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September 2012 Issue 76 Asia Pacific Telecommunications INSIGHT BMI’s monthly market intelligence, trend analysis and forecasts for the telecommunications industry across Asia Pacific ASIA CONTENTS More Efforts Needed To Promote Asia More Efforts Needed To Promote Cloud Sector ........................................................ 1 Australia Cloud Sector Site Sharing To Boost VHA’s and Optus’s Networks .................................................. 2 The cloud computing industry in Asia Pacific is starting to gain traction New Zealand with the increasing proliferation of quality fixed and mobile internet Stronger Vodafone NZ To Challenge TCNZ .............................................................. 3 connectivity with, unsurprisingly, developed countries and regional Indonesia hubs such as Japan, Hong Kong and Singapore leading the way. While Telkom's Pacnet Bid May Not Yield Expected Results ............................................... 3 emerging markets are trailing behind by a distance due to various reasons, Timor-Leste we believe that telecoms companies should not be deterred by initial New Licences To Introduce Competition ................................................................. 4 challenges, especially in the consumer segment, as the long-term revenue Malaysia potential is too big to ignore. FRiENDi Looks East .............................................................................................. 5 At present, one of the easiest entry point for telecoms firms to break Thailand into the cloud industry would be through the enterprise market where 3G Auction On Track, Outlook Remains Uncertain ................................................... 5 business clients are more receptive to cloud services in light of poten- Vietnam Resolve Skewed Competitive Landscape Before MNP............................................... 6 tial cost savings. Further, concerns about network reliability and data Philippines protection are gradually being addressed by cloud service providers. Domestic Dominance Could Fuel Overseas Expansion ............................................. 7 Indonesia's XL Axiata started marketing its Xcloud services in May and Cambodia has allocated US$1mn to develop its cloud business. The firm is working Emaxx-Excell Deal Long Over ................................................................................ 7 with established players such as Microsoft, Fujitsu and IBM to reduce Myanmar development cost and bolster its product portfolio. The mobile operator Still A Major Risk For Entrants ............................................................................... 8 has a revenue target of US$5-6mn for its cloud services (comprising Japan hosting, storage-as-a-service and server-as-a-service). Amazon To Launch Prepaid Internet ...................................................................... 8 By contrast, the consumer market is slightly trickier as evident from Flicker Of Opportunity For Japan's Smart TVs ......................................................... 9 the fact that telecoms operators globally have yet to devise a success- South Korea ful model due to the prevalence of over-the-top (OTT) services such LG’s First-Mover Advantage May Not Last ..............................................................10 as Skype and WhatsApp. These OTT services pose a direct threat to Taiwan telecoms operators' revenue stream while increasing stress on their data EV-DO Upgrade To Boost APT ..............................................................................10 networks. However, like the Middle East, BMI believes that operators in China emerging Asia still have room and the time to carve out a greater revenue Baidu's New Smartphone A Safe Bet .....................................................................11 share due to lower smart device adoption rates and wcultural differences. China Telecom Eyes Future With Cloud Gaming .....................................................11 Teguh Prasetya, founder of the Indonesian Cloud Forum (ICF), has India urged domestic telecoms operators to invest in cloud-based services, Industry To Suffer From Continued Regulatory Uncertainties ..................................12 content and applications in order to leverage on their assets, which Challenges Remain Ahead For Reliance Communications ........................................13 Bangladesh include the sizeable mobile subscriber bases, their user data and embed- GSM Switch To Boost Citycell's Outlook .................................................................14 ded billing. This is in line with our view that introducing cloud-based Afghanistan value-added services will reduce the possibility of operators becoming 3G Competition Heating Up ..................................................................................14 mere 'dumb-pipes' and generating revenue only through subscriptions. BMI believes that the immediate challenge for telecoms operators in emerging Asia is to encourage the adoption of internet services, par- ticularly mobile data. According to the ICF, only 22mn out of Indone- sia's 230mn mobile subscribers can be categorised as internet-friendly. Mobile 3G subscription rates in alternative Asian emerging market are still generally low. For example, Indian operators Bharti Airtel, IDEA Cellular and Vodafone India have slashed their 3G tariff rates due to poor consumer response. We believe that companies can take the opportunity presented by an infant mobile internet market and pro- mote mobile data and cloud-base services together. Indonesian mobile Editorial Office: 85 Queen Victoria Street, London EC4V 4AB, UK Tel: +44 (0)20 7248 0468 Fax: +44 (0)20 7248 0467 www.businessmonitor.com www.telecomsinsight.com AUSTRALIA Asia Telecommunications operators are eyeing the domestic 3G market, and we believe that launching localised services will not only encourage consumers to AUSTRALIA sign up for data services, but also lessen the threat of OTT providers. Site Sharing To Boost VHA’s Private Companies Cannot Do It Alone The Asia Cloud Computing Association (an organisation compris- and Optus’s Networks ing firms such as Alcatel-Lucent, Cisco, Dimension Data Asia Vodafone Hutchison Australia (VHA) and Optus signed a bind- Pacific, Rackspace and Telstra International) announced a Cloud ing Memorandum of Understanding in May to expand their current Readiness Index in September 2011, which ranks 14 Asian countries. network joint venture agreement, which would lower the cost to The index looks at criteria and conditions required for the successful challenge the resurgence of mobile market leader Telstra. This implementation and uptake of cloud computing technology through development chimes with BMI’s core view that telecoms opera- 10 key attributes, which affect how products and services can be tors would seek network-sharing opportunities in spite of intense offered, delivered and consumed by the market. competition due to the benefits. Developed countries scored well due to strong underlying infra- Resurgent Telstra Is Cause For Concern structure (quality of broadband and power grid as well as interna- Australia Mobile Subscribers By Operator (‘000) tional connectivity) and an environment conducive for businesses 14,000 and cloud developments (for example, regulatory conditions, data 12,000 protection policy, government prioritisation and business efficiency index). While emerging markets generally fared poorly in several of 10,000 these aspects, the situation could be improved if the governments 8,000 are able to provide more support in addition to efforts from the private sector. 6,000 Despite their relatively low readiness, BMI believes that the 4,000 growth potential in emerging markets should attract companies to Telstra invest in the technology. The Asia Cloud Computing Association Optus 2,000 reckons that worldwide spending on cloud services is expected to Vodafone Hutchison Australia 0 10 11 10 11 10 10 11 11 09 10 11 10 11 reach US$150bn by 2014, and the spending on cloud computing is - - - - - - - - - - - - - Apr Oct Apr Oct Jun Jun Feb Feb Dec Dec Dec forecast to reach