬁc Overview According to ﬁgures from Nielsen/NetRatings, the number of Hong Kong Australia Web surfers visiting the top 100 online shopping sites increased by 47% China between September 2001 and September 2002. Although all but one of the Hong Kong

India top 10 shopping sites logged a strong increase in trafﬁc, Yahoo!, Cityline,

Japan and eBay recorded the highest growth rates. Yahoo!’s 138% gain between Singapore 2001 and 2002 created a wide margin between the leading e-commerce South Korea giant and its closest competitor, Amazon.com. Taiwan Among the competitive ﬁeld of online shopping sites in 2002, those that Index of Charts offered general merchandise proved to be the most popular among Hong Kong Internet users, followed by auction sites and classiﬁed listings. As the leading auction site, Yahoo!’s hk.auctions.yahoo.com is credited with playing a major role in the company’s explosive growth during 2002.

Top 10 Shopping Sites among At-Home Internet Users in Hong Kong, September 2001 & September 2002 Unique Unique % change audience audience September September 2001 2002 1. Yahoo shopping/auction 139,200 322,700 132% 2. Amazon 94,800 132,500 40% 3. Cityline 45,100 106,600 137% 4. HKgolden 72,300 96,400 33% 5. eBay 35,100 93,900 168% 6. Red-dots 83,800 81,800 -2% 7. Broadway theatres 53,600 79,600 48% 8. Go2hk 55,100 74,200 35% 9. Yesasia 46,600 67,500 45% 10. Commercial press 26,600 43,400 63% Source: Nielsen//NetRatings, November 2002 045455 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology A study by Nielsen/NetRatings reveals that nearly half of Hong Kong’s at- Introduction home Internet users accessed news sites. While online news is most popular Asia-Paciﬁc Overview among 18 to 34 year olds, the Apple Daily’s popularity with all age groups Australia

China contributed to its signiﬁcant lead over other news sites.

Hong Kong

India Top 10 News Sites among At-Home Internet Users in

Japan Hong Kong, August 2002 (in thousands)

Singapore

South Korea Apple Daily 524

Taiwan Ming Pao 293 Index of Charts Oriental Daily 291

The Sun 203

HK Yahoo! News 137

Singtao 126

Sina Daily News 109

ichannel News 80

Singpao 75

SCMP 50

Interest in online news sites was nearly even across gender lines. Nielsen//NetRatings reports only a slightly higher percentage of male trafﬁc to news Web sites.

Online News Web Site Visitors in Hong Kong, by Gender, December 2002 (as a % of Internet users)

Male 45.4%

Female 42.2%

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Methodology Based on figures from Nielsen//NetRatings, a significant proportion of the Introduction Hong Kong population is turning to the Web to access current news. Online Asia-Pacific Overview news sites are particularly popular among younger Internet users, with the Australia

China highest percentage of visitors between the ages of 16 and 34.

Hong Kong

India Online News Web Site Visitors in Hong Kong, by Age,

Japan December 2002 (as a % of Internet users)

Singapore

South Korea 2-15 37.8%

Taiwan 16-24 56.6% Index of Charts 25-34 45.0%

35-49 38.6%

50+ 34.7%

According to Nielsen//NetRatings, online shopping sites continue to draw an increasing number of Web surfers. In 2001 and 2002, the level of increased trafﬁc to online shopping sites far exceeded the rate of new Internet users.

At-Home Online Shoppers in Hong Kong, December 2000, December 2001 & December 2002 Unique Active reach Year-over- Year-over- audience year year shopping Internet audience audience growth growth December 2000 536,712 34% – – December 2001 781,617 41% 46% 21% December 2002 986,869 44% 26% 16% Source: Nielsen//NetRatings, January 2003 049886 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Hong Kong’s technologically advanced society continues to drive more of Introduction its population to the Internet. Although the 15% growth reported by Asia-Paciﬁc Overview Nielsen//NetRatings between January 2002 and 2003 is marginally less Australia

China than the 20% growth reported the prior year, the number is expected to Hong Kong increase as the Internet continues to penetrate the market. India Japan At-Home Internet Users in Hong Kong, January 2001, Singapore January 2002 & January 2003 (in unique audience and South Korea % growth) Taiwan Index of Charts January 2001 1,594,100

January 2002 1,905,400 (20%)

January 2003 2,194,600 (15%)

Statistics from Nielsen//NetRatings reﬂect an interest in online news that transcends age, gender, and education. Online news sites proved most popular among well-educated females, with a 61% readership rate. The next highest group was 18 to 34 year olds with slightly more than half of the population.

Profile of Online News Readers among At-Home Internet Users in Hong Kong, by Gender, Education and Age, March 2003 Unique audience Active reach Male 554,000 46.9% Female 442,000 44.6% Tertiary educated males 214,000 50.9% Tertiary educated females 181,000 61.0% Under 18 185,000 38.1% 18-34 515,000 55.0% 35 and older 296,000 39.3% All top 10 news audience 996,000 45.8% Source: Nielsen//NetRatings, April 2003; Upstreamasia 049924 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology SARS Introduction According to ﬁndings from Nielsen//NetRatings, the SARS outbreak had a Asia-Paciﬁc Overview

Australia profound impact on at-home Internet behavior as fear of contracting the China virus drove people to pursue safer avenues for conducting transactions. Hong Kong Between February and April of 2003, the number of unique Internet users India surged by 13%, with online shopping sites logging a 15% increase. Japan

Singapore Although the elevated usage levels recorded during this period peaked

South Korea during April, some sectors have maintained an increased level of activity, Taiwan indicating that the incident may have successfully captured a new share of Index of Charts the consumer market.

Effect of SARS on Online Shoppers in Hong Kong, February & April 2003 (unique audience and % active reach) Pre-SARS Full SARS % growth (February (April (April vs. 2003) 2003) February) Total number of unique Internet users 2,173,570 2,446,390 13% Total unique audience of top 75 876,200 1,006,870 15% shopping sites Active reach 40.3% 41.2% 2% Source: Nielsen//NetRatings, May 2003 049926 ©2003 eMarketer, Inc. www.eMarketer.com Figures released by Nielsen//NetRatings clearly indicate the shift in consumer motivation during the SARS outbreak. Unlike the casual visitor of the pre-SARS days who might peruse a site out of curiosity or for comparative information, many online shoppers sought the haven of the Internet to accomplish speciﬁc tasks. While the majority of sites attracted a higher volume of trafﬁc during this period, it is interesting to note that the online supermarket, ParknShop, experienced an explosive increase of 161%.

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Methodology Although many Internet-based businesses experienced strong growth, the Introduction SARS outbreak had a negative impact on some industries, such as travel Asia-Paciﬁc Overview and entertainment. With fewer consumers willing to venture out in public, Australia

China the online movie ticket site, cinema.com.hk experienced a decline of 24%.

Hong Kong

India Effect of SARS on Top 10 Shopping Web Sites in Hong

Japan Kong, February & April 2003 (unique audience and %

Singapore active reach) South Korea Total unique Total unique % change Taiwan audience audience (April vs. Index of Charts (February 2003) (February 2003) February) Yahoo Shopping/Auctions 371,320 429,710 16% HKGolden 101,600 146,770 44% Red-dots 92,490 122,000 32% Amazon 85,060 120,610 42% eBay 87,070 118,480 36% cinema.com.hk 142,020 108,100 -24% Go2HK 102,560 105,040 2% YesAsia.com 54,650 100,380 84% ParknShop 30,140 78,630 161% 21126888.com 39,570 59,400 50% Source: Nielsen//NetRatings, May 2003 049927 ©2003 eMarketer, Inc. www.eMarketer.com

Although increasing consumer conﬁdence about issues such as online security drove a steady increase of customers to banking sites throughout 2002 and early 2003, the industry recognized that its efforts to attract new users to online banking had yet to convince a signiﬁcant number of potential customers to alter habitual practices. No one could have predicted the unexpected catalyst that would provide an effective incentive to try online banking.

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Methodology As reflected in the figures released by Nielsen//NetRatings, the SARS Introduction outbreak created an online banking boom that even exceeded the surge Asia-Pacific Overview recorded in the shopping sector. Between February and April, the number Australia

China of visitors to the 25 top online banking sites increased by 27%. Although Hong Kong the SARS outbreak led to record highs in many online businesses, online India banking may well experience the most lasting effect. In many cases, Japan convincing people to try online banking is the biggest hurdle in winning Singapore

South Korea new customers. During the weeks that were overshadowed by the fear of

Taiwan exposure to the SARS virus, necessity drove many customers to explore Index of Charts online banking features who may not have done so otherwise.

Effect of SARS on Online Bankers in Hong Kong, February & April 2003 (unique audience and % active reach) Pre-SARS Full SARS % growth (February (April (April vs. 2003) 2003) February) Total number of unique Internet users 2,173,570 2,446,390 13% Total unique audience of top 25 482,850 614,020 27% banking sites Active reach 22.2% 25.1% 13% Source: Nielsen//NetRatings, May 2003; Upstreamasia 049928 ©2003 eMarketer, Inc. www.eMarketer.com As the fear of SARS prompted a signiﬁcant portion of the population to minimize their exposure to public places, a number of Internet users were prompted to turn to online banking to perform a variety of tasks such as paying bills, monitoring accounts, transferring money and trading stocks. By April 2003, the number of average daily online transactions had dramatically increased over ﬁgures reported two months earlier. According to a study by Nielson//NetRatings, the top three banks experienced the greatest growth, with HSBC up 34%, Hang Seng up 41%, and the Bank of China (BOC) showing a 58% increase. Global banking leader HSBC maintained its strong lead position.

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Methodology Since online banking is more cost effective, banks have invested a great Introduction deal of effort in building secure Web sites and encouraging online Asia-Paciﬁc Overview customers through marketing campaigns and customer incentives. By Australia

China reducing the volume of in-person business, branches can save payroll costs Hong Kong or assign staff to spend more time on proﬁtable activities such as selling India mutual funds and insurance. When the sudden onset of the SARS outbreak Japan triggered a sharp increase in demand for online services, the top banks Singapore

South Korea were already well-positioned to respond to the needs of their customers.

Taiwan

Index of Charts Effect of SARS on Top Online Banking Web Sites in Hong Kong, February & April 2003 (unique audience and % active reach) Total unique Total unique % change audience audience (February 2003) (April 2003) HSBC 279,130 374,500 34% Hang Seng 162,420 229,130 41% BOC 43,630 68,760 58% Standard Chartered 55,890 61,860 11% HKBEA 56,180 60,960 9% Source: Nielsen//NetRatings, May 2003 049929 ©2003 eMarketer, Inc. www.eMarketer.com

Wireless According to the ITU, 2001 was a watershed year for the Hong Kong wireless market as mobile phone subscriptions jumped from 63.6% of the population to 85.5%. Such high penetration typically means slowing growth in the following year, but the Hong Kong market grew to 93% penetration in 2002, ranking it third among all countries.

Mobile Phone Subscribers in Hong Kong per 100 Inhabitants, 2000-2002

2000 81.73

2001 85.90

2002 94.43

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Methodology Claiming that 6.2 million Hong Kong residents had a mobile phone Introduction subscription in 2002, The Research Room sees mobile phone penetration in Asia-Paciﬁc Overview Hong Kong as signiﬁcantly lower than the ITU estimate for 2002. However, Australia

China The Research Room forecasts that penetration will continue to grow until Hong Kong 2007 when population growth is expected to cause penetration to shrink. India However, with over 92% of Hong Kong inhabitants having a mobile phone Japan subscription by that time, the country is still slated to rank as one of the Singapore

South Korea leading wireless countries for the next few years.

Taiwan

Index of Charts Mobile Phone Subscribers in Hong Kong, 1991-2007 (in thousands and % penetration)

1991 190

1992 233

1993 285

1994 432

1995 668

1996 1,210

1997 2,083

1998 2,858

1999 3,782

2000 5,196

2001 5,680 (78.8%)

2002 6,152 (84.2%)

2003 6,558 (88.6%)

2004 6,883 (91.8%)

2005 7,011 (92.3%)

2006 7,120 (92.6%)

2007 7,190 (92.3%)

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Asia-Paciﬁc Online

Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89 VI India 107 A. Internet Users 108 B. Broadband 110 C. Wireless 113 VIVII Japan 115 VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology “The opportunities for [wireless] growth in Asia Introduction continue to come from new network deployments Asia-Paciﬁc Overview

Australia in emerging markets, with a great deal of growth China projected for China and India.” Hong Kong — Shiv Putcha, Yankee Group Wireless/Mobile Asia-Paciﬁc senior analyst India

Japan

Singapore

South Korea A. Internet Users Taiwan According to the ITU, there were 16.6 million Internet users in India in Index of Charts 2002, a sum that represents a far greater increase in 2002 than in 2001. The world’s second most populous country more than doubled its number of Internet users, adding more than 9.5 million people in 12 months. However, these figures barely scratch the surface of India’s massive population, which is more than a billion people. eMarketer expects India’s Internet population to continue growing rapidly as its outsourcing firms staff up and require more connectivity in order to accommodate the influx of IT business from Western economies.

Internet Users in India, 2000-2002 (in thousands and as % penetration)

2000 5,500 (0.5%)

2001 7,000 (0.7%)

2002 16,580 (1.6%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 1,002.7 million for 2000, 1,018.5 million for 2001 and 1,034.2 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049354 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The difﬁculty in forecasting a nascent market is apparent in the wide Introduction disparity in projections for India’s Internet population. While IDC pegs the Asia-Paciﬁc Overview number of users in 2006 at 8.2 million, PricewaterhouseCoopers sees it as Australia

China more than quadruple that number at 35 million, and the World Bank’s Hong Kong estimates is more than double that of PwC at 72.9 million. Even taking the India World Bank’s most aggressive forecast, however, India will have less than Japan 10% penetration by 2007. This, however, should still represent one of the Singapore

South Korea largest Internet populations in the world, greater than the total population

Taiwan of many of its Asian neighbors.

Index of Charts Comparative Estimates: Total At-Work and At-Home Internet Users in India, 2001-2007 2001 2002 2003 2004 2005 2006 2007 Computer Industry Almanac (CIA), – 16.6 – – – – – December 2002 International Data Corporation – 3.2 4.0 5.1 6.4 8.2 – (IDC), February 2003 International Telecommunication 7.0 16.6 – – – – – Union (ITU), November 2003 (1) Morgan Stanley, May 2002 9.0 – – – – – – PricewaterhouseCoopers (PwC), 10.0 16.0 22.0 26.0 31.0 35.0 – May 2002 (2) World Bank, March 2003 (3) 9.0* 14.5 21.5 34.3 53.3 72.9 103.9 Note: *Actual; (1) Internet users ages 2+ who have accessed the Internet in the past 30 days ; (2) in conjunction with Wilkofsky Gruen Associates ; (3) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, 2003 054037 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology B. Broadband Introduction Asia-Paciﬁc Overview eMarketer believes there will be 63,000 broadband subscribers in India by Australia the end of 2003. This represents a gain of 7,000 subscribers in the latter China half of 2003 when compared to Point Topic estimates. In addition, Hong Kong

India eMarketer sees cable modems providing a strong alternative for DSL for at

Japan least 2003, with 26,000 households connecting via cable systems. However, Singapore DSL should pull solidly ahead in the next few years. eMarketer expects that South Korea of the 122,000 broadband households in 2005, 75,000 will use DSL Taiwan technology, while only 46,000 will use cable. In addition, more appealing Index of Charts alternatives such as two-way satellite service will have a small impact on Indian broadband access by 2005, with approximately 1,000 households connecting via alternative methods.

