Access Price Benchmarking. TRPC Pte Ltd

Transcription

1 Access Price Benchmarking A Study Produced for the Asia Pacific Carriers Coalition (APCC) By TRPC Pte Ltd February

2 Table of Contents Page 1. Executive Summary 3 2. Introduction Scope of Study Data coverage Leased Lines Access Coverage Simple and Groomed Circuits Simple Leased Lines Ethernet Access Coverage Point-to-point (P2P) Ethernet Point-to-multipoint (PMP) Ethernet Digital Subscriber Line (DSL) Symmetric/Asymmetric DSL Installation charges Leased Circuits vs. Ethernet Access Conclusion Appendix 57 2

3 Executive Summary 1. This report follows similar APCC Access Benchmarking reports in 2003, 2006 and This report covers 14 economies, the same as in 2009 and two more than in the 2006 report. The economies are: Australia China Hong Kong Indonesia India Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam 2. All 14 economies reported data for leased lines and for Ethernet access and 11 economies for symmetrical DSL compared with six in 2009, and six for asymmetric DSL compared with eight in The data suggests a continuing spread of Ethernet access, especially for 100Mbps and 1Gbps and use of DSL. 3. As in previous reports, the prices reported are not list prices but the prices actually paid by the seven respondent international carriers. However, it is not possible to judge from the data how representative overall they are of any particular economy. Clearly the actual prices will be influenced by, among other factor, discounts for bulk-buying and for strategic marketing purposes. 4. The idea of real price comparisons was introduced into the 2009 report to take account of changes in dollar exchange rates and local rates of inflation. This report does likewise, but with the caveat that the international financial crisis and policy responses to it has played havoc with currency exchange rates and affected local rates of inflation in different ways. Therefore 2009-equivalent real prices are a less reliable measure than in the previous report. At the end of the day international carriers have to pay in very real current US dollars. A table of deflators is provided in Table The prices used for comparative purposes are simple averages across all bitrates of leased circuits. This follows the practice of the previous two reports. Ideally a weighted average would be used reflecting the number of circuits in each category, but this data is mostly not available. Some inference may be drawn that the weighting towards lowerpriced (and therefore lower bitrate) circuits has lessened since See Table 3.3.6a. 3

4 6. Key issues are: Leased lines remain the most widely used leased circuits. Overall prices have fallen, in some cases substantially such as South Korea by 41% and 22% in Indonesia; but Indonesia, Malaysia and Vietnam are by far the most expensive. Notable trends are the fall in overall prices in India and the continuing fall of prices in China. On the contrary, if the data is taken at face value, reported prices in Australia and New Zealand have increased substantially even more so in real prices. However for Australia, removing one set of reported high price data (i.e. treating it as an outlier) reduces the price increase to 2% and in the case of New Zealand for each bitrate there is only one carrier reporting data. For Ethernet access Vietnam seems to be an outlier, way beyond other economies in price. Also high is the Philippines which shows marked price increases for some bitrates over Malaysia is close behind but its prices are down by a large margin from Installation costs seem to have come down in proportion to annual rentals as the average across all economies is 8.8% in 2012 compared with 8.9% in However, see Appendix Table 8 for an alternative method of estimation. Although there is data for leasing DSL circuits from 11 economies, most of it comes from Australia and China, with Australia notably higher in rental charges and notably lower in installation charges than China. Installation charges exceed 10% of annual rental costs for symmetric DSL in five economies, in Malaysia they are reported as reaching 25%. For asymmetric DSL in Australia they are reported as close to 40%. Certain economies tend to benchmark each other. For ease of reference Table 1 summarizes pairs of economies. Hong Kong continues to stand out as the most price competitive economy. See Conclusion Tables 7 and 7a-7c. Australia and New Zealand Hong Kong and Singapore Indonesia and Philippines Japan and South Korea Malaysia and Indonesia Table 1 Australia lower for leased circuits but higher for Ethernet Hong Kong consistently lower Indonesia higher for leased circuits but lower for Ethernet Japan lower for some leased circuits, higher for some Ethernet Malaysia consistently higher 4

