Without fixed-line infrastructure, FMC is not a
side-scale option for most developing markets at
present (Swift & Wilson, 2004). The deployment of
broadband infrastructure will determine the time and
scale for FMC (Swift & Wilson, 2004). Unlike in
Europe and America, the rollout of broadband is
crucial for the introduction of FMC due to the very
low fixed-line penetration rate (Swift & Wilson,
2004). Increasing broadband penetration will create
a VoIP revolution, decreasing the price of voice and
creating a mobile premium (Swift & Wilson, 2004).
Once this has occurred, FMC will become an
attractive proposition for both operators and
consumers in South East Asia.
Internet access options in South East Asia are
generally fragmented. For example, the
telecommunications and information infrastructure
in the Philippines is still relatively underdeveloped
and largely concentrated in metropolitan areas
(Lallana, 2003). Low personal computer penetration,
relatively high Internet access costs and bandwidth
limitations have slowed down the adoption of the
Internet for higher-end uses in Philippines (Lallana,
2003). In 2003, personal computer penetration in
Philippines is estimated at 1.9 for every 100 persons;
Internet penetration is at 6 for every 100 persons (or
4.5 million of the total 76.5 million Filipinos)
(Lallana, 2003). Of these Internet users, 3.1 million
(about 70 percent) are said to access the Internet
using prepaid cards at Internet cafés (Lallana, 2003).
The Philippine archipelago is made up of 7,107
islands and this makes connecting residents on all
islands via cable a cumbersome and expensive task.
In Malaysia, there are 353,978 broadband
subscribers (penetration rate of 1.35 percent) and
around 10,710,000 Internet dial-up subscribers
(penetration rate of 13.7 percent) as of the second
quarter of 2005 (MCMC, 2005b). Statistics indicate
that as of the end of second quarter in 2002, there
were 2.3 million Internet subscribers in the country,
with the number of users being almost 7 million
(MCMC, 2005b). In comparison, in 1997, just 5
years earlier, the figures were a mere 0.2 million and
0.6 million respectively (MCMC, 2005b).
While the figures may seem impressive, it is
important to take note that similar official statistics
indicate that the digital divide in Malaysia is still
very wide. For example, 34.2 percent of the
residents in Kuala Lumpur are Internet dial-up users
while only 4.2 percent of the residents in Sabah are
Internet dial-up users as of the first quarter in 2005
(MCMC, 2005b). 79.2 percent of the population in
Kuala Lumpur use cellular phones while only 26.7
percent of the population in Sabah use cellular
phones (MCMC, 2005b).
While deployment of broadband infrastructure in
underdeveloped areas ensures that the population
residing in these areas are always connected, it has
been argued that these residents may not even have
the need to get connected. Therefore, the cultivation
of access to personalised information anywhere and
anytime is also seen as an important driver affecting
the diffusion of FMC solutions.
South East Asian countries with minimal fixed-
line penetration and without a push towards
broadband infrastructure rollout are a different
prospect for FMC services. FMC will most likely
come in the form of bundling bills and “home-zone”
tariff for mobiles (Swift & Wilson, 2004).
Operators, driven by fiercely competitive market
conditions, will utilise these forms of FMC as a
means of differentiation (Swift & Wilson, 2004).
FMC handsets will not appeal in underdeveloped
markets until the rollout of broadband infrastructure
makes it a feasible solution (Swift & Wilson, 2004).
2.2 Mobile Market
On the other end, high penetration rate of mobile
devices in a particular country indicates that the
consumers are either always on the move or reside in
remote areas. These consumers may require specific
services to suit their needs.
Figure 3 shows that mobile phone penetration
rate in South East Asian countries is generally
higher compared to fixed-line penetration rate. The
mobile market in Malaysia continues to grow
increasingly competitive. Declining Average
Revenue per User (ARPU) are forcing telcos to seek
other means of profits. Value-added mobile data
services were expected to foster industry growth.
According to studies conducted by Malaysian
Communications and Multimedia Commission
(MCMC) by the end of 2004, there were 14,455,000
mobile subscribers in Malaysia. This makes up
penetration rate of 55.9 percent, making it the
second highest in Asia after Singapore (MCMC,
2005a). Whether FMC services will take off in the
local marketplace and when this will happen depend
very much on the interaction between cellular
operators and other parties to offer FMC services.
Whether appropriate applications can be developed
and whether these are introduced via the appropriate
marketing mix become crucial (IDC, 2003). Low
personal computer penetration that hinders access to
the Internet via desktop, together with a high level of
interest in new mobile technologies among the Asian
BUSINESS MODEL ANALYSIS OF SEAMLESS ACCESS IN SOUTH EAST ASIA
53