State of Telecom Industry in Pakistan

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?

The last post about 3G in Pakistan had Mobilink’s presentation. Now lets take a look at the views of equipment makers like Huawei, ZTE and Ericsson. Obviously all of them were optimistic about 3G and they talked about the benefits and the smooth transition to 3G  they can provide.

ZTE had a very well thought out set of slides. Here is how it was organized.

• WCDMA Worldwide Deployment
• WCDMA in Emerging Markets
• Advantages of WCDMA for Pakistan
• Economical 2G/3G Construction Solution

There was agreement that the key issue for WCDMA is handset pricing and infrastrucutre investment.

Does it make business sense to introduce 3G in Pakistan at this time? PTA has been deliberating on this question for a while. Recently PTA asked major technology stakeholders (equipment makers, mobile companies) to share their view points on 3G licensing and roll-out. The presentations have been posted at the PTA website. Telenor CEO has talked to press about his views on 3G, covered here. Take a look at few points from a presentation by another one of the major mobile company. The argument presented is that conditions are not suitable for 3G in Pakistan and the data revenue potential does not justify investments needed for 3G. They recommend to either defer spectrum allotment or give partial spectrum at nominal cost. Can you guess which mobile operator is this?

3G Situation in Pakistan

• Pakistan is a low priced voice dominated market. Industry is building voice capacity rather than enhanced capability
• Pakistan Mobile Data Subscriptions Disappointing
• Nominal GPRS subscriptions in the industry
• ARPU uplift from these subscriptions is negligible
• Multi-mode (GSM/UMTS) handsets are still costly
• GSM market exploded due to economies of scale in the hand sets
• GSM hand set is available as low as $25
• Small percentage of 3G capable hand sets in the market
• 3G non-voice mobile revenues are expected to be negligible
• Localized content stimulates usage — Low literacy in Pakistan
• No content available in local/regional languages

Spectrum Cost

• Spectrum forms part of investment for an operator to roll out a 3G network
• Five operators can be expected to invest over a billion dollars on initial launch
• More cell sites would required to support higher data rates
• Local content development is an uphill task

Option 1
Defer the allotment of spectrum for another 1-2 years (as per our recommendation May 2007)

Option 2
Award 5Mhz of 3G spectrum to all MNOs at nominal cost (similar to WiMax spectrum fee )

Why?

1. Incentive to build and grow 3G services
2. Justify high capex on roll outs
3. Technology proliferation
4. Affordable 3G services for masses
5. Allocation of additional 3G spectrum at a subsequent date
6. Operators keen to expand on 3G portfolio can bid
7. Market foundation is laid
8. Business case for further investments
9. Strengthen operator capability to offer better QoS and advanced services

CTIA Wireless 2008 is one of the largest wireless events in the US. Among its various programs is the Emerging Technology Awards which claims to highlight the most innovative products and applications representing all facets of the mobile lifestyle in wireless”. It is a good place to see some promising gadgets, applications and products.

Take a look at this report. Do you think these were truly worthy of awards?

Mobile CE - Phone/Smartphone
1st place - Instinct by Samsung, exclusively from Sprint
2nd place - Nokia N96
3rd place - Samsung ACE (SPH-i325)

Consumer Applications - Messaging (SMS/MMS)/Mobile Marketing
1st place - Cellfire 3.0
2nd place - Reply with Jott for BlackBerry
3rd place - SnapNow Mobile Visual Search

Consumer Applications - Mobile Entertainment/Social Networking
1st place - Ontela’s PicDeckâ„¢
2nd place - WidSets
3rd place - Yahoo! Go 3.0

Mobile Widgets - Consumer
1st place - Zumobi
2nd place - Fusion Voicemail Plus by PhoneFusion
3rd place - JACKED Mobile SportsTop

In our previous discussions we have observed the growth rates and overall positions of the mobile companies. Telenor has emerged as one of the leading company in 2007 with about 8 million new subscribers (or SIMs if you want to be accurate). Despite a few growing pains such as low ranking in the PTA quality ratings, Telenor is poised to push further its brand and subscriber growth.

Telenor has also started to become more involved in social activities. In addition to the typical corporate social responsibility activities, Telenor has sponsored recent Startup Insider series event in Islamabad. That is a good trend and I hope that it will continue. Companies such as Telenor can make a big impact in terms of guiding and training the youth through such activities.