5 2. Introduction In 2012, the Asia Pacific Carrier s Coalition (APCC) commissioned TRPC Pte Ltd to produce a report benchmarking the price of access circuits across 14 economies in the Asia Pacific region. The report is an update of a 2009 report which in turn was an update of reports commissioned in 2006 and 2003 by the APCC from Teligen. The cost of international circuits has fallen dramatically over the past decade giving a boost to international telecommunications and to cross-border trade and the commerce that relies upon it. But local access prices have often not fallen as far nor as fast, and it is often the case today that they can constitute up to 40% or more of the end-to-end costs of international communications. As the 2009 report noted, while it is a reasonable assumption that where the local market is characterized by competition local access prices are likely to be lower, the determinants of local access prices are far from transparent. Regulatory and ownership issues can be an influence on prices, and there can be significant differences between list prices and actual prices after discounts are given for strategic market reasons, or because of bulk buying or long term contracts. This report covers 2012 prices across 14 Asia Pacific economies as reported by APCC members, and provides tables comparing these prices with those reported in 2009, as well as between economies in It does not investigate the cause of particular price levels, nor changes in them, nor possible explanations behind economy comparisons. The coverage of cities in each economy included (i) primary or major cities and (ii) secondary named cities or others. The tables in this report focus upon the major cities for comparison purposes. A list of secondary cities is included in Table 3.1 below. Methodology As with the 2009 report, this report for 2012 does not represent the individual prices offered in each market but composite prices based upon contributing APCC members. It also follows the 2009 report by using simple averaging ( median ) of the reported prices, despite some respondents reporting weighted average prices which should better reflect bulk-buy discounts. 1 In 2009 it was found that insufficient data was available to use weighted average prices (where the weights are the number of lines leased at different speeds) and it appeared 1 The median is preferred over the mean as it more readily reflects the range of price levels. 5

6 that using simple average prices (the average of the lowest and highest prices reported for each category of leased circuit) made little overall practical difference to results. This report follows the 2009 methodology which also makes more transparent a direct comparison with the 2006 report. The data generating process is always the most critical link in a chain of statistical analysis. If the data is not available, or not available in the form required, the statistical outcome is inevitably limited and possibly compromised. Ideally, statistical analysis requires careful quality control over where the data is collected, how it is collected and how it is represented for input into an analytical process. It is the nature of the beast that where commercially sensitive data is involved from a variety of competing sources that necessitate confidentiality, the data will not knowingly meet all these requirements. Working within these limitations, this 2012 report is a fair representation of the data as reported by respondents. Price Deflators Price deflators are only a very approximate method of comparing real prices between years. This is even more the case for the period which has been dominated by the international financial crisis, sometimes referred to as The Great Recession starting in Currency fluctuations and domestic rates of inflation have been influenced by extraordinary issues, but the bottom line is that international carriers still have to pay in real current dollars. Real price deflators are therefore only used in this report as occasional reality checks. For example, the nominal prices of simple leased circuits are generally much higher in Indonesia than in other economies, and after using the price deflator it remains true that Indonesian prices are generally higher. The deflator is composed of two elements: the change in the dollar exchange rate and the local rate of inflation (annual mean average x 3 years). Other things remaining equal, a rise in the dollar exchange rate (a fall in the dollar value of the local currency) will make 2012 prices appear lower than in 2009, and vice-versa. Other things remaining equal, a rise in the local rate of inflation (higher prices in 2009 dollar terms) will make 2012 prices appear higher than in 2009, and vice-versa. The two moving in the same direction together will counteract each other, whereas the two moving in opposite directions will reinforce each other. To arrive at real (or constant dollar) 2009-equivalent prices for 2012, the percentage change in the dollar-local currency exchange rate should be deducted from the percentage change in the local inflation rate. For ease of reading, in Table 2.1 the currency rates are inverted to show local currencydollar exchange rates. 6

7 Table 2.1 summarizes the deflators for each of the 14 economies in the 2012 report. Rates are measured from 16 January 2009 to 16 January Table 2.1 Dollar Value Currency Deflators for each economy Economy Currency Inflation Deflator Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam Rates are measured from 16 January 2009 to 16 January 2013 Sources: and 7

8 2.1 Scope of Study This 2012 report covers the same 14 economies as in The objective of the study was to assess local access prices charged by domestic operators to international carriers in those 14 economies: Economy Table 2.2 Scope of Study Number of Economy Reporting Telcos Number of Reporting Telcos Australia 7 New Zealand 4 China 7 Philippines 6 Hong Kong 7 Singapore 7 Indonesia 6 South Korea 7 India 5 Taiwan 7 Japan 7 Thailand 6 Malaysia 7 Vietnam 6 Seven international carriers contributed to the input of price data. All seven carriers reported prices from eight economies (compared with five economies in 2009). The lowest number reporting for any economy was four (compared with three in 2009). This indicates a slight increase in the geographical activities of the seven international carriers over the period Leased Lines Leased line speeds reported by respondents correspond to those of previous reports. 64 kbps 2048 kbps 256 kbps 34 Mbps 512 kbps 45 Mbps 1536 kbps 155 Mbps 1984 kbps Prices for leased circuits include the installation fee and the monthly recurring cost (MRC) or rental. Installation fees, or one-off access fees, in some cases are waived entirely, in other cases show considerable variation. Purely for purposes of comparison with the two previous reports, installation fees are presented divided by 12 for the first year of operation and added to the MRC. 8

