State of Telecom Industry in Pakistan

The issue of imported mobile handsets in Pakistan is getting attention from foreign press as well. Here’s a report from Press Trust of India /Rezaul H Laskar.

Pakistanis spend about one billion dollars a year on imported mobile handsets, with 20 per cent of users changing their phones up to three times a year.

Most markets in major cities are chock-a-block with shops — ranging from plush showrooms to small kiosks — offering the latest handsets and a variety of services, including the “unlocking” of handsets smuggled in from abroad for as little as Rs 700.

Apple’s iPhone, brought in illegally and hacked for use in Pakistan, goes for about Rs 40,000 in shops here, which also offer a wide array of cheap handsets aimed at people living in areas not covered by fixed phone services.

Like their counterparts across the border in India, cellphones with cameras, MP3 players and all the other bells and whistles are a trendy fashion statement with Pakistani youth.

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BusinessWeek Story. In Pakistan Nokia has the number 1 spot and Samsung faces strong competition. Motorola does not have a chance against Samsung and other Asian handset makers!

With Motorola (MOT) struggling for more than a year, Samsung overtook its American rival in 2007 to become the world’s second-largest handset maker [BusinessWeek.com, 11/30/07] after Nokia. Its global market share is up about three percentage points from last year, at 14.5% in the third quarter, compared with Motorola’s 13.1%. And for every quarter this year, Samsung set a new sales record, with the 115 million phones sold in the January-September period exceeding the 114 million sold during all of last year.

Samsung believes its record-breaking run is just beginning. This year, its sales are expected to top 160 million phones, up 40% from last year, and executives are confident the pace of its growth will be about double that of the rest of the industry next year, when they expect sales of 200 million. “The growth momentum is accelerating, and there’s no reversal in the trend,” says Samsung’s Executive Vice-President Chu Woo Sik.

Building on Cheap Handsets

The big question is whether Motorola can rebound and stop Samsung. New Motorola chief Greg Brown, who was chief operating officer before being named CEO last month, has spent the past few months tackling the company’s problems to try and restore the glory it had just after the Razr’s sensational debut in 2004. “Samsung will face challenges,” says mobile communications analyst Tina Teng at market researcher iSuppli.

Samsung’s top brass believe the company’s recent run is sustainable. That’s because Choi Gee Sung, a marketing expert who took over as Samsung’s telecom chief in January, has targeted the fast-growing market for cheap handsets, which wasn’t a priority for his predecessor, Lee Ki Tae, a former engineer.

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In  a recent interview with the media, Zouhair Khaliq speaks about Mobilink’s future expansion and investment plans and recent standing of the company among mobile and data service providers. Excerpts are presented below, full story here. As I have written before, Mobilink has been successful in 2 strategic directions. It has maintained its top position in mobile market by adding wireless subscribers. Secondly it has diversified into the broadband and data services market by acquiring Internet Service Providers such as DanCom, WOL, DVCom etc . Overall Mobilink continues to be a strong player and a good profit source for Orascom, the parent company.

In fibre optics, Pakistan Telecommunication Limited (PTCL) had been the only company that owned an optic fibre backbone. Mobilink has successfully introduced competition through the introduction of a nationwide network. Mobilink’s optic fibre backbone provides the perfect platform to Mobilink for connecting its customers nationwide with highest level of voice and data quality with more reliability.

Deployment of the national backhaul stands completed with full protection, making Mobilink’ optic fibre backbone fully protected/redundant. By providing last mile connectivity Mobilink has positioned itself as a one-stop shop for meeting all communication requirements of enterprises and individuals. The optic fibre network currently covers 6,500 kilometres and will be increased to cover another 2000 kilometres very soon.

“We are envisaging sustainable growth in Pakistan. With mobile penetration still at around 43 percent, the room for growth is immense. The growth is not only limited to mobile telephony, as there are huge opportunities in other fields like broadband (optic fibre, DSL, WiMax), LDI etc. This coupled with the enabling environment being provided by the Pakistan Telecommunications Authority ensures an excellent future for this sector,” he said when asked to comment on the company’s future plans in Pakistan.

PTA must have been feeling guilty about all the consumer issues in Pakistan telecom. Perhaps thats why they have recently started throwing a consumer alert as soon as you get to their site. Last time I checked, the role of the regulator / watchdog is to take corrective action. I get a feeling that PTA thinks that by putting up a pop up page, they have completed their obligation. First, with the low number of internet users in Pakistan, how many have access to this? and then how many will visit their site and follow the terse instructions? It seems that more and more responsibility is being shifted to the consumers to fix the mess created by the industry. This is wrong and unacceptable. I hope other bloggers take note and write against this trend.

