INTERNATIONAL INTERNET BANDWITH IN
ASIA-PACIFIC
The Asia-Pacific region is witnessing an explosion of
international Internet bandwidth. Capacity on Internet links connecting
Asia-Pacific to the world have skyrocketed more than eightfold over the last two
years from 8 to 65 gigabits (Gbit/s) by the end of 2001.1
International Internet capacity in the region now far exceeds conventional
telephone capacity (see Figure 1).
This is an astonishing achievement considering that just a
few years ago, Asia-Pacific still had the bandwidth blues. The price of Internet
bandwidth was dear and countries had to pay for the cost of the full link to the
United States, the number one destination of choice for Internet connections.
Not only did the United States host the sites users wanted to surf to, it was
also the most popular transit point for Internet traffic. Australia complained
that it was subsidizing United States’ Internet service providers (ISP). New
Zealand was losing e-commerce business to companies who would prefer to host
their websites in the United States, where they would get more bandwidth for
less money. Some countries in the region turned to
methods like caching (storing popularly accessed Web pages locally) to reduce
the need for users to surf abroad.
Asia-Pacific was the most vocal region about what it calls
“International Charging Arrangements for Internet Services.” The region
passed a number of resolutions calling for a more equitable distribution of
international Internet connectivity costs. But lately, this issue has not been
as publicized and Asia-Pacific Internet connectivity has grown rapidly. What has
changed and driven this massive boost in capacity?
One is a bandwidth glut. Some half-dozen fibre-optic
submarine cables have been completed in the region over the last few years. One
example, the Australia-Japan fibre cable, which connects the two countries and
is interconnected to submarine cables heading to Europe, other Asia-Pacific
points and the United States, has a design capacity of 640 Gbit/s, “more
than 500 times the capacity currently available from or to the East coast of
Australia.”
A second trend is liberalization. Most of the region’s
advanced economies allow competition in the international Internet bandwidth
market, which has driven down the costs of connectivity. For example, the
Internet Initiative of Japan is paying one tenth of what it used to pay five
years ago for Internet connectivity (see Figure 2).
A third trend is that telecommunication operators got more
comfortable with the Internet. Many had inherited academic networks and were new
to the world of the Internet. Over time, they have begun to realize that their
own traditional circuit-switched networks would evolve to Internet networks.
These traditional telecommunication operators are now investing heavily in
Internet infrastructure. One focus has been on end-to-end connectivity. If you
have to pay for the full cost of a circuit, you might as well own the whole
link. The most dramatic example is Japan’s NTT purchase of Verio in August
2000 for USD 5.5 billion. Verio is one of the world’s largest Web hosting
companies with an extensive Internet back- bone. The purchase provided NTT with
an instant international Internet network, including direct access points in the
United States. Related to this are regional alliances and cross-holdings
allowing companies to leverage partner links in order to reduce cost and duplication. For example, Hong Kong, China’s Pacific Century CyberWorks
(PCCW) and Australia’s Telstra
combined their Internet backbones to form Reach. Another example is ISPs using
the Internet backbones of their parent companies. Sri Lanka Telecom, for
example, has Internet connectivity to Japan via its part owner NTT while
LankaCom, another ISP, has a four Mbit/s connection to Singapore via its owner
SingTel.
A big boost in Internet connectivity is
increasingly celebrated as a significant event in most countries throughout the
region. Take India’s incumbent international operator VSNL, which proudly
announced in April 2001 that it had reached 1000 Mbit/s of international
Internet capacity, a major milestone: “The achievement of 1000 Mbit/s of
leased connectivity is a landmark for India…” The
increase in bandwidth was also significant since India now has more Internet
than voice telephone capacity. Or take Fiji, which has the good fortune of being
a landing point on the new 30 500 km-long Southern Cross Cable, which also links
Australia and New Zealand to Hawaii and the United States West Coast. Fiji spent
USD 22 million to connect to Southern Cross, one of the biggest investments the
island nation has ever made. The Chairman of Fiji’s international
telecommunication operator FINTEL, noted: “The significance of the
investment should not be under emphasized…the impact of the project will be
far reaching…it will influence investors’ decisions to invest in Fiji.”
But not all countries in the region
have participated in the bandwidth boom. While some nations have gigabits of
connectivity others get by on less bandwidth than an average Asymmetric Digital
Subscriber Line (ADSL) connection. Two groups of countries are particularly
suffering, cursed by unfavourable geographic locations. One group includes
land-locked Asian nations such as Laos P.D.R or Nepal that cannot benefit from
undersea cables. The other group, Pacific island nations, lies too far away from
main submarine cable routes. These nations find thermselves in a situation where
they rely on lower quality and high-cost satellite connections. Another factor
affecting these countries is economies of scale. While the cost of bandwidth is
coming down, the savings are particularly significant when you buy megabits of
it. Smaller nations do not have the resources to buy large amounts and thus pay
higher prices. For example, ITU research suggests that countries in South East
Asia are paying between six and seven times more than what Japan pays for
international Internet bandwidth. There is also a lack of transparency in
bandwidth pricing and vendors tend to not publish their prices.
What is the remedy for bandwidth crippled nations?