9 Groomed leased circuits are those which multiplex lower speed leased circuits into a single larger leased circuit. Their use is reported in all 14 economies in 2012 (compared with eight in 2009) Digital Subscriber Line (DSL) Symmetric and asymmetric combinations were reported from 11 economies in 2012, excluding New Zealand, Korea and Taiwan (compared with six economies in 2009 including New Zealand, Korea and Taiwan). Australia Indonesia Malaysia Thailand China India Philippines Vietnam Hong Kong Japan Singapore The downlink and uplink speeds reported in 2012 were as follows: 64 kbps 1000 kbps 3072 kbps 1.2 Mbps 15 Mbps 128 kbps 1024 kbps 3200 kbps 1.55 Mbps 45 Mbps 256 kbps 1538 kbps 2500 kbps 4 Mbps 155 Mbps 384 kbps 2000 kbps 4000 kbps 6 Mbps 622 Mbps 512 kbps 2048 kbps 4500 kbps 8 Mbps 640 kbps 2200 kbps 6000 kbps 10 Mbps 768 kbps 2700 kbps 8000 kbps 12 Mbps Ethernet All economies were reported as using Ethernet access circuits in 2012, including Vietnam which was not reported in The use of Ethernet appears more widespread than in 2009 which in turn was significantly more widespread than in Reported speeds, as in 2009, were as follows: 2 Mbps 50 Mbps 1 Gbps 10 Mbps 100 Mbps 10 Gbps 9

10 2.2 Data Coverage The data used in this report, provided on a confidential basis by seven international carriers, all members of APCC, is based as we understand it upon the prices they actually paid during 2012 (i.e., wholesale prices), rather than the price lists of the domestic carriers providing the access circuits. Table 2.3: Data Available Leased Circuits DSL Ethernet Australia Y Y Y Y Y Y China Y Y Y Y Y Y Hong Kong Y Y Y Y Y Y Indonesia Y Y Y N Y Y India Y Y Y N Y Y Japan Y Y Y Y Y Y Malaysia Y Y Y N Y Y New Zealand Y Y N N Y Y Philippines Y Y Y N Y Y Singapore Y Y Y Y Y Y South Korea Y Y N Y Y Y Taiwan Y Y Y Y Y Y Thailand Y Y Y Y Y Y Vietnam Y Y Y N Y N 3. Leased Line Access This report covers fourteen economies. 3.1 Coverage The following speeds were used as the basis of services: 64 kbps 2048 kbps 256 kbps 34 Mbps 512 kbps 45 Mbps 1536 kbps 155 Mbps 1984 kbps The prices in this report refer to leased circuits covering major city areas on the grounds that these are the most representative of the requirements of international carriers. This approached was adopted in the 2009 report and the previous 2006 report. This report also dropped the distinction between 2km and 5km prices. In the 2009 report respondents were 10

11 asked to make this distinction but it proved unnecessary. In some cases leased circuit lengths for distances up to 1km from the local exchange were priced lower than distances beyond 1km, and thereafter prices rose according to longer distances, for example below and beyond 6km, 12km, etc. In other cases, the shortest distance covered by the lowest prices extended across an entire Central Business District (CBD) or city or metropolitan area. In some economies there are major price differences between circuits leased to cover city areas and national long distances. Table 3.1 Major and Secondary Cities Major Cities Secondary Cities Australia Sydney, Melbourne Canberra, Adelaide, Brisbane, Perth China Beijing, Shanghai Guangzhou India Bangalore, Chennai, Mumbai Indonesia Jakarta Bandung, Bekasi, Bogor, Denpasar, Depok, Jogjakarta, Malang, Semarang, Solo, Surabaya, Tangerang Japan Tokyo, Osaka Malaysia Kuala Lumpur New Zealand Auckland Hamilton, Wellington Philippines Manila, Makati Cavite, Bulacan, Laguna, Batangas, Visayas, Mindanano-Cebu, Davao South Korea Seoul Dongchun Taiwan Taipei Taichung, Hsinchu Thailand Bangkok Vietnam Hanoi, HCMC 11

12 3.2 Simple and Groomed Circuits Most leased line circuits are simple point-to-point direct connections between a customer s premises and an international carrier s Point-of-Presence (POP). Diagram A illustrates this situation where the leased line can be of any commercially-available bitrate. Diagram 3.2a: Simple Leased Line Section A Competitive Carrier s POP End user In some cases operators offer a service whereby two or more lower-speed leased line circuits that pass through the same local exchange of a domestic carrier can be multiplexed into a higher-speed circuit connecting directly to an international carrier s POP. This saves on the cost of renting multiple end-to-end simple leased line circuits, but a grooming charge may be levied by the domestic carrier. Diagram B illustrates this situation, where the combined bitrates of the leased lines is typically no more than 80% of the bitrate of the larger multiplexed circuit. Diagram 3.2b: Groomed Leased Lines Section A Section B Section A Competitive Carrier s POP Local exchange connection Section A Grooming services in 2012 were reported for all 14 economies compared with eight in 2009 (Australia, China, Hong Kong, India, New Zealand, Singapore, Taiwan and Thailand) and five in 2006 (Australia, Hong Kong, New Zealand, Singapore and Taiwan). 12