Here’s an interview of Telenor CEO in which Tore Johnsen talks about the total investment Telenor has made, agreements with Nokia-Siemens & Multinet and his views on WiMAX and 3G. Excerpts:

We understand the government’s ambition of introducing 3G in the market, but growth and investment in the basic mobile infrastructure should not be sacrificed, as there are too many people still without basic access to mobile telephony.

we demand that the government should consider 3G not as a licensing opportunity, but rather as allocation of additional spectrum linked with roll out obligations and not hefty upfront fee. PTA and FAB should also make additional UMTS spectrum available in order to have equitable spectrum allocation

Ministry of IT and Telecom has been working on the broadband woes in Pakistan. MoITT published a study on this topic which is available here. This summary of broadband situation in Pakistan discusses the issues and suggested a few approaches to resolve the problem. MoITT has been soliciting comments from public and industry  — the question posed is: Is Entire Pakistan Underserved in Broadband Penetration? Yes Of Course! Rest are details but the simple answer is Yes.

On Feb 8 a discussion took place at Islamabad Club where the Minister of IT and other stake holders participated. This conference in Islamabad was continuation of the “Fix Broadband” theme. When talking about broadband problems, comparison and references to the steep increase in teledensity in last 5 years are often made. Tariq Mustafa, one of the industry veterans and blogger, shares some interesting thoughts at Telecom Grid Pakistan. Tariq points out that even if wireless broadband is the ultimate winner in context of Pakistan and other emerging economies, there is still a large wired infrastructure required to support it. Another avenue which has been pushed is the utilization of Universla Services Funds for broadband.

Another interesting angle of  supply vs demand is raised by Tariq Mustafa. He asks:
“do we have compelling applications that will drive the growth riding this gap?”

This question is important if you talk about real broadband. But here we are talking about 256K speeds so I still feel that if the prices are reasonable the new generation will be quick to take the bandwidth and given the demographics that can be significant.

Ok if you still want to get into the supply and demand - here are 2 applications: telecommuting and offshore work.

Readers - let us know how much you would be willing to pay for broadband and what applications or usage scenario will justify that expense?

As the new year starts research and media companies present their views on what the future holds. Over the next few days I’ll share some selected articles about the future of communication technologies. Here’s one from TMC.

The evolution of mobile devices to an open platform and the movement of Internet video into the mainstream are this year’s two macro trends that will have the greatest impact in the future, according to a report released on Monday by MultiMedia Intelligence.

This year marked a new transition of mobile devices into open platforms. Although it’s known for being a closed platform when it comes to allowing third-party applications, Apple’s iPhone started a new dynamic, and Google’s Android platform and a possible Java-based operating system are the next phase, MultiMedia Intelligence said in the report.

Another important development rounding out the macro trends of 2007 is Motorola’s recent investment in UIQ, a software platform based on the Symbian OS. In October, Motorola bought 50% of Sony Ericsson’s stake in UIQ, which is also the platform behind Sony Ericsson’s touch-screen smartphones. This means touch screens are likely to become a major focus for the phone maker.

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In the November issue of Global Telecom News:

• Korea’s SK Telecom acquires Hanarotelecom
• Rise of HTC in Taiwan and how it is playing dual game with windows and linux
• 3G pushes demand for chip industry

As we have been discussing, SK Telecom, Korea’s top wireless service provider, had plans to expand its business. But SKT has not yet made a move outside Korea. It has been announced that SK Telecom will take over the country’s second-largest telephone and broadband line provider, Hanarotelecom. SK Telecom’s acquisition is expected to trigger a flurry of mergers and takeovers in and outside the telecommunications industry, according to Korea Herald. The stocks of SKT have soared on this news.

Taiwan’s High Tech Computer (HTC) is the largest maker of mobile phones running on Microsoft Corp’s system. Now it is hedging its bets by going with Google’s android and it joined on the open handset alliance. HTC also expanded a distribution agreement with U.S-listed Brightpoint to improve the global reach of its entire range of products and services.

The business opportunities of the third generation (3G) mobile telecommunications chips booms in China. Chinese government has officially announced to support TD-SCDMA and GSM (GPRS) as the mobile telecommunications standards in China. Taiwan Business News reports that this means that a few companies will benefit from this.

ZTE Corporation, in charge of the TD-SCDMA network establishment in Beijing, Qin Huang Dao, Xiamen and so forth, says that the network establishment in most areas and Olympic game stadiums in Beijing will be completed by the year’s end. The network coverage rates in Liaonin, Tienjin and Shenzhen will top 90 percent. The TD-SCDMA mobile telecommunications network will be able to come into use in the top ten cities late this year or early next year.

Read more »

In this issue:

1. China - Opens Handset Manufacturing Market To Outsiders; SK Telecom Attempts To Break Into Chinese Telecom Market
2. India Working On 3G Policy, New Players Expected
3. Cell Phones To Solve Africa’s Problems?

China will allow foreign handset manufacturers to compete for their huge market, reports Shanghai Daily. China now has more than 500 million mobile-phone subscribers and is adding an average of about 6.8 million subscribers per month, according to the Ministry of Information Industry. 