One way of reducing costs is to open up markets. While
some countries profess to have open Internet markets with no restrictions on the
number of ISPs, in reality they are constrained. ISPs are not allowed to
directly procure their own international capacity and must instead obtain it
from the monopoly gateway provider, typically the incumbent telecommunication
operator. In other countries, although ISPs may be free to obtain international
connectivity, it is only for a half circuit and they must obtain the other half
from the incumbent operator.
Another way is to reduce the volume of outgoing
Internet traffic. It is absurd for e-mails between two users in the same country
to be transited through a third country. This can be avoided by the use of a
national Internet exchange. In the case of Indonesia, ISPs estimate that half
their operating costs go towards establishing international Internet links. The
nation’s Internet Service Provider association, in cooperation with Cisco,
built a national Internet exchange for ISPs to keep their national traffic from
leaving the country. As a result, ISPs estimate they have reduced the costs for
international links by some 15 per cent.
A third method is to develop asymmetric links. This is
based on the assumption that incoming traffic (e.g., Web pages from abroad) will
be greater than outgoing (e.g., a one line website address). A number of ISPs in
the region have thus arranged for Internet connections via satellite where they
have more incoming than outgoing bandwidth to reduce their costs. One drawback
of this approach is that it is not ideal for electronic commerce. The reason is
that overseas users will find it slower to access Web pages in the country that
has asymmetric links since they will have less bandwidth available.
A fourth solution would be for countries with small
markets to pool their bandwidth requirements in order to leverage lower
connectivity costs.
In conjunction with these steps, other actions could be taken
to ensure that geographically disadvantaged nations are not excluded from the
global information society. This might include applying the spirit of various
resolutions that call for the cost of the Internet link between countries to be
shared.
Asia-Pacific Internet economy (2001)
|
|
Number
of users |
Number of
subscribers (000s) |
|
|
|
Number of ISPs |
Total (000s) |
Per 100 inhabitants |
Total |
Broadband |
International Internet bandwidth (Mbit/s) |
Australia |
603 |
7200 |
37.1 |
4181 |
123 |
7000 |
Bangladesh |
60 |
250 |
0.2 |
100 |
- |
40 |
Bhutan |
1 |
3 |
0.4 |
2 |
- |
2 |
Brunei Darussalam |
2 |
35 |
10.4 |
23 |
- |
60 |
Cambodia |
2 |
10 |
0.1 |
5 |
- |
6 |
China |
936 |
33 700 |
2.6 |
17 364 |
203 |
7598 |
Fiji |
2 |
15 |
1.8 |
6 |
- |
4 |
French Polynesia |
1 |
16 |
6.8 |
9 |
- |
8 |
Guam |
5 |
48 |
30.5 |
|
|
|
Hong Kong, China |
258 |
2601 |
38.5 |
2631 |
623 |
6308 |
India |
90 |
7000 |
0.7 |
3200 |
50 |
1475 |
Indonesia |
60 |
4000 |
1.9 |
600 |
15 |
343 |
Iran (Islamic Republic of) |
1005 |
1.6 |
402 |
1 |
160 |
|
Japan |
4000 |
55 930 |
43.9 |
24 062 |
3835 |
22 705 |
Kiribati |
1 |
2 |
2.3 |
1 |
- |
0.13 |
Korea (Republic of) |
99 |
24 380 |
52.1 |
8956 |
7806 |
5432 |
Lao P.D.R. |
2 |
10 |
0.2 |
2 |
- |
2 |
Macao, China |
6 |
101 |
22.5 |
35 |
10 |
120 |
Malaysia |
6 |
6500 |
27.3 |
2115 |
4 |
733 |
Maldives |
1 |
10 |
3.6 |
1 |
- |
5 |
Micronesia |
1 |
5 |
4.2 |
2 |
- |
1 |
Mongolia |
7 |
40 |
1.7 |
10 |
- |
10 |
Myanmar |
1 |
10 |
0.0 |
4 |
- |
2 |
Nepal |
15 |
60 |
0.3 |
15 |
- |
10 |
New Caledonia |
4 |
25 |
11.4 |
15 |
- |
8 |
New Zealand |
80 |
1092 |
28.6 |
660 |
17 |
1900 |
Pakistan |
70 |
500 |
0.3 |
200 |
- |
225 |
Papua New Guinea |
6 |
50 |
0.9 |
27 |
- |
6 |
Philippines |
51 |
2000 |
2.6 |
600 |
10 |
237 |
Samoa |
3 |
3 |
1.7 |
... |
- |
2 |
Singapore |
42 |
1500 |
36.3 |
927 |
151 |
2639 |
Solomon Islands |
1 |
2 |
0.5 |
1 |
- |
0.26 |
Sri Lanka |
29 |
150 |
0.8 |
62 |
- |
18 |
Taiwan, China |
185 |
7820 |
34.9 |
6316 |
1130 |
7228 |
Thailand |
18 |
3536 |
5.8 |
1500 |
2 |
642 |
Tonga |
1 |
3 |
2.8 |
1 |
- |
1 |
Vanuatu |
1 |
6 |
2.7 |
2 |
- |
1 |
Viet Nam |
4 |
1010 |
1.2 |
252 |
- |
34 |
Asia-Pacific |
6654 |
160 217 |
4.6 |
74 290 |
13 979 |
64 955 |
Note: Local Internet access in Afghanistan and
the Democratic People’s Republic of Korea is not available.
Source: ITU. |
|