13 3.3 Simple Leased Lines, 2012 and 2009 This section summarises the data on simple and groomed leased lines, showing the average Monthly Recurring Charges (MRC) or monthly rental, and the average one-off installation charges for each of the economies in 2012 and compares these prices with Monthly Rental Simple Leased Lines The following tables show the 2012 results and then comparisons with Table 3.3.1a 2km MRC simple line price (USD), major cities, 2012 Australia China Hong India Indonesia Japan Malaysia Kong 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps

14 Table 3.3.1b 2km MRC simple leased line prices (USD) including installation, major cities 2012 Australia China Hong India Indonesia Japan Malaysia Kong 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps 10, New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps Note: Prices are simple averages of monthly rental plus 1/12 th of the installation charge Table 3.3.1c Comparison of 2km MRC simple leased line prices (USD) with 2009 Australia China Hong Kong India Indonesia Japan Malaysia kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps

15 New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps Table 3.3.1d Comparison of 2km MRC simple leased line prices (USD) plus installation charges with 2009 Australia China Hong Kong India Indonesia Japan Malaysia kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps ,

16 New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps

17 Figure Note: Simple (mean) average of changes across all speeds of leased lines Tables to and Figure indicate that With the exceptions of Australia and New Zealand, there have been falls in average nominal prices across the board, although some increases in different bitrates. For example, in India nominal prices fell for 45Mbps and 155Mbps but rose in four lesser bitrates. In the Philippines, nominal prices fell in two bitrates and rose in four others, leaving the average overall change approximately zero. In Vietnam, although the average fell by 4%, nominal prices rose in the four lower bitrates. Despite an average decrease of 22% in nominal price terms, Indonesia ranks the highest priced market on six bitrates up to 2048kbps and 3 rd and 2 nd highest for 45Mbps and 155Mbps. Malaysia on the other hand has come slightly down the list from the previous reports, being the 2 nd highest only once (45Mbps) and 3 rd highest four times. Vietnam takes the 1 st slot for 34Mbps, 45Mbps and 155Mbps and 2 nd slot three times. Adjusting for 2009 equivalent dollar-local currency prices brings Indonesian prices down by 27% but still leaves Indonesia way out in front. Only Vietnam and Malaysia are higher in both nominal and 2009-equivalent prices at 45Mbps and Vietnam at 155Mbps. In the case of Vietnam real (2009 equivalent) prices come down by 28% but still not anywhere enough to change the situation. Australia and New Zealand are the outlying cases in this set of data showing remarkable nominal price increases, averages across all bitrates of 38% and 28% respectively. Converting to real prices simply exaggerates the rises by nearly 50% due to the 17

18 depreciation of their currencies against the US dollar since Given that the mean average annual rate of inflation was only around 2.5% in each economy over this period it is not immediately obvious exactly why the cost of leased circuits has risen by so much in three years. However it needs to be pointed out that in the case of Australia, if the data from the highest reporting carrier is removed from the higher speeds (34Mbps, 45Mbps and 155Mbps there were three, four and three carriers respectively reporting these bitrates) the average nominal price increase drops to just 2%. In the case of New Zealand, only one carrier reported across 5 bitrates and one carrier reported at a single higher speed, so the data is very thin. An interesting reversal of trend is the average nominal price fall in India despite price increases for the lower band leased circuits. A conversion to real (2009 equivalent) prices reduces prices by a further 40%. The 2009 report recorded prices in India appearing to rise substantially over 2006 prices, but the trend in 2012 is reversed. China continued a steady downward trend: 14% in 2009 and 12% in Comparing economies, Hong Kong is consistently lower than Singapore, Australia is lower than New Zealand, Malaysia is higher than Thailand, Japan is higher than S. Korea below 45Mbps and higher for 45Mbps and 155Mbps and Indonesia is consistently higher than the Philippines. The havoc wreaked by the international financial crisis after 2010 which badly affected trade and investment flows has distorted many of the economic indicators, so not too much weight should be assigned in 2012 to 2009-equivalent real prices of leased circuits. And the fact is that international carriers still have to pay very real dollars at current prices. 18

19 3.3.2 Monthly Rentals for Leased Lines Figure 3.3.2a 2km simple circuit monthly rental charges (64kbps) China India Japan New Zealand Singapore Taiwan Vietnam USD Figure 3.3.2b 19

20 Figure 3.3.2c Figure 3.3.2d 20

21 Figure 3.3.2e Figure 3.3.2f 21

22 Figure 3.3.2g Figure 3.3.2h 22

23 Figure 3.3.2i Installation charge relative to annual rental Reported installation charges as a proportion of the first annual leased line rental vary from 25% in the case of Australia and China to zero in the case of Hong Kong. A simple mean average of this proportion across 14 economies is 8.8% compared with 8.9% in The methodology used is the same as 2009 for comparison purposes, namely a simple mean average of installation charges across the 14 economies for all bitrates. However, a more weighted approach would be to average the averages per bitrate. Doing this produces rather more startling figures which are presented separately in the Appendix for possible comparison in future reports. From Figures 3.3.3a 3.3.3j (below) installation charges appear a higher percentage at the lower bandwidths. 23