Broadband Households in India, by Access Technology, 2001-2005 (in thousands)

2001 12 13 0 25

2002 25 20 0 45

2003 37 26 0 63

2004 52 35 0 87

2005 75 46 1 122

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048217 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The Indian broadband market is atypical of many Asian markets. Not only Introduction is it small – even when looking at total residential and business Asia-Paciﬁc Overview connections, but according to Point Topic, cable modems lead DSL by a Australia

China signiﬁcant margin, garnering three times as many users both in December Hong Kong of 2002 and June of 2003. This is a different conclusion than that reached India by eMarketer. However, the market is still so embryonic in India that it is Japan premature to draw any conclusions about the long-term leadership of cable Singapore

South Korea modems. Furthermore, Point Topic’s estimate includes other technologies

Taiwan with cable modems, such as Ethernet networks that may be more popular Index of Charts with businesses.

Broadband Subscribers in India, by Access Technology, 2002 & 2003 (in thousands)

DSL 28.0 30.0

Cable modem, etc.* 107.3 126.6

Total broadband 135.3 156.6

The number of DSL subscribers in India has fluctuated somewhat. While Point Topic estimates that those receiving the broadband service increased by 50% in the first half of 2002, it slipped a bit in the latter half of that year. However, subscriptions have crept back up again in 2003. Such fluctuations are not uncommon in the early stages of a service, and with only 30,000 subscribers as of June 2003, DSL penetration in India is almost nonexistent.

DSL Subscribers in India, 2001-2003 (in thousands)

December 2001 20.0

June 2002 30.0

December 2002 28.0

June 2003 30.0

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Methodology As in other Asian countries, DSL subscriptions have been primarily adopted Introduction by consumers, but the gap in India is not as great as it is elsewhere. This Asia-Paciﬁc Overview may be in part due to the brisk business among smaller Indian outsourcing Australia

China ﬁrms that require high-speed connectivity to the Internet. Point Topic Hong Kong estimates that of the 28,000 DSL subscribers as of March 2003, over 11,000 India of them were businesses. Japan Singapore DSL Subscribers in India, Business and Residential, South Korea End of 2002 (in thousands) Taiwan Index of Charts Business 11.2

Residential 16.8

Total 28.0

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Methodology C. Wireless Introduction Asia-Paciﬁc Overview According to the Cellular Operators Association of India, the number of Australia mobile phone subscribers continued to rise steadily in the ﬁrst half of 2002. China Carriers added an average of 120,000 subscribers per month, and reached Hong Kong

India the 3 million mark in June. However, with over 1 billion people living in

Japan India, this represents marginal penetration.

Singapore South Korea Mobile Phone Subscribers in India, by Month, 2002 (in Taiwan millions) Index of Charts January 2.3

February 2.4

March 2.6

April 2.7

May 2.8

June 3.0

In contrast to many advanced economies of Asia, which saw cell phone use achieve rapid growth in the late 90s, India is just beginning to ramp up its wireless user base according to The Research Room. Nearly 16 million people are expected to subscribe to mobile phone services at the end of 2003, growing rapidly to over 43 million by the end of 2007. However, there will still be plenty of room left for growth in this market, as that total will represent less than 4% of India’s massive population.

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Methodology

Introduction Mobile Phone Subscribers in India, 1991-2007 (in

Asia-Paciﬁc Overview thousands and % penetration)

Australia 1991 China 0 Hong Kong India 1992 Japan 0 Singapore

South Korea 1993 Taiwan 0 Index of Charts 1994 0

1995 51

1996 256

1997 780

1998 1,077

1999 1,584

2000 3,085

2001 5,458 (0.5%)

2002 10,367 (1.0%)

2003 15,937 (1.5%)

2004 20,769 (1.9%)

2005 28,484 (2.6%)

2006 38,325 (3.4%)

2007 43,444 (3.8%)

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Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107 VII Japan 115 A. Internet Users 116 B. Broadband 120 C. Wireless 126 VIID. Digital Television 134 VIII Singapore 135

IX South Korea 151

X Taiwan 173

Index of Charts 183

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Methodology “Japan has become a broadband empire. It’s Introduction becoming clear that Japan’s broadband can lead Asia-Paciﬁc Overview

Australia the world.”

China — Toru Takahashi, chairman, Internet Association of Japan

Hong Kong India In a land infamous for its aggressive consumption of technology, one Japan would think that the Internet would be a natural draw. However, Singapore

South Korea monopolistic pricing by NTT conspired with relatively low PC penetration Taiwan to keep many off the Internet and especially off broadband for years. Now, Index of Charts however, competition is paving the way for more aggressive usage.

A. Internet Users Until 1999, PC penetration in Japan was a relatively low 38%, but smaller case designs, lower prices on compact notebooks, and an increased demand to connect to the Internet resulted in explosive growth in 2000. In that year, penetration increased to more than half the country, and continued to approach 60% in 2001.

PC Penetration in Japan, 1996-2002 (as a % of households)

1996 22.3%

1997 28.8%

1998 32.6%

1999 37.7%

2000 50.5%

2001 58.0%

2002 71.7%

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Methodology The increased penetration of PCs helped to spur Internet penetration. Not Introduction only has the rate of Internet penetration increased to the point where it Asia-Paciﬁc Overview exceeded PC penetration in 2001, but the ratio of online PCs as a Australia

China percentage of total PCs grew dramatically from 68% in 2000 to over 100% Hong Kong in 2001. India Japan Percent of Households Using the Internet in Japan, Singapore 1996-2002 South Korea Taiwan 1996 3.3% Index of Charts 1997 6.4%

1998 11.0%

1999 19.1%

2000 34.0%

2001 60.5%

2002 81.4%

Note: access devices include, but are not limited to, PCs, mobile phones, PDAs, Internet-capable video game consoles and TVs Source: Information and Communications Policy Bureau, Ministry of Public Management, Home Affairs, Posts and Telecommunications - Japan, November 2002 049958 ©2003 eMarketer, Inc. www.eMarketer.com

According to the ITU, the number of Internet users in Japan continued to grow in 2002, albeit at a somewhat slower pace than in 2001. Japan’s Internet population grew by more than 8 million users in 2002 after picking up almost 11 million in 2001. The better availability of broadband appears to have been most successful in persuading current users to upgrade than greatly expanding the Internet audience.

Internet Users in Japan, 2000-2002 (in thousands and as % penetration)

2000 38,000 (30.0%)

2001 48,900 (38.5%)

2002 57,200 (45.0%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 126.7 million for 2000, 126.9 million for 2001 and 127.0 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049355 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Despite mixed forecasts about Japan’s recent efforts to revitalize its Introduction stagnant economy, Internet usage continues to increase. According to data Asia-Paciﬁc Overview from the Impress Corp., by the end of 2003 the number of Internet users in Australia

China Japan will reach 60 million.

Hong Kong

India Internet Users in Japan, 2001-2003 (in millions)

Japan

Singapore December 2001 43.8

South Korea February 2002 46.2 Taiwan Index of Charts February 2003 56.5

End of 2003 60.0

For many years, the Internet was adopted slowly in Japan; the market was marked by relatively low PC penetration. In contrast, Japanese led the world in interactive cellular systems such as i-mode popularized by NTT DoCoMo, high-deﬁnition satellite television technology, and a thriving videogame market driven by local giants Sony and Nintendo. However, PC penetration and thus Internet connectivity has grown. Greater affordability of laptops and more stylish, smaller desktop form factors that better accommodate city dwelling have appealed more to the Japanese. As PCs forge better links with the consumer electronics that are entrenched within the society, there will be less of a substitution effect between Internet computing and wireless technology.eMarketer forecasts that Japan’s Internet population will reach 77.7 million by 2005, up from 65.1 million in 2003. In addition, Internet penetration will rise especially quickly since Japan’s population is expected to slow and eventually begin to decline by the end of the decade.

Population, Internet Users and Internet Penetration in Japan, 2000-2005 (in millions) Population Internet users Internet penetration 2000 126.7 38.0 30.0% 2001 126.9 48.9 38.5% 2002 127.0 57.2 44.9% 2003 127.2 65.1 51.1% 2004 127.3 72.8 57.2% 2005 127.4 77.7 60.9% Note: population figures are US Census Bureau through 2004 and eMarketer extrapolations for 2005 based on Bureau projected growth of 0.0% from 2000 to 2010; Internet user figures are ITU through 2002 and eMarketer projections for 2003-2005; Internet penetration figures are eMarketer projections based on the previous data Source: US Census Bureau, International Telecommunication Union (ITU) and eMarketer, January 2003 054094 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer sees 2001 as the year when Japan saw a great surge in the Introduction number of Internet users. Since then, growth has been slower. Asia-Paciﬁc Overview Comparatively, however the eMarketer forecast for 2003 and 2004 is higher Australia

China than those of other research ﬁrms.

Hong Kong

India Comparative Estimates: Total At-Work and At-Home Japan Internet Users in Japan, 2001-2007 (in millions) Singapore 2001 2002 2003 2004 2005 2006 2007 South Korea Computer Industry Almanac (CIA), – 64.8 – – – – – Taiwan December 2002 Index of Charts Datamonitor, November 2002 21.4 – – – – 37.2 – eMarketer, November 2003 (1) 48.9 57.2 65.1 72.8 77.7 – – Morgan Stanley, September 28.0 42.0 53.0 64.0 73.0 82.0 – 2003 PricewaterhouseCoopers (PwC), 60.0 66.0 71.0 74.0 77.0 80.0 – May 2002 (2) World Bank, March 2003 (3) 15.6* 21.8 27.0 30.7 35.7 41.6 44.8 Yankee Group, May 2002 – – – – – 31.9 – Note: * Actual; (1) eMarketer's year 2000 and 2001 baselines are from the International Telecommunication Union's November 2003 estimate of Internet users ages 2+ who have accessed the Internet in the past 30 days; (2) in conjunction with Wilkofsky Gruen Associates; (3) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, November 2003 054084 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology B. Broadband Introduction Asia-Paciﬁc Overview While broadband, particularly DSL, is rapidly making gains, most Japanese Australia continue to access the Internet via dial-up. While nearly 60% of Japan’s China households were online at the end of 2002, fewer than 16% of total Hong Kong

India households had high-speed connections.

Japan

Singapore Japan: Internet Access Summary, End of 2002 (in

South Korea thousands and as a % of total households and

Taiwan population) Index of Charts Online % of total households households** Dial-up* 19,680 43.9% DSL 4,820 10.8% Cable Internet 1,940 4.3% Other 200 0.4% Total broadband households 6,960 15.5% Total online households 26,640 59.5% Internet users 64,500 50.6%*** Note: *includes ISDN; **based on 44.8 million households; ***based on population of 127.4 million Source: eMarketer, March 2003 048213 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer forecasts that there will be over 12 million broadband users by Introduction the end of 2003; this represents a substantial increase from less than 7 Asia-Paciﬁc Overview million at the end of 2002. Cable modems are also expected to add millions Australia

China of users from 2003 to 2005. However, eMarketer sees 2005 as the year that Hong Kong alternative technologies, many of them using wireless technologies, India surpass cable modems. These technologies will gain on DSL, which will Japan account for 63% of broadband users in 2005, down from 70% in 2003. Singapore South Korea Broadband Households in Japan, by Access Taiwan Technology, 2000-2005 (in thousands) Index of Charts 2000 12 620 3 635

2001 1,250 1,300 20 2,570

2002 4,820 1,940 200 6,960

2003 8,654 2,660 755 12,069

2004 11,768 3,365 2,149 17,282

2005 14,926 4,209 4,445 23,580

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048208 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Morgan Stanley and Japan’s telecommunications ministry forecast that the Introduction number of online households will reach 30.6 million by 2006. The Asia-Paciﬁc Overview investment ﬁrm sees the overwhelming majority of those households being Australia

China broadband users, with only 4.6 million households using dial-up Hong Kong connections. DSL is expected to have a sizeable lead over cable, with other India alternatives pushing ahead of cable modems by the end of 2004. The data Japan includes small and medium businesses, which are far more likely to take Singapore

South Korea advantage of DSL or other technologies than cable modems.

Taiwan The combinations of these technologies will signiﬁcantly increase online Index of Charts penetration in Japan, with Internet access reaching 64% of households in 2006. That number would represent a jump of seven percentage points from the end of 2003.

Online Households in Japan, by Access Type, 2001-2006 (in millions and as a % of total households) 2001 2002 2003 2004 2005 2006 DSL 1.5 2.8 8.2 10.1 11.5 12.6 Cable 1.3 2.3 3.1 4.1 6.9 5.2 Other broadband 0 0.7 2.2 4.4 6.9 8.1 Total broadband 2.8 8.8 12.5 18.6 23.2 26.0 Dial-up 21.0 16.8 13.4 9.4 6.6 4.6 Total subscribers 23.8 25.6 26.9 28.0 29.8 30.6 Penetration Internet access 51% 54% 57% 59% 62% 64% Broadband 6% 19% 28% 39% 49% 54% Note: account numbers could include SME accounts Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications - Japan, Morgan Stanley estimates, October 2002 046853 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Using the Organization for Economic Cooperation and Development data Introduction as a benchmark for 2000 and 2001, eMarketer estimates that there will be Asia-Paciﬁc Overview 23.6 million broadband households by the end of 2005. This estimate tracks Australia

China very closely to the Morgan Stanley estimate.

Hong Kong

India Comparative Estimates: Broadband Households in

Japan Japan, 2001-2007 (in millions) Singapore 2001 2002 2003 2004 2005 2006 2007 South Korea eMarketer, March 2003 (1) 2.6 7.0 12.1 17.3 23.6 – – Taiwan

Index of Charts Informa Media Group, May 3.2 6.3 10.1 14.6 18.5 21.9 26.1 2002 (2) International Data Corporation 2.8 7.0 – – – 18.0 – (IDC), September 2002 Ministry of Public Management, 2.8 8.8 12.5 18.6 23.2 26.0 – Home Affairs, Posts and Telecommunications - Japan, October 2002 Morgan Stanley, October 2002 2.8 8.8 13.5 18.6 23.2 26.0 – Nomura Research Institute, 3.5 – – – – – – August 2002 OECD, December 2002 2.8 5.0 (3) – – – – – World Bank, March 2003 (4) 2.7* 6.2 10.9 14.3 19.1 24.6 27.6 Note: * Actual; (1) eMarketer’s year 2000 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD) ; (2) Broadband Internet includes DSL, cable modem, satellite-to-PC, fixed wireless, FTTH/FTTC and powerline of more than 200kbps ; (3) as of 30 June 2002; (4) estimates by Pyramid Research Source: various as noted, November 2003 054085 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology DSL Introduction Japan saw very high growth in DSL in 2002, dispelling notions that it was a Asia-Paciﬁc Overview

Australia country that had embraced wireless at the expense of the Internet. While China penetration remains low, the number of DSL users more than doubled Hong Kong during 2002. Growth was steady throughout the year. India Aggressive marketing of DSL by NTT and competitors resulted in a Japan

Singapore tremendous increase in adoption Although fewer than 1.8 million Japanese

South Korea subscribed to DSL service in January, that number had grown to over 5.6 Taiwan million by the end of the year. Among the challenges that were faced in Index of Charts growing DSL was competition against the slower ISDN standard that was moderately successful in Japan.

