Farncombe undertook a comprehensive study of the broadband markets in six key Southeast Asian (SEA) developing countries: Indonesia, Malaysia, Philippines, Thailand, Vietnam and India, that aims to find out if flagging broadband speeds prove a barrier for the development of OTT in the region.
The study analysed fixed and mobile broadband service offers, technologies, nominal and actual bitrates and pricing plans, which show that around 30% of the existing fixed broadband residential subscriptions offer speeds that are equal to or higher than 2Mbps – the threshold required by many OTT service providers for delivering video content to connected devices, including TVs.
Farncombe forecasts that this percentage will reach almost 50% by the end of 2017 – with more than 25m fixed broadband connections ≥ 2Mbps across the six countries by then. India will lead, accounting for 28% of the households in this segment, followed by Vietnam and Thailand. Cable and Fiber to the x (FTTx) will gradually increase their presence in the main cities and will increase with CAGR 2013-17 of 31% and 36% respectively. Wireless Broadband Access (mostly WiMAX) and other technologies such as satellite and Ethernet will remain niche alternatives with limited market shares. Malaysia takes the top position in terms of FTTx connections across the six SEA territories, with the average download bitrates increasing at a CAGR of 25% in the final three years to 2017. However, the average bitrates in India, Indonesia and Vietnam are increasing at a CAGR of less than 10%, bringing the average regional speed up to just 1.5Mbps by the end of last year.
Most fixed broadband plans now include unlimited usage, unlike mobile packages, which are typically “capped” – an issue that still slows down OTT usage over mobile broadband. Farncombe compared fixed and mobile broadband costs by looking at how much each charged ‘per Mbps’, taking into account actual bitrates and mobile usage caps and found that on average mobile broadband users would have to cap their monthly use at 1-3Gb to obtain the same “per Mbps” price-performance as a fixed plan.
Similar results were derived across all six markets, demonstrating that despite the significant increase in mobile broadband users – which we expect to reach nearly 0.5 billion subscribers by 2017 with a CAGR of 37% across the six countries – fixed broadband remains as a more cost-effective choice for video use. As competing two-way platforms will require substantial up-front investment, especially for countries with challenging landscapes like India, Indonesia and the Philippines, OTT platforms can offer significant opportunities for players in these regions to reach audiences and capture market share more cost-effectively and with tighter launch-schedules.