24 Figure 3.3.3a Installation Charge relative to annual rental Figure 3.3.3b 24

25 Figure 3.3.3c Figure 3.3.3d 25

26 Figure 3.3.3e Figure 3.3.3f 26

27 Figure 3.3.3g Figure 3.3.3h 27

28 Figure 3.3.3i Figure 3.3.3j 28

29 3.3.4 Monthly Rental Groomed Leased Lines In 2012 data was reported from all 14 economies, compared with eight economies in Table 3.3.4a 2km MRC groomed leased line prices (USD), major cities 2012 Australia China Hong India Indonesia Japan Malaysia Kong 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps Table 3.3.4b 2km MRC groomed leased line prices (USD) including installation, major cities 2012 Australia China Hong Kong India Indonesia Japan Malaysia 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps

30 New Zealand Philippine s Singapore South Korea Taiwan Thailand Vietnam 64kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps *Prices in red had no installation costs reported, hence are the same as the MRC for leased line prices Table a Comparison of 2km MRC groomed leased lines prices (USD) with 2009 Australia China Hong Kong India kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps New Zealand Singapore Taiwan Thailand kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps

31 Table b Comparison of 2km MRC groomed leased line prices (USD) including installation charges with 2006 Australia China Hong Kong India kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps New Zealand Singapore Taiwan Thailand kbps kbps kbps kbps kbps kbps Mbps Mbps Mbps *Prices in red had no installation costs reported, hence are the same as the MRC for leased line prices 31

32 Figure Tables a to b and Figure indicate The price of groomed circuits in Australia showed substantial increases for all bandwidths, but the data is from only one carrier. Data from two carriers for New Zealand shows prices fell for all categories. Why the difference between the two when they mirror each other in their price increases for simple leased circuits is not clear. For all other economies the results are mixed: Taiwan shows an overall increase of 54% in the mean average of all groomed circuits, and while the increases are lower using real 2009-equivalent pricing, they remain increases. All other economies show either no change (Hong Kong and India) or an overall decline with variations according to bandwidths: China seven up and three down, Hong Kong four up and four down, India three up and two down, Singapore four up and five down, and Thailand four up and five down. As with simple leased circuits, China exhibits a notable downward trend Comparing Simple and Groomed Circuits In 2009 only New Zealand showed a substantial average premium of groomed over simple leased lines, especially for 64kbps and 1536kbps, and no other economy reached 50%. Figure 3.3.5a shows that in 2012 seven of the 14 economies show premiums of over 50%, with Thailand apparently charging a premium of nearly 200% for 256kbps, Malaysia over 150% for 32

33 512kbps and Japan nearly 150% for 155Mbps. There were positive mean average premiums in eight of the economies with Japan showing the highest. By contrast, there were significant negatives in China, the Philippines, Singapore and Vietnam. Figure 3.3.5a Figure 3.3.5b 33

34 3.3.6 Price range analysis The following graphs show ranges (minimum and maximum) of prices below and above the average price for leased lines at different bitrates offered in each economy as reported in Average prices are indicated by the 100% line. Prices below that line show the percentage of the lowest price to the average price, and prices above that line show the percentage of the highest price to the average price. The range of prices above the simple average is greater than the range of prices below in all cases except 35Mps and 45Mbps and in both these cases it is Vietnam that has reduced prices more than the others have raised them. Overall, as in 2009, this seems to imply a weighting in favour of prices lower than the average, maybe a reflection of discounts and/or of bulk buying by some international carriers. However, the ranges are decisively lower than reported in 2009 which suggests the weighting in favour of lower prices is weaker than in Table Upper Price Range percentage differences over average prices, 2012 and 2009 Bitrates Bitrates kbps >200% >400% 2048 kbps >350% >1100% 256 kbps >250% >800% 45 Mbps >180% >300% Figure 3.3.6a 34

35 Figure 3.3.6b Figure 3.3.6c 35

36 Figure 3.3.6d Figure 3.36e 36

37 Figure 3.3.6f Figure 3.3.6g 37

38 Figure 3.3.6h Figure 3.3.6i 38

39 4. Ethernet Access In 2012 data was available from all 14 economies, including Vietnam for which there was no data in The bitrates reported in 2012 were the same as in the 2009 report. Below 1Gbps the only economy that did not report usage of all bitrates was Indonesia for 54Mbps. Only 5 economies were reported as using 10Gbps. 2 Mbps 100 Mbps 10 Mbps 1 Gbps 50 Mbps 10 Gbps 4.1 Coverage Data was reported from all 14 economies 4.2 Point-to-Point (P2P) Ethernet P2P Ethernet connections are dedicated circuits (uncontended) but may vary according to the technical facilities supplied by domestic operators. As in 2009 and 2006, only price information was reported in Point-to-multipoint (PMP) information was separately identified and is shown in section 4.3 below. Figure 4.2a 2Mbps Ethernet P2P monthly rentals and installation charges, 2009 and Mbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam

