State of Telecom Industry in Pakistan

Last year we saw Telenor and Warid vie in the media as the first one to install solar base stations. That was a start and the trend for green, renewable and more efficient solutions will continue. There is a lot more work to be done in the energy conservation and alternative reneable sources of energy for the technology and telecom industry. The infrastructure elements such as base stations consume significant energy and the data centers needed to run the IT operations are also major energy spenders. The infrastructure sharing idea promoted in Pakistan was also a good point in theory but its actual success has not been reported yet.

Typically, around half of the operating expenditure of a network company is spent on electricity, according to Ericsson. The proportion tends to be higher for operators in the developing world because their base-stations may be in remote areas, and therefore require diesel-fuelled generators. So the recent spike in energy prices has prompted operators to look for ways to cut costs.

The Economist ran a story about green telecom networks and ways to conserve energy in the telecom world. Good tips for saving energy from Economist.com include:

There are some relatively simple ways to reduce the energy consumption of a base-station. The first is to turn down the air-conditioning. Many mobile operators now run base-stations at a standard temperature of 35ºC, rather than the previous norm of 25-30ºC. Studies show that the higher temperature does not reduce the equipment’s reliability or life expectancy. “The biggest restriction is actually our technicians, who do not like going into the hut to work at 35 degrees,” says Andy MacLeod, Vodafone’s global networks director.

Operating at this temperature means ambient air can be used for cooling, even in hot countries. An air-filter is installed on one side of the cabin, and a fan is installed on the other, resulting in a steady flow of air. Vodafone plans to replace air-conditioning with this simpler approach, called “freecooling”, in the majority of its base-stations over the next three years, as part of a plan to reduce its carbon footprint by 50% between 2006 and 2020.

Other energy-saving tips are even simpler. In many hot countries, telecoms firms paint the exterior of base-stations white to deflect the sun. Another power-saving measure is to turn off base-stations completely when they are not busy. In densely populated areas, many base-stations are installed to boost the network’s capacity, rather than to provide essential coverage. In quiet periods when there are fewer calls to handle, such as the middle of the night, some base-stations can be turned off. A further trick is to redesign the base-station to make it more energy-efficient. A technique called “remote radio-head” involves shifting radio equipment from the cabin to the top of the mast, where it is cooled naturally.

And on renewable energy.

Efforts are also under way to exploit renewable sources of energy to power telecoms networks. Leading equipment-makers such as Ericsson and Nokia Siemens Networks have installed hundreds of base-stations powered by solar panels, wind turbines or biofuels, mostly in parts of the developing world where there is no electricity grid. The number of renewable-powered base-stations will increase as networks expand into rural areas of the developing world. But so far they make up only a tiny proportion of the total.

There is also scope to reduce the environmental impact in another area: the handsets. Nokia, the world’s biggest handset-maker, has been looking at making mobile phones entirely from recycled materials such as plastics from drinks bottles and old tyres. Sony Ericsson, another handset-maker, recently announced a project called GreenHeart, which proposes various things the company would like to include in future devices, such as bioplastics and recycled materials, a low-power charger and online rather than paper-based user manuals.

The problem for operators is that even as they become more energy-efficient, network expansion and subscriber growth may still increase their overall carbon footprints. The Smart 2020 report, published in June by the Global e-Sustainability Initiative, a partnership of technology firms and industry associations, and the Climate Group, a non-profit environmental club, predicts that global emissions from telecoms networks and handsets will more than double between 2002 and 2020 as adoption increases.

Remeber the free dialup Internet from PTCL which caused an outroar from ISPs? After a few months of complaints and negotiations, there is an agreement which was mediated by PTA. This agreement levels the playing field for ISPs. Consumers get dialup Internet for free by paying for a local call of 20-minute pulse.

A statement by PTA confirms that PTCL has signed revenue sharing agreements with three major Internet Service Providers (ISPs): Link dot Net, Sky Net and Comsats. This is a welcome development as it will be easier for the dialup customers to use the service, eliminating the hassle of dealing with scratch cards and its vendors.

With the signing of this agreement with PTCL, ISPs will now offer internet services at zero tariffs to general public on postpaid mechanism. The users will only be charged local call tariffs for 20-minutes pulse by PTCL revenue for which shall be shared between PTCL and ISPs. It is expected that internet will now proliferate as internet users can use free internet services of any ISP of their choice without the hassle of buying prepaid cards.

Previously, the internet dialup services had unlimited metering, however, on the request of PTCL and ISPs, PTA has agreed to change pulse duration of 131 calls to 20-minutes provided the ISPs shall not charge the users for internet services. This decision by PTA will go a long way in bridging the digital divide across the country. It is hoped that this will also benefit the development of the telecommunication services in general and ICT services in particular. Other ISPs will also sign similar agreement with PTCL.