China announced that it would relax license regulations for handset manufacturing. China’s State Council has abolished some 186 administrative examination and approval items covering mobile communication systems and terminals. Now is the time to let the market rule and see qualified new players replace the market positions held by established companies which depended heavily on the income from renting licenses to other companies, according to United Securities. The new players such as Tianyu, largely unknown by established industry players, have challenged and even surpassed leading domestic firms like Ningbo Bird and TCL Communications.

At PT/EXPO COMM China 2007, a telecom tech fair held in Beijing, SK Telecom offered tech-savvy Chinese consumers a taste of their mobile future. Using a Chinese-developed mobile telecommunication technology called TD-SCDMA, Korea’s largest mobile phone operator showcased international video telephony and high-speed mobile multimedia functions such as video on demand and real-time TV. SK Telecom is expected to accelerate a foray into the Chinese telecom market after becoming the second largest shareholder of China Unicom.

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Continuing the coverage of 3G and WiMAX, here’s a research paper by a grad student at Colorado University, which provides the point of view that 3G technologies have an edge over WiMAX. I wanted to share it to see what you think. For those who are interested in a detailed comparison, it is a good reference. Note that the context of the paper is North American market so the conclusions do not necessarily make sense for other markets such as Pakistan.

Here’s the source of the abstract, full paper is here.

There has been much conversation over the past few years regarding the evolution of next-generation air interfaces supporting mobile broadband. One of the most talked about as far as promise is concerned is 802.16e, otherwise known as mobile WiMAX. In its advertised form, the standard can support data rates of tens of megabits per second while supporting many real-time user applications that cannot be supported by third-generation technologies. Although mobile WiMAX sounds promising as a next-generation technology, other factors do exist which will limit its overall success. Some of the factors that will be discussed in this paper will include the design challenges facing base-station architecture, competing third-generation long-term evolution (LTE) technologies, and costs to existing service providers to upgrade their networks. This paper is meant to demonstrate that from a service-provider’s point-of-view, the upgrade path to mobile WiMAX may not be the correct solution.

I am sharing a piece about WiMAX in Paksitan, which I wrote for All Things Pakistan. As this is an overview, some of the information here may already be in my previous WiMAX posts.

Pakistan’s telecommunication industry - mobile communication in particular - has made impressive strides in the last few years after deregulation. However broadband growth in the country has been very disappointing - there are less than 100,000 broadband users in Pakistan. The open competition observed in mobile industry has not been replicated to broadband. Reasons include high prices, control of PTCL over bandwidth resources, policy issues, lack of infrastructure and legal disputes.

Enter WiMAX. Simply stated, it’s a relatively new standards-based wireless technology which is intended for large coverage areas on the order of several kilometers (instead of a few hundred meters, as is the case with Wi-Fi).

With base stations transmitting signals and some equipment at customer location, it promises fast bandwidth for both fixed locations and mobile users. In this backdrop, Pakistan made headlines in 2006 when Wateen announced plans to work with Motorola to rollout Mobile WiMAX, the largest network of its kind in the world.

Is WiMAX (Worldwide Interoperability for Microwave Access) the right technology for developing countries? In other words, will this new technology deliver the promise of broadband at affordable prices?

WiMAX comes with many theoretical advantages but its potential is yet unproven. Without getting too technical, it is purpose-built for Internet (IP) communication and is based on standards (as opposed to other proprietary solutions) endorsed by a respected world standards body, the Institute of Electrical & Electronic Engineers (IEEE)*.

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Guest Post By Rakesh Gopchandani - originally published at his blog - Paths.

The International Telecom conference at ITCN-ASIA 2007 was held on Aug 9-11 at Karachi Expo center. Over the years, ITCN (Ecommerce Gateway Pakistan) has become known for industry gatherings in which high profile technological announcements are made. Last year at the ITCN conference, Telenor announced its EDGE service. This year at ITCN, it was Wateen which announced WiMax’s commercial deployment.

The first session was mostly filled with keynote addresses from big-hats of Nortel, Wateen, PTCL and Motorola along with a little opening ceremony by the City Nazim right in the middle of the session. The speakers were talking about how big the Telecommunication infrastructure has grown in the country and how desperately we need the killer applications to ride on this new wave of data-com infrastructure. When inquired on what that killer application might be, the speakers pointed towards Video-on-demand and Internet-applications as the biggest contender. I particularly liked the session on Hyper-connectivity and the place for 4G wireless networks in it by Nortel, their managing director explained how future devices that can be connected and need to be connected will be connected. Also, the exchange of sentences between the two Qureshis from Wateen and PTCL (now to-be fierce competitors for their common market in OFAN and Broadband links) was interesting.

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