DSL Subscribers* in Japan, by Month, 2002 (in thousands)

January 1,787.6

February 2,076.3

March 2,378.8

April 2,699.3

May 3,028.6

June 3,300.9

July 3,610.2

August 3,915.7

September 4,223.2

October 4,639.5

November 5,117.1

December 5,645.7

Note: *The number of subscribers using terminal lines offered by the NTT regional companies Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications - Japan, December 2002 043778 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology According to Point Topic, the rapid rate of DSL adoption in Japan has Introduction continued throughout the ﬁrst half of 2003, which has seen the technology Asia-Paciﬁc Overview pick up nearly 3 million subscribers. The annual growth rate from June Australia

China 2002 to 2003 was a strong 150%.

Hong Kong

India DSL Subscribers in Japan, 2001-2003 (in thousands)

Japan

Singapore December 2001 1,524.6

South Korea June 2002 3,301.0 Taiwan Index of Charts December 2002 5,640.0

June 2003 8,257.1

As is the case in many other Asian countries, DSL adoption by residential users has far exceeded that by businesses. Point Topic estimates, that, of the 5.6 million DSL subscribers, 84% are residential installations.

DSL Subscribers in Japan, Business and Residential, End of 2002 (in thousands)

Business 930.6

Residential 4,709.4

Total 5,604.0

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Methodology C. Wireless Introduction Asia-Paciﬁc Overview According to the ITU, Japan’s mobile phone subscription penetration stood Australia at 63.7% at the end of 2002. While this is high enough to rank it as a China leading wireless economy, it is far below that of Scandinavian countries Hong Kong

India such as Sweden and Denmark, as well as Australia closer to home. Still, Japan Japan has achieved worldwide recognition for the depth and variety of data Singapore services available on its mobile phones. South Korea Taiwan Mobile Phone Subscribers in Japan per 100 Index of Charts Inhabitants, 2000-2002

2000 52.62

2001 58.78

2002 63.65

eMarketer forecasts that the number of mobile phone subscribers will continue to grow slowly from 2003 to 2005. This trickle of new subscribers will contrast from even the start of the decade. By the end of 2005, there should be over 88.5 million mobile phone subscribers, an increase of 2.6 million over the previous year.

Mobile Phone Subscribers in Japan, 2000-2005 (in millions)

2000 66.8

2001 74.8

2002 79.1

2003 83.0

2004 85.9

2005 88.5

Note: ITU figures for 2000-2002, eMarketer estimates for 2003-2005 Source: International Telecommunication Union (ITU), 2000-2003; eMarketer, September 2003 052633 ©2003 eMarketer, Inc. www.eMarketer.com

While the Japanese wireless market is known as among the world’s most successful, a look at how it has grown reveals that the growth ramp-up began in 1996. From 1996 to 2002, Japan added more than 10 million cellular phone subscribers each year. As the market begins to reach saturation, Japanese carriers will need to focus more on value-added services to sustain growth by deriving more revenue per subscriber. Japan’s initial rollout of third-generation services did not proceed well, but carriers are committed to making the high-speed service a success.

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Methodology

Introduction Mobile Phone Subscribers in Japan, 1989-2002 (in

Asia-Paciﬁc Overview millions)

Australia End of March 1989 China 0.2 Hong Kong India End of March 1990 Japan 0.5 Singapore

South Korea End of March 1991 Taiwan 0.8 Index of Charts End of March 1992 1.4

End of March 1993 1.7

End of March 1994 2.1

End of March 1995 4.3

End of March 1996 10.2

End of March 1997 20.9

End of March 1998 31.5

End of March 1999 41.5

End of March 2000 51.1

End of March 2001 60.9

End of March 2002 69.1

End of July 2002 71.2

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Methodology According to Japan’s telecommunications ministry, mobile phone growth Introduction came to nearly a dead stop in 2001, a dramatic contrast from ﬁve years Asia-Paciﬁc Overview ago, when penetration grew by over 10 percentage points in a single year. Australia

China Growth continued through the late 90s and started to show signs of Hong Kong slowing in 2000. India Japan Mobile Phone Penetration in Japan, 1996-2002 (as a % Singapore of households) South Korea Taiwan 1996 24.9% Index of Charts 1997 46.0%

1998 57.7%

1999 64.2%

2000 75.4%

2001 75.6%

2002 86.1%

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Methodology While Japan may be a wireless society, not all devices have been growing Introduction as of late. As has happened in other countries, data-capable phones and Asia-Paciﬁc Overview other more advanced devices have largely replaced pagers that simply Australia

China convey short messages such as phone numbers. According to Japan’s Hong Kong telecommunications ministry, pager use reached its peak in the country in India 1996, and is now at levels lower than those seen in 1988. Japan Singapore Pager Subscribers in Japan, 1988-2002 (in millions) South Korea Taiwan End of March 1988 3.0 Index of Charts End of March 1989 3.5

End of March 1990 4.2

End of March 1991 5.1

End of March 1992 5.9

End of March 1993 6.7

End of March 1994 8.1

End of March 1995 9.4

End of March 1996 10.7

End of March 1997 10.1

End of March 1998 7.1

End of March 1999 3.8

End of March 2000 2.1

End of March 2001 1.4

End of March 2002 1.1

End of July 2002 1.1

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Methodology The telecommunications ministry has also found that subscribers to Japan’s Introduction Personal Handy-Phone Service, a short-range wireless technology, have Asia-Paciﬁc Overview maintained relatively constant since 1999 after dropping a bit from its high Australia

China of 6.7 million subscribers in 1998.

Hong Kong

India PHS Subscribers in Japan, 1996-2002 (in millions) Japan

Singapore End of March 1996 1.5

South Korea End of March 1997 6.0 Taiwan Index of Charts End of March 1998 6.7

End of March 1999 5.8

End of March 2000 5.7

End of March 2001 5.8

End of March 2002 5.7

End of July 2002 5.7

As is the case in many markets where mobile phones have reached a large base of the user population, Japan’s telecommunications carriers have turned to data to boost growth in subscription revenue. However, after a meteoric rise in 2000, growth slowed to just 3.4 percentage points in 2001.

Internet-Capable Mobile Phone Penetration in Japan, 1999-2002 (as a % of households)

1999 8.9%

2000 26.7%

2001 44.6%

2002 47.7%

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Methodology In a country that has embraced wireless communications, many factors affect Introduction satisfaction with mobile phones. The two most important of these, according Asia-Paciﬁc Overview to JD Power Asia-Paciﬁc, are Internet access and the handset itself, the latter Australia

China of which must support such advanced communications. After these two Hong Kong leading factors, communication quality was cited by nearly one out of ﬁve India respondents in a survey among Japanese consumers. Only 11% of these Japan consumers, who are popularly characterized as being less price-sensitive than Singapore

South Korea their American counterparts, cited cost as the leading factor.

Taiwan

Index of Charts Factors Contributing to Overall Satisfaction with Mobile Phones in Japan, 2002 (as a % of respondents)

Brand image and credibility Sign-up 9% experience Telephone set 9% 26% Cost 11%

E-mail and internet Communication browsing quality 26% 19%

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Methodology One irony is that while Japan’s mobile handset user base has continued to Introduction rise, the number of handsets in use has steadily fallen, according to Japan’s Asia-Paciﬁc Overview electronics association and the Yankee Group. From April 2002 to March Australia

China 2003, 40 million cell phones were in use, a decrease of 10 million from the Hong Kong same period two years earlier. PHS, the Japanese standard that trades India shorter range for less expense, also saw handset usage fall from 4.2 million Japan handsets to 1.2 million. Singapore South Korea Handsets in Use in Japan, April 2000-March 2003 (in Taiwan millions) Index of Charts April 2000-March 2001 4.2 50.0

April 2001-March 2002 2.6 42.8

April 2002-March 2003 1.2 40.0

“The fascination with integrated digital cameras began in Japan and has now come to Europe. The US trails the rest of the world in this regard and this is bound to inﬂuence the product designs of US-led companies..” — Andy Buss, senior analyst, Canalys

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Methodology In 2002, NTT DoCoMo rolled out its FOMA service, which relied on Introduction handsets with integrated digital cameras. The service proved enormously Asia-Paciﬁc Overview popular in a culture that has had a long-running appreciation for Australia

China photography. In fact, several companies sprang up simply to help manage Hong Kong the load of digital imaging trafﬁc and conversion among separate formats. India InfoPLANT has found that over one-quarter of FOMA mobile phone users Japan take pictures with their handsets 2 to 3 days per week, with another 16% Singapore

South Korea taking pictures 3 to 4 days per week. Friends and family were fond to be

Taiwan popular subjects for mobile photography.

Index of Charts DoCoMo FOMA Mobile Phone Users in Japan Who Use an i-mode Phone with a Camera Function, by Number of Times a Week, June 2003 (as a % of respondents)

One or two days a week 35.0%

2-3 days a week 27.1%

3-4 days a week 15.9%

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Methodology D. Digital Television Introduction Asia-Paciﬁc Overview Digital television is typically associated with higher quality pictures. It can Australia often support, but does not necessarily imply, interactivity. In studying China cable and satellite households in Japan, iDate found that over 6 million Hong Kong

India households received digital television. Just over half of them were Japan receiving interactive TV.

Singapore South Korea Digital TV and iTV Households in Japan, End of 2001 Taiwan (in millions) Index of Charts Digital TV households 6.1

iTV households 3.2

While only 9% of Japan’s population had access to digital television at the end of 2002, that number is expected to grow signiﬁcantly by 2008, according to Informa Media Group. Much of the growth will be led by cable television, which is expected to increase its user base nearly tenfold over the ﬁve-year period. Expanding broadband penetration will also increase opportunities for video over DSL, which is expected to reach 883,000 users. That would represent nearly 5% of the market, up from zero in 2002.

Digital TV Households in Japan, by Platform, 2002 & 2008 (in thousands) Cable Satellite DSL DTT Total Digital TV video households as a % of TV households 2002 1,188 2,750 0 0 3,938 9% 2008 12,125 4,029 883 1,349 18,386 42% Source: Informa Media Group, October 2002 044684 ©2002 eMarketer, Inc. www.eMarketer.com

IDC expects the recent surge of broadband adopters to continue after the end of this year. The IT research ﬁrm expects such subscriptions to increase to 10 million by 2006, which would represent a CAGR of 26.6% from 2002 to 2006.

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Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115 VIII Singapore 135 A. Broadband 140 B. Internet Usage 145 C. Wireless 147 VIIIIX South Korea 151 X Taiwan 173

Index of Charts 183

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Methodology A small but wealthy country that shares a watery border with Malaysia, Introduction Singapore is strategically placed as a port between India and China, Asia-Paciﬁc Overview Singapore’s population of 4.2 million is spread over more than 20 islands. Australia

China However, the country is highly developed in terms of its Internet Hong Kong development. Singapore boasts high levels of Internet penetration and India signiﬁcant broadband penetration. Japan After a signiﬁcant spurt between 1997 and 1999, the number of PC Singapore

South Korea households in Singapore continues to grow, but has slowed considerably as

Taiwan the market has begun to saturate. In 2002, the percentage of PC households Index of Charts rose to 68.4%. While the 2002 increase of 4.5 percentage points represented an increase from the 2001 gain, it is a far cry from the 1997 to 1999 jump of nearly 18 percentage points.

PC Households in Singapore, 1988-2002 (as a % of total households)

1988 11.0%

1990 19.1%

1992 20.2%

1993 26.6%

1996 35.8%

1997 41.0%

1999 58.9%

2000 61.0%

2001 63.9%

2002 68.4%

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Methodology Not surprisingly, the penetration of online households jumped during the Introduction same years that PC penetration did, but saw an even faster rise. From 1997 Asia-Paciﬁc Overview to 1999, the percentage of online households jumped from 14% to 42%. Australia

China Unlike PC penetration, though, online households did not see as strong a Hong Kong recovery in growth in 2002. Online penetration rose less than three India percentage points in 2002. Japan Singapore Online Households in Singapore, 1996-2002 (as a % of South Korea total households) Taiwan Index of Charts 1996 8.6%

1997 14.0%

1999 42.1%

2000 49.8%

2001 56.8%

2002 59.4%

According to the ITU, which eMarketer uses as a benchmark, the number of Internet users rose considerably from 2000 to 2002. The ITU estimates that, at the end of 2002, there were more than 2.2 million Singaporeans who had used the Internet within the past 30 days. That represented slightly increased annual growth than the standards body had seen in 2001, when the country had added 400,000 Internet users.

Internet Users in Singapore, 2000-2002 (in thousands and as % penetration)

2000 1,300 (31.3%)

2001 1,700 (39.5%)

2002 2,247 (50.4%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 4.2 million for 2000, 4.3 million for 2001 and 4.5 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049357 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology At the end of 2002, the ITU estimated the number of Internet users to be 2.2 Introduction million. PricewaterhouseCoopers was near that mark, estimating 2.3 Asia-Paciﬁc Overview million for the year and 2.6 million at the end of 2003. Looking ahead, PwC Australia

China estimates that the number of users should grow steadily to 3 million in Hong Kong 2006. However, the World Bank estimates are much more aggressive, and India would mean nearly total saturation of Singapore’s population by 2007. Japan Singapore Comparative Estimates: Total At-Home and At-Work South Korea Internet Users in Singapore, 2001-2007 (in millions) Taiwan 2001 2002 2003 2004 2005 2006 2007 Index of Charts International Telecommunication 1.7 2.2 – – – – – Union (ITU), April 2003 (1) Morgan Stanley, May 2002 1.6 – – – – – – NetValue, June 2002 (2) – 1.0 – – – – – PricewaterhouseCoopers (PwC), 2.0 2.3 2.6 2.8 2.9 3.0 – May 2002 (3) World Bank, March 2003 (4) 3.3* 3.6 3.8 4.0 4.1 4.2 4.4 Note: * Actual; (1) Internet users ages 2+ who have accessed the Internet in the past 30 days; (2) Internet users who have connected to the Internet at least once in the past month; (3) in conjunction with Wilkofsky Gruen Associates; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, November 2003 054086 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Like several Asian countries, Singapore is a land of diverse languages, and Introduction not all have ﬂocked to the Internet in equal numbers. Across all languages, Asia-Paciﬁc Overview more people did not use the Internet than used it. While more Chinese Australia

China speakers than English speakers in Singapore use the Internet, the gap Hong Kong between those who used the Internet and didn’t use it was greater for Chinese India than English, both in terms of absolute numbers and percent difference. Japan Singapore Internet Use in Singapore, by Language Spoken, 2002 South Korea (in thousands) Taiwan

Index of Charts English 207 146

Chinese 1,074 669

Tamil 88 44

Malay 414 186

Other 207 2

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Methodology A. Broadband Introduction

Asia-Paciﬁc Overview Australia “About 25% of Singapore-based SMEs are using dial- China up services, which is signiﬁcantly below the Hong Kong

India region’s overall average of 55%. DSL is the most

Japan widely used broadband access service in Singapore Singapore and will stay that way in the future as well.” South Korea — Tim Crowley, IDC’s senior analyst of broadband markets and technologies Taiwan for the Asia-Paciﬁc. Index of Charts

eMarketer estimates that there are currently 2.2 million Internet users in Singapore, accounting for more than half of the total population. Penetration is slightly higher for online households. eMarketer estimates that 60% of Singaporean households access the Internet. Dial-up remains the most popular Internet access method, although broadband has made inroads at over 17% penetration. Over 42% of total households access the Internet via a modem.