Anyway, here’s a snapshot of the alert from PTA site.

The general public / users of Telecom Services are advised to note the following:   International Roaming Tariffs for Saudi Arabia The cellular mobile operators are offering International Roaming (IR) facility to prepaid as well as postpaid subscribers. For IR tariff details, click here   PTCL Pakistan Package PTCL has activated “Pakistan Package” on all its subscriber-lines w.e.f. December 01, 2007. PTCL is charging Rs. 199 per month (excluding 15% GST) in addition to normal line-rent and is offering 5,000 free on-net (PTCL to PTCL/Vfone) NWD minutes. Validity of PTCL “Pakistan Package” is “Two (02) months”. For de-activation of “Pakistan Package”, dial 1236. Helpline & Friends & Family Charges The cellular mobile operators are charging for helpline and friends & family services (Excluding 15% GST & 10% Advance Tax). For further details, click here PTCL Voice Messaging Service (VMS) PTCL is charging local call charges of Rs. 2.01 per 5 minutes (excluding GST) when a call is diverted to VMS or a caller listens greeting message / prompt tone. For de-activation, dial 1236 or visit PTCL’s website for further details: http://www.ptcl.com.pk/contentb.php?NID=133   Mobilink Helpline   Mobilink is charging Rs.0.86 (including taxes) per call for calls made to Mobilink Helpline (111).   Hoax Calls and Falsified / Unsolicited SMS(s) Be aware of hoax calls and falsified / unsolicited SMS(s) that are being called / sent to subscribers to buy scratch cards and notify scratch number to calling party for prizes of immense value. You are requested to be mindful of receiving hoax / unsolicited calls and SMS(s) notifying that you have won a prize of immense value. However, in order to retrieve the prize, you have to inform the calling party the hidden numbers on the prepaid scratch cards. As a result, you will be deprived of the value of the Scratch Card. For Further details, click here

Article from Taiwan about the potential growth of WiMAX in coming years. Full story here. This is in the context of rapid overall growth of the information and communications technology (ICT) market in the Asia-Pacific region. The spending will reach US$154 billion in 2008, up 10% over 2007, with China and India together contributing about half of the spending, according to a prediction by ICD.

With companies of worldwide interoperability for microwave access (WiMAX) network to start building related hardware next year, the new network technology is expected to bring huge business potential worth US$25 billion worldwide in next five years, according to Market Intelligence Center (MIC), a market survey institute for the sector making ICT (information and communication technology) products.

Also, Topology Research Institute (TRI) opined that market demand for mobile WiMAX network will start growing in 2008 and sharply increase in 2009. In 2011, registered users of the network are estimated at 30 million persons all around the world.

MIC noted that starting this year through 2010, the U.S. plans to invest US$5 billion, the largest amount in the world, in constructing WiMAX network, with Taiwan and Korea to respectively pour US$1 billion and US$900 million in that. After bidding for WiMAX licenses, bid winners in Japan are also expected to funnel a total of US$3.8 billion into building WiMAX.

In fact, development of WiMAX technology is different among developed and emerging countries, with the U.S. tending to focus on integrated products based on the technology, and India, the Middle East and Pakistan on fixed WiMAX initially to make up their penetration rates of broadband network.

Pakistan’s mobile telecom industry has a new reality to contend with: that of falling service quality (see the quality of service results below). If I could draw a graph it would show a rise in excitement, quality and investment in the years from 2002-2006 and from there the graph would fall down because of network congestion, poor quality of service and poor customer service.

This is typical of emerging markets telecom. In the beginning we had new companies coming in with promises and marketing campaigns. They were ready to subsidies costs and were willing to go the extra mile to bring in new customers and to keep them happy. Eventually their investors wanted financial results and they could not afford to keep spending. Look at where we stand now. One has to pay for a customer service call. The ads are misleading. There are hidden charges. Wrong billing is common. Calls get dropped. I can go on and on but you get the point.

However there is still hope. This is the time when companies with good service and solid long-term vision can succeed in keeping customers happy. I hope they don’t take Pakistani consumers for granted.

Here are the service quality results (source: PTA site). Deterioration of quality is evident.

‘For your convenience ptcl Pakistan Package has already been activated on your ptcl landline phone’. The default activation of the package by PTCL is unfair, unethical and inconvenient. First the voice mail and then this … what a brazen way to rip off customers! Just force these packages down the throat of consumers, many of whom will not realize or may not have time or knowledge to deactivate it. I have read and heard stories about how difficult it has become to call 1236 and get rid of this package.

