X-play and service bundling: strategies in the Asia-Pacific market

As in Europe, customers in Asia-Pacific are increasingly purchasing two or more telecommunications services. Apart from fixed telephony, Asia-Pacific customers in the region are heavy users of mobile services, and several Asia-Pacific markets lead in the penetration of broadband services. Hong Kong is the world's leading IPTV market.

However, there are important differences between the Asia-Pacific region and other developed markets like Europe and North America. Overall, we see bundling having a smaller place amongst Asia-Pacific operators than in other parts of the world, especially in less developed markets:

• compared to North America, DSL faces less competition from cable in some important Asia-Pacific markets. For this reason, cable has not been as important a catalyst for triple-play offerings, and television currently plays a small role in bundling in most markets. Singapore, Korea and Japan are amongst the exceptions
• compared to Europe, access regulation in the Asia-Pacific region is less advanced and broadband resale is less important, which reduces price competition. Also there are few moves towards naked DSL across the region. These factors have reduced the need for incumbent operators to discount bundles and to differentiate themselves from resale competitors
• in addition, regulation limits bundling in some markets such as Korea and Japan, especially by incumbents. This has also reduced incentives for bundling amongst the incumbents' competitors.