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Asia Pacific International Data Services Markets - Strategic Analysis on Pricing
Frost & Sullivan, March 2007
This Frost & Sullivan research service titled Asia Pacific International Data Services Markets - Strategic Analysis on Pricing provides great insight on dynamics of Asia Pacific international data service market. This study focuses primarily on the pricing aspect data services in the region and provides an in-depth analysis of the driving of price trends in the region. It also investigates emerging International Ethernet service. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: international data services, asynchronous transfer mode (ATM), frame relay, international private leased circuit (IPLC), IP VPN, IP transit, International Ethernet, and local loop circuit.
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The following technologies are covered in this research service:
- Asynchronous Transfer Mode (ATM): ATM is a dedicated connection-switching technology that organizes digital data into 53-byte cell units and transmits them over a physical medium, using digital signal technology.
- International Ethernet: International Ethernet is a cost-effective connectivity solution that is customized for enterprises that require greater resilience, flexibility, and capacity for their global networks. The service promises the benefits of scalable bandwidth, capability to support high-bandwidth applications, competitive local access costs, efficient network transport interface, and higher customer routing privacy.
- Frame Relay (FR): Frame Relay is a cost-efficient data transmission technology for intermittent traffic between LANs and end points in a wide area network (WAN).
- International Private Leased Circuit (IPLC): IPLC is a point-to-point private line used by an organization to communicate between offices that are geographically dispersed throughout the world. An IPLC can be used for Internet access, business data exchange, video conferencing, and other forms of communication.
- Internet Protocol Transit: Internet protocol transit is the transmission of IP traffic across the network backbone.
- IP Virtual Private Network (IP VPN): IP VPN is a virtual private network (VPN) based on IP, which is fast, reliable, flexible, and accessible by remote workers, suppliers, and customers.
Market Overview
Data Services Price Decline Slows Down as the Highly Competitive and Price-sensitive Asia Pacific Market Recovers from Bandwidth Abundance
While the international data services market in Asia Pacific is experiencing a steady growth in demand, intensifying competition is forcing prices down and restraining revenue growth. Taking advantage of the intense competition in the market, data service customers are negotiating better discounts based on the duration and the value of contracts. While international private leased circuit (IPLC) prices in the Asia Pacific have declined by 8 to 15 percent year-on-year, frame relay (FR) and asynchronous transfer mode (ATM) prices have dropped by an average of 15 to 20 percent since early 2005. The Indian market is expected to undergo radical changes as the Government plans to open up the resale market and the globalization trend is set to instigate similar deregulation in other regulated markets. This move will foster fierce competition from international and regional carriers, putting further pressure on price. The trend will be less obvious in regulated markets such as China and Malaysia, where domestic incumbents dominate the market and face less competitive pressure.
Asia Pacific’s data services end users remain price sensitive. However, their importance in carrier selection is subsiding. Network availability and stability is taking priority at present. Taking advantage of competition, enterprise customers continue to negotiate better discounts based on the duration and the value of contracts. Enterprise customers are able to demanding more value-added services to be bundled with the contracts. The data services price is also expected to reduce slowly as available capacity matches demand. 'For the first time since the bandwidth market bust, bandwidth demand is in sync with the available capacity of the region,' says the analyst of this research service. 'In response to the significant growth in bandwidth demand in 2006 and the strong positive demand forecasts, carriers have not only started investing in upgrading existing submarine cable systems, but also plan to deploy new ones.' Adopting a more consultative selling approach and offering customized end-to-end solutions in every type of service at every QoS level is the way forward for service providers to capture market share.
IP VPN Demand Experiencing Impressive Growth
IPLC remains the most popular data service offering in the Asia Pacific, especially for intra-regional routes. However, Internet protocol virtual private network (IP VPN) services have made significant advances during 2006. Since it is perceived by end users as a cost-effective alternative to legacy services such as FR and ATM, service providers continue to maintain IP VPN at a competitive price, which is substantially lower than that of traditional data services. 'With technological maturity and security concerns being addressed, enterprises in Asia started to take advantage of security, scalability, extensibility, and multiservice capabilities of IP VPNs as a lower cost alternative to legacy data networks,' says the analyst. 'As a result, leading service providers have announced many winning deals for IP VPN services and are aggressively marketing the service especially in relatively developed markets such as Hong Kong, Japan, Singapore, and South Korea.' Mass migration is expected to start within the next 18 to 24 months and IP VPN prices are likely to stabilize in the next 12 to 18 months across the region. In the meantime, competitive service providers are striving to offer more value-added services to complement the basic connectivity.
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