Note that I am not criticizing the package, I am against the way it has been forced on each and every landline. If this package is so good people will make their own choice and get it. With this move PTCL has lost whatever goodwill it had. 

Is there any limit to which PTCL will not go to make quick money on the expense of consumers? How can you justify this blatant use of monopoly? Will PTA let them get away with it?

Wateen’s WiMAX has been one of the most active topic of discussion in Pakistan telecom circles. After many months of planning and early marketing campaigns, there is news from Wateen on the official launch of its WiMAX based triple play services. For those who have been waiting for the rates,  the tariffs are now available on the Wateen site.

The CPE cost presents a significant one-time investment for home users. Monthly rates are reasonable – as long as you don’t mind the caps. Overall I think the WiMAX broadband will only appeal to certain demographics, which are not price sensitive. I did not see any tariff info for business users.

For home users the following packages have been announced:

The official press release:

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 There are many attempts going on “create your own phone” idea. Here’s one from US startup BugLabs (cool logo I must say). I saw it featured at Springwise. Click here to read the full story.

Would-be product designers start with Bug Labs’ basic module—in essence, a Linux-based mobile computer. Then, they add other modules to give the basic device fresh capabilities. Want a camera that tags photos with a GPS-derived location and then uploads them to the web? All it takes is fitting the necessary components together. The software to run the device is also modular, though customizing it may require some minor coding. Bug Labs aims to start selling both the basic module and the first four add-ons (GPS, digital camera/videocam, colour LCD touchscreen and an accelerometer/motion sensor) by the end of 2007.

I need to watch this and try it out, so please remind me if you don’t see an update on this after a few weeks!

Spotted this interesting article at LIRNEAsia.net. Nathan Eagle, who is developing a voice interface for the mobile internet, writes about the challenges of making mobile web useful for developing countries.

The Mobile Web is NOT helping the Developing World… and what we can do about it.
By Nathan Eagle | MobileActive.org

The phones that are designed and marketed for the ‘developing world’ today aren’t data enabled, they have no browser or any ability to function as a traditional data device. We’re dumping hundreds of millions of devices into these regions that are essentially crippled – and their legacy (the average life span of a phone in Africa is many times that of it’s Western counterpart) will affect mobile internet usage in these regions throughout the next decade. Furthermore, in the small Kenyan village where I live it’s significantly less than 1 in 10 phones that can support the traditional ‘mobile Web’ experience, and it’s probably closer to 1 in 1000 phones that have ever successfully connected to the web. Most of the phones I see in the village were originally manufactured well before 2003. (The most popular selling phone in my village is an old Ericsson that stopped being made back in 2001.) The local mobile operators should take some blame as well – many simply don’t have the equipment or expertise to role out a data network on top of their rapidly expanding GSM net. It took me over 10 days of phone calls with my local Kenyan operator to get my phone activated for their new EDGE network. Most people I know give up after the first couple of hours of configuration. And that’s assuming they actually have the right phone…

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PTCL has consistently been facing market criticism with respect to its strategic management, policy, procedures, quality assurance, product flavors and orientation towards customer services. Our readers who have read the post on Balanced Score Card Technique (PTCL: Future Prospects & Challenges) on this blog can now see the practical implementation of BSC effectively being done by PTCL at present. If PTCL continues on the same path with focus on product, market & corporate leadership, they have all the means to differentiate for clear competitive advantage.

The Balanced Scorecard is a management tool that helps an enterprise to focus on holistic development across the organization rather than just focusing on a single area or on a specific objective, for instance, revenues & finance. Today, many large corporate entities across the world have adopted the BSC technique to exceed the overall growth objectives. The key areas of PTCL’s focus are:

The initiatives taken by the PTCL may not be enough for an abrupt change, however, if the strategic focus and strategy remains correct and effective as stated above, the list of initiatives will keep on increasing and shall lead PTCL towards Leadership in all the segments it serves.

As announced in various press releases, Motorola continues its bet on WiMAX. Part of the financing of this initiative is by Morotorla. See previous coverage of WiMAX in Pakistan and here. This is an interesting and expected development which puts pressure on Wateen to execute on the hype it created.

Motorola Inc. said Wednesday it has reached an agreement with telecommunications company Mobilink GSM to create a wireless network in Pakistan.

Motorola will design and set up the system using WiMax, a technology that allows transmission of wireless data over long distances.

The network will cover major metropolitan areas in Pakistan including Lahore and Islamabad and will allow Mobilink to extend its cellular service to include high-speed broadband.

This is the second such system Motorola will create in Pakistan and its fourth in the Middle East and Africa region.