40 Figure 4.2b 10Mbps Ethernet P2P monthly rentals and installation charges, 2009 and Mbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam Figure 4.2c 50Mbps Ethernet P2P monthly rentals and installation charges, 2009 and Mbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam

41 Figure 4.2d 100Mbps Ethernet P2P monthly rentals and installation charges, 2009 and Mbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam Figure 4.2e 1Gbps Ethernet P2P monthly rentals and installation charges, 2009 and Gbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Philippines Singapore South Korea Taiwan Thailand Vietnam

42 Figure 4.2f 10Gbps Ethernet P2P monthly rentals and installation charges, 2009 and Gbps Installation 2Km >2Km Installation 2Km >2Km Australia China Hong Kong India Indonesia Japan ,000 0 Malaysia New Zealand Philippines Singapore ,147 8,147 0 South Korea Taiwan Thailand Vietnam Vietnam is the outstanding example of reported high prices in the five tables above, so far above all the others as to be considered an outlier. Of the others, below 1Gbps the Philippines is the highest in three categories and second highest in the 4 th (10Mbps), followed by Malaysia in three categories and highest in 10Mbps. Some excessively high installation prices are reported, notably for India. The good news is that the overall rental trend is downwards, steadily so for 10Mbps, 100Mbps (two exceptions), and 1Gbps and 10Gbps. Comparisons show that Hong Kong remains consistently and significantly lower than Singapore; Japan is higher than South Korea for 2Mbps and 10Mbps, lower for 50Mbps and 100Mbps, and higher for 1Gbps; Malaysia is consistently higher than Thailand up to 100Mbps; Philippines is always ahead of Indonesia which tends to fall marginally below Malaysia. Figure 4.2 shows 2012 installation charges for P2P Ethernet connections across the range of bitrates. Installation charges generally increase according to bitrate, with some significant rises for 1Gbps, e.g. China, but also some notable falls, e.g. Japan. Interpretation however is difficult without knowing in detail the nature of the contract. 42

43 Figure 4.2 Note: 1. Prices are simple averages across the available data, in USD; 2. Installation is distributed over 12 months 4.3 Point-to-Multipoint (PMP) Ethernet Data for uncontended PMP Ethernet connections in 2012 was available for 13 economies (not Indonesia) compared with only eight in In 2012 data for contended PMP Ethernet connections was reported only from India, compared with five economies in Reported prices for Malaysia and Thailand stand out as much higher for rentals for 2km contended Ethernet connections coming 1 st and 2 nd for all bitrates, followed by the Philippines. The Philippines is reported as having a flat rate installation charge of USD5,000 per month which puts it at the top of the table below 100Mbps, after which Malaysia overtakes. For comparison, Hong Kong is consistently and significantly below Singapore, Japan is marginally cheaper than Korea below 1Gbps, and Malaysia is way higher than Thailand. 43

44 Table 4.3a PMP Uncontended Australia China Hong Kong India Japan Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km 2Mbps 1, , , Mbps 2,228 1,057 1,057 3,500 1, , ,090 1,125 1,633 50Mbps 2,008 2,070 2,070 6,350 2, , ,511 2, Mbps 3,080 2,185 2,185 12,700 3, ,410 1,515 1,515 1,238 2,265 3,531 1Gbps 6,503 2,228 2,228 19,050 25,320 1,404 1,530 1,410 9,822 9,822 2,049 9,819 13,367 10Gbps 16,900 7,907 7,907 3,766 78,576 78,576 Malaysia New Zealand Philippines Singapore Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km 2Mbps , ,000 1, Mbps 2,217 6, ,000 1,900 3,000 2, Mbps 4,737 10, ,763 5,000 3,600 5,200 3,153 1, Mbps 6,316 11, ,114 2,578 5,000 4,600 6,500 2,898 3,073 1Gbps 12,632 76,648 1,720 2,072 11,390 5,000 6,400 8,300 3,056 4,929 10Gbps South Korea Taiwan Thailand Vietnam 2Mbps 10Mbps 50Mbps 100Mbps 1Gbps 10Gbps Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km Install 2Km >2Km ,428 1,328 1, , ,346 2,919 2,434 2,084 1,580 1, , ,958 1,444 1,751 2,747 1,368 2,088 2,468 2, , ,543 2,569 1,829 7,661 7,069 3,403 4,901 4,901 1,645 30,441 1,050 17,648 16,584 44

45 India Table 4.3b PMP Contended Install 2Km >2Km 2Mbps 1, Mbps 1, Mbps 1, Mbps 1,410 1,515 1,515 1Gbps 1,410 9,822 9,822 10Gbps 3,766 78,576 78,576 45

