Extending Broadband Connectivity in Southeast Asia: Highlights

EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA HIGHLIGHTS

Extending Broadband Connectivity in Southeast Asia

What is the context?

Broadband connectivity is not just the backbone of modern economies; it is also a critical enabler of vibrant societies. As many countries in Southeast Asia (SEA)* transition from middle to high-income status, high-quality broadband connectivity has become a pivotal enabler of this transformation.

It fuels innovation, streamlines the exchange of goods and services, and drives economic growth.

Broadband connectivity to address pressing challenges However, the importance of broadband connectivity extends beyond economic development. It is crucial for addressing the unique socio-economic and environmental challenges that face SEA. Particularly in rural areas and on islands, connectivity could contribute to better education by providing access to quality and up-to-date educational content, or to health and long-term care services through telemedicine or teleassistance, which are becoming increasingly important as the ageing of the region’s population accelerates.

On the environmental front, SEA faces mounting concerns related to climate change. Over the past four decades, climate-related disasters have quadrupled in frequency, putting countries like the Philippines, Indonesia or Viet Nam at high risk.1 The increase in climate shocks has a domino effect, impacting all sectors of the economy, including critical areas like agriculture as well as human health and labour productivity.

Development of broadband technology and policies in Southeast Asia Broadband connectivity has become a cornerstone in the drive towards greater digitalisation, resilience and development in Southeast Asia. The OECD report Extending Broadband Connectivity in Southeast Asia highlights a surge in the region’s broadband connectivity, primarily led by mobile broadband. As of 2022, there were 769 million total broadband subscriptions, a tenfold increase from 2010 (Figure 1).2 Mobile broadband accounted for 92% of this figure in 2022.2

Figure 1. Broadband subscriptions in SEA, 2010-22 Fixed broadband suscriptions

Mobile broadband suscriptions

Subscriptions in millions 900 800 700 600 500 400

300 200 100 0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Note: 2022 total mobile broadband subscriptions data includes 2021 data for Indonesia and Lao PDR. 2022 total fixed broadband subscriptions data includes 2021 data for Lao PDR. Sources: SEA countries except Singapore: ITU (2023), World Telecommunication/ICT Indicators Database 2023 (27th edition/July 2023), www.itu.int/ en/ITU-D/Statistics/Pages/publications/wtid.aspx (accessed on 22 August 2023); Singapore: Data provided by national authorities. * Southeast Asia (SEA) is defined in the report as the ten member countries of the Association of Southeast Asian Nations (ASEAN), namely, Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. 2 . EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA

However, the SEA broadband landscape is far from uniform. Significant disparities appear when comparing individual countries. Mobile broadband subscriptions per 100 inhabitants range from a low of 56.4 in the Lao People’s Democratic Republic (hereafter “Lao PDR”) to a high of 169.6 in Singapore (Figure 2).2 However, six of the ten countries exceed 100 mobile broadband subscriptions per 100 inhabitants in 2022, including countries with low fixed broadband penetration like Cambodia or Indonesia.2 Fixed broadband figures reveal an even more significant divide. While Singapore leads with 27.4 subscriptions per 100 inhabitants followed

by Viet Nam with 21.7,2 both are still below the OECD average (34.9).3 However, they are far higher than regional peers like Cambodia, Lao PDR or Myanmar, which have rates not surpassing 3 per 100 inhabitants.2 The regional average for fixed broadband subscriptions is a staggering 3.7 times lower than that of OECD countries.

The disparity extends to the realm of broadband performance and service quality. Recent data from July 2023 shows a marked difference in median mobile download speeds between countries like Brunei Darussalam or Singapore – which enjoy

considerably higher speeds – and the rest of the region.4 Median fixed download speeds in the same time period show an even greater gap, with Singapore and Thailand clearly in the lead with speeds above 200 Mbps, compared to Myanmar with around 20 Mbps.4 These disparities are not only across countries, but also within countries, affecting various socio-economic groups and geographical areas. Factors contributing to these divides range from limited rural infrastructure and high service costs to insufficient digital literacy programmes, gender biases and a perceived lack of utility for broadband services.

Lastly, it is worth mentioning the distinct characteristics of communication markets in SEA countries. Mobile communication markets in the region generally fall within “moderately concentrated” to “highly concentrated” classifications, using the Herfindahl-Hirschman Index (HHI).5 Compared to many OECD countries, some SEA governments are more involved in the communications market through shareholdings in communications operators, although their involvement and approach vary considerably from one country to another.

Figure 2. Mobile broadband subscriptions per 100 inhabitants, 2022 Singapore OECD Malaysia Thailand Brunei Darussalam Indonesia SEA Cambodia Myanmar

169.6 127.9 127.4 121.8 118.8 114.8

Indonesia CORRE

SEA Corrected

103.7 102.0 97.1 96.9

Viet Nam World Philippines Lao PDR

86.9 69.8 56.4 0

20

40

Note: Data for Indonesia and Lao PDR are for 2021.

