Broadband breakdown

12 May 2006

Asia is still the world's biggest broadband market, but the rest of the world is catching up fast. Oh, and DSL still rules

For years, the Asia-Pacific market has been leading the charge in broadband access, driven famously by aggressive rollouts in Korea and Japan. But while it's still the largest regional broadband market in the world, and is still growing, other regions and non-Asian markets are swiftly catching up, according to annual data released in March by Point Topic.

Of the world's 209.3 million broadband lines tallied at the end of 2005, the Asia-Pacific market accounted for 40%. However, that's 2% less than its market share in 2004, according to the report by Point Topic analyst Katja Mueller, despite a 29% increase in broadband lines over the past year.

South Korea remains the world's leading broadband market by penetration (just over 25%), but saw negligible growth last year, and is now on the verge of being surpassed by Denmark and the Netherlands. Hong Kong and Finland are also coming up fast, both now at 23% broadband penetration.

Meanwhile, the hottest regional growth markets for broadband take-up is the Middle East and Africa (MEA) and Eastern Europe. Both regions have the smallest shares of the broadband access pie (1% and 2%, respectively), but they're also the two fastest growing regions of the world, expanding 95.9% and 92.7% respectively in 2005.

None of this to say that Asia Pacific is losing its momentum in the broadband race. Southeast Asia grew 45.4% year on year. China added 11.7 million new broadband lines in 2005, accounting for the bulk of Asia's 18.7 million new lines in the same time period. India is seeing triple-digit annual growth rates, with a 222% increase last year. The Philippines is growing at close to 250%. If anything, says Mueller, Asia's overall growth is being sandbagged by markets where broadband has been slow to catch on.

DSL: tomorrow's FTTH‾

As for technologies, DSL unsurprisingly still leads the broadband pack, accounting for two-thirds of the global market. Cable modems and FTTH still grew at a collective annual rate of 27.2%, but DSL grew just over 42%. The US remains the top cable modem market, and one of the few where cable modems outnumber DSL.

On the other hand, certain trends in saturated North American and Asian markets could herald an interesting change in direction at the expense of DSL - in favor of FTTH. Verizon in the US, and most major carriers in South Korea and Japan, have been aggressive in plans to migrate their DSL customers to FTTH. Point Topic's research doesn't separate cable modem numbers from FTTH take-up, but RBC Capital Markets analyst Mark Sue estimates that there are around six million FTTH connections worldwide, which he says amounts to 140% growth from 2004.

Still, it would be pushing things to suggest that today's DSL line is tomorrow's fiber connection - at least not in the next few years. Demand for faster speeds (for the purpose of offering richer content services like video and VoIP) is becoming a serious driver in saturated markets, but fiber isn't the only means of delivering that.

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