46 5. Digital Subscriber Line (DSL) Price information was reported for the leasing of symmetrical DSL from 11 economies compared with six in 2009, and for asymmetric DSL from six economies compared with eight in Symmetric/Asymmetric DSL Tables 5.1a and 5.1b provide data on monthly rental prices and installation costs. Almost all the data comes from just two economies, Australia and China, with Australia notably higher in rental charges and notably lower in installation charges than China. For 1000kbps symmetric, Indonesia is three times higher priced than Australia, and Singapore slightly under Australian prices. Hong Kong prices are by far the lowest. Prices in the remaining economies are all moderately low in comparison. DSL Symmetric Downlink/ Uplink (Kbps) Table 5.1a Malaysia Philippines Singapore Thailand Vietnam Rent Install ation Rent Install ation Rent Install ation Rent Install ation 512/ / / / / / / Rent Install ation 46

47 Downlink/Uplink (Kbps) Australia China Hong Kong India Indonesia Japan Rent Install ation Rent Install ation Rent 64/ / / / / / / Install ation Rent Install ation Rent Install ation 1000/ / / / / / / / / / / / / / Mbps/1.2Mbps Mpbs/1.55Mbps Mbps/45Mbps Mbps/155Mbps Mbps/622Mbps M/4M 133 6M/6M 164 8M/8M M/10M 231 Rent Install ation 47

48 DSL Asymmetric Downlink/ Uplink (Kbps) Rent Figure 5.1b Australia China Hong Kong Japan Singapore Taiwan Installa tion Rent Installa tion Rent Installa tion Rent Installa tion Rent Installa tion 256/ / / / / / / / / / / / / / / / / / Mbps/ Rent Installa tion 48

49 5.2 DSL installation charges As with the case of simple leased circuits, installation prices as a proportion of annual rental costs as shown in Tables 5.2a and 5.2b have risen over those of 2009 when for symmetric they did not exceed 17% and for asymmetric 0.6%. In 2012, for symmetric in the case of Malaysia they reach 25% and exceed 10% in five cases. For asymmetric in 2012 they are close to 40% in Australia. Figure 5.2a Installation charges as a percentage of annual rental (symmetric) 49

50 Figure 5.2b Installation charges as percentage of annual rental (asymmetric) 50

51 6. Leased Circuits vs. Ethernet Following the 2012 report, Figures 6.1a and 6.1b compare leased line prices with Ethernet access prices, noting (as in the 2009 report) that although they are not necessarily substitutes many companies may be considering moving over to all-ip platforms in the future. 2 Mbps Leased Line vs. 2Mbps Ethernet Figure 6.1a 51

52 155 Mbps Leased line vs. 100 Mbps Ethernet Figure 6.1b In Mbps leased line prices appear to higher in most economies, except Australia, Hong Kong, the Philippines and Vietnam. In Vietnam, the outlier, they are half the price. By contrast in Indonesia and Japan leased line prices are over twice Ethernet prices. Leased line prices for 155Mbps are consistently higher than Ethernet prices or, in the case of Vietnam, almost on a par. Therefore, besides some apparent correlation between price differentials and bitrates there seems to be no other discernible relationship between them. Roughly the same pattern of price differentials held true in 2009, but in 2012 overall prices were very slightly lower. 52

53 7. Conclusion Compared with the 2009 report, the data reported in 2012 indicates that despite overall price falls, Indonesia and Malaysia have been joined by Vietnam as showing consistently higher prices across most categories of leased circuits, and by the Philippines for Ethernet prices. An interesting downwards trend in prices takes place in India and continues in China. Installation costs seem to have come down in proportion to annual rentals as the average across all economies is 8.8% in 2012 compared with 8.9% in However, see Appendix Table 8 for an alternative method of estimation. Although by no means the highest priced economies, the data taken at face value for Australia and New Zealand shows remarkable price increases over 2009 of 38% and 28% respectively. Using the 2009-equivalent price deflator actually increases the price levels. However it needs to be pointed out that in the case of Australia, if the data from the highest reporting carrier is removed from the higher speeds (34Mbps, 45Mbps and 155Mbps there were 3, 4 and 3 carriers respectively reporting these bitrates) the average nominal price increase drops to just 2%. In the case of New Zealand, only one carrier reported across 5 bitrates and one carrier reported at a single higher speed, so the data is very thin. Table 7 compares economies that are often benchmarked against each other Comparing economies: Table 7 Australia and New Zealand Australia lower for leased circuits but higher for Ethernet Hong Kong and Singapore Hong Kong consistently lower Indonesia and Philippines Indonesia higher for leased circuits but lower for Ethernet Japan and South Korea Japan lower for some leased circuits, higher for some Ethernet Malaysia and Thailand Malaysia consistently higher Leased Lines Indonesia and Malaysia, the highest priced markets for leased circuits in 2009 and in 2006, have been joined in 2012 by Vietnam. Deflating nominal prices into 2009-equivalent real prices does not change their ordinal standing. Despite some individual price increases for various bitrates (for example, prices in India rose for the lower bitrates and in the Philippines they rose for 4 separate bitrates) overall prices have fallen as shown in Figure For example, Indonesian prices have fallen on average by 22%. 53

