NORTH EAST ASIA ERICSSON MOBILITY REPORT JUNE

Transcription

1 NORTH EAST ASIA ERICSSON MOBILITY REPORT JUNE 2016

2 Market Overview Key figures: North East Asia CAGR Mobile subscriptions (million) 1,560 1,800 2% Smartphone subscriptions (million) 1,130 1,700 7% Data traffic per active smartphone (GB/month) % Total mobile traffic (EB/month) % The North East Asia region consists of Mainland China, Japan, South Korea, Taiwan, Hong Kong and Macau. With 1.6 billion inhabitants, this region represents 22 percent of the world s population. Mainland China and Japan are currently the second and third largest consumer markets in the world after the US North East Asia has witnessed astonishing levels of economic growth since the late 20th century. China, for example, has experienced near double-digit economic growth over the last decade, transforming the country into the world s second largest trading nation. Today, however, economic growth in North East Asia has slowed, and the region s overall economic conditions are weak. To ease this tension, the prospective trilateral free trade agreement between China, Korea and Japan has been under discussion to open a new chapter of cooperation and prosperity in North East Asia, and to create a more sustainable high-tech and service-led economy structure. In Mainland China, LTE networks have scaled up rapidly, and many LTE devices have since been launched. Currently, Mainland China is the largest LTE market in the world (in terms of subscriptions), surpassing the US in All operators plan to commercialize Voice over LTE (VoLTE) in , with China aiming to cover the entire population via 4G by The country also initiated 5G tests in 2015, with the ambition to launch 5G networks in Operators in North East Asia are paving the way to 5G in the run up to three Olympic and Paralympic Games In Korea, operators continue to evolve mobile connection speeds. The Ministry of Science, ICT and Future Planning (MSIP) reports that the average LTE download speed in Korea was 118 Mbps at the end of 2015 almost 4 times faster than in the US and Europe. Following the deployment of tri-band carrier aggregation of LTE-Advanced, the country now has the fastest mobile network service worldwide. In the coming years, North East Asia is set to host three Olympic and Paralympic Games: Pyeongchang, Korea, in 2018; Tokyo, Japan, in 2020; and Beijing, China, in Mobile operators in the region are focusing their 5G launch efforts around these events. 1 The region is a useful testing ground for new telecom technologies, such as 5G, with deployments taking place in ultra-dense areas both in terms of data volume and the number of subscribers. In Japan, all operators have launched LTE Advanced with carrier aggregation functionality in a move to improve user experience. There is also a push from the Ministry of Internal Affairs and Communications (MIC) to reduce smartphone subscription prices in order to increase smartphone penetration among less affluent users. 1 5G networks, based on standards that will meet ITU IMT-2020 requirements, are expected to be deployed commercially in The launch of pre-standard, pre-commercial networks is anticipated earlier in selected markets. 2 ERICSSON MOBILITY REPORT NORTH EAST ASIA JUNE 2016

3 Mobile subscriptions The number of mobile subscriptions is increasing in North East Asia, with almost 1.6 billion recorded at the end of 2015 equating to 20 percent of the global market. This figure will grow at a Compound Annual Growth Rate (CAGR) of 2 percent, reaching 1.8 billion subscriptions by the end of 2021 Mobile subscriptions in Mainland China surpassed 1.3 billion at the end of 2015, and had at that time almost 35 percent of the world s LTE subscriptions, with 95 million net added during Q The smartphone market is the world s largest in terms of volume. In 2015, smartphone penetration in Mainland China reached nearly 70 percent, and 0.5 billion LTE handset subscriptions were passed in North East Asia. LTE subscriptions are exploding In North East Asia, LTE subscriptions reached above 500 million by the end of 2015, and at the time had almost 50 percent of the world s LTE subscriptions. Mainland China, Japan and South Korea are among the top four countries in the world using LTE. In Mainland China, LTE subscriptions passed 500 million during Q1 2016, accounting for almost 40 percent of mobile subscriptions in China. Migration from 3G to 4G has also been steady in South Korea and Japan. LTE subscriptions in Taiwan reached approximately 12 million at the end of 2015, achieving 50 percent LTE penetration after less than 2 years in the commercial market. Mobile operators in the country are introducing 3 carrier aggregations, in order to boost LTE download speed to more than 300 Mbps. Mobile subscriptions, North East Asia (million) 2,000 LTE/5G subscriptions Other In China, as more people adopt mobile devices, the number of LTE/5G subscriptions is expected to reach around 1.2 billion by the end of This will represent approximately 75 percent of total subscriptions in China and 25 percent of total global LTE subscriptions. In North East Asia, smartphone subscriptions are predicted to increase by 7 percent CAGR between 2015 and 2021 to 1.7 billion. Furthermore, approximately 95 percent of handsets will be smartphones in G subscriptions start to increase in 2020 Mobile operators in South Korea, Japan and Mainland China plan to initiate a fully commercial 5G service by around As such, 5G subscriptions are expected to enter the market on a large scale in the early 2020s. This will result in super high-speed data access, with massive and critical Machine Type Communication (MTC) services also anticipated. The former will enable high-definition video streaming distribution, while the latter will be utilized, for instance, in agriculture and smart cities. 2 LTE/5G subscriptions, North East Asia (million) Mainland China South Korea 1,600 Japan Rest of North East Asia 1,800 1,600 1,400 1,200 1, ,400 1,200 1, North East Asia had almost 50 percent of the world s LTE subscriptions in Excluding cellular M2M NORTH EAST ASIA JUNE 2016 ERICSSON MOBILITY REPORT 3

