Communications: Government and Business Practices in the Asia Pacific Region

1. Communications:Government and Business Practices in the Asia Pacific Region The Background Paper on the Asia Pacific Region Khelia Johnson, J.D. Khelia_Johnson@ksg03.harvard.edu Future of Voice Workshop 15 January 2007

2. Objectives For each country: • Investigate the trend of declining APRU • Investigate the telecommunication market and services available • Highlight government strategies • Highlight business strategies For the region: • Analyze trends within telecommunication market • Compare government strategies • Compare business strategies

3. Hong Kong Basic Telecommunication Indicators • Great deal of political independence despite being part of China • Extremely competitive and advanced telecommunications market • Independent and neutral telecommunications regulator • Open markets with transparent entry conditions • “Walled garden” approach to supply of content causes some concern

4. South Korea Basic Telecommunication Indicators • Technology savvy public • Government and business emphasis on creation of infrastructure • Broadband is fast and cheap • Emphasis on value-added service as subscriber saturation occurs in telephony and broadband • Feuding amongst regulatory agencies may interfere with market development

5. Japan Basic Telecommunication Indicators • Tokyo: the largest metropolitan area in the world, • U-Japan: the country’s vision of a ubiquitous telecommunication society • Focus is on the creation of the right regulatory environment • Strategic moves made through mergers and acquisition • Consolidation of power from mergers and acquisitions may cause antitrust concerns

6. Australia Basic Telecommunication Indicators • Strong mobile telecommunications market • Emphasis on value-added services • Lagging in fixed networks but an upgrade to a broadband fiber network is planned • Dial-up subscribers outnumber broadband subscribers • Telstra, the incumbent, is 51.8% government owned • Complications between regulatory agencies, government, and Telstra resulting in large amount of regulation and uncertainty

7. China Basic Telecommunication Indicators • Most populous country in the world, 1.3 billion • Huge market potential • Leapfrogging of technologies • Low technology penetration rates • Banning of convergence between telecommunications and broadcast has resulted in interagency rivalry • Operators are all government controlled

8. Findings • Decline in revenue and subscriber base in traditional voice services • Consumer preference for mobile over fixed-line communication due to flexibility and mobility • Some preference for mobile data services over mobile voice • Broadband infrastructure is key, especially for converged services such as VoIP and IPTV • Value-added, converged services have been embraced by consumers and operators but are encountering regulatory difficulties in some parts of the region • Regulation has the power to encourage or encumber new services • All countries have IP telephony and VoIP in some manner and the market is growing • All countries have IPTV in some manner and the market is growing • Convergence is the future of the telecommunications market

9. A Model of Convergence Consists of the following categories: • Convergence of Operators • Convergence of Services • Convergence of Technology • Convergence of Markets • Convergence of Regulation Note: There can be overlap and one form of convergence can be catalyst for another