54 An interesting reversal of trend is the average nominal price fall in India despite price increases for the lower band leased circuits. A conversion to real (2009 equivalent) prices reduces prices by a further 40%. The 2009 report recorded prices in India appearing to rise substantially over 2006 prices, but the trend in 2012 is reversed. China continued a steady downward trend; 14% overall price reduction in 2009 and 12% in Interpretation of Figure 3.3.6a suggests there may have been weaker weighting in favour of lower prices than in 2009, or in other words, possibly fewer lower-priced circuits in use or fewer discounts for bulk leasing on those circuits. For groomed circuits, in 2012 of the 14 economies, seven showed price premiums of over 50% for simple leased circuits, compared with one economy (New Zealand) in Altogether there were eight economies showing positive mean average premiums (Japan the highest) but significant price discounts in China, the Philippines, Singapore and Vietnam. Reported installation charges as a proportion of the first annual leased line rental are very similar to 2009, averaging 8.8% of the annual rental charge compared with 8.9% in However, see Appendix Table 8 for an alternative method of calculating the percentage. Table 7a: Comparing economies Simple Leased Circuits Australia New Zealand Australian prices are consistently lower Hong Kong Singapore Hong Kong prices are consistently lower Indonesia Philippines Indonesian prices are consistently higher Japan South Korea Japanese prices under 45Mbps are lower, then higher Malaysia Thailand Malaysian prices are consistently higher Ethernet Vietnamese prices are so far above all others as to make it an outlier. Of the others, the Philippines is by far the overall highest, followed Malaysia, but Malaysian prices are down by quite large margins from 2009 levels. By contrast prices reported in the Philippines are substantially above 2009 levels except for 1Gbps. Overall, 2012 prices are down, in some 54

55 cases substantially down, from 2009 levels. For example, in South Korea the reported price for 2Mbps is down from US$1,674 to US$574. Some excessively high installation prices are reported, notably for India. Overall, there are 27 recorded cases of installation charges increasing and 21 cases decreasing, a rather mixed picture. They generally increase according to bitrate, with some significant rises for 1Gbps, e.g. China, but also some notable falls, e.g. Japan. Interpretation however is difficult without knowing in detail the nature of the contract. Table 7b: Comparing economies for Ethernet P2P Australia New Zealand Australian prices are consistently higher Hong Kong Singapore Hong Kong prices are consistently lower Indonesia Philippines Indonesian prices are consistently lower Japan South Korea Japanese prices higher for 2Mbps, 10Mbps, 1Gbps and lower for 50Mbps and 100Mbps Malaysia Thailand Malaysian prices are higher up to 100Mbps Data for uncontended PMP Ethernet connections in 2012 shows prices for Malaysia and Thailand as much higher for rentals for 2km uncontended Ethernet connections coming 1 st and 2 nd for all bitrates, followed by the Philippines. The Philippines is reported as having a flat rate installation charge of USD5,000 per month which puts it at the top of the table below 100Mbps, after which Malaysia overtakes. Table 7c: Comparing economies for Uncontended PMP Australia New Zealand Australian prices are consistently higher Hong Kong Singapore Hong Kong prices are consistently lower Japan South Korea Japanese prices marginally lower below 1Gbps Malaysia Thailand Malaysian prices consistently higher 55

56 Digital Subscriber Line (DSL) Almost all the data (Tables 5.1a and 5.1b) comes from two economies, Australia and China, with Australia notably higher in rental charges and notably lower in installation charges than China. For 1000kbps symmetric Indonesia is three times higher priced than Australia and Singapore slightly under Australian prices. Hong Kong prices are by far the lowest. Prices in the remaining economies are all moderately low in comparison. As with the case of simple leased circuits, installation prices as a proportion of annual rental costs as shown in Tables 5.2a and 5.2b have risen over those of 2009 when for symmetric they did not exceed 17% and for asymmetric 0.6%. In 2012 for symmetric in the case of Malaysia they reach 25% and exceed 10% in five cases. For asymmetric in 2012 they are close to 40% in Australia. Leased Circuits vs. Ethernet In Mbps leased line prices appear to higher in most economies, except Australia, Hong Kong, the Philippines and Vietnam. In Vietnam, the outlier, they are half the price. By contrast in Indonesia and Japan leased line prices are over twice Ethernet prices. Leased line prices for 155Mbps are consistently higher than Ethernet prices or, in the case of Vietnam, almost on a par. Therefore, besides some apparent correlation between price differentials and bitrates there seems to be no other discernible relationship between them. 56

57 Appendix A more weighted approach to estimating the average proportion of installation charges to first year leased line rentals is to average per bitrate and then take the mean average of these averages. Figure 8 shows the results. In the case of China the percentage rises to 61% and generally installation charges rise as an overall proportion of annual rentals to 14.8% compared with 8.8% using the methodology of Figure 8 57