Emerging economies move up the broadband ranks

As the world continues to face a mixture of financial meltdown, recession and the threat of deflation to broadband continues to provide a selection of bright spots.

For a start it is still growing"&brkbar;mostly. In the 12 months to the end of September 2008 64 million broadband lines were added around the world, an increase of 19.2%, to total just under 400 million.

Perhaps not a tiding of joy in the traditional sense but for those who believe in the benefits that the internet and in particular fast internet brings then it's a plus. Recent quarters show growth is slowing in many regions. Some countries in Western Europe and Asia Pacific in particular are in danger of actually shrinking, but the slack has been taken up by new challengers for the broadband crown.

China is now the largest broadband country in the world, with 81 million subscribers at the end of September and the country is accelerating away from the newly deposed USA now in second place.

Brazil is a new entry in the top ten broadband countries in the world, adding over 600,000 new lines to move ahead of Spain and within striking distance of Canada which it will pass before the end of the year.

Table 1: Top 10 broadband countries, total broadband subscribers - Q3 2008

Rank  Country  Q2 2008  Q3 2008 Q2 2008  Q3 2008
1  China  75,768,350  80,930,000
USA  76,878,195  78,745,996
3  Japan  29,434,700  29,677,900
4  Germany  21,711,702  22,516,750
5 France  16,646,786  17,075,125
6  UK  16,718,400  17,039,700
7  South Korea  15,061,659  15,264,917
8 Italy  11,534,230  11,779,650
9  Canada  9,005,181  9,212,465
10  Brazil  8,490,400  9,101,200

Russia is another country on the up, as are Mexico, India, Argentina, Vietnam, Colombia and Greece - all of whom are now growing at least ten times as fast as Japan in broadband terms.

This rapid reversal of the old order, where first mover countries flew ahead of the pack has a number of causes.

Saturation is the answer in many countries. In South Korea, Japan, Hong Kong, for example, there are only a limited number of houses without broadband, so net additions are low. In those markets technology substitution is taking place, where consumers are ditching their DSL lines and moving to fiber where it's available.

Coupled with a global downturn where many of the developed countries are entering recession, saturation accounts for the slowdown in broadband growth. Advanced and secondary emerging economies aren't immune to market conditions, but so far perhaps only the edge has been taken off their numbers.

It's difficult to tell; growth in the US has halved over the last 12 months while in India its gone from 15% a quarter to 18% a quarter in the same period. So while the downturn has an effect on broadband growth it seems that its worst effects are mitigated by the sheer pace of adoption.

We expect to see continued downward pressure on growth rates in the coming quarters as broadband still teeters on the boundary between necessity and discretionary spend, but globally it will still grow even in these darker times.

Fiona Vanier, senior analyst, Point Topic

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