60

80

100

120

140

160 180 Per 100 inhabitants

Sources: SEA countries except Singapore: ITU (2023), World Telecommunication/ICT Indicators Database 2023 (27th edition/July 2023), www.itu.int/en/ ITU-D/Statistics/Pages/publications/wtid.aspx (accessed on 22 August 2023); Singapore: Data provided by national authorities. OECD: OECD (2023), Broadband Portal, July 2023 update, www.oecd.org/sti/broadband/broadband-statistics/ (accessed on 28 August 2023).

EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA . 3

Extending Broadband Connectivity in Southeast Asia

OECD recommendations for broadband connectivity in Southeast Asia

Promote coordination of civil works

In light of the challenges and opportunities that shape the digital landscape in Southeast Asia, the OECD report Extending Broadband Connectivity in Southeast Asia outlines tailored recommendations aimed at stimulating broadband deployment and reducing digital divides. These recommendations consider all policy areas covered in the OECD Council Recommendation on Broadband 6 Connectivity.

Leverage synergies between initiatives to increase coverage and adoption

While the full report provides recommendations for five countries—Cambodia, Indonesia, Singapore, Thailand and Viet Nam—several overarching policy recommendations apply more broadly and are presented below.

Strengthen the independence of regulatory bodies Independent regulators insulated from undue influence are crucial for long-term regulatory effectiveness and market competitiveness.

Conduct regular competition assessments Such assessments could help identify whether there are factors that could hinder market competition and the need for regulatory measures to foster market competition.

Facilitate private sector participation Amending or removing restrictions hindering private sector participation (foreign or national) could stimulate innovation, diversify services and contribute to the long-term development of the communication sector.

Streamline administrative processes Streamlining network construction permits, access to rights of way and public infrastructure, and improving local coordination mechanisms could significantly facilitate timely network deployment in many SEA countries.

4 . EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA

Promote coordination of civil works and infrastructure-sharing between communication networks and other infrastructures, such as roads or electricity grids.

Leverage synergies between public policy initiatives to increase coverage and adoption of services, particularly by improving digital literacy.

Publish granular and reliable data for network quality Establishing a standardised framework for open, verifiable and granular data publication on subscription, coverage and quality of service would empower end-users and stimulate competition.

Promote policies to enhance network resilience These measures address challenges in disasterprone areas and vulnerabilities, strengthening communication infrastructure for uninterrupted connectivity.

Promote smart and sustainable networks Measures to support and promote smart and sustainable networks and also encourage operators to report regularly on environmental impacts.

Regularly assess the state of connectivity Such a process ensures a continuous, datadriven evaluation of connectivity metrics, enabling evidence-based policy adjustments and targeted interventions.

References 1. OECD (2023), “Enabling sustainable investment in ASEAN”, OECD Business and Finance Policy Papers, No. 23, OECD Publishing, Paris, https:// doi.org/10.1787/ eb34f287-en.

2. SEA countries except Singapore: ITU (2023), World Telecommunication/ICT Indicators Database 2023 (27th edition/July 2023), www. itu.int/en/ITU-D/Statistics/Pages/publications/ wtid.aspx (accessed on 22 August 2023). Data for Singapore provided by national authorities.

3. OECD (2023), Broadband Portal, July 2023 update, www.oecd.org/sti/broadband/ broadband-statistics/ (accessed on 28 August 2023).

4. Ookla® (2023), Speedtest Global Index ®, www.speedtest.net/global-index (accessed on 22 August 2023).

5. Calculations of HHI are based on market share data from the following sources: [Cambodia, Indonesia, Thailand and Viet Nam] OECD elaboration based on data from national sources.

[All other SEA countries] GSMA Intelligence (2023) Database, https://www.gsmaintelligence. com/data/ (accessed on 9 November 2023).

6. OECD (2021), Recommendation of the Council on Broadband Connectivity, OECD/LEGAL/0322, Compendium of Legal Instruments, OECD, Paris, https://legalinstruments.oecd.org/en/ instruments/OECD-LEGAL-0322.

PUBLICATION OECD (2023), Extending Broadband Connectivity in Southeast Asia, OECD Publishing, Paris.

WEBSITE https://oe.cd/ConnectSEA

CONTACTS Verena Weber, Head of the Communication Infrastructures and Services Policy Unit, OECD verena.weber@oecd.org Inmaculada Cava Ferreruela, Policy Analyst, Communication Policy and Regulation, OECD inmaculada.cavaferreruela@oecd.org Lauren Crean, Policy Analyst, Communication Policy and Regulation, OECD lauren.crean@oecd.org

EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA . 5

EXTENDING BROADBAND CONNECTIVITY IN SOUTHEAST ASIA . 5