4 Consumer Trends The lifestyle of today s technology consumers, the networked lifestyle, is shaped by their ability to blend digital services and devices with everyday life. Mobile broadband boosts this integration by making online services more easily accessible The networked lifestyle New technologies are becoming increasingly commonplace in the networked life. Over 70 percent of all consumers agree that their usage of technology has significantly increased over the last 5 years. 3 One reason for this is that smartphones have greatly impacted consumers mindsets and their readiness to try new innovations. For instance, while many users are keen to try new apps on their smartphone, they can just as easily discard them if uninterested and move on to new services and technologies. Online connectivity in the networked lifestyle empowers people to share knowledge and resources with each other. More than 40 percent of consumers surveyed in Mainland China and South Korea have already engaged in some form of sharing activity for example, goods and services with peers through websites and smartphone apps. Ultimately, the belief that connecting more people via the internet will benefit society will redefine networked lifestyle needs. 3 Adoption of networked lifestyles Consumers in North East Asian markets are moving towards the networked lifestyle at varying speeds. In Japan, 62 percent of respondents surveyed use the internet for over 3 hours per day. In comparison, 25 percent of respondents in Mainland China spent less than 1 minute per day browsing the internet, indicating an opportunity for people to become better connected. 3 The forerunners of the networked lifestyle are the netizens, who are known to use several digital services daily and own several connected devices. South Korea has the largest group of netizens leading a networked lifestyle. In contrast, Mainland China has a large group of un-networked consumers. This group probably owns a mobile phone and is connected technically. However, they are yet to experience the positive effects of connecting with others. 3 Proportion of internet users participating in a sharing activity via websites or apps 50% More than 40 percent of internet users in Mainland China and South Korea participate in a sharing activity via websites and smartphone apps 40% Netizens and un-networked share of population 30% 20% 10% Netizen 35% 30% 25% 20% Un-networked 0% Mainland China Japan South Korea 15% 10% Source: Ericsson ConsumerLab, Analytical Platform (2015) Base: Internet users aged in Mainland China, Japan and South Korea 5% 0% Mainland China Japan South Korea 3 Ericsson ConsumerLab, Analytical Platform (2015) Source: Ericsson ConsumerLab, Analytical Platform (2015) Base: Population aged in Mainland China, Japan and South Korea 4 ERICSSON MOBILITY REPORT NORTH EAST ASIA JUNE 2016

5 Streaming natives As part of the networked lifestyle, consumers expect greater mobility and an increased number of devices to be connected In Japan, 24 percent of all consumers own a smart TV, whilst in Mainland China, 35 percent of urban consumers own one. Currently, 47 percent surveyed would like their TVs to be connected to the internet, which suggests that video streaming apps have the potential to become mainstream in the near future. 4 This could ultimately have a positive ripple effect across the entertainment industry. New generations are driving this change particularly as many of them are streaming natives. In Mainland China, 83 percent of those aged think free online video sources have more relevant and interesting content than traditional TV channels. In Japan, 13 percent of year olds see online video as their primary channel of accessing TV content, compared to only 5 percent of those between the ages of years. 4 Amongst year old internet users in South Korea, nearly 75 percent watch streamed videos on a daily basis, compared to only 30 percent of those over % In Mainland China, 83 percent of year olds think online video sources have more relevant and interesting content than traditional TV channels Mobile TV/video viewing is also driven by the younger generation. For year olds in South Korea, Taiwan and Mainland China, more than 50 percent of video viewing hours take place on mobile screens. In fact, more than 30 percent of total viewing time within this population is conducted on smartphones, as shown in the graph below. Smartphone share of total weekly TV/video viewing time by age group Mainland China South Korea Taiwan 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: Ericsson ConsumerLab, TV & Media (2015) Base: At least weekly viewers of TV/video with broadband at home aged in Mainland China, South Korea and Taiwan 4 Ericsson ConsumerLab, Analytical Platform (2015) 5 Ericsson ConsumerLab, TV & Media (2015) NORTH EAST ASIA JUNE 2016 ERICSSON MOBILITY REPORT 5