Recently Daily Times reported a significant increase in shift of PCOs from fixed lines to wireless. Here are some details and data from the report about this shift.

Major card pay phone companies have shifted their Public Call Office (PCO) business from fixed line telephony to Wireless Local Loop (WLL) owing to its advanced technology and service portability, it is learnt.

This trend has been increasing in the country since the WLL technology was introduced in 2003 and still continues, as the technology has penetrated 70 percent population of the country as per Pakistan Telecom Authority (PTA) report.

The PCO’s business has significant share in the overall WLL subscribers’ base of the country because it is easily installed with no process of getting connection from operator’s side.

According to PTA, more than 0.44 million PCOs are operating in the country on WLL networks, which showed 16 percent growth in the year 2007-08. PCO share on fixed line network has declined from 31 percent in 2006-07 to 27 percent in the year 2007-08, whereas the rest of the business has shifted to WLL and Mobile telephony network.

Telecard has the leading share with 0.17 million PCOs across the country, which is about 8 percent higher than previous year. WorldCall has become the second big player by installing more than 24,846 PCOs. The telecom giant has posted impressive growth of 52 percent to provide PCO connections in 2007-08. Pakistan Telecommunication Limited (PTCL) has also set up 14,528 PCOs on its WLL network so far. Great Bear International has installed 1,089 PCOs in the country by the end of outgoing fiscal year 2007-08.

Mobile phone operators have also allowed providing telephony connections for PCO since the deregulation of the sector. Mobilink was the only operator, which has significantly set up its PCO on mobile telephony with more than 61,229 PCOs by June-end 2008.

PCO service is available in all the four provinces of the county which provides telephony services along with employment to million of peoples. Most of the share of PCO is concentrated in Punjab and Sindh, which are lucrative for PCOs business owing to big population. Punjab has a share of more than 53 percent with more than 0.23 million PCOs whereas Sindh has a share of 33 percent having 0.14 million PCOs. NWFP and Balochistan have more than 37,896 and 25,836 PCO’s respectively by the end of June 2008.

WLL companies are expanding the networks rapidly and are installing cell sites all across the country. In the year 2007-08, they have installed over 951 cell sites and its growth reported over 49 percent in the year 2007-08 compare to previous year. 2,897 cities are covered by the service by the same year. The overall WLL subscriber’s base stands at 2.3 million in the country with 1.5 teledensity. There are total 11 WLL operators having license of PTA but only 9 operators are operational in various telecom regions. Majority of them is coming up with 3GHz technology, which will break the digital divide in Pakistan.

Too interesting to pass!

As the world is entering an era of technology convergence, the wireless panorama is changing ‘fast and furious’. The recent convergence of the Internet and mobile radio has also accelerated the demand for “Internet in the pocket” on light, low-cost terminals, as well as for radio technologies that boost data throughput and reduce cost per bit. Mobile networks are now going multimedia, potentially leading to an explosion in throughput from a few bytes for the Short Message Service (SMS) to a few Kbits/s for the Multimedia Messaging Service (MMS), to several 100 kbits/s for video content.

This trend to higher data rates over wireless networks will culminate in the introduction of Third Generation (3G) System UMTS (Universal Mobile Telecommunications System).

High Speed Downlink Packet Access (HSDPA) technology is a cost-efficient upgrade to UMTS systems and promises to deliver performance comparable to today’s wireless LAN services, but with the added benefit of mobility and ubiquitous coverage.

Mobile operators who have invested heavy amounts in existing infrastructure will obviously show reluctance towards deployment of new 3G infrastructure. An extremely flexible expansion and migration strategy along the road to the 3G would be “soft” network evolution that does not render existing installations superfluous.

Evolution Path

Investment risks are minimized and competitive positions strengthened through the gradual deployment of technology. Intelligently expanding existing infrastructures is often all it takes to be able to offer new forms of mobile data services in practice quickly and flexibly.

Basically four transmission systems play a role in the evolution from GSM to the Third mobile radio generation (3G), namely:

• HSCSD (High Speed Circuit Switched Data)
• GPRS (General Packet Radio Service)
• EDGE (Enhanced Data Rates for GSM Evolution)
• UMTS (Universal Mobile Telephone System)

The chart below shows the evolution path.

The present network architecture stands on EDGE, it stands for Enhanced Data Rates for Global (instead of “Global”, originally: GSM) Evolution. Based on the GSM standard, EDGE permits faster data rates - and so is intermediate step from GSM technology toward UMTS.

