The Hindu : Gartner sees higher telecom growth in Asia

Online edition of India's National Newspaper
Thursday, Jan 22, 2004

Business

Business

Gartner sees higher telecom growth in Asia

By Our Special Correspondent

NEW DELHI, JAN 21. After three years of focusing on cutting cost, telecom service companies in Asia and Pacific will again begin to focus on growth in 2004 but the results will be patchy. This is due to better economic conditions, improving carrier financial performance and a decline in price competition. "This will not only result in new service offerings but it will also lead to the first growth in telecom investment in the region for five years,'' said a senior official of Gartner, a research company.

But despite improving conditions, the situation is not rosy for everyone. "Some sectors of the industry, such as long distance and international will continue to feel the pain of over-capacity. The effect of a renewed focus on growth will be patchy and not yet pay dividends for many carriers during 2004,'' added another official.

Gartner's predictions pinpoint both the region's bright spots and challenges ahead: Telecom investment will grow for the first time in five years during 2004 in Asia Pacific. During the year, investment is expected to be 9 per cent higher than in 2003. However, It will still remain 11 per cent lower than the record levels reached during the boom in 1999. One noteworthy feature of the market will be the increased spending on next-generation technologies, bringing voice and data together on the same networks. Increasingly, carriers building infrastructure in green-field locations, especially in China and India, will move straight to next generation networks rather than deploy older style switched infrastructure. Investment will also flow into supporting the rollout of new services such as new high-speed data and video services, but the results of these are unlikely to show through this year — and disappointments are likely as carriers struggle with new business models.

Another prediction is that the growth of new mobile connections will outpace those of fixed by 2-to-1 in 2004. Mobile substitution is gathering pace in the region. In developing markets, fixed-line carriers are struggling to compete with the explosion in the popularity of wireless or limited mobility wireless local loop services. Meeting the challenge of wireless connections is one the big issues facing the region's fixed line carriers as they search for growth. One way forward for fixed carriers is to differentiate themselves from mobile carriers by offering higher speed broadband services.

Gartner also anticipates a rapid adoption of IP telephony. This will be driven by the need to replace an aging installed PABX base in enterprises. More than half of new telephony lines installed in the region in enterprises in 2004 will also be pure IP rather than IP-enabled.

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