Singapore: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) Online % of total households households** Dial-up* 491 42.7% DSL 90 7.8% Cable Internet 98 8.5% Other 10 0.9% Total broadband households 198 17.2% Total online households 689 59.9% Internet users 2,100 50.0%*** Note: *includes ISDN; **based on 1.2 million households; ***based on population of 4.2 million Source: eMarketer, March 2003 048186 ©2003 eMarketer, Inc. www.eMarketer.com

IDA Singapore estimated that the number of broadband users grew six percentage points in 2002. At the end of 2002, 42% of Singaporeans 10 years old or older had broadband access.

Broadband Users in Singapore, 2001 & 2002 (as a % of users ages 10+)

2001 34%

2002 42%

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Methodology According to IDA, broadband penetration jumped from only 8% in 2000 to Introduction nearly 18% in 2001 and continues to grow. IDA Singapore estimates that Asia-Paciﬁc Overview nearly a quarter of Singapore’s households had high-speed access at the Australia

China end of 2002, an estimate that is higher than eMarketer’s.

Hong Kong

India Broadband Households in Singapore, 1999-2002 (as a

Japan % of total households)

Singapore

South Korea 1999 3.0%

Taiwan 2000 8.0% Index of Charts 2001 17.7%

2002 24.2%

eMarketer projects that broadband penetration in Singapore will continue to rise, growing steadily in 2004 and 2005. With both DSL and cable modem technologies gaining greater appeal, broadband penetration is expected to surpass 34% in 2004 and 46% in 2005.

Broadband Penetration in Singapore, 2000-2005 (as a % of total households)

2000 8.1%

2001 11.7%

2002 17.2%

2003 26.1%

2004 34.0%

2005 45.7%

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Methodology There will be 313,000 broadband households in Singapore by the end of Introduction 2003. This number should more than double by the end of 2005 as it grows Asia-Paciﬁc Overview to 584,000. 2003 will be the ﬁrst year that DSL technology has outpaced Australia

China cable modems. The gap between DSL and cable modems is expected to Hong Kong grow, although both technologies will continue to share the market. India Japan Broadband Households in Singapore, by Access Singapore Technology, 2000-2005 (in thousands) South Korea

Taiwan 2000

Index of Charts 40 53 0 93

2001 50 80 5 135

2002 90 98 10 198

2003 155 140 18 313

2004 225 175 25 425

2005 301 255 38 584

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048185 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology According to Point Topic, the number of broadband subscribers has greatly Introduction accelerated in the first half of 2003 and continued an emerging trend of Asia-Pacific Overview first-half growth established in 2002. While the number of broadband Australia

China subscribers jumped 64.3% in the ﬁrst half of 2002, it grew 86.4% in the Hong Kong ﬁrst half of 2003. India Japan DSL Subscribers in Singapore, 2001-2003 (in Singapore thousands) South Korea Taiwan December 2001 56.0 Index of Charts June 2002 92.0

December 2002 103.0

June 2003 192.0

Point Topic has found that the number of broadband subscribers grew a dramatic 55% in the ﬁrst half of 2003. Most of that growth has been driven by DSL, which has picked up 89,000 subscribers during the period. In contrast, cable modems and other technologies a scant 12,000 subscribers.

Broadband Subscribers in Singapore, by Access Technology, 2002 & 2003 (in thousands)

DSL 103.0 192.0

Cable modem, etc.* 80.0 92.0

Total broadband 183.0 284.0

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Methodology While Point Topic’s numbers for DSL growth include both residential and Introduction business use, it has found that far more consumers than businesses are Asia-Paciﬁc Overview ﬂocking to the technology. Of the 103,000 DSL subscribers at the end of Australia

China 2002, 81% were residential users.

Hong Kong

India DSL Subscribers in Singapore, Business and Japan Residential, End of 2002 (in thousands) Singapore

South Korea Business 19.5

Taiwan Residential 83.5 Index of Charts Total 103.0

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Methodology B. Internet Usage Introduction Asia-Paciﬁc Overview Popular broadband applications in Singapore matched generally popular Australia online activities such as e-mail, online chat, and online shopping. China Activities such as online games and music are enhanced by the Hong Kong

India responsiveness of broadband, while others, such as Internet SMS, lend

Japan themselves well to countries with high wireless penetration. Singapore South Korea Top 10 Applications Used by Broadband Users in Taiwan Singapore, 2002 (as a % of users ages 10+) Index of Charts E-Mail 94%

Information retrieval/search 54%

Instant messaging 44%

Online music 40%

Online chat 38%

Download/update software applications 35%

Online shopping 34%

Internet SMS 29%

Online banking 26%

Play online games 21%

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Methodology As seen in other countries, online music was a leading application among Introduction students. Online music was by far the leading broadband use among Asia-Paciﬁc Overview students in 2002, with 57\% citing the activity as the most popular. Australia

China Downloading software also proved popular. Of activities more directly Hong Kong related to academic endeavors, online library services were cited by 32% of India respondents while e-learning was cited by only 19%. Japan Singapore Broadband Usage among Students in Singapore, 2002 South Korea (as a % of users) Taiwan Index of Charts Online music 57%

Download/update software applications 40%

Online library services 32%

Online videos 23%

Online shopping 20%

E-Learning 19%

IDA Singapore found that online transactions ranked high among the activities associated with broadband usage. This is a trait that is typically associated with maturing online economies. While online shopping led the list at 39% of users, usage relating to online banking, software downloads and updates, and online music followed closely behind.

Broadband Usage among Employed Adults in Singapore, 2002 (as a % of users)

Online shopping 39%

Online banking 35%

Download/update software applications 34%

Online music 34%

Online government-related transactions 25%

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Methodology C. Wireless Introduction Asia-Paciﬁc Overview According to the ITU, mobile phone penetration in Singapore reached Australia 79.6% in 2002, a signiﬁcant jump from the 72.4% penetration in 2001. China Even though mobile penetration is already high in Singapore, it is still Hong Kong

India growing at a fair clip.

Japan

Singapore Mobile Phone Subscribers in Singapore per 100

South Korea Inhabitants, 2000-2002

Taiwan

Index of Charts 2000 63.38 2001 72.41

2002 79.56

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Methodology In 2000, Singapore saw the greatest growth in its mobile user base as it Introduction added nearly 1.5 million subscribers. Growth began slowing down Asia-Paciﬁc Overview considerably in 2002, however, as the percentage of those with cell phone Australia

China plans jumped into the low 70s. The Research Room sees Singapore ending Hong Kong 2003 with 3.4 million mobile subscribers, and sees the total number rising India to only 3.8 million by 2007. Due to predicted increases in the country’s Japan population, however, mobile phone penetration is expected to begin Singapore

South Korea dropping after 2004, when it will hit a peak of 74.8%.

Taiwan

Index of Charts Mobile Phone Subscribers in Singapore, 1991-2007 (in thousands and % penetration)

1991 74

1992 120

1993 154

1994 237

1995 290

1996 430

1997 750

1998 1,025

1999 1,343

2000 2,345

2001 2,803 (65.2%)

2002 3,209 (72.1%)

2003 3,400 (73.8%)

2004 3,568 (74.8%)

2005 3,673 (74.4%)

2006 3,779 (74.0%)

2007 3,849 (72.8%)

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Methodology Among those aged 15 and older, SMS or text messaging is by far the most Introduction popular mobile function used in Singapore. SMS was used by more than Asia-Paciﬁc Overview twice as many adults as games built into mobile handsets. Subscribers were Australia

China nearly four times more likely to use these games than they were to Hong Kong download games and other applications. Infrared, which allows cell phone India users to beam information to each other, was surprisingly popular with Japan 14% reporting usage. Bluetooth, however, which allows many of the same Singapore

South Korea tasks without requiring line-of-sight between devices, was used by fewer

Taiwan than 2% of respondents.

Index of Charts Type of Mobile Phone Built-In Functions Used in Singapore, 2002 (as a % of respondents aged 15+)

SMS (texting) 82.7%

Built-in games 38.5%

Personal information management (e.g., calendar, schedule appointments) 30.4%

Infra Red 14.0%

Download applications (e.g., games) 10.5%

MMS 7.6%

WAP/GPRS browsing 5.5%

Taking pictures 1.9%

Bluetooth 1.8%

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Asia-Paciﬁc Online

Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135 IX South Korea 151 A. Broadband 155 B. Internet Usage 165 C. Wireless 167 IXD. Digital TV 172 X Taiwan 173

Index of Charts 183

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Methodology For providers of interactive services, South Korea is a kind of paradise. Introduction With both the highest broadband penetration in the world and highest- Asia-Paciﬁc Overview speed cellular network in the world, the small country has embraced Australia

China advanced communication technology both in the homes and the popular Hong Kong Internet cafes, called bangs. In addition, it is rapidly gaining on Japan as India the worldwide capital of consumer electronics, with conglomerates Japan Samsung, LG, and Daewoo making major inroads in markets from DVD Singapore

South Korea players to cell phones.

Taiwan Of the two major cellular systems in use globally, Korea is the only Index of Charts country besides the US in which a majority of subscribers use Code Division Multiple Access (CDMA). This technology provides for smooth upgrades to faster data speeds. Korean carriers use an advanced form of CDMA and so Koreans enjoy near-broadband wireless data speeds on their cell phones.The number of users in South Korea that have accessed the Internet in the past 30 days rose 8% in 2002. Internet usage is becoming ubiquitous in South Korea as many types of activities have shifted online, including political campaigns. The number of Internet users continues to increase in South Korea driven by affordable broadband access and the increasing integration into daily activities. According to the ITU, there were 26.3 million South Korean Internet users in 2002, making it one of the largest online populations in the Asia- Paciﬁc region and in the world. Furthermore, with online penetration at less than 55%, there is much room left for growth in the market. As with China, usage at Internet cafes (“PC Bangs”) is common, creating the potential for shared or multiple accounts possibly underestimating the size of the market.

Internet Users in South Korea, 2000-2002 (in thousands and as % penetration)

2000 19,040 (40.3%)

2001 24,380 (51.2%)

2002 26,270 (54.8%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 47.3 million for 2000, 47.6 million for 2001 and 48.0 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049356 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology By 2005, eMarketer estimates that there will be 33 million Internet users in Introduction South Korea, accounting for more than two-thirds of its total population. Asia-Paciﬁc Overview Online growth should continue linearly, with some slowdown occurring in Australia

China 2005 as the country begins to reach saturation.

Hong Kong

India Poulation, Internet Users and Internet Penetration in Japan South Korea, 2000-2005 (in millions) Singapore Population Internet users Internet penetration South Korea 2000 47.3 19.0 40.3% Taiwan

Index of Charts 2001 47.6 24.4 51.2% 2002 48.0 26.3 54.8% 2003 48.3 28.3 58.7% 2004 48.6 31.0 63.9% 2005 48.9 33.0 67.5% Note: population figures are US Census Bureau; Internet user figures are ITU through 2002 and eMarketer projections for 2003-2005; Internet penetration figures are eMarketer projections based on the previous data Source: eMarketer, November 2003 054048 ©2003 eMarketer, Inc. www.eMarketer.com

“Initially Internet traffic [in South Korea] went overseas, 98% of it. There was no Korean content. But this has changed completely. Domestic traffic is now about 85%, and overseas, 15%. However, this does not mean that overseas traffic has decreased. Instead, domestic traffic has increased.” — Jin-wook Son, managing director of Korea Telecom UK

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Methodology With the exception of NetValue and the World Bank, there is general accord Introduction on the number of Internet users in South Korea at the end of 2002.As it did Asia-Paciﬁc Overview with Singapore, World Bank ﬁgures estimate assumes nearly total Australia

China penetration. The ﬁgures estimate that there will be 47.4 million South Hong Kong Koreans online in 2005, very close to the US Census Bureau’s projected India total population 48.9 million. In contrast, eMarketer estimates that two- Japan thirds of South Koreans will be online in 2005, which is still a signiﬁcant Singapore

South Korea leap from the 58.7% estimated to be online at the end of 2003.

Taiwan

Index of Charts Comparative Estimates: Total At-Work and At-Home Internet Users in South Korea, 2001-2007 (in millions) 2001 2002 2003 2004 2005 2006 2007 Computer Industry Almanac – 26.9 – – – – – (CIA), December 2002 eMarketer, November 2003 24.4 26.3 28.3 31.1 33.0 – – (1) Korea Network Information 24.4 25.7 – – – – – Center (KRNIC), June 2002 Morgan Stanley, May 2002 15.0 – – – – – – NetValue, June 2002 (2) – 18.5 – – – – – PricewaterhouseCoopers (PwC), 25.0 29.0 32.0 34.0 36.0 38.0 – May 2002 (3) World Bank, March 2003 (4) 35.7* 40.0 43.7 46.0 47.4 48.2 48.6 Yankee Group, November 2003 24.4 26.3 – – – – – Note: * Actual; (1) eMarketer's year 2000 and 2001 baselines are from the International Telecommunication Union's November 2003 estimate of Internet users ages 2+ who have accessed the Internet in the past 30 days; (2) Internet users who have connected to the Internet at least once in the past month; (3) in conjunction with Wilkofsky Gruen Associates; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, November 2003 054087 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology A. Broadband Introduction Asia-Paciﬁc Overview With 95% of its Internet users connected to broadband, South Korea Australia currently leads the Asia-Paciﬁc region for broadband access despite China growing numbers in other countries such as Japan and China. With a Hong Kong

India population of 48.4 million people, broadband access has reached 65% of

Japan the households, mainly due to one of the world’s most advanced Singapore telecommunications networks and government intervention to allow South Korea competitors to use existing lines at a low cost. Many South Koreans live Taiwan within approximately 2.5 miles of a broadband-enabled local telephone Index of Charts exchange, providing easy access to a broadband connection.

South Korea: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) Online % of total households households** Dial-up* 498 3.2% DSL 5,930 38.3% Cable Internet 3,600 23.2% Other 545 3.5% Total broadband households 10,075 65.0% Total online households 10,573 68.2% Internet users 26,500 54.8%*** Note: *includes ISDN; **based on 15.5 million households; ***based on population of 48.4 million Source: eMarketer, March 2003 048344 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Broadband services in South Korea continue to eradicate the dial-up Introduction market, which lost another 4.6% of online households in 2002. Most ISPs Asia-Paciﬁc Overview have stopped marketing dial-up and ISDN services at this point, with the Australia

China mass acceptance of high-speed connections available in the home or in the Hong Kong thousands of Internet cafes (“PC Bangs”). The entertainment industry has India been instrumental in driving demand for broadband access in South Korea, Japan with carriers offering services that include video-on-demand services for Singapore

South Korea movies and soap operas, gaming, and even karaoke.

