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Regulation and security key to improving digital connectivity in Asia-Pacific

COVID-19 ensured rapid digitalisation. It is now up to all stakeholders of the industry to ensure an equitable, resilient and reliable digital ecosystem
A person wearing a hat and seated in a cafe in Jakarta, Indonesia is intently viewing his smartphone while his laptop is open

Asia-Pacific is witnessing a spurt in digital transformation driven by the growing trends in mobile, satellite and broadband connectivity. Asia-Pacific trumps all other regions in terms of revenues earned from digital platforms. Of the total global revenue of $3.79 trillion from digital platforms, Asia contributed $1.81 trillion or about 48% of the share.

Mobile cellular subscriptions on the rise

A recent report by the International Telecommunication Union points to developing trends in ICT technology in Asia-Pacific that can transform the digital economy of the region. Mobile cellular subscriptions within the region are in excess of 100 per 100 inhabitants in 22 of the 38 countries. Although some countries within the region have subscription rates below 100, the region’s average subscription rate is estimated to be 104.6 per 100 inhabitants – falling little short of the global average of 105. Countries such as Marshall Islands, Micronesia and North Korea have subscription rates below 30 per 100 inhabitants.

Exhibit 1: Mobile cellular subscriptions, 38 Asia-Pacific countries, 2019

Source: Based on the ITU WTI Database, July 2020 edition.

Meanwhile, active mobile broadband subscriptions are estimated to be around 76.6 which is slightly above the global average of 75 per 100 inhabitants. A quarter of the countries in the region have mobile broadband subscription rates in excess of 100 per 100 inhabitants, with Vanuatu and Japan being significant outliers, recording 237.1 and 203 respectively.

Exhibit 2: Active mobile broadband subscriptions per 100 inhabitants, 35 Asia-Pacific countries, 2019

Source: Based on the ITU WTI Database, *2020 estimate. Note: As no data were available for 2019 for the following countries, 2017 or 2018 values have been used instead: Democratic People's Republic of Korea (2017), Fiji (2018), Nauru (2017), the Philippines (2017) and Samoa (2017).

Disproportionate progress in satellite broadband connectivity

Satellite broadband is considered to be an effective medium of addressing the digital divide in the region. It can help provide affordable broadband connectivity to underserved communities in remote and rural areas in the region. But progress has been slow especially in the island states of Vanuatu, Tonga and even Japan which are prone to natural hazards such as earthquakes, cyclones, floods and tsunamis.

Exhibit 3: Satellite broadband subscriptions, Asia-Pacific region, 2018-2019

Source: ITU, based on the ITU WTI Database. Note: The 2018 figure was used for New Zealand for 2019.

Potential for fixed broadband connectivity

Fixed broadband connection in Asia-Pacific is expected to be at par with the global average. The report estimates the region to average around 15 fixed broadband subscriptions per 100 inhabitants, which is almost at par with the global average of 15.2. Mostly, developed economies within the region such as South Korea, Australia, New Zealand, Japan, Singapore, China and Vietnam have surpassed this average subscription rate.

Exhibit 4: Fixed broadband subscriptions per 100 inhabitants, Asia-Pacific region, 2019

Source: ITU, based on the ITU WTI Database, *2020 estimate. Note: As no data were available for 2019 for the following countries, 2017 or 2018 values have been used instead: New Zealand (2018), Tuvalu (2017), Micronesia (2017), the Republic of Nepal (2018), the Marshall Islands (2017), Fiji (2018), Samoa (2017), Myanmar (2018) and Papua New Guinea (2017).

The e-commerce sector has benefitted the most due to the fundamental shift towards digital. E-commerce digital platforms such as Alibaba, Flipkart and Meituan-Dianping have contributed as much as $1.19 trillion to Asia-Pacific’s economy. It is also one of the fastest growing sectors in terms of digital revenue – growing by 19.6% in 2019. The pandemic has accelerated the adoption of e-commerce and the sector will see tremendous growth in the coming years – with forecasts suggesting that the e-commerce sector in Asia could be worth $1.92 trillion by 2024.

Internet connectivity demands have also increased remarkably. This is clearly evident in the increasing numbers of internet users desiring for better international connectivity. The total international bandwidth in the region has grown by three times from 118 Tbit/s in 2017 to 301 Tbit/s in 2020.

Exhibit 5: kbit/s per Internet user, most recent year (2017, 2018 or 2019), and CAGR, 2015-2019, Asia-Pacific region

Source: ITU, based on the ITU WTI Database, 2020.

Undersea cables are also contributing greatly in bringing international connectivity to some of the small island developing states in the region. The four island states of Nauru, Tuvalu, Timor-Leste and Kiribati are yet to receive submarine cables. Micronesia and Solomon Islands were recently connected with undersea submarine cable networks, while Kiribati is expected to have undersea cable connectivity by 2021. These developments have boosted the percentage of individuals using the Internet – increasing from 46% to 52.4% between 2017-2019. Similarly, active mobile broadband subscriptions have also increased from 44.8% to 54% in the same period.

In the future, there will be more developments in the digital space which will transform the digital capabilities of the region. However, growing concerns around cybersecurity cannot be ignored – with ITU estimating that the global cost of cybercrime was $2 trillion in 2019. Economies will need to focus on developing a robust cybersecurity framework to ensure sustainable economic and socio-economic development. The report found that in Asia-Pacific only Singapore, Malaysia and Australia have shown the highest commitment towards cybercrime preparedness.

Exhibit 6: Heatmap of national cybersecurity commitment based on the ITU GCI 2018

Source: ITU, based on data from ITU GCI.

Going forward

According to the report: “The role played by digital technologies in mitigating the impact of the COVID-19 crisis has re-emphasised the importance of digital infrastructure, not only in terms of universal access and digital inclusion, but also other attributes such as quality, resilience, security and affordability. The increased reliance on digital infrastructure and services during the COVID-19 lockdown has been unprecedented, as has the response of the ICT sector. ICT sector policymakers, regulators, industry members and academics have together helped meet expectations.”

Although the pandemic put the focus on rapid digitalisation, it also revealed wide gaps in skills and infrastructure capabilities. Going forward, governments will need to develop programmes and initiatives that work towards addressing these gaps.

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