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.
 

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. 

Here’s a peek at some of the interesting upcoming mobile phone technologies. These include next generation voice-recognition which allows you real hands-free control of phone, 3D maps, sending streaming video to cell phones, games (mobile second life), digital storage of documents for mobiles, surveillance, social applications which allow you to locate buddies using GPS and location-aware apps which provide personalized suggestions about attractions like restaurants as you’re walking around the neighborhood.

This post coincides with one of the biggest wireless event: CTIA, which opens today. Many of new mobile and wireless technologies are announced there. I’ll cover that soon.

Video courtesy of Wall Street Journal. Let me know if you are interested in the full article.

Osama Hashmi at Green & White on the relationship of startups and Telcos. Telcos are always looking for interesting value-added services to drive up their ARPU and will partner with anyone who can offer such mobile apps. Of course telcos are also known for their control obsession over content & partners.

This is part of a conversation that started in a Startup Insiders session - should a young fledgling firm with a good idea think about building products around the mobile telecom space?

If you have a nice brilliant consumer-focused idea today, you’ll also have a number of options available to implement it. You could realize your idea as a web-2.0 implementation, as a widget, as a facebook / open-social application, as a web-M solution (mobile-focus website), as a handset-only application, or as a specialized value-added service built and offered in close partnership with a telecom operator.

The question is - where and why would you want to work with a telco, when some of the other options (particularly facebook) can offer a much higher potential audience-base and much lower total development costs.

Adnan from PixSense had the best answer I’ve heard about this - and as a backdrop I’ll point to a recent interview by the Mobile Marketing Magazine of the CEO of PixSense, Paul Singh.

The answer, according to Adnan, lies not in what telecos in general are doing with service vendors, but in what they could do in terms of pricing of the service.

Read more »

$99 unlimited calling plans have been recently introduced in the US by 3 of the largest wireless carriers. This has been making headlines in the US media and blogs. Many thought such plans will not come this soon as the US wireless industry has been very slow to adopt consumer-friendly trends. I started thinking whether this kind of flat rate unlimited calling plan will ever make sense in Pakistan? If so, for how much? Is Rs.10,000 a reasonable number?

Back to the US market - there are a number of analysts who think that this price war is going to hurt the wireless carriers’ bottom line. These announcements sent the shares of the wireless carriers like Verizon and AT&T down.

I see this as an interesting experiment which these large companies can afford. It will squeeze companies like Sprint who are already struggling - and may be that is part of the intended impact. Interestingly a large percentage of the revenue grwoth of these wireless companies is from data usage, for which the plans are different from calling plans. For instance Verizon will offer customers monthly data plan options of 50 MB for $39.99 a month or 5 GB for $59.99 a month.

I am interested in a true flat rate unlimited data and voice plan - which should make a phone like BlackBerry an even more attractive choice!

We have seen a very active discussion about the total subscribers and what this growth means. The chart above shows the total subscribers added in 2007, based on PTA numbers. Consistent with previous reviews Mobilink and Telenor came out as winners. Paktel showed a sluggish growth for most of 2007 but picked up speed towards the end of the year. All the political unrest did not dampen the short-term growth and some will argue that the telecom voice and data usage increased because of the situation. In a way this sends a message that the risk taken by companies such as Telenor in investing in volatile emerging markets can pay off.

Here are the numbers and subscribers added in 2007 as percentage of the total. For example Telenor added 55% of its total subscribers in 2007.

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.

Telenor has announced solid results for third quarter 2007. See details at Telenor’s corporate site. Telenor’s stock is up since the earning announcement.

Telenor subscribers in Pakistan reached to 12.58 million - however the rate of growt slowed a bit. For details and Pakistan specific information, see the complete spreadsheet from Telenor or click on the thumbnail for a higher resolution quick snapshot. For a review of Telenor’s worldwide performance see this piece from Telecom magazine.

As presented in my previous coverage, Telenor has been successfully working to build its reputation and subscriber base.  When you look at the performance and subscriber numbers note the very high percentage of prepaid customers. This is true for all operators in Pakistan and a common phenomenon present in the emerging market telecom which pulls the ARPU down. The next challenge for operators such as Telenor is to bump up the ARPU. By introducing a wide range of value-added services such as comics, mobile tv and convenient picture uploading they are already on track for this. Next year results will show the uptake on these services.

The trend of business case competitions, awards and other related activities in Pakistan is encouraging. I am excited to write about another great opportunity for innovators and entrepreneurs in the information and communiction technology sector.  The PASHA ICT Awards are now open for nomination in 15 categories. Category winners represent Pakistan at the APICTA ICT Awards 2007 in Singapore in November, one of the most well respected regional competitions for software companies from Asia. PASHA will cover the airfare to Singapore. But hurry the nomination ends on Oct 19  21 (extended by 2 days).

As you rush to send in your nominations, see Jawwad’s Blog post for his team’s past experience and observations (an excerpt below) and Jehan Ara’s Blogfor more info about the different clusters and product definitions. Jehan emphasizes that “the student category is also important so if you know of any student projects that deserve recognition, please ask them to nominate their projects for the P@SHA Awards.”

The real reason why you should participate is that the Awards are a very strong mechanism for changing perceptions about Pakistan. Two of my very good friends in the region thought that this country had no significant technology focus or future when it came to technology. Their interaction with the number of technology companies from Pakistan at the awards and the depth of our product offerings changed their point of view.  Both of them are now bullish on us as a nation. Both took the time to travel to Karachi. One of them, I suspect is responsible for the Singapore Pavilion at our local IT exhibition this year.

So if you think you have done something remarkable  that the world or at least the Asia Pacific region should know about, use the PASHA ICT Awards and the ASOCIO APICTA Awards to showcase yourself.  Make us proud.  It makes for great bragging rights.

With the monthly additions average around 2.5 million subscribers, 2007 has been a phenomenal year for the mobile market growth in Pakistan.  Here’s a look at the numbers (from PTA site) for the first 8 Months Of 2007. A quick analysis of this data reveals few trends about market leadership.

Mobilink gained the most subscribers (5.45 million)  in this period. Its market share has been decreasing gradually but that’s expected with the increase in competition and teledensity.

Telenor was the fastest growing company, 45% of their current subscribers (5.35 million) were gained this year. No doubt that Telenor has emerged as a strong contender. It took a small lead over Warid in March and has been able to maintain it.

The rate of growth for Ufone has been impressive as well. It gained 5.32