Mobile Internet Providers in Asia Face Demand Uncertainty

Source: Asiabriefing

One of the great challengers mobile service providers face in much of Asia is how much demand there will be, in the future, for mobile Internet access, and how to supply that demand at prices users can afford.

The other problem is that present trends might not predict future behavior.

Mobile data consumption patterns in Asian countries might show “mean” (arithmetic average) of about a gigabyte a month, but the median (half use more, half use less) consumption is more on the order of 300 MB to 400 MB.

On the other hand, present consumption trends are likely skewed by use of mobile devices or dongles to support PC usage. Also, usage is further skewed by users in some countries, compared to others, as Nielsen data suggests.

In the Asia-Pacific region, about one percent of subscribers account for 29.2 percent of upstream traffic and 18.5 percent of downstream traffic, as well as 18.7 percent of aggregate bytes each month, Sandvine reports.

So “average” consumption is skewed by dongles or tethered access to support PC operations.

Smartphone data consumption patterns arguably are quite different, at least for the moment.

Still, Ericsson predicts, smartphone usage could approach a gigabyte a month for smartphone users in Asia by about 2016.

Source: Statista, Sandvine

To be sure, even those patterns do not tell us much about how demand will change as more Asian users get smartphones and start to consume more data.

And patterns could be quite different between the more developed and still developing parts of the mobile market.

But it would be a reasonably safe bet that consumption will grow to match developed Asian norms, over time, even if not at quite identical volumes.

Nearly half of all the data was consumed by video features and apps, according to Sandvine’s second half 2013 report. And, without, a doubt, appetite for video is going to be key.

So unless one wishes to argue that consumers in South Asia and Southeast Asia will not consume much video entertainment, something few likely would be willing to build a business plan upon, demand eventually is going to grow to gigabytes a month.

Mobile ISPs therefore are going to have to craft new strategies to stimulate and supply demand at prices consumers can afford. That is always a challenge in any developing market, of course.

But it will be an important challenge to supply networks that match expected demand, with infrastructure costs as much as an order of magnitude or two orders of magnitude cheaper than is possible today, using traditional mobile or fixed networks.

Present forecasts likely are unable to capture the non-linear development of Internet access in the region, though. The shift from feature phones to smartphones, role of new access platforms, relentless development of affordable smartphones and even the rates of growth in household income all are going to render today’s assumptions incorrect.