Taiwan

Index of Charts Online Households in South Korea: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households)

2001 9.3% 90.7%

South Korea leads the world in its commercial application of broadband technologies, with the highest number of broadband connections per capita. Huge growth occurred in the number of broadband subscribers during the years 2000 through 2002, due to the government’s push to lay 22,000 kilometers of fiber-optic network linking 144 cities in the early nineties. However, by 2003 the broadband market will saturate at 69%, with only minimal growth projected for 2004 and 2005. The main players in the field fear financial problems and will have to offer additional services to generate revenue.

Broadband Penetration in South Korea, 2000-2005 (as a % of total households)

2000 30.0%

2001 49.3%

2002 65.0%

2003 69.2%

2004 72.3%

2005 73.4%

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Methodology Broadband access will reach 12.1 million households in 2005. The Introduction exponential growth in subscribers levels off in 2002, with increases in the Asia-Paciﬁc Overview single digits – 8% in 2003, 6% in 2004, and 4% in 2005, as critical mass Australia

China has been reached. Internet cafes, known as “PC bangs,” helped to drive Hong Kong much of the interest in household broadband connections. The cafes, India popular with young people, introduced users to the beneﬁts of a high-speed Japan connection for uses such as online gaming and downloading music and Singapore

South Korea movies. Carriers then identiﬁed the consumer demand for such services in

Taiwan the home and began to offer affordable residential broadband services.

Index of Charts

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Methodology

Introduction Broadband Households in South Korea, by Access

Asia-Paciﬁc Overview Technology, 2000-2005 (in thousands)

Australia 2000 China 2,840 Hong Kong

India 1,500

Japan 10 Singapore 4,350 South Korea

Taiwan 2001

Index of Charts 4,650 2,815 35 7,500

2002 5,930 3,600 545 10,075

2003 6,402 3,925 604 10,931

2004 6,880 4,082 678 11,640

2005 7,065 4,225 799 12,109

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048340 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The number of broadband households will increase by 61% from 7.5 Introduction million in 2001 to 12.1 million in 2005. Growth is estimated to slow Asia-Paciﬁc Overview signiﬁcantly beginning in 2003, continuing on through 2006. Australia

China

Hong Kong Comparative Estimates: Broadband Households in

India South Korea, 2001-2007 (in millions)

Japan 2001 2002 2003 2004 2005 2006 2007 Singapore eMarketer, March 2003 (1) 7.5 10.1 10.9 11.6 12.1 – – South Korea Frost & Sullivan, March 2002 6.5 – – – – – – Taiwan

Index of Charts Informa Media Group, May 7.8 10.9 12.0 12.8 13.3 13.6 13.9 2002 (2) Korea Network Information 7.5 – – – – – – Center (KRNIC), January 2002 Ministry of Information & 7.8 10.0 (4) – – – – – Communication - Republic (3) of Korea, October 2002 Morgan Stanley, October 7.7 10.2 11.0 11.4 11.8 12.1 – 2002 OECD, December 2002 8.1 9.1 (5) – – – – – World Bank, March 2003 (6) 6.0* 8.1 9.5 10.2 10.6 10.9 11.0 Yankee Group, February – 7.8 – – – – – 2002 Note: * Actual; (1) eMarketer’s year 2000 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD); (2) Broadband Internet includes DSL, cable modem, satellite-to-PC, fixed wireless, FTTH/FTTC and powerline of more than 200kbps ; (3) as of December of each year; (4) as of October 2002; (5) as of 30 June 2002 (6) estimates by Pyramid Research Source: various as noted, November 2003 054088 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology According to KRNIC, the Korea Network Information Center, and Morgan Introduction Stanley, broadband continues to dominate the Internet access market in Asia-Paciﬁc Overview South Korea as DSL and cable subscriptions rise, dwarﬁng the number of Australia

China dial-up users. At the end of 2003, the majority of online households in Hong Kong South Korea, 6.6 million households, will subscribe to DSL for access. DSL India subscribers will grow to a projected 7.2 million while cable access will grow Japan to 4.2 million in 2006. Only 800,000 users will continue to access the Singapore

South Korea Internet via a dial-up connection in 2003, shrinking to 600,000 in 2006.

Taiwan Growth in overall Internet penetration in South Korea began to slow in Index of Charts 2002 with 11.5 million households and is projected to increase only by 1% in 2006 to 77%.

Number of Online Households and Penetration in South Korea, by Access Type, 2001-2006 (in millions and as a % of total households) 2001 2002 2003 2004 2005 2006 DSL (1) 4.5 6.1 6.6 6.8 7.0 7.2 Cable 2.8 3.6 3.9 4.0 4.1 4.2 Other broadband (2) 0.5 0.6 0.6 0.7 0.7 0.7 Total broadband 7.8 10.2 11.0 11.4 11.8 12.1 Dial-up (3) 2.0 1.3 0.8 0.6 0.6 0.6 Total subscribers 79.7 11.5 11.9 12.0 12.3 12.7 Penetration Internet access 65% 76% 76% 76% 76% 77% Broadband 52% 67% 71% 72% 72% 73% Note: numbers may not add up to total due to rounding; (1) excludes B&A - KT’s Home Lan type high speed access; (2) includes WLL, satellite, KT B&A (Home Lan), WLAN; (3) this is an estimate of paying online service subscribers Source: Korea Network Information Center (KRNIC), Morgan Stanley estimates, October 2002 046850 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology The total broadband market in South Korea reached 10.9 million Introduction subscribers in June 2003, according to Point Topic, with 62% of the Asia-Paciﬁc Overview broadband subscribers using DSL services. Earlier in April 2002, the Korean Australia

China government had announced a series of loans in the sum of $60 million to Hong Kong Korean ISPs to help further increase the number of broadband subscribers. India The Korean government also discussed plans to spend more that US $10 Japan billion in VDSL & ﬁber infrastructure by the end of 2005. Singapore

South Korea Broadband Subscribers in South Korea, by Access Taiwan Technology, 2002 & 2003 (in thousands) Index of Charts DSL 6,438.0 6,811.0

Cable modem, etc.* 3,553.8 4,108.1

Total broadband 9,991.8 10,919.1

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Methodology DSL Introduction Declining prices and the widespread availability of infrastructure in South Asia-Paciﬁc Overview

Australia Korea make this one of the most saturated broadband markets in the Asia- China Paciﬁc region. DSL, the dominant form of broadband access in South Hong Kong Korea, will continue to gain additional subscribers as the number of India households grows from 4.7 million in 2001 to 7.1 million in 2006. Japan

Singapore eMarketer projects the growth in the number of DSL households to slow

South Korea from 68% in 2001 to only 3% in 2005.

Taiwan

Index of Charts Comparative Estimates: DSL Households in South Korea, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 eMarketer, March 2003 2,840 4,650 5,930 6,402 6,880 7,065 Korea Network Information – 4,600 – – – – Center, January 2002 MIC Korea, October 2002 2,074 4,388 5,384* – – – Morgan Stanley, October 2002 2,131 4,456 6,056 6,566 6,776 6,968 OECD, December 2002 – – 5,735** 6,254 – – Point-Topic, March 2003 – 4,661 6,254 – – – Note: eMarketer’s year 2000 and 2001 baselines are from the Organization for Economic Cooperation and Development (OECD); *subscirbers as of 10 October 2002; **subscribers as of 30 June 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048336 ©2003 eMarketer, Inc. www.eMarketer.com The number of cable Internet households will also grow in the coming years, although DSL will remain the dominant form of broadband access in South Korea due to strong price competition and readily available infrastructure. While DSL is more commonly used for broadband access, South Korea has one of the largest user bases of cable modems in the Asia- Paciﬁc region. As with other types of broadband access, most of the growth occurred during 2001 and is projected to ﬂatten during 2004 and 2005.

Comparative Estimates: Cable Internet Households in South Korea, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 eMarketer, March 2003 1,500 2,815 3,600 3,925 4,082 4,245 Korea Network Information – 2,900 – – – – Center, January 2002 MIC Korea, October 2002 1,386 2,530 3,449* – – – Morgan Stanley, October 1,434 2,767 3,562 3,861 4,000 4,114 2002 OECD, December 2002 1,556 2,936 3,288** – – – Note: eMarketer's year 2000 and 2001 baseline is from the Federal Communication Commission (FCC); *subscribers as of 10 October 2002; **subscribers as of 30 June 2002 Source: various, as noted, 2001-2003; eMarketer, March 2003 048338 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Due its growing subscriber base in the Asia-Paciﬁc region, DSL leads all Introduction forms of Internet access in terms of market share, according to the Korea Asia-Paciﬁc Overview Network Information Center, and Morgan Stanley. In South Korea, DSL and Australia

China cable continue to grow at the expense of dial-up, which is expected to lose Hong Kong 15% of its market share over 5 years, as more users shift to broadband India options to access the Internet. Subscriptions to DSL are projected to Japan gradually reach 57% of the market in 2006 while cable access slowly rises Singapore

South Korea to 33%. By 2006, the market share for broadband access will represent 95%

Taiwan of the total market.

Index of Charts Internet Access Market Share in South Korea, by Access Type, 2001-2006 2001 2002 2003 2004 2005 2006 DSL 46% 53% 55% 56% 56% 57% Cable 29% 31% 33% 33% 33% 33% Other broadband* 5% 5% 5% 5% 5% 5% Dial-up 20% 12% 7% 5% 5% 5% Note: *includes WLL, satellite, KT B&A (Home Lan), WLAN Source: Korea Network Information Center (KRNIC), Morgan Stanley estimates, October 2002 046851 ©2003 eMarketer, Inc. www.eMarketer.com

The use of DSL for broadband access has continued to grow in the Asia- Paciﬁc region over the past 2 years, including year over year growth in DSL subscriptions in South Korea. According to Point Topic, DSL subscribers (residential and business accounts combined) in South Korea reached a total of 6.8 million in June 2003, a 19% increase over the 5.7 million subscribers during June of the previous year. Some DSL carriers have also helped increased their numbers of subscribers by absorbing the cost of the modems rather than passing it on to the customer.

DSL Subscribers in South Korea, 2001-2003 (in thousands)

December 2001 5,178.3

June 2002 5,734.0

December 2002 6,438.0

June 2003 6,811.0

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Methodology The market for broadband access providers in South Korea remains split Introduction among several telecom operators. Thrunet started to provide Internet access Asia-Paciﬁc Overview services using cable modems in June 1998, while Hanaro Telecom launched Australia

China its ADSL access service in April 1999, following Korea Telecom’s service Hong Kong launch in same year. Both Korea Telecom and Hanaro Telecom ended 2002 India with 2.9 million subscribers, while Korea Thurnet, predominantly made up Japan of cable subscribers and hindered by the lack of DSL offerings, followed Singapore

South Korea with 1.3 million subscribers.

Taiwan

Index of Charts Leading Broadband Access Providers in South Korea, 2001 & 2002 (in thousands) Technology End of 2001 End of 2002 Korea Thrunet Cable Internet/LAN 1,380 1,307 Hanaro Telecom Various 2,450 2,878 Korea Telecom Various 3,858 2,878 Source: eMarketer, March 2003, company reports, 2002 & 2003 048341 ©2003 eMarketer, Inc. www.eMarketer.com

Operators providing DSL services enjoy the largest market share for broadband access in South Korea. Korea Telecom and Hanaro Telecom controlled the majority of the market as of October 2002 with 46% and 29%, respectively, according to the Korean Ministry of Information and Communication. Available services and afﬁliations are important for DSL providers. For example, online gamers will select one DSL provider over another because it’s branded more closely with gaming. Five operators make up the lowest 13% of the market, highlighting the largely fragmented South Korean broadband market, particularly for non-DSL-based offerings

Broadband Subscribers In in South Korea, by Operator and Access Technology, 10 October 2002 (in thousands) xDSL Cable Internet LAN Total Market share Korea Telecom 4,020 – 557 4,583 45.8% Hanaro Telecom 1,204 1,273 388 2,865 28.6% Korea Thrunet – 1,298 9 1,307 13.1% Onse – 390 8 398 4.0% Value- added 7 333 5 345 3.4% Special 68 – 112 180 1.8% Dream Line 86 87 3 177 1.8% Dacom – 68 79 148 1.5% Total 5,385 3,449 1,161 10,003 100.0% Market share of 53.8% 34.5% 11.6% – – technology Source: Korean Ministry of Information and Communication, October 2002 048342 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology B. Internet Usage Introduction

Asia-Paciﬁc Overview Australia “I think the Korean devotion to online gaming is China unique. The appeal of playing Lineage or a network Hong Kong

India game like StarCraft is working as a team. I think

Japan players in the US enjoy one-on-one competition Singapore more, like ﬁrst-person shooter games, and they South Korea excel at those types of games. But there is a large Taiwan cultural difference.” Index of Charts — Joh Jung Hyun, senior manager, MBC Game, a cable TV game channel

Government support of the Internet in South Korea through infrastructure investments and the creation and promotion of a digital signature system have opened the doors to widespread usage, particularly for transaction-based activities. Information gathering and e-mail are the most common online activities followed by online gaming and entertainment (movies and music).

Online Activities in South Korea, March 2003 (as a % of respondents)

Surfing for information 88.2%

E-Mail 79.2%

Online games 62.2%

Movies and music 61.5%

News 53.8%

Online shopping 42.4%

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Methodology Instant messaging is prevalent in South Korea through use of readily Introduction available broadband connections as well as mobile services, and continues Asia-Paciﬁc Overview to increase in popularity. Initially, non-English speaking countries were Australia

China slow to adopt instant messaging, but as local language capabilities were Hong Kong added in usage increased. Interoperability of SMS on mobile devices and India instant messenger clients has also driven usage among online users. Japan According to KoreanClick and Asia Times, instant messaging usage Singapore

South Korea increased from 27.5% of respondents in 2002 to 42.6% in 2003.

Taiwan

Index of Charts Instant Messaging Users in South Korea, 2002 & 2003 (as a % of respondents)

2002 27.5%

2003 42.6%

MSN Messenger is the most heavily used instant messaging program in South Korea followed by BuddyBuddy and Daum messenger. The wide lead by Microsoft’s instant messenger program is mainly due to its bundling in the Windows XP operating system.. Microsoft has also recently launched revenue-generating services such as MSN Avatar in South Korea, offering MSN messenger users the opportunity to purchase two-dimensional representations of themselves.

