State of Telecom Industry in Pakistan

Mobile Internet devices include smart phones, electronic readers, connected navigation devices, media players, gaming gadgets etc. Due to a variety of reasons will see more of these devices around. Depending on the market, the combination of online and offline capabilities of mobile connected devices will present new business models. The success of such offerings is mainly based on the utility of services and whether wireless broadband prices are affordable.

Why will these devices rise in popularity? To name a few reasons: improvements in processors and computing capacity, advances in: hardware, storage, flash memory, battery life and the explosive growth of social computing. Abundant and affordable wireless broadband could be another factor but there is still plenty of room there for improvement.

Challenges abound as well. Problems with user interfaces are still a major issue with many portable devices which connect with Internet. One of the main reasons why Apple has emerged a winner is because it provided a slick solution to the common user interface problems. Sony is an example of a large brand which used to be poor performer in user interface and lost market share. Over the years Sony has improved on usability.

Other problems include lack of standards, proprietary OS and incompatible applications which make it hard to share data and force users to duplicate efforts. Of course there are business reasons behind these which can take up many posts but for an end user this is a major headache.

Device convergence and context-relevant advertisement are the potential killer areas. Cell phones claim that they are the one gadget which can absorb everything else but that’s not how it has worked out. Apple’s iPhone has done the best so far by including iPod in the iPhone. Admit it, for a while there will be multiple devices. Cell phone has made its way into third world countries, breaking the first and most important barrier. This presents an interesting opportunity for various adaptations of technology  for commercial and even NGO purposes.  How will the new crop of mobile Internet devices interplay with the two established platforms of web and mobile phones? Will there be a clear distinction of how youth uses these devices?

An excerpt from Forrester Research about the mobile Internet devices:

Mainstream consumers are now using digital photographs and downloading music — and are even starting to download and stream digital video. Unfortunately, they confine much of this activity to a home PC — or at least use a home PC to load up or “side load” mobile devices. Being able to connect mobile devices directly to media and communications services like photo sharing sites and music download services gives consumers, content owners, and service providers far greater freedom.
 

Interesting … Zong is betting that a offering simplicity of call features and calling plans will differentiate it by cutting through the clutter of packages. The concept of this ad may not be original but I think this is a good approach.

The telecom honeymoon in Pakistan which lasted about 5 years (2002-2007) allowed Pakistani consumers to leapfrog over older landline based infrastructure and get cheap and quick access to modern telecommunication technology. The investors, telecom businesses and Pakistani treasury - all made good money and it was a win-win situation. It seems that the golden period for Pakistan telecom is over. The spike in teledensity and corresponding load on the new infrastructure is causing a number of service issues. To add fuel to fire the telecom rates for calls to Pakistan and within Pakistan have started rising, causing a lot of concerns. Consider the following points (follow links for details) from the last few months:

• Rise in local call charges by PTCL
• Calls to Pakistan made more expensive
• PTCL forces Pakistan package on its customers
• Deceptive advertisements by Mobile Companies
• Customer service calls are not free any more
• Telecom consumer protection laws still in draft

Some people hold the view that given the tremendous progress made, complaining about telecom situation in Pakistan is not justified. Yes, there have been great advances made but if we do not fix the structural issues early on, we will lose much of that progress. Left unchecked we may even regress to a point where there’s plenty of competition but consumers end up without the services they deserve at a fair price. Broadband is an appropriate example … Pakistani public has been tormented with poor service and caps on the usage. 

I believe that with the right regulatory measures, consumer protection laws and a code of ethics we can keep the telecom sector on the right track. 

Continuing on the series of posts from TeleCON 2008, this one is on Profitability Challenges in a Low ARPU market. This presentation was made by Sajjad Hussain, Director Networks of Ericsson. It has some material which students and researchers will find particularly useful.

Naturally the presentation is tilted towards networks, transmission efficiencies, 3G and NGN. But most importantly it talks about the energy consumption and ways to address the energy demand by considering Green Sites which utilize alternative energy sources such as solar power and battery backup. There are a few slides on mobile commerce as well. Here is the full presentation in pdf. 

Related Posts:

• Challenges Of High Growth Mobile Telecom-Markets
• Will Average Revenues Per User In Pakistan Rise?

Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators according to a report from World Bank on global business ranking . The business rankings report highlights the business reforms which have been implemented in Pakistan and provides details of various aspects of starting and running a business. In terms of issues, energy shortage is one of the major problem in Pakistan just like other emerging economies.

Here’s a summary, taken from Dawn Blog.

