Data Services Tread the Convergence Path as Prices Decline

Frost: Aggressively growing economies, stable political environment, and the corresponding rise in connectivity needs of businesses are driving the demand for international data services in Asia Pacific. Keeping pace with this requirement, multinational corporations (MNCs) are implementing numerous bandwidth-building solutions such as enterprise resource planning (ERP) and supply chain management (SCM). As Internet protocol (IP) convergence becomes vital for increasing profitability, these MNCs are adopting IP technologies to integrate and transport voice, fax, video and data traffic on a single IP-based network.

Revenues in this market totaled US$11.08 billion in 2004 and can reach US$13.72 billion in 2009. As prices decline, leased circuits are continuing to generate the bulk of revenues for international data services at 46.1 percent of total data revenues in 2004. Also, conventional options such as frame relays are set to make way for ATM (asynchronous transfer mode) and IP VPN (virtual private network) in the future. Mounting competition has forced some players into opting for Chapter-11 (bankruptcy) protection, while others are drastically reducing prices, and thus are able to maintain low fixed costs for their services.

While the demand continues to rise, the excess bandwidth on all major international routes is fueling the price war in Asia Pacific. Understanding the pricing trend provides operators the needed advantage in this competitive marketplace”

Nevertheless, customers are no longer sensitive toward the vagaries of price, and factors such as network uptime and stability are assuming priority, especially for those in the financial sector. To meet these requirements, service providers must focus more on product differentiation and offer end-to-end customized solutions at every quality of service (QoS) level sought by end users.

Service providers are increasingly modifying their strategies to be in tandem with the global trend where IP-based networks and services are gaining popularity to better position themselves in the marketplace. They are also focusing on selling value-added solutions to boost their customer base.

Overall, varied factors such as huge foreign investments in China, the country’s global expansion, fledging Internet/broadband sector, and a greater demand for content from foreign enterprises are benefiting the market for international data services in China, which in turn is stimulating the region’s progress in this segment. The Asia Pacific International Data Service Pricing and Analysis

Publ 20051215