2013 Hong Kong - Telecoms, Mobile, Broadband and Forecasts

Rising imperative for new business models to succeed as LTE and FttX fuel data demand

Hong Kong, a Special Administrative Region (SAR) of China, has built one of the most sophisticated and dynamic telecommunications markets in the world. Hong Kong’s regulator, the Office of the Communications Authority (OFCA), has played a major role in developing the telecom sector. The country has put in place substantial infrastructure which supports one of the world’s highest population penetration of mobile and fixed telephone services at around 230% and 50% respectively. In addition to Hong Kong’s strong technology edge, its close geographical proximity to mainland China makes it a key gateway for all foreign telecom companies and equipment vendors. Hong Kong is also a key regional telecommunications hub and is the landing point for a number of strategically important submarine cables.

Hong Kong provides 90% of all households with access to broadband connectivity. The number of broadband subscribers represents about 75% of the total internet subscriber base. The extensive FttX, DSL and cable coverage coupled with a large fibre optic footprint has driven the market for triple play services and IPTV.

The mobile market continues to evolve as all operators have now launched LTE services. A stronger than anticipated mobile growth rate has resulted in BuddeComm lifting the forecast to 2018. The strong up-take in 4G has seen an encouraging lift in ARPU due to operators changing pricing plan constructs, which has mitigated accelerated declines in SMS traffic volumes.

Key Highlights:

• Fixed line subscriptions decline faster than expected, impacted by increased VoIP usage coupled with an element of mobile substitution.
• Fixed broadband growth is the slowest on record although this is largely attributed to household penetration levels reaching 90%. Fibre accounts for 60% of all broadband subscriptions and Hong Kong is a world leader in terms of broadband connection speeds and competitive pricing.
• 3G/4Gsubscriptions consist of close to 60% of the total mobile base while data contributions to mobile revenue now exceed 50%.
• An additional 50MHz of spectrum in the 2.5/2.6GHz band was awarded to five operators which will alleviate short term spectrum congestion concerns. Increasing smartphone and tablet adoption has resulted in a six-fold increase in mobile data used per subscriber over the past four years. . The average 2.5G/3G/4G subscriber used in excess of 750Mbytes per month in 2012.
• 2012 saw increased Wi-Fi deployment in Hong Kong. Notably, Hong Kong Broadband Network acquired a well established Wi-Fi wholesale operator to expand its consumer reach.
• Domestic traffic demand has been met by a 45% increase in equipped submarine capacity over 2012 and a 27% increase in activated submarine capacity.

Hong Kong – Key performance indicators – 2010 - 2013

 (Source: BuddeComm)