6 Mobile traffic Total mobile data traffic in North East Asia was around 1.3 ExaBytes (EB) per month at the end of 2015, of which 0.9 EB per month came from smartphones On average, total mobile traffic in North East Asia is expected to grow by 45 percent annually between 2015 and Mobile data traffic in the region is likely to reach almost 12 EB per month in 2021; representing 99 percent of the region s mobile traffic. Increasing mobile data traffic in Mainland China Data consumption per subscription varies across the region. The lowest average is measured in Mainland China; however, this figure is increasing with the introduction of LTE. At the end of 2015, the average mobile data usage per subscription, including all technologies, was around 0.4 GB in China. Currently, Chinese consumers are rapidly switching to 4G, with nearly 90 percent 6 of all devices sold by the end of 2015 being 4G capable. Total mobile data traffic in the country is expected to increase almost fourteen-fold between 2015 and Mobile traffic, North East Asia (monthly PetaBytes) Voice Data 12,000 10,000 8,000 6,000 4,000 High penetration rates drive data 2,000 The increase of mobile data traffic is accelerated by high smartphone and LTE penetration rates. Countries like Japan and South Korea are already advanced in applying these technologies and will continue to see rising data traffic due to mobile video growth Mobile data traffic, North East Asia, split per device (monthly PetaBytes) Total mobile data traffic in Mainland China is expected to increase almost fourteen-fold between 2015 and ,000 Smartphones Mobile PCs, tablets and mobile routers 10,000 8,000 6,000 4,000 2, China Academy of Telecommunication Research of MIIT (CAICT) 6 ERICSSON MOBILITY REPORT NORTH EAST ASIA JUNE 2016

7 Network performance The increased use of media and video in North East Asia highlights the importance of network performance, as the mobile user experience is judged on how well apps perform. Therefore, network performance is key to providing good user satisfaction User viewing experience can be estimated by using network performance measurements from North East Asian metropolitan areas 7, with 90 percent probability a good proxy for cell-edge performance. The downlink throughput measurements show that in Tokyo and Beijing, mobile users can get 9 Mbps or more. In Taipei and Seoul, users can experience 6 Mbps and 3 Mbps or more, respectively, while in Hong Kong users will get 1 Mbps or better. Different apps have their own set of network performance requirements. As a point of reference, focusing on downlink demanding apps, a throughput rate of at least 1.5 Mbps is recommended for collaboration services and 2.5 Mbps is recommended for HD video viewing. Average LTE network speed in Busan, South Korea has more than doubled following the aggregation of three carriers Carrier aggregation Operators in the region are continuously taking measures to improve app user experience, and carrier aggregation is a good example of this. Carrier aggregation was recently demonstrated by a South Korean operator, where the aggregation of 2 carriers (20+10 MHz) in June 2014 to 3 carriers ( MHz) in January 2015, increased network speeds for end users. An MSIP 8 study into benchmarking network downlink speed in a major city, Busan, South Korea, found that average speed has more than doubled; this was due to the deployment of three carrier aggregation components in the network. Network downlink throughput, cell-edge in metropolitan cities, North East Asia (Mbps) Average LTE network downlink throughput with/without carrier aggregation in Busan, South Korea (Mbps) Beijing 1 Hong Kong Seoul Taipei Source: Ericsson analysis on Ookla s Speedtest Intelligence data from Speedtest.net (Q4 2015) 7 Ookla s Speedtest Intelligence data from Speedtest.net (Q4 2015) 8 Ministry of Science, ICT and Future Planning, in Republic of Korea Tokyo Wideband LTE 20 MHz 2CC* (20+10 MHz) 3CC* ( MHz) Source: MSIP 8 report on 2015 telecommunication service quality measurement result Base: Performance benchmark based on drive test/walk test measurements on LTE networks in Busan, South Korea *Carrier components NORTH EAST ASIA JUNE 2016 ERICSSON MOBILITY REPORT 7

8 Ericsson is the driving force behind the Networked Society a world leader in communications technology and services. Our long-term relationships with every major telecom operator in the world allow people, business and society to fulfill their potential and create a more sustainable future. Our services, software and infrastructure especially in mobility, broadband and the cloud are enabling the telecom industry and other sectors to do better business, increase efficiency, improve the user experience and capture new opportunities. With approximately 115,000 professionals and customers in 180 countries, we combine global scale with technology and services leadership. We support networks that connect more than 2.5 billion subscribers. Forty percent of the world s mobile traffic is carried over Ericsson networks. And our investments in research and development ensure that our solutions and our customers stay in front. Ericsson SE Stockholm, Sweden Telephone EAB-16: Uen Rev B Ericsson AB 2016