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Sunday, January 30, 2005

Where's The Asian Equivalent Of Vonage?

Om Malik made the famous statement sometime back ,"The axis Of technology has shifted to south china sea" and here he writes about the reach of internet in asia and predicts the internet traffic in asia to further improve. Om Malik writes,"Japan’s influence on mobility, South Korea’s leadership in broadband deployment, China’s growing influence in manufacturing and net-enabled economy, and India’s services sector are creating a whole new set of dynamics for technology industry". He quotes,Telegeography’s Global Internet Report ( Aug 2004), and spots that the international IP Traffic Grew 115 percent between 2003 and 2004, outpacing the underlying capacity growth of 46 percent. But the most surprising number is the sharp increase in the traffic between Asian countries - 434 percent between 2003 and 2004, compared to 82 percent between European countries. However, one could easily discount that because after all it is coming off a smaller base. But the number to watch is the traffic growth between US and Europe and US and Asia. Average Internet traffic across the Atlantic and Pacific grew 110 and 119 percent, respectively, between 2003 and 2004. It used to be exactly the opposite a few years ago. Unscientifically speaking, the following stat shows that US is conducting more "net" business with Asia and expects this to increase further. As India, Singapore and other new hubs become more and more fiber-enabled there will be a growth in the traffic and hence contact between US and Asia, concludes Om Malik.

Smalla.Net points to this paper
Breaking the Ice- Rethinking the telecommunications law for the the digital age
talking about the changes that beed to take place in the telecom environment. The paper notes," Telecommunications is a trillion-dollar industry undergoing a massivetransformation. As technology and market developments undermine long-standing business models and value chains, existing legal frameworks are failing" and is recommending a few ideas to facilitate the transformation.
I was wondering, as Asia is really moving fast in this space, we should be seeing a lot of IP based phones and related enteprises -IP Telephone services providing flat rate services springing out of Asia - I keep visiting all Asian capitals regularly and could not find asia headquartered one across shanghai,seoul,singapore and chennai.

As James Seng points out, there are several hurdles in making this happen.
- The first and foremost problem is the lack of harmonization of regulatory framework across Asia. This means licensing, getting phone numbers, negotiate interconnections, implementing emergency services, wiretapping, universal service obligation would be very different across each economy where unlike US or EU. Poor understanding of regulators and lack of open market are issues.

-In many countries, providing Internet is a job for the incumbent with very few alternatives. Even in countries which is supposingly wired up, issues like poor quality of copper wires or lack of maintenance are issues to be grappled.

-Backbone would also be a nightmare if you are gung ho to "give better voice quality" via your own network. Due to close-market regulation and competitions on other routes, a STM-1 from neighbouring countries would cost several times compared to Singapore to US rates. (sea routes are often cheaper then land even at greater distance).

Asia also have some highest Broadband pentration countries in the world. Broadband is one of the basic requirement for IP Telephony service to boom and so this represent an immediate market for one willing to explore. Asia also represent 250M Internet Users or 32% of the internet population with huge room for growth with 60% of the world population. This means a huge long-term potential for a pan-asia player.

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