Views expressed are those of the

author and may not reflect opinion of ITU, its members or the government of the Hong Kong

Special Administrative Region of the

People’s Republic of China

For brevity, Hong Kong Special Administrative Region of the

People’s Republic of China is referred to as Hong Kong in

this presentation

Contents

• Factors for Hong Kong’s broadband success

• Broadband statistical analysis

Reasons for Hong Kong’s success

• Geography– Essentially large city– 95% live in apartments

• Sophistication– On Internet over 11 years– 46% of 10+ population use

Internet at least once a month

• Wealth– GDP per capita of

US$25’920 (12th highest in world)

• Competition– 15 broadband suppliers

21.3

14.6

11.5

9.4

8.6

Korea(Rep.)

HongKong

Canada

Taiwan,China

Iceland

Top five economies by broadband subscribers per 100 inhabitants, 2002

Source: ITU World Telecommunication Indicators Database.

Geography

• Small, compact size and fact that 95% of population lives in apartments makes Hong Kong easy to wire for communications

• As a result, high coverage for availability of broadband services Total households

2.1 millionADSL

2 million, 95%

Broadband coverage, Hong Kong, June 2002

Cable modem1.8 m, 85%

LMDS0.95 million

45%

Sophistication• Online since 1991• Among most intense Internet

users in world• This drives demand for high-

speed access• One of first economies to

launch broadband in May 1998.

• Biggest reason for broadband demand appears to be convenience (no need for 2nd telephone line, always on) rather than sophistication of applications

19:20

12:12

09:27

08:48

08:04

07:41

06:59

Korea(Rep.)HongKong

Japan

Singapore

Taiwan,China

Australia

NewZealand

Hours of Internet use per month, July 2000

Source: ITU adapted from Nielsen//NetRatings.

Wealth

• Relatively affluent• Majority can afford a

broadband subscription• Broadband pricing lowest

in region• Broadband mainly seen

as substitute for 2nd line• Free local calls but not

Internet dial-up

3541 36

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Aus

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Monthly fee

Price per Mbps

ADSL pricesDecember 2002, US$

Source: ITU adapted from company reports.

Competition• Regulation

– Local loop unbundling mandated– Regulator ready to act if market

negotiations fail– Fixed line incumbent has 24% wholesale

DSL lines compared to EU average of 16%• Variety of operators and technologies

– Technologies• DSL• Cable modem• Fixed wireless / LAN• Fibre optic • WLAN (> 1’600 hotspots)

– 15 Providers• 4 fixed• 5 fixed wireless• 1 cable TV• 5 ISP resellers

Often seems to be a third player that has an impact on broadband. Hong Kong Broadband Network is The

Third Man. Using fixed wireless to interconnect buildings; Ethernet wiring within buildings

“Hawkers” selling broadband access.Wanchai Computer Centre, Hong Kong

December 2002

Broadband as a commodity

Once that happens, then Hong Kong will have transitioned from a broadband market to a broadband society.

As one broadband provider notes: “Competition is expected to be keener this year as the marketplace approaches commoditisation.” This commoditisation is reflected in stands set up in the street to hawk broadband Internet access as if it was apples or oranges. In order to entice potential users, providers offer everything from toasters to stereo equipment. In Hong Kong, broadband is no longer perceived as a luxury but a mass-market product. More work is needed to develop broadband applications and to entice users to use them.

It is unlikely that there is this degree of broadband competition anywhere else in the world. There are 15 retail broadband providers in Hong Kong, resulting in intense competition for potential customers.

Statistical analysis

MARKET DEMAND• Households

– With PC– With Internet access– With broadband

subscription

• Broadband coverage• Price of broadband

subscription

BROADBAND ANALYSIS• Total broadband

subscribers– By subscriber:

• Residential subscribers• Business subscribers

– By technology• DSL• Cable modem• Other

• Total Internet subscribers

+ operator reports

Demand analysis

11.8%

36.4%48.7% 52.5%

0%

10%

20%

30%

40%

50%

60%

70%

1998 2000 2001 2002

Households with PCs

68.2%

33.7%

Broadband

Telephoneline

Multiple answers allowed

53.1%

22.1%

20.2%

15.5%

13.4%

No need

Planning

ExpensivePreventchildren

Lackskills

Source: ITU adapted from Census & Statistics Department, “Thematic Household Survey Report No. 10, Information Technology Usage and Penetration”.

Connected to the Internet

Reasons for no Internet connection

Type of connection

Broadband analysis

Leased line

0.1%

Dial-up58.0%

Broad-band

41.8%

Internet subscribers

by type, 12/02

Offices7.1%Others

0.3%

House-holds

92.6%

Broadband accounts by type, 12/02

Other21%

Cable modem

23%DSL56%

Broadband accounts by technology,

12/02 010'00020'00030'000

Nov

-00

Feb-

01

May

-01

Aug

-01

Nov

-01

Feb-

02

May

-02

Aug

-02

Nov

-02

Broadband traffic, terabits

Source: ITU adapted from Office of Telecommunication Authority (OFTA) and PCCW, i-Cable reports.

For questions about this report:Michael.Minges@itu.int

For other studies in the series, see:www.itu.int/ITU-D/ict/cs/