Instant Messaging Programs Used in South Korea, March 2003 (as a % of respondents)

MSN Messenger 57.4%

Buddybuddy 31.1%

Daum messenger 25.2%

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Methodology C. Wireless Introduction Asia-Paciﬁc Overview Mobile phone subscriptions grew faster in 2002 than 2001 according to the Australia ITU. South Korea ﬁnished the year with 68% penetration. South Korea is China the only wireless economy to standardize on CDMA, which allows for faster Hong Kong

India data rates and an easier upgrade path for carriers than the GSM standard

Japan used throughout most of the world. CDMA is also the leading wireless Singapore technology in the US used by Verizon Wireless and Sprint PCS. However, South Korea US handsets do not work in South Korea and vice versa. Taiwan Index of Charts Mobile Phone Subscribers in South Korea per 100 Inhabitants, 2000-2002

2000 58.32

2001 62.08

2002 67.95

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Methodology According to The Research Room, South Korean mobile phone penetration Introduction is expected to grow slowly over the next several years, inching up from Asia-Paciﬁc Overview over 33 million at the end of 2003 to under 37 million by the end of 2007. Australia

China For South Korea, the mobile boom hit later and faster than it did in Japan, Hong Kong with the number of subscribers more than doubling in 1998 and growing India 72.5% in 1999. South Korea is expected to cross the 70% penetration Japan threshold in 2006. Singapore

South Korea Mobile Phone Subscribers in South Korea, 1991-2007 Taiwan (in thousands and % penetration) Index of Charts

1991 173

1992 272

1993 472

1994 960

1995 1,641

1996 3,128

1997 6,145

1998 13,988

1999 24,135

2000 26,538

2001 28,936 (60.4%)

2002 31,995 (66.2%)

2003 33,394 (68.5%)

2004 33,650 (68.4%)

2005 34,568 (69.6%)

2006 35,647 (71.2%)

2007 36,523 (72.3%)

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Methodology As the South Korean penetration rate reaches 69% in 2003, carriers are Introduction seeking to offer value-added mobile services, such as video and music to Asia-Paciﬁc Overview derive more revenue from this saturated market. South Korea has adopted Australia

China CDMA technology by Qualcomm and is one of the leading countries in Hong Kong terms of 3G mobile users. WCDMA, the second 3G standard to enter the India Korean telecommunications market, is expected to be commercially Japan available by the very end of 2003 or early 2004. Singapore

South Korea Mobile Penetration and Growth in South Korea, Taiwan 1996-2003 Index of Charts 1996 94% 6.98%

1997 109% 14.44%

1998 111% 29.77%

1999 73% 51.08%

2000 11% 56.31%

2001 9% 60.64%

2002 11% 66.93%

2003 3% 69%

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Methodology As with broadband access, South Korea has embraced wireless technology, Introduction creating one of the highest penetration rates of mobile phones in the Asia- Asia-Paciﬁc Overview Paciﬁc region. SK Telecom leads the wireless market in South Korea with Australia

China 17.6 million subscribers and a market share of 54%. In previous attempts to Hong Kong win market share prior to 2000, the carriers were offering heavily India subsidized handsets, causing the government to step in and monitor Japan promotional activities. Instead, operators now offer cheaper airtime and Singapore

South Korea use-based loyalty programs to reward subscribers.

Taiwan

Index of Charts South Korea's Top Three Wireless Operators' Subscribers and Market Share, March 2003 (in millions)

SK Telecom Co. 17.6 (54%)

KTF Co. 10.4 (32%)

LG Telecom Co. 4.8 (15%)

According to International Telecommunication Union, penetration of third- generation (3G) handsets in South Korea continues to rise as mobile phone manufacturers continue to roll out handsets supporting improved functionality that allow users to exchange both video and voice data faster than what was previously available. The number of 3G handsets in South Korea grew from 4.2 million at the end of December 2001 to 10.3 million at the end of June 2002, an increase of 145%. However, the growth has slowed during 2002, where the growth rate during the second quarter of 2002 was 35.5%.

3G Handsets in Korea, November 2001-June 2002 (in millions)

November 2001 3.5

December 2001 4.2

January 2002 5.1

February 2002 6.2

March 2002 7.6

April 2002 8.3

May 2002 9.3

June 2002 10.3

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Methodology The growth in the number of feature-rich handsets in Korea is diversifying the Introduction types of mobile activities performed by users. Driven by the improved video Asia-Paciﬁc Overview and sound capabilities in 3G handsets, SK Telecom and the ITU report that the Australia

China leading activity in 2002 by mobile Internet (3G) users in Korea was Hong Kong downloading ring tones and pictures followed by games/entertainment. Users India favored utility-based functions far less such as seeking location/travel/trafﬁc, Japan checking stocks/banking, and e-mail/chatting. Total usage for non- Singapore

South Korea entertainment activities accounted for only 18% of total usage.

Taiwan

Index of Charts Mobile Internet (3G) Usage in Korea, by Activity, 2002 Stocks/banking 5.6% Other 2.9%

E-Mail/ chatting Location/ 5.2% travel/ traffic 7.2% Ring tone/picture download Games/ 44.9% entertainment 34.2%

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Methodology D. Digital TV Introduction Asia-Paciﬁc Overview Recently, the South Korean Ministry of Information and Communication Australia announced support for the US digital TV standard. The government is China committed to transitioning the country to digital terrestrial, cable and Hong Kong

India satellite broadcasting by 2010. In 2006, the Korea Information Strategy

Japan Development Institute and DACOM project the number of digital televisions Singapore to surpass the number of analog television sets. South Korea Taiwan Digital TV Households in South Korea, by Type, Index of Charts 2002-2007 (in thousands) 2002 2003 2004 2005 2006 2007 Analog TV 10,344 10,084 8,560 6,760 5,629 4,857 Total digital TV 500 958 2,951 5,143 6,354 7,193 Digital TV (cable) – 81 1,371 2,904 3,766 4,405 Digital TV (satellite) 500 877 1,580 2,239 2,588 2,788 Total 10,844 11,043 11,511 11,883 11,983 12,050 Source: Korea Information Strategy Development Institute (KISDI), DACOM, April 2003 052190 ©2003 eMarketer, Inc. www.eMarketer.com

Operators in South Korea are embracing advanced digital television services, such as video-on-demand and high deﬁnition television, to differentiate their services and offer a new experience for the subscriber. In this competitive market, cable, direct-to-home satellite and terrestrial broadcasters are all aggressively targeting consumers with a variety of new digital services. Revenues for digital TV services will begin to increase substantially in 2004 as the subscriber base grows to almost 3 million households in South Korea. Satellite service revenues are eclipsed by cable services in 2005, to become the secondary network option.

Digital TV Revenues in South Korea, by Type, 2002-2007 (in billions of Won) 2002 2003 2004 2005 2006 2007 Analog TV 765.0 752.0 690.0 550.0 427.0 354.0 Total digital TV 65.0 121.0 380.0 847.0 1,380.0 1,789.0 Digital TV (cable) – 2.0 142.0 490.0 844.0 1,119.0 Digital TV (satellite) 65.0 119.0 238.0 357.0 536.0 670.0 Total 830.0 873.0 1,070.0 1,397.0 1,807.0 2,143.0 Source: Korea Information Strategy Development Institute (KISDI), DACOM, April 2003 052192 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151 X Taiwan 173 A. Broadband 176 B. Wireless 181 X Index of Charts 183

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Methodology “Although the Korean market [for broadband] is Introduction reaching saturation in terms of subscriber base, Asia-Paciﬁc Overview

Australia other markets such as China and Taiwan are growing China rapidly as more infrastructure is being made Hong Kong available to users, businesses and consumers.” India — Sandra Ng, vice president of communications and peripherals at IDC Japan Asia-Paciﬁc Singapore

South Korea Taiwan While no recent data is available on PC penetration in Taiwan, Global Index of Charts Industry Analysts forecasts that PC shipments in Taiwan will continue to rise in 2004 and 2005, although they are not poised to grow as quickly as they sometimes have in the past. Nearly 3.6 million computers are predicted to ship in 2004. While this is a modest gain from 2004, the market is expected to pick up again slightly in 2005, when it should grow to nearly 3.8 million PCs.

PC Shipments in Taiwan, 2000-2005 (in millions of units)

2000 2.43

2001 2.71

2002 3.04

2003 3.44

2004 3.58

2005 3.79

Note: CAGR=9.30% Source: Global Industry Analysts, Inc., January 2003 048970 ©2003 eMarketer, Inc. www.eMarketer.com According to the ITU, there were 8.6 million people online in Taiwan at the end of 2002, an increase of less than 1 million people from the 2001 total. Still, the small island region has added an average of 1.2 million subscribers over the past two years.

Internet Users in Taiwan, 2000-2002 (in thousands and as % penetration)

2000 6,260 (28.3%)

2001 7,820 (35.1%)

2002 8,590 (39.9%)

Note: Internet users ages 2 years and older, who have accessed the Internet within the previous 30 days; penetration rates calculated by eMarketer based on October 2003 US Census Bureau figures of 22.2 million for 2000, 22.3 million for 2001 and 22.5 million for 2002 Source: International Telecommunication Union (ITU), eMarketer, October 2003 049358 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology While both PricewaterhouseCoopers and the World Bank have higher Introduction estimates than the ITU for the Intenet population of Taiwan at the end of Asia-Paciﬁc Overview 2002, they both project relatively linear growth. However, as the World Australia

China Bank estimates begin with a baseline that is more than 6 million users Hong Kong higher in 2001, World Bank estimates continue to be much higher than India PwC’s. The bank ﬁnally sees Internet growth ﬂattening out in 2007, when it Japan expects Taiwan to add only 300,000 users. Singapore South Korea Comparative Estimates: Total At-Work and At-Home Taiwan Internet Users in Taiwan, 2001-2007 (in millions) Index of Charts 2001 2002 2003 2004 2005 2006 2007 Computer Industry Almanac (CIA), – 9.5 – – – – – December 2002 International Telecommunication 7.8 8.6 – – – – – Union (ITU), November 2003 (1) Morgan Stanley, May 2002 7.6 – – – – – – NetValue, June 2002 (2) – 6.3 – – – – – PricewaterhouseCoopers (PwC), 8.0 9.0 10.0 11.0 12.0 13.0 – May 2002 (3) World Bank, March 2003 (4) 14.3* 15.5 17.4 18.2 18.8 19.6 19.9 Note: * Actual; (1) Internet users ages 2+ who have accessed the Internet in the past 30 days ; (2) Internet users who have connected to the Internet at least once in the past month; (3) in conjunction with Wilkofsky Gruen Associates ; (4) Number of active, unique individuals who have used the Internet in the past 30 days; estimates by Pyramid Research Source: various as noted, November 2003 054089 ©2003 eMarketer, Inc. www.eMarketer.com

IDC sees growth ahead for B2C e-commerce in Taiwan. Revenues are expected to grow steadily, picking up steam in 2004 and again in 2005 when they are expected to reach nearly $8 million.

B2C E-Commerce Revenues in Taiwan, 2000-2005 (in millions)

2000 $0.372

2001 $0.848

2002 $1.561

2003 $2.736

2004 $4.852

2005 $7.914

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Methodology A. Broadband Introduction Asia-Paciﬁc Overview eMarketer estimates that there were over 3.5 million online households at Australia the end of 2002, accounting for over 55% of Taiwan’s 6.4 million China households. Dial-up was still an important part of the market with Hong Kong

India approximately 1.5 million subscribers.

Japan

Singapore Taiwan: Internet Access Summary, End of 2002 (in

South Korea thousands and as a % of total households and

Taiwan population) Index of Charts Online % of total households households** Dial-up* 1,486 23.2% DSL 1,720 26.9% Cable Internet 350 5.5% Other 5 0.1% Total broadband households 2,075 32.4% Total online households 3,561 55.6% Internet users 10,500 46.7%*** Note: *includes ISDN; ** Based on 6.4 million households; ***based on population of 22.5 million Source: eMarketer, March 2003 048191 ©2003 eMarketer, Inc. www.eMarketer.com

In 2002, the percentage of broadband households surpassed that of dial-up households. Indeed, the relative percentages of these telecom technologies practically reversed from 2001, when nearly three out of ﬁve Taiwanese dialed up to the Net.

Online Households in Taiwan: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households)

2001 56.8% 43.2%

2002 41.7% 58.3%

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Methodology eMarketer estimates that there will be 3.3 million broadband households in Introduction Taiwan by the end of 2003; that number is expected to grow to over 5 Asia-Paciﬁc Overview million by the end of 2005. DSL will take the lion’s share of the market, Australia

China accounting for 85% of the market, up from 82% at the end of 2003. While Hong Kong cable modem use is expected to grow, alternative technologies will also India surface to take a small part of the access pie. Japan Singapore Broadband Households in Taiwan, by Access South Korea Technology, 2000-2005 (in thousands) Taiwan

Index of Charts 2000 116 108 0 224

2001 910 215 0 1,125

2002 1,720 350 5 2,075

2003 2,752 480 15 3,247

2004 3,853 635 27 4,515

2005 4,316 730 46 5,092

DSL Cable Internet Other* Total Note: *Other includes fixed wireless, satellite, fiber, Ethernet LAN and powerline technology Source: eMarketer, March 2003 048190 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer projects that Taiwan will have 3.3 million broadband households Introduction by the end of 2003, growing to over 5 million households by the end of Asia-Paciﬁc Overview 2005. This projected growth rate is faster than that projected by Gartner Australia

China Dataquest in 2001, but is historically consistent with estimates by more Hong Kong recent estimates by the Institute of Information Industry and the Taiwan India Ministry of Transport and Communication. Japan Singapore Comparative Estimates: Broadband Households in South Korea Taiwan, 2000-2005 (in thousands) Taiwanyay 2000 2001 2002 2003 2004 2005 Index of Charts eMarketer, March 2003 224 1,125 2,075 3,247 4,515 5,092 Gartner Dataquest, 2001 164 476 994 1,484 1,906 – Institute of Information Industry, – 1,100 – – – 2002 Taiwan Ministry of Transport & – 1,142 2,084 – – – Communication, 2003 Source: various, as noted, 2001-2003; eMarketer, March 2003 048187 ©2003 eMarketer, Inc. www.eMarketer.com

Broadband Access Technologies Much of the disparity between the eMarketer and Gartner estimates are due to differences in forecasting the growth of DSL. The eMarketer projection assumes that most Taiwanese broadband growth will come from this technology. eMarketer ﬁnds that the number of DSL households will be at least double that of the Gartner Dataquest estimate in 2003 and 2004. The 2002 estimate is consistent with that of Point Topic and the Institute of Information Industry, which again are more recent estimates.

Comparative Estimates: DSL Households in Taiwan, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 eMarketer, March 2003 116 910 1,720 2,752 3,853 4,316 Gartner Dataquest, 2001 92 340 780 1,180 1,496 – Institute of Information Industry, 2002 – 880 1,800 ––– Point-Topic, March 2003 – 968 1,724 ––– Source: various, as noted, 2001-2003; eMarketer, March 2003 048188 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology DSL technology saw great growth in the latter half of 2002, jumping 43% Introduction in the six-month period. Use of the technology practically doubled from Asia-Paciﬁc Overview the end of 2001. Growth of the technology continued to grow more slowly Australia

China in the ﬁrst half of 2003, according to Point Topic.

Hong Kong

India DSL Subscribers in Taiwan, 2001-2003 (in thousands)

Japan

Singapore December 2001 1,075.6

South Korea June 2002 1,400.0 Taiwan Index of Charts December 2002 2,024.5

June 2003 2,141.6

The majority of those who have adopted DSL are consumers as opposed to businesses. Point Topic found that in 2002, only 300,000 businesses had adopted DSL technology. This may be due in part to other, higher-speed Internet access alternatives being favored by corporate users.

DSL Subscribers in Taiwan, Business and Residential, End of 2002 (in thousands)

Business 300.8

Residential 1,723.8

Total 2,024.5

While eMarketer also believes that the number of cable modem subscribers will be higher than that predicted by Gartner Dataquest, the estimates are not as disparate.

