India and China are to overtake Western Europe to become the region with the largest number of broadband connections, says analyst and consulting firm Ovum.
"The fastest growth in broadband connections over the next few years will be in the China/India region, which are still adopting DSL at a rapid rate and we expect this trend to continue," said Claudio Castelli, of Ovum.
In the rest of Asia-Pacific region, however, the consulting firm sees slower growth, with a compound annual growth rate (CAGR) of 4 percent.
Growing Demand, Declining Prices
Ovum also noted that access services in China and India are still subject to severe price decline. "We see high competition for services and continued pressure on DSL pricing; however, demand is growing and counteracts this revenue loss," said Mr. Castelli, based in Melbourne.
"We forecast revenue increases in the China/India region with revenues rising from US$18.1 billion to US$23.1 billion (a CAGR of 5 percent) in 2012, which will be more than 40 percent of the global market."
Global Decline in Broadband Access Revenues
On a global level, Ovum noted that enterprise demand for broadband access will continue to grow. This growth is being driven by two key factors driving demand. The first being, enterprise migration from legacy services to next-generation technologies. The second factor is due wider implementation of voice over IP and network-based applications throughout the enterprise.
According to the analyst firm, enterprises want higher bandwidth and reliability to enable them to increase productivity and ultimately reduce costs. "Ovum forecasts a total of 59.8 billion broadband connections globally in 2007, rising to 87.6 billion in 2012, representing a CAGR of 8 percent," said Lucy Hipperson, analyst based in London.
Most importantly, Ovum forecasts an overall decline in broadband access revenues over the next five years, with global revenues of US$59.4 billion in 2007 rising to US$62.4 billion in 2009 before declining to US$55.6 billion in 2012.
"Although we see continued price decline, in the short term we see subscriber growth enabling continued revenue growth," said Hipperson. "In the long term continued price decline in developing markets will have a greater effect on the overall market and lead to a decline in revenues."
Ovum also highlighted that ethernet access revenues are increasing and act as a counterbalance to the decline in DSL revenues. However, they fail to prevent revenue decline over the five-year forecast period.
This story, "China, India to Lead in Broadband Connections" was originally published by Computerworld-Singapore.