Prediction 1: Regulation
The battle over mobile broadband spectrum and national broadband initiatives will be the key regulatory themes in Asia Pacific in 2012.
While Asia's 3G and now 4G subscriber base continues to grow, limited spectrum available to operators will become an increasingly contentious issue in the region. While many markets have already auctioned LTE spectrum, there will be increasing calls for more bands – particularly in the 700 MHz band – to be opened to mobile operators. Spectrum refarming will be another issue that is a gray area in many countries, and while 2G network shutoffs are still not feasible in most countries, this will become an option for operators who can't secure enough spectrum.
On the fixed broadband side, national broadband plans are well underway in Singapore, Australia, New Zealand and Malaysia with Indonesia becoming the most recent country to announce such a plan. We believe that more countries will follow suit such as Thailand, Vietnam, and India to promote the use of fiber optic services and at the same time protect the revenues of state-owned fixed incumbents.
Prediction 2: M&A activity
The region will see less M&A Activity then in years past, but some transactions will occur driven by overcrowding and spectrum grabs.
The region will see some M&A activity, notably in markets like India, Indonesia, Cambodia and potentially Vietnam where market overcrowding has led to big losses for market laggards. A new trend that will emerge is that an operator's spectrum assets will be valued considerably higher due to the need for more mobile broadband spectrum, especially now that the 2.3 GHz band can be used for TD-LTE. We don't expect many new opportunities for new mobile licenses, as South Korea seems reluctant to offer a fourth license (which would go to a domestic consortium in any case) although the NTC might offer a new license in the Philippines to rebalance the market after the Smart-Sun Cellular deal.
Prediction 3: Smartphones
Do or die year for Nokia, & Japanese vendors.
Nokia will be put to the test in the region this year as it has been fading into obscurity in the device markets, and needs a big game-changer in the smartphone space leveraging Windows Mobile to stay afloat in the region. Similarly, Japan's handset manufacturers will have to finally make a serious effort to expand outside of their domestic market as SoftBank, KDDI and even NTT DoCoMo are all expected to carry the iPhone 5. RIM has managed to stay afloat in the region as its brand is still very strong across Southeast Asia, but more regulatory problems are possible. LG will also need to come up with a new strategy as it has been pushed out of the smartphone space and is at risk of following Nokia down the mobile device value chain.
Prediction 4: Mobile broadband
LTE licensing will proceed more-smoothly than 3G licensing, but hurdles remain in many markets.
The fact that China and India have both started TD-LTE deployments is good news for the region as both markets were very slow to deploy 3G services. We expect that most markets who don't have LTE services such as Malaysia, New Zealand and Taiwan will sort out licensing and launch commercially in late 2012 or early 2013. The advent of LTE smartphones coupled with increased 3G use will put an end to unlimited data plans in many markets.
Prediction 5: Mobile payments
Mobile payment services will become more popular, but the business model has not been perfected.
2012 is being heralded as the year of NFC, and while vendor support is materializing and regulatory initiatives in Singapore and South Korea are encouraging adoption, the business model continues to elude mobile operators. SMS based payments, money transfers and remittances are continuing to gain traction in emerging markets and will still comprise the bulk of activity outside of Japan in 2012.
Prediction 6: Telecom vendors
Do or die year for Nokia-Siemens, Alcatel-Lucent.
Both vendors have announced significant layoffs in 2011 in the face of mounting losses, and the new strategies put in place will be put to the test in 2012. Both vendors have streamlined operations and are heavily betting on mobile broadband as their future. Competition with Ericsson, Huawei, ZTE and perhaps Samsung will put them to the test and we believe it is very possible for future consolidation either via a merger of a Nortel-style spinoff is highly possible next year.
Prediction 7: Machine-to-machine communications
While the sector holds considerable promise, most M2M activity will be restrained to the automotive sector.
Machine–to-machine services are generating significant hype in the region due to the potential billions of new "subscribers" and revenues M2M can bring, APAC lacks both the regulatory mandates seen in other regions and the business models in place to kick start the markets, as manual labor costs are considerably lower in Asia. Therefore, we believe that M2M will remain largely in the automotive sector in 2012.
Prediction 8: Mobile advertising
New business models will start to transform Asia's mobile advertising market.
Japan's mobile advertising market has long dominated Asia's revenues but this is quickly changing due to the rise of smartphones in the region. While SMS-based models are still largely popular there is a wide sweeping migration to banner ads. What is perhaps more interesting is the fact that new business models such as idle-display advertising, augmented reality services and better data analytics are being used to bring the market to the next level and we expect more of such services in 2012.
Prediction 9: Tablet PCs
Apple is vulnerable, but will still own the market.
Apple will still be the undisputed king of the tablet PC market in APAC in 2012, although there is certainly room for other players to compete at lower price points. While we think that the Amazon Fire will certainly appeal in the West, e-readers are not as popular in Asia and we think sales volumes will be lower in this region.
Prediction 10: Mobile operating systems
Android is coming to prominence in key markets but Windows Mobile could get a second wind.
Android leapfrogged iOS in key markets Japan and South Korea in 2011 while RIM's OS holds the lead in many Southeast Asian countries and Apple rules in markets like Australia, Singapore and Hong Kong. We see this trend continuing although Google's purchase of Motorola's mobile device division may push Korean vendors more towards Windows Mobile or their homegrown OS Bada.
Marc Einstein is an industry manager at Frost & Sullivan. For more information, visit http://www.frost.com/prod/servlet/frost-home.pag