Comparative Estimates: Cable Internet Households in Taiwan, 2000-2005 (in thousands) 2000 2001 2002 2003 2004 2005 eMarketer, March 2003 108 215 350 480 635 730 Gartner Dataquest, 2001 72 136 214 304 410 – Institute of Information Industry, 2002 – 210 –––– Source: various, as noted, 2001-2003; eMarketer, March 2003 048189 ©2003 eMarketer, Inc. www.eMarketer.com

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Methodology Clearly, Chunghwa Telcom, the dominant DSL provider in the country, saw Introduction its offerings resonate during 2002. The telco held nearly 86% market share, Asia-Paciﬁc Overview with newcomer ET Webs signing up only 160,000 users through March of Australia

China last year.

Hong Kong

India Leading Broadband Access Providers in Taiwan, 2001

Japan & 2002 (in thousands) Singapore Technology End of 2001 2002 South Korea ET Webs Cable Internet – 160* Taiwan

Index of Charts Chunghwa Telcom DSL 900 1,735 GigaMedia Various 100 130* Note: *subscribers as of 30 March 2002 Source: eMarketer, March 2003, company reports, 2002 & 2003 048192 ©2003 eMarketer, Inc. www.eMarketer.com

Point Topic also sees DSL as dominating the Taiwanese broadband market. With at least nine DSL subscribers for each cable modem user in the country, DSL saw its lead extended in 2003 when the technology picked up over 117,000 users in the ﬁrst half of 2003. In contrast, cable modem and other technologies netted only 20,000 users.

Broadband Subscribers in Taiwan, by Access Technology, 2002 & 2003 (in thousands)

DSL 2,024.5 2,141.6

Cable modem, etc.* 267.0 287.0

Total broadband 2,291.5 2,428.6

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Methodology B. Wireless Introduction Asia-Paciﬁc Overview According to the ITU, Taiwan boasts the highest wireless penetration in the Australia world, with each inhabitant having, on average, more than one mobile phone China subscription. The second highest-ranked country, Israel, still had a few Hong Kong

India inhabitants without cell phones at the end of 2002 with 95.5% penetration.

Japan

Singapore Mobile Phone Subscribers in Taiwan per 100

South Korea Inhabitants, 2000-2002

Taiwan

Index of Charts 2000 80.24 2001 96.55

2002 106.45

The Research Room also saw 2002 as the ﬁrst year that the number of cell phone subscriptions was larger than the population of Taiwan. Indeed, it appears as if many Taiwanese will have more than one cell phone as this level of total saturation will not completely hinder subscription growth. More than 1 million more subscriptions are expected to be sold between 2003 and 2007, at which point penetration will be at nearly 110% of the population.

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Methodology

Introduction Mobile Phone Subscribers in Taiwan, 1991-2007 (in

Asia-Paciﬁc Overview thousands and % penetration)

Australia 1991 China 105 Hong Kong India 1992 Japan 385 Singapore

South Korea 1993 Taiwan 539 Index of Charts 1994 600

1995 770

1996 971

1997 1,492

1998 4,119

1999 11,541

2000 17,785

2001 21,550 (96.3%)

2002 23,648 (104.9%)

2003 24,040 (105.8%)

2004 24,641 (107.5%)

2005 25,010 (108.3%)

2006 25,482 (109.5%)

2007 25,781 (109.9%)

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Methodology 7

I Introduction 11

II Asia-Paciﬁc Overview 13

III Australia 47

IV China 69

V Hong Kong 89

VI India 107

VII Japan 115

VIII Singapore 135

IX South Korea 151

X Taiwan 173 Index of Charts 183

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Methodology 7 The eMarketer Difference 8 The Benefits of eMarketer’s Aggregation Approach 9 “Benchmarking” and Projections 9 I Introduction 11 II Asia-Pacific Overview 13 A. Population and Economy 14 Internet Users in Select Countries in the Asia-Pacific Region, 2000-2002 (in thousands) 14 B. Population 16 Population in Select Countries in the Asia-Pacific Region, 2003 & 2010 (in thousands) 16 C. PCs 17 PC Shipments in the Asia-Pacific Region, by Country, Q1 2002 & Q1 2003 (in units, % market share and as a % increase/decrease vs. prior year) 17 PC Shipments in the Asia-Pacific Region, by Industry, Q1 2002 & Q1 2003 (in units, % market share and as a % increase/decrease vs. prior year) 18 PC Shipments in the Asia-Pacific Region, by Country, 2001-2002 (in thousands of units and as a % change from previous year) 19 PC Shipments in the Asia-Pacific Region, by Vendor, 2001-2002 (in thousands of units and as a % change from previous year) 20 D. Internet Users 21 Top Five Fastest Growing Countries in International Telecommunication Union (ITU)’s Digital Access Index, 1998 & 2002 (according to change in index ranking) 21 Top Five Countries in International Telecommunication Union (ITU)’s Digital Access Index, 2002 (rating on a scale of 0-1*) 21 Top Five Developing Asia-Pacific Countries in International Telecommunication Union (ITU)’s Digital Access Index, 2002 (rating on a scale of 0-1*) 22 Internet Users in Select Countries in the Asia-Pacific Region, 2000-2002 (in thousands) 23 Internet Users’ Penetration Rate in the Asia-Pacific Region, by Country, 2002 (per 100 inhabitants) 24 Internet User Forecasts 25 Internet Penetration Worldwide, by Region, 2001, 2002 & 2006 25 Comparative Estimates: At-Home and At-Work Internet Users in the Asia-Pacific Region, 2001-2007 (in millions) 25 Most Spoken Languages Worldwide, by Number of Speakers, 2003 (in millions) 26 Internet Users Worldwide, by Languages Spoken, September 2003 (as a % of Internet users worldwide*) 27 E. Broadband 28 Broadband Users 28

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Broadband and Internet Subscribers Worldwide, by Country, 2002 (total subscribers, % of the population and % of all Internet subscribers) 29 Top Five Countries in International Telecommunication Union (ITU)’s Digital Access Index with Highest Number of Broadband Subscribers per 100 Inhabitants, 2003 30 Broadband Forecast 31 Leading Broadband Markets in the Asia-Pacific Region, 2002 & 2005 (as a % of total broadband households in region) 31 Broadband Households in the Asia-Pacific Region, 2002 & 2003 (in millions and as a % increase vs. prior year) 32 Broadband Households in Select Countries in the Asia-Pacific Region, 2000-2005 (in thousands) 32 Broadband Access Technologies 33 Broadband Households in the Asia-Pacific* Region, by Access Technology, 2000- 2005 (in thousands) 33 Cable Internet Households in Select Countries in the Asia-Pacific Region, 2000- 2005 (in thousands) 34 DSL Households in Select Countries in the Asia-Pacific Region, 2000-2005 (in thousands) 34 F.Internet Usage 35 Online Gaming Market Share in the Asia-Pacific Region, by Country, 2003 35 Online Travel Revenues in the Asia-Pacific Region, 2002-2004 (in billions) 36 Leading Online Purchases by Internet Users in Select Countries in the Asia- Pacific Region, 2002 (as a % of Internet users who have shopped online) 37 Top 25 E-Government Countries, 2003 (by E-Government Readiness Ranking*) 38 G. Wireless and Mobile Content 39 Largest Mobile Data Subscriber Markets Worldwide, 2007 (in millions) 39 Mobile Subscribers in the Asia-Pacific Region, 2002-2007 (in millions and % of the population) 39 Importance of Select Mobile Services among Mobile Phone Users in Japan, South Korea and Hong Kong, 2002 (on a scale from 1-7*) 40 Content Services that Mobile Internet Users in Japan, South Korea and Hong Kong Are Most Willing to Purchase in the Future, 2002 (as a % of respondents) 41 Content Services that Mobile Internet Users* Under 20 in Japan, South Korea and Hong Kong Are Most Willing to Purchase in the Future, 2002 (as a % of respondents) 42 Product/Service that Mobile Internet Users in Japan, South Korea and Hong Kong Purchase Most Often, 2002 (as a % of respondents) 42 H. Digital TV 44 Digital TV Households in the Asia-Pacific Region, by Country, 2001-2010 (in thousands) 44 Digital TV Penetration of TV Households in the Asia-Pacific Region, by Platform, 2010 45 III Australia 47 A. Internet Users 48

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Internet Users in Australia, 2000-2002 (in thousands and as % penetration) 48 Comparative Estimates: Total At-Work and At-Home Internet Users in Australia, 2000-2006 (in millions) 49 Internet Access Locations Used in the Past Three Months in Australia, by Age, January-December 2002 50 Australia: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 51 B. Broadband 52 Broadband Penetration in Australia, 2000-2005 (as a % of total households) 52 Online Households in Australia: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households) 52 Broadband Households in Australia, by Access Technology, 2000-2005 (in thousands) 53 Comparative Estimates: DSL Households in Australia, 2000-2005 (in thousands) 54 Comparative Estimates: Broadband Households in Australia, 2000-2007 (in millions) 54 Growth in Residential and Business Broadband Customers in Australia, by Quarter, Q2 2002-Q2 2003 55 Broadband Access Technologies 56 Comparative Estimates: Cable Internet Households in Australia, 2000-2005 (in thousands) 56 Number of Residential and Business Broadband Customers in Australia, by Access Method, 30 June 2003 56 DSL Subscribers in Australia, 2001-2003 (in thousands) 57 Leading Broadband Access Providers in Australia, 2001 & 2002 (in thousands) 57 C. Internet Usage 58 Online Activities in Australia, 2003 (as a % of respondents) 58 Top 10 Content Categories for Broadband vs. Narrowband Users in Australia, 2002 (as a % of respondents) 59 Type of Online Content that Internet Users in Australia Would Most Likely Pay For, by Access Technology, 2003 (as a % of respondents) 60 Top Business and Finance Web Sites in Australia, June 2003 (unique visitors and % change from May) 61 Top Web Sites in Australia, June 2003 (unique visitors and % change from May) 61 Top 10 Web Sites in Australia, August 2003 (ranked by unique visitors and % change from July) 62 Top 10 Health Web Sites in Australia, April 2003 63 Top 10 News Web Sites in Australia, March 2003 63 Online Banking Activities in Australia, Q4 2002 (as a % of respondents) 64 Wish List of Online Banking Users in Australia, 2002 (as a % of respondents) 65 D. Wireless 66 Mobile Phone Subscribers in Australia per 100 Inhabitants, 2000-2002 66 Mobile Phone Subscribers in Australia, 1991-2007 (in thousands and % penetration) 67

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IV China 69 PC Market Share in China, by Vendor, 1999-2002 70 Internet Users in China, 2000-2002 (in thousands and as % penetration) 71 Population, Internet Users and Internet Penetration in China, 2000-2005 (in millions) 71 Comparative Estimates: Total At-Work and At-Home Internet Users in China, 2001-2007 (in millions) 72 A. Broadband 73 China: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 73 Broadband Penetration in China, 2000-2005 (as a % of total households) 74 Online Households in China: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households) 74 Broadband Households in China, by Access Technology, 2000-2005 (in thousands) 75 Broadband* Households in China, 2001-2003 & 2008 (in millions) 76 Comparative Estimates: Broadband Households in China, 2000-2005 (in thousands) 76 Comparative Estimates: DSL Households in China, 2000-2005 (in thousands) 77 DSL Subscribers in China, Business and Residential, End of 2002 (in thousands) 77 Broadband Subscribers in China, by Access Technology, 2002 & 2003 (in thousands) 78 DSL Subscribers in China, 2001-2003 (in thousands) 79 B. Internet Usage 80 B2C E-Commerce Revenues in China, 2000-2005 (in millions) 80 Online Gamers with Paid Subscriptions in China, 2001-2006 (in millions and % growth) 81 Online Gamers in China, 2001-2006 (in thousands and % growth) 81 C. Wireless 82 Mobile Phone Subscribers in China, by Operator, 1996-2005 (in millions) 83 Mobile Internet (2.5G) Usage in China, by Activity, 2002 84 Cellular Connections in China, 2002 & 2007 (as a % of total connections in the Asia-Paciﬁc region) 84 Mobile Subscribers in China, 1998-2007 (in thousands and % of the population) 85 Mobile Subscriber Growth in China, 1998-2007 86 Mobile Handset Sales in China, 2002-2007 (in millions) 87 D. Digital TV 88 Digital TV* Households in China, 2002, 2003 & 2008 (in millions) 88 V Hong Kong 89 Internet Users in Hong Kong, 2000-2002 (in thousands and as % penetration) 90

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Comparative Estimates: Total At-Work and At-Home Internet Users in Hong Kong, 2001-2007 91 A. Broadband 92 Internet Subscriptions in Hong Kong: Broadband vs. Dial-Up, 2001 & 2002 (in thousands) 92 Hong Kong: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 92 Broadband Penetration in Hong Kong, 2000-2005 (as a % of total households) 93 Broadband Households in Hong Kong, by Access Technology, 2000-2005 (in thousands) 94 Broadband Subscribers in Hong Kong, by Access Technology, 2002 & 2003 (in thousands) 95 Leading Broadband Access Providers in Hong Kong, 2001 & 2002 (in thousands) 95 DSL Subscribers in Hong Kong, 2001-2003 (in thousands) 96 DSL Subscribers in Hong Kong, Business and Residential, End of 2002 (in thousands) 96 B. Internet Usage 97 Top 10 Shopping Sites among At-Home Internet Users in Hong Kong, September 2001 & September 2002 97 Online News Web Site Visitors in Hong Kong, by Gender, December 2002 (as a % of Internet users) 98 Top 10 News Sites among At-Home Internet Users in Hong Kong, August 2002 (in thousands) 98 At-Home Online Shoppers in Hong Kong, December 2000, December 2001 & December 2002 99 Online News Web Site Visitors in Hong Kong, by Age, December 2002 (as a % of Internet users) 99 Proﬁle of Online News Readers among At-Home Internet Users in Hong Kong, by Gender, Education and Age, March 2003 100 At-Home Internet Users in Hong Kong, January 2001, January 2002 & January 2003 (in unique audience and % growth) 100 SARS 101 Effect of SARS on Online Shoppers in Hong Kong, February & April 2003 (unique audience and % active reach) 101 Effect of SARS on Top 10 Shopping Web Sites in Hong Kong, February & April 2003 (unique audience and % active reach) 102 Effect of SARS on Online Bankers in Hong Kong, February & April 2003 (unique audience and % active reach) 103 Wireless 104 Mobile Phone Subscribers in Hong Kong per 100 Inhabitants, 2000-2002 104 Effect of SARS on Top Online Banking Web Sites in Hong Kong, February & April 2003 (unique audience and % active reach) 104 Mobile Phone Subscribers in Hong Kong, 1991-2007 (in thousands and % penetration) 105