A recent World Bank report has declared Pakistan as one of the top favourable economies in the world. The “Doing Business 2008″ report states that Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators, such as: ease of doing business, dealing with licenses, and protecting investors.

Pakistan is quickly emerging as a powerhouse in the region, partly due to its fast paced IT industry. The government’s policies towards foreign investors have also contributed in helping the country stand out. These include 100 per cent foreign equity ownership, 100 per cent repatriation of profits for foreign investors and tax exemption for the sector till 2013.

An increasing number of foreign companies also prefer Pakistan for their outsourcing operations. This is due to the large pool of English-proficient professionals, cheap connectivity rates and competitive operational costs.

‘Doing Business 2008? is an annual report that evaluates the regulations that directly impact economic growth and provides objective measures of business regulations and their enforcement. The report evaluates business
activities based on regulation affecting the “10 stages” of a business’s life: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Story via Telecom Grid Pakistan.

MobileActive.Org, a grass root organization which focusses on the role of mobile technology for social change and awareness, has released a new report, Wireless Technology for Social Change: Trends in NGO Mobile Use. A key point which struck me was the importance of affordability. Survey shows that Financial discounts by telecom companies and vendors is the most significant factor … I see this as a great opportunity to make a huge difference to these organizations and to create goodwill!

Here’s a brief intro.

Mobile technology is transforming the way advocacy, development and relief organizations accomplish their institutional missions. The report Wireless Technology for Social Change: Trends in NGO Mobile Use, released by the United Nations Foundation and The Vodafone Group Foundation, brings this point home.

Wireless Technology for Social Change: Trends in NGO Mobile Use was written by Sheila Kinkade (ShareIdea.org) and Katrin Verclas, and commissioned by the United NationsFoundation-Vodafone Group Foundation Technology Partnership. The report examines emerging trends in “mobile activism” by looking at 11 case studies of groups active in the areas of public health, humanitarian assistance and environmental conservation.

We (bloggers, consumers, industry experts) are usually quick to criticize organizations such as PTA. Main reason is that these organizations have a lot of authority and their decisions have significant impact on consumer’s pockets and industry’s profit margins. They face a lot of challenges and have to make difficult decisions. Consider the presentation “Telecom Policy Evolution“, by Mudassar Hussain of MOITT, at the TeleCON 2008 event. It acknowledges that convergence (IP, telecom + media) has significantly changed the landscape and policy makers need to address these changes. The time to do that is the upcoming 5 year policy review cycle which starts in July 2008. It is an important time for the policy makers to look back and assess their performance and to define objectives on which to base their new policies. And with a new government in place there will be additional twists. Excerpt:

Synergies between different regulatory areas should be developed:
• Telecom contributing with infrastructure and access issues
• Broadcasting with access and content issues
• IT with privacy and security, access to PCs, etc.
• Policies to supplement each other and work in cohesion even
if not converged

Objectives of Policy:

Policy has to be well thought out keeping in mind local market
objectives to be achieved: Consultation and partnership of all
key industry stakeholders is crucial.

Industry concerns of protection of investment have to be duly
addressed with full industry participation by both the policy
makers and the regulators.

Strength of the markets has to be ensured by dynamic and
timely actions of the Govt. in direct partnership and consultation
with industry and consumer community stakeholders.

Inputs of all stakeholders present in the forum are welcome on
all areas of format, scope and outlook as well as specific issue
related proposals.

For full presentation click below.
Telecom Policy Evolution - Muddasir Husain

I am glad to share the announcement of a new social initiative around Corporate Social Responsibility:

SocialBridges.Org - Seeking corporate social leadership in Pakistan.

This is a sign that citizen journalism and blogging is taking off in Pakistan. The topics and content of the SocialBridges will appeal to the growing consumer and commercial segment which needs a strong voice. There are some great insights there with a high-profile set of authors. I look forward to some thought-provoking stories there. See this announcement from Green & White.

Of course Telecom sector in Pakistan has been a major force behind corporate involvement in society. Consider the recent presentation by Zouhair Khaliq, CEO of Mobilink at TeleCON 2008 event in Karachi. The title of his presentation was Mobilizing Social Change and he talked about the recent launch of Mobilink Foundation. Get the full presentation in pdf: Mobilink presentation: Mobilizing Social Change.

Tee Emm was not impressed by the corporate brochure readout by Zouhair. However Bilal Mughal thought that there were positive aspects in Zouhair’s presentation. He writes this at Telecom Grid Pakistan:

Industry revenues are based on these mainstream factors and eliminating poverty is the heartbeat of all the problem whether it comes to you in the form of purchasing power or uplifitng the life trends from one consumer sect to another (higher). These things grow to be a central part of your company plans especially in our GDP environment and rotating them around different conferences provides with the direction to other participants to target the source issue of the market because at the end of the day if I sell dialup connection I would not want to sell at 2Rs if I’m selling at 5 today and you can only do that by increasing the consumer power at various levels and keeping it stable.

Here’s the new world order in handsets for Q1 2008, based on an undisclosed research report.

Motorola drops to number three in volume terms and number five in value terms.

LG was the winner for the quarter with a YoY volume growth rate of 54% followed by Samsung with 33% growth. The market grew 14%. Motorola wasn’t the only loser. Sony Ericsson lost market share. And so did Apple. RIM and HTC are gaining smartphone share.

The handset market grew at YoY rate of 14% and again grew slightly less concentrated, with the top-five vendors taking 83.5% of global volume. This compares to 84.5% during the same period a year ago and 83.6% during Q4 2007. This is a reflection of both Motorola’s share loss and specialty vendors such as RIM, HTC and Apple taking higher-end share and smaller vendors taking some at the low-end (for example, the success of operator-branded handsets in Europe and some emerging markets).

The Korean vendors have been hedging their bets, using every form factor and platform known to man while working hand-in-hand with operators in key markets. In addition, Samsung and LG have been helped by the South Korean won’s weakness, which is at a two-year low against the U.S. dollar and even lower against the Euro.

Nokia’s market share for Q1, at around 41% according to Strategy Analytics, is up almost four points year-on-year and steady from the previous quarter. The combined share of Samsung, Motorola, LG, and Sony Ericsson was around 42.6%, meaning Nokia is close to matching the combined volumes of the two, three, four, and five vendors.

Guest Post From Umar Farooq

Telecom Infrastructure Sharing is an important concept in emerging telecommunication markets. Here’s an extract from a GSM World report

Commercial considerations, rather than regulatory mandates, appear to be driving the increasing trend for Mobile Operators to adopt a variety of infrastructure models. Examples of mobile network sharing can be found in both mature and developing markets, with 3G providing an added impetus to assess the commercial and regulatory viability of network sharing. Network sharing may take many forms, ranging from passive sharing of cell sites and masts to sharing of radio access networks (RANs) and other active elements such as network roaming and the core.

In Pakistan, this concept’s utilization has taken place. However, we still have to see an effective regulation from PTA on this one (Editor’s note: See this link on PTA website for consultation paper on Infrastructure sharing - the pdf is also available here). We have seen different operators having their towers erected on the same roof top and at times within feet from each other on ground. Why couldn’t they use the same tower to place their antennas and share the cost ?

Infrastructure sharing has been taking place where Telenor did strike a lease deal with Wateen Telecom to use their Fibre capacity for their core transmission ring. But here, Wateen established the Fibre to sell its capacity to telecom operators. Infrastructure of RAN or Core Transmission has still some grounds to cover, before telecom operators in Pakistan become mature enough to operate shared structures while reducing operations costs.

The element of operator maturity is key here, because infrastructure sharing, does reduce costs if it is operated efficiently. If not operated efficiently, additional operational costs plus the reduced QOS loss, makes it useless for an operator.

From an end-user’s point of view, you see less number of towers and operators competing on their services rather than coverage.

Here’s a view of how the mobile companies stack up against each other. In terms of the subscriber growth from Jan-Mar of 2008, Telenor is at the top.

In terms of total number of subscribers (see the chart on the right), Telenor (16.7 million) is closing the gap with Ufone (17.2 million). I am interested in hearing views about the drivers of this growth.

By end of Q2 it will be interesting to re-visit this and see whether Zong lived up to the buzz it created!

Recently I stumbled upon Mobile Marketing Association website. I found the information there to be quite useful. One of the report on their site was about consumer guideline and best practices for marketing to consumers. The context is US market but the principles mentioned in the report are applicable anywhere. I hope that the designers and implementers of mobile marketing programs in Pakistan and Asia pay attention to these. Otherwise mobile advertising may be looked upon as another form of annoyance.

The complete report in pdf: Mobile Marketing Consumer Best Practices

Some of the topics covered in the report include:

• Unsolicited Messages
• Opt-in Mechanisms
• Privacy
• Sweepstakes and Contests
• Free to End User Programs
• Billing (charges related to marketing)
• Customer Care
• Dispute Resolution