Asian internet use grows despite high hurdles

Despite a daunting array of challenges, the Internet will see continued strong growth in the Asia-Pacific region through the start of the next decade, according to the market research collective The New Century GroupExcluding Japan, the region will see the number of Internet users balloon at a compound annual growth rate of 52 per cent, from 2.69 million at the end of last year to 21 million by 2001, the researcher said in a new report. Internet use in 1996 climbed 86 per cent from 1.44 million users in 1995.

What sets the Asia-Pacific region apart from other parts of the world - which are moving to the Internet at a similar pace - are the much higher hurdles that users have to overcome, the report said.

The most important factor about the Internet in Asia is "what's going to hold it back, trip it up", said Simon Barker, Hong Kong-based chairman of the New Century Group. "The whole thing is less useful here."

The growth comes in defiance of a wide range of obstacles including an unfavourable regula- tory environment, low incomes dovetailing with often high costs of equipment and service, lack of local content, poor telecommunications infrastructures and, in some countries, the unreliability of Internet service pro-viders (ISPs).

"When you get onto the Net eventually," Barker said, "there's very little to see, very little of relevance."

The region shows a wide range of environments in which the Internet will blossom or be stunted, according to the report.

Countries facing the fewest obstacles are those that have already developed mature Internet communities, including Australia, Hong Kong, New Zealand and Taiwan. Those facing the greatest obstacles include China, India, Indonesia, the Philippines and Vietnam.

To date, the development of the Internet has been strongest in Australia and Taiwan, which together accounted for more than half the region's total number of users in 1996.

The countries poised for strongest growth in the years to come, obstacles notwithstanding, are those where Internet penetration has been most limited: China, India, Korea and Malaysia.

China will witness a compound growth rate of more than 100 per cent per year, though it could grow more quickly with better ISP services and telecomms infrastructure.

"China is ripe for strong growth", even though government regulations "dampen the comfort factor for people using the Net in China", Barker said.

Although having an e-mail address is becoming critical to doing business in the region, widespread electronic commerce by way of the Internet is at least four years away as a result of technical hindrances, low PC penetration rates and preferences for cash-based transactions, the report said.

The region's gamut of challenges includes the following, as described by the New Century Group:


Many countries think it best to err on the side of caution and control, wanting the economic boost that the Internet promises without wanting to tempt what they see as destabilising influences. The report quotes one Singapore politician as saying the issue is one of "opening the window while keeping the flies out".

In addition, governments in the region have historically been heavy regulators of the telecommunications sector in the protection of monopoly interests. India, for instance, has only one or perhaps two ISPs.

High costs

Telecommunications charges have tended to be higher in Asia than anywhere else in the world. While the cost of bandwidth typically represents 20 per cent of an ISP's total costs in the US or Europe, in Asia it represents more like 40Ð80 per cent of the total.

Lack of local content

Although the number of Web sites is growing exponentially in each Asia-Pacific country, both the quality and quantity of sites with local content in the local language will continue to be lacking for at least several years.

Poor telecommunications infrastructure

Telecomms environments in China, the Indian subcontinent and most of South-East Asia are "woefully lacking", with long waits for often noisy and unreliable phone lines.

Asia-Pacific internet users by country (1996-2001)Country 1996 1997 2001Australia 1,000,000 1,600,000 5,300,000Taiwan 590,000 870,000 3,350,000Korea 155,000 325,000 2,900,000China 70,000 250,000 2,700,000Malaysia 90,000 210,000 1,750,000India 40,000 200,000 1,800,000Singapore 150,000 255,000 900,000New Zealand 210,000 310,000 740,000Thailand 80,000 150,000 630,000Hong Kong 200,000 275,000 700,000Indonesia 60,000 115,000 550,000Philippines 40,000 70,000 420,000Source: The New Century Group