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VI India 107 A. Internet Users 108 Internet Users in India, 2000-2002 (in thousands and as % penetration) 108 Comparative Estimates: Total At-Work and At-Home Internet Users in India, 2001- 2007 109 B. Broadband 110 Broadband Households in India, by Access Technology, 2001-2005 (in thousands) 110 DSL Subscribers in India, 2001-2003 (in thousands) 111 Broadband Subscribers in India, by Access Technology, 2002 & 2003 (in thousands) 111 DSL Subscribers in India, Business and Residential, End of 2002 (in thousands) 112 C. Wireless 113 Mobile Phone Subscribers in India, by Month, 2002 (in millions) 113 Mobile Phone Subscribers in India, 1991-2007 (in thousands and % penetration) 114 VII Japan 115 A. Internet Users 116 PC Penetration in Japan, 1996-2002 (as a % of households) 116 Internet Users in Japan, 2000-2002 (in thousands and as % penetration) 117 Percent of Households Using the Internet in Japan, 1996-2002 117 Population, Internet Users and Internet Penetration in Japan, 2000-2005 (in millions) 118 Internet Users in Japan, 2001-2003 (in millions) 118 Comparative Estimates: Total At-Work and At-Home Internet Users in Japan, 2001-2007 (in millions) 119 B. Broadband 120 Japan: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 120 Broadband Households in Japan, by Access Technology, 2000-2005 (in thousands) 121 Online Households in Japan, by Access Type, 2001-2006 (in millions and as a % of total households) 122 Comparative Estimates: Broadband Households in Japan, 2001-2007 (in millions) 123 DSL 124 DSL Subscribers* in Japan, by Month, 2002 (in thousands) 124 DSL Subscribers in Japan, Business and Residential, End of 2002 (in thousands) 125 DSL Subscribers in Japan, 2001-2003 (in thousands) 125 C. Wireless 126

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Mobile Phone Subscribers in Japan, 2000-2005 (in millions) 126 Mobile Phone Subscribers in Japan per 100 Inhabitants, 2000-2002 126 Mobile Phone Subscribers in Japan, 1989-2002 (in millions) 127 Mobile Phone Penetration in Japan, 1996-2002 (as a % of households) 128 Pager Subscribers in Japan, 1988-2002 (in millions) 129 Internet-Capable Mobile Phone Penetration in Japan, 1999-2002 (as a % of households) 130 PHS Subscribers in Japan, 1996-2002 (in millions) 130 Factors Contributing to Overall Satisfaction with Mobile Phones in Japan, 2002 (as a % of respondents) 131 Handsets in Use in Japan, April 2000-March 2003 (in millions) 132 DoCoMo FOMA Mobile Phone Users in Japan Who Use an i-mode Phone with a Camera Function, by Number of Times a Week, June 2003 (as a % of respondents) 133 D. Digital Television 134 Digital TV Households in Japan, by Platform, 2002 & 2008 (in thousands) 134 Digital TV and iTV Households in Japan, End of 2001 (in millions) 134 VIII Singapore 135 PC Households in Singapore, 1988-2002 (as a % of total households) 136 Internet Users in Singapore, 2000-2002 (in thousands and as % penetration) 137 Online Households in Singapore, 1996-2002 (as a % of total households) 137 Comparative Estimates: Total At-Home and At-Work Internet Users in Singapore, 2001-2007 (in millions) 138 Internet Use in Singapore, by Language Spoken, 2002 (in thousands) 139 A. Broadband 140 Broadband Users in Singapore, 2001 & 2002 (as a % of users ages 10+) 140 Singapore: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 140 Broadband Penetration in Singapore, 2000-2005 (as a % of total households) 141 Broadband Households in Singapore, 1999-2002 (as a % of total households) 141 Broadband Households in Singapore, by Access Technology, 2000-2005 (in thousands) 142 Broadband Subscribers in Singapore, by Access Technology, 2002 & 2003 (in thousands) 143 DSL Subscribers in Singapore, 2001-2003 (in thousands) 143 DSL Subscribers in Singapore, Business and Residential, End of 2002 (in thousands) 144 B. Internet Usage 145 Top 10 Applications Used by Broadband Users in Singapore, 2002 (as a % of users ages 10+) 145 Broadband Usage among Employed Adults in Singapore, 2002 (as a % of users) 146 Broadband Usage among Students in Singapore, 2002 (as a % of users) 146

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C. Wireless 147 Mobile Phone Subscribers in Singapore per 100 Inhabitants, 2000-2002 147 Mobile Phone Subscribers in Singapore, 1991-2007 (in thousands and % penetration) 148 Type of Mobile Phone Built-In Functions Used in Singapore, 2002 (as a % of respondents aged 15+) 149 IX South Korea 151 Internet Users in South Korea, 2000-2002 (in thousands and as % penetration) 152 Poulation, Internet Users and Internet Penetration in South Korea, 2000-2005 (in millions) 153 Comparative Estimates: Total At-Work and At-Home Internet Users in South Korea, 2001-2007 (in millions) 154 A. Broadband 155 South Korea: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 155 Broadband Penetration in South Korea, 2000-2005 (as a % of total households) 156 Online Households in South Korea: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households) 156 Broadband Households in South Korea, by Access Technology, 2000-2005 (in thousands) 158 Comparative Estimates: Broadband Households in South Korea, 2001-2007 (in millions) 159 Number of Online Households and Penetration in South Korea, by Access Type, 2001-2006 (in millions and as a % of total households) 160 Broadband Subscribers in South Korea, by Access Technology, 2002 & 2003 (in thousands) 161 DSL 162 Comparative Estimates: Cable Internet Households in South Korea, 2000-2005 (in thousands) 162 Comparative Estimates: DSL Households in South Korea, 2000-2005 (in thousands) 162 DSL Subscribers in South Korea, 2001-2003 (in thousands) 163 Internet Access Market Share in South Korea, by Access Type, 2001-2006 163 Broadband Subscribers In in South Korea, by Operator and Access Technology, 10 October 2002 (in thousands) 164 Leading Broadband Access Providers in South Korea, 2001 & 2002 (in thousands) 164 B. Internet Usage 165 Online Activities in South Korea, March 2003 (as a % of respondents) 165 Instant Messaging Programs Used in South Korea, March 2003 (as a % of respondents) 166 Instant Messaging Users in South Korea, 2002 & 2003 (as a % of respondents) 166 C. Wireless 167

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Mobile Phone Subscribers in South Korea per 100 Inhabitants, 2000-2002 167 Mobile Phone Subscribers in South Korea, 1991-2007 (in thousands and % penetration) 168 Mobile Penetration and Growth in South Korea, 1996-2003 169 3G Handsets in Korea, November 2001-June 2002 (in millions) 170 South Korea’s Top Three Wireless Operators’ Subscribers and Market Share, March 2003 (in millions) 170 Mobile Internet (3G) Usage in Korea, by Activity, 2002 171 D. Digital TV 172 Digital TV Revenues in South Korea, by Type, 2002-2007 (in billions of Won) 172 Digital TV Households in South Korea, by Type, 2002-2007 (in thousands) 172 X Taiwan 173 Internet Users in Taiwan, 2000-2002 (in thousands and as % penetration) 174 PC Shipments in Taiwan, 2000-2005 (in millions of units) 174 B2C E-Commerce Revenues in Taiwan, 2000-2005 (in millions) 175 Comparative Estimates: Total At-Work and At-Home Internet Users in Taiwan, 2001-2007 (in millions) 175 A. Broadband 176 Online Households in Taiwan: Dial-Up vs. Broadband, 2001 & 2002 (as a % of online households) 176 Taiwan: Internet Access Summary, End of 2002 (in thousands and as a % of total households and population) 176 Broadband Households in Taiwan, by Access Technology, 2000-2005 (in thousands) 177 Broadband Access Technologies 178 Comparative Estimates: DSL Households in Taiwan, 2000-2005 (in thousands) 178 Comparative Estimates: Broadband Households in Taiwan, 2000-2005 (in thousands) 178 DSL Subscribers in Taiwan, Business and Residential, End of 2002 (in thousands) 179 DSL Subscribers in Taiwan, 2001-2003 (in thousands) 179 Comparative Estimates: Cable Internet Households in Taiwan, 2000-2005 (in thousands) 179 Broadband Subscribers in Taiwan, by Access Technology, 2002 & 2003 (in thousands) 180 Leading Broadband Access Providers in Taiwan, 2001 & 2002 (in thousands) 180 B. Wireless 181 Mobile Phone Subscribers in Taiwan per 100 Inhabitants, 2000-2002 181 Mobile Phone Subscribers in Taiwan, 1991-2007 (in thousands and % penetration) 182 Index of Charts 183

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Also Available from eMarketer Security Online: Corporate & Consumer Protection A comprehensive overview of Internet security. Topics include security breaches, the business costs of cyberattacks, tech solutions, Internet fraud and security risks faced by individual users. (117 Pages, 96 Charts) Automotive Industry Online The automobile industry is reshaping itself - putting manufacturing, marketing and sales online creating a value chain connecting suppliers, dealers and consumers. Henry Ford would be proud. (172 Pages, 149 Charts) Privacy in the Information Age Privacy is a growing consumer concern. Many companies use it as a competitive edge - others are skewered for misusing it. Find out why it pays to protect your customers’ privacy. (228 Pages, 191 Charts) IT Spending: Comparative Forecasts and Trends in Technology Spending Provides in-depth analysis and statistics, reinforced by comparative survey data, on IT spending in 2002 and 2003, by region and key technology market segments. (131 Pages, 138 Charts) The Online Content report Examines the emerging trends in online paid content and services in the US consumer sector. Topics include market size and forecasts, leading subscription sites, the broadband factor, music, games, sports, pornography and much more. (184 Pages, 164 Charts) Interactive Marketing: Stats, Strategies and Trends A thorough analysis of the strategies that are reshaping today’s online marketing universe—along with guidelines on how to take advantage of them. (311 Pages, 328 Charts) Consumer Electronics Online Examines how CE manufacturers and retailers are using the Internet to change how they do business. Covers electronics industry IT spending, b2b e-commerce trade, US online shopping grid and electronics industry online ad spending. (83 Pages, 77 Charts) The European Wireless report Analysis of the wireless market throughout Europe, covering retail and business applications, technology infrastructure, subscriber populations, and mobile apps. (121 Pages, 120 Charts) The US Online Holiday Shopping report A comprehensive update of the leading trends in e-business and online retailing in the world's largest Internet market, the United States, and also looks at the growing world market. (108 Pages, 107 Charts) Essential E-Business Numbers for Marketers, Q3 2002 A quick-reference, "stats-only" report. Data gathered from hundreds of sources is combined with eMarketer ’s own forecasts, and presented in side-by-side tables, graphs and source comparison charts. (74 Pages, 60 Charts)

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Latin America Online: Demographics, Usage & E-Commerce A comprehensive update of the leading trends in e-business and online retailing, with a focus on six countries that form the "core" of the region’s online market. (197 Pages, 211 Charts) Interactive Banking: Integrating Online into Traditional Channels A comprehensive overview of the interactive banking market. "Interactive," not just "online," because banking is being transformed into a cross-channel business. (386 Pages, 427 Charts) Retail Industry Online Covers the three major areas of retailers’ business operations that have been impacted by the Internet: 1) IT and e-business spending, 2) online advertising and 3) selling to consumers online. (122 Pages, 126 Charts) North American Wireless Market: On the Road to 3G As mobile voice penetration approaches 50%, a heated marketing battle is shaping up between North American wireless operators. Find out why--and what it means for your business. (160 Pages, 170 Charts) Asia-Pacific Online: Access, Demographics and Usage A comprehensive update of the leading trends in Internet usage and user demographics in the Asia-Pacific region, with a focus on eight "core" countries. (158 Pages, 179 Charts) Asia-Pacific E-Commerce: B2B & B2C Provides a thorough analysis of the demographic characteristics, usage patterns and category preferences of online shoppers in the Asia-Pacific region. (156 Pages, 156 Charts) Online Selling & eCRM A compilation of the latest survey and forecast data examining the current trends facing companies operating commercial Web sites. (125 Pages, 137 Charts) Broadband & Dial-Up Access Examines the residential broadband and dial-up Internet access markets in 27 countries across four regions. The report covers technologies, major players and trends in broadband access costs. (338 Pages, 433 Charts) E-Mail Marketing: Strategies, Stats, Techniques & Tools Gathering the latest findings from leading researchers, the report tracks the steady growth of e-mail marketing and shows why it is rapidly becoming one of a marketer's sharpest tools. (188 Pages, 209 Charts) The Pharmaceutical Industry Online An essential reference tool covering all aspects of the pharmaceutical industry online from companies using the Internet for trading, to the consumer using the Internet to research and buy pharmaceuticals. (88 Pages, 111 Charts)

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Online Investing: Brokers, Investors, Statistics, and Market Trends Provides a wide-ranging analysis of the trends and strategies that shape today's interactive investing market - along with guidelines on how to take advantage of them. (214 Pages, 203 Charts) Europe E-Commerce: B2B & B2C Provides a comprehensive review of data from leading research firms and government organizations regarding revenue forecasts for B2B and B2C e-commerce. (208 Pages, 209 Charts) CPG Online A comprehensive review of how CPG companies are working with each other and with the consumer online. It is the ideal resource for retailers, wholesale/ distributors, consultancies and marketers. (76 Pages, 80 Charts) Europe Online: Access, Demographics and Usage An overview of Internet users and usage in the 12 "core" countries that best represent the region's market, including Internet penetration rates in each country, how users are accessing the Internet, and why. (188 Pages, 195 Charts) The Benefits of Broadband A review of all available research quantifying the economic benefits of broadband. The report covers supply and demand for broadband in the US, and analyzes direct and indirect benefits of widespread adoption. (138 Pages, 124 Charts) North America E-Commerce: B2C & B2B A comprehensive overview of e-commerce in the US and Canada, including analysis of online shoppers versus buyers, the factors that influence people to buy online and the demographics of online buyers. (212 Pages, 250 Charts) PDA Market report Reviews the status of the worldwide PDA/handheld computer market from the perspective of data-centric devices, and analyzes the trends that are shaping its future growth. (124 Pages, 128 Charts) Interactive TV: Reality & Opportunity An overview of worldwide iTV usage and revenue prospects, television commerce, iTV advertising, video-on-demand, personal video recorders and iTV services. (194 Pages, 200 Charts) E-Commerce Trade and B2B Exchanges A comprehensive update of the leading trends shaping e-business decisions in 2002, focusing on the multiple channels businesses are using to migrate their business-to-business (B2B) trade onto the Internet. (127 Pages, 134 Charts) Online Advertising A definitive, objective look at the online ad market, including the pros and cons of emerging ad formats and the role of online advertising within a traditional media campaign. (272 Pages, 318 Charts)

195 ©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. Asia-Paciﬁc Online

North America Online A comprehensive overview of the North American Internet user and market, focusing on US and Canadian user demographics, access and usage. (252 Pages, 333 Charts) Travel Market Worldwide Provides a clear picture of the current situation in the travel industry, with information and statistics regarding travel purchased both online and ofﬂine. (186 Pages, 205 Charts) For more information, or to order a copy, contact eMarketer at: Phone: 212.763.6010 Fax: 212.763.6020 eMail: [email protected] Web: www.emarketer.com For Sales Inquiries: For Media Inquiries: Nick Lovett David Berkowitz [email protected] Director of Media Relations 212.763.6010 [email protected] 212.763.6038 To sign up for eMarketer's free newsletter, the eMarketer Daily, visit http://www.emarketer.com/news/newsletter.php

196 ©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.