UMTS (Universal Mobile Telecommunication System) is the name given to a totally new performance dimension in mobile radio. UMTS is the cornerstone of what is called the third mobile radio generation (3G) for voice and data communication, both packet and circuit-switched. UMTS employs separate frequency bands so is free from the bottlenecks of GSM systems.

Once UMTS is implemented, it would pave the path for HSDPA (High Speed Downlink Packet Access). HSDPA provides a smooth evolutionary path for the Universal Mobile Telecommunications System (UMTS) networks to higher data rates and higher capacities, in the same way as Enhanced Data rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM) world. HSDPA is primarily implemented in the Node B (identical to a BTS in a GSM network) and the RNC (Radio Network Controller, both are the entities oF UMTS RAN (Radio Access Network).

Advantages of HSDPA

Eventually every UMTS market will see HSDPA deployments - the technology offers operators too much of an edge to be ignored.

Major advantages include:

• Peak data rates of up to seven times higher than those in the most advanced UMTS networks
• A four-fold improvement in network capacity
• Reduced round-trip time between network and terminals
• Sophisticated scheduling allowing favorable allocation of resources

HSDPA’s improved spectrum efficiency enables much faster downstream throughput - between network and terminal - than current UMTS technology. Although the theoretical maximum data transfer speed of HSDPA is 10- 14Mbps, the technology will deliver a 2 - 3Mbps downlink on average. Shared among users in an adequately covered area, this will provide each user with a 300K - 1Mbps downlink, i.e. comparable to current wireless LANs and domestic fixed line broadband.

HSDPA is an extremely cost-effective path to higher data rates and provides more efficient use of valuable spectrum. It enables operators to compete effectively in increasingly converged markets and satisfy the need for enhanced QoS and bandwidth-hungry services in an efficient and cost-effective manner.

References:

[i] www.umts-forum.com

[ii] http://www.3gamericas.org/pdfs/gsm_to_umts-siemens.pdf

[iii] www.3gamericas.org/pdfs/lucent_hsdpa_paper_2005.pdf

Twelve recent, noticeable telecom and technology trends from Pakistan.

• Popular: iPhone 3G, Book your number by Zong, Mobile Internet with USB modems
• Success Stories: Zong brand launch, Telenor strategy
• Survivors: Ptcl, Warid
• On the defensive: Mobilink
• Wrong Turns: Tax increase on telecom, charging for customer service call
• Defying the odds: Entreprenurship continues to thrive and inspire
• Becoming mainstream: Social networking
• Getting noticed: bloggers and Internet users by Google
• Shift in business model: User generated content threatens traditional media
• Challenges: economy, energy & power shortage, political instability 
• On track: WiMAX with second commercial rollout
• Policy issues: Enforcement of new SIM registration policy, when to rollout 3G

Mobilink under its Corporate Social Responsibility (CSR) drive has launched a project of recycling handsets. The CSR drive plays an active role in supporting the community and social development of Pakistan.

As a caring corporate citizen and an environmentally responsible organization, Mobilink has initiated a project to collect mobile phones and accessories no longer in use, refurbish repairable items and donate them to the Pakistan Association of the Deaf and the Disabled Welfare Association. Your donation will greatly benefit hearing impaired and physically disabled individuals by connecting them with the people around them and providing an essential source of communication.

Items beyond repair will be disposed of in an environmentally-friendly manner in order to ensure toxic chemicals found in mobile phones do not pollute the air or leak into our groundwater.

What is useless to you could bring connectivity to someone’s life.

For more details visit Mobilink website page on recycling. Also read more about phone recycling trends and Nokia’s contributions to recycling efforts over the world.

A detailed report from Universal McCannon social networking trends shows that Pakistani users are fast adopting social networking. The popularity of social networking in Pakistan is no surprise, given the high numbers (percentage and overall) of youth, growing access to Internet and a culture inclined toward sharing and social activities. The telecom reform and subsequent growth of access to social networks through Internet and smart phones has contributed to this. For example, look at the number of blog readers and social network participants. This number could be much higher if a) obstacles to broadband could be removed and b) an Internet exchange is developed within the country and c) useful local content generation is encouraged.

According to PTA numbers, mobile subscriber growth across Pakistan declined slightly in November 2008. After many years of explosive growth this is the first decline. Although the dip is a small one (-118K users), but it is an indicator of the difficult environment for the telecom market. However this does not mean that all companies are losing customers. Mobilink is the only one which lost market share (over 827K) while Warid added over 244K users, Telenor added 240K. Ufone and Zong added subscribers as well. Total number: 90.4 million.

Telenor took a big step seven years ago when it decided to expand in international markets. At that time Telenor was just another midsized European incumbent telecom operator. That strategy of international investment paid off and now Telenor is the 7th largest mobile company in the world. The impressive part is that Telenor has not sacrificed margins in the race for growth. Many of Telenor’s competitors - Vodafone , Deutsche Telekom - have started to emulate its strategies. Let’s take a look at the critical success factors and what can be learned from this.

Forrester Research did a case study on Telenor and praised its strategy and execution. The key take points include: right time, targeting of emerging markets, policy of full management control (avoided joint ventures) and deployment of a repeatable methodology (for example the djuice brand).

Over the past seven years, Telenor — the incumbent telco in Norway — has transformed itself from a small operator with limited opportunities in a tiny country into a major global telecommunications group. How? By leveraging repeatable strategic methodologies and pursuing an innovative twin-track geographic strategy. While rivals were investing in developed economies, Telenor focused on making money in emerging markets — and timing this investment when they were experiencing explosive growth in mobile. Telenor has been so successful that competitors are now copying its approach. Vendor strategists can learn from Telenor that size need not be an inhibitor: What matters most is the right strategy, at the right time and precision in execution.

How did Telenor decide to invest in Pakistan? According to a presentation by Telenor it identified 5 criteria before entering Pakistan:

1. 1. High growth potential
2. Forward looking telecom policy
3. Investment friendly climate
4. Good regulatory execution
5. Acceptable political and economic situation

These are all excellent points and are stated very well. Luck was on its side as well. Telenor came to Pakistan in 2005, during the telecom boom and the growth exceeded its own expectations and projections.

Telenor sees many opportunities, now that it has network and grasp on the market. It is working on new strategies which include a focus on mobile Internet, mobile broadband and diversification in new directions and regions. It has acquired a microfinance bank, which will be an interesting development to watch. Telenor has also entered the Indian market by taking a stake in Unitech Wireless.

Here’s the outlook for Pakistan by 2010-2011 shared by Telenor with its investors:

• SIM penetration over 70%
• Market share above 25%
• EBITDA in mid thirties
• Capex/sales belwo 25%

A word of caution though - the network quality is something Telenor needs to keep working on.

Ufone is little late to the USB mobile Internet game but it has come up with the best offer yet: The USB stick is Rs.6999 and you get first 6 months free. What will be the first year cost for the so called “unlimited”  mobile Internet for different companies?

• Ufone: Rs 6,999+6 free months+Rs.3000(500*6) = Rs.10,000.
• Zong: Rs 10,000+Rs.4800(400*12) = Rs.14,800.
• Telenor: Rs 12,700+Rs.6000(500*12) = Rs.18,700.

It is clear that after the initial investment on the USB and the promotional period, the monthly cost is not that different and therefore the connectivity and download speed should be the deciding factor.

Ufone UrEDGE works with both prepaid and postpaid and is available in many cities. Unlimited data download - which is 1.5GB per month for Ufone - is also available. Details at Ufone website. This will be a great option for those who waited for a better deal or those who don’t get good coverage for Zong or Telenor.

The first question is - what happens after 6 months? Here’s an example of the rate plan. I found the validity of 15 days to be annoying because if you do not use your volume it may be wasted. Note that it is Rs. 500 for 1.5GB  package, also marketed as the Unlimited package. Complete packages & tariff details can be pulled by sending SMS ‘info’ to 800.

There’s not much feedback available about Ufone’s download speeds. If you are a user, please share your experience with others who can benefit from your feedback.

Recycling is a very important factor in creating a sustainable future given today’s high consumption lifestyle. However recycling of gadgets such as cell phones is below where it should be. A recent study by Nokia showed that consumer awareness is a major issue which results in lower levels of recycling. In Pakistan - and other developing countries - most phones are sold over and over again as there is demand for old and cheap phones. Many used phones from the developed countries also end up in developing countries and I think more awareness and education about recycling can help there. Below is some information from a recent Nokia survey on recycling trends.

Only 3% of people recycle their mobile phones despite the fact that most have old devices lying around at home that they no longer want, according to a global consumer survey released by Nokia. Three out of every four people added that they don’t even think about recycling their devices and nearly half were unaware that it is even possible to do so.

The survey is based on interviews with 6,500 people in 13 countries including Finland, Germany, Italy, Russia, Sweden, UK, United Arab Emirates, USA, Nigeria, India, China, Indonesia and Brazil. It was conducted to help Nokia find out more about consumers’ attitudes and behaviors towards recycling, and inform the company’s take-back programs and efforts to increase recycling rates of unused mobile devices. Read full story »