According to a new study by Frost & Sullivan, Asia Pacific International Data Services Market 2007, the international data services market in Asia-Pacific is growing steadily, boosted by the high economic growth in India and China. However, the intense competition has kept prices down and data service providers are finding it increasingly difficult to see satisfactory revenue growth.

"The continuous inflow of FDI (foreign direct investment), establishment of regional bases by MNCs (multinational corporations) in growing economies, increasing importance of Asia as a BPO (business process outsourcing) destination, and the expansion of Asian enterprises beyond home markets are the few factors that are fuelling international connectivity needs," noted Frost & Sullivan industry analyst Krishna Baidya.

"Bandwidth demand is escalating with enterprises seeking the convergence of voice and data networks and running more bandwidth-intensive applications. The increasing adoption of broadband and the booming Internet market in the region is also driving the demand for greater bandwidth,” Baidya added.

The opening up of the resale markets is also expected to result in fierce competition, which in turn would result in price reduction.

Taking advantage of the competition, enterprise customers continue to demand for more value-added services and negotiate for better rates based on the duration and value of the contracts. Price-sensitivity in carrier selection is however subsiding, with network availability and stability taking priority instead.

"IP VPN (Internet Protocol virtual private network) in particular is seeing high demand even though IPLC (international private leased circuit) remains the most popular data service in Asia-Pacific," adds Baidya. "Legacy services such as frame relay and ATM (asynchronous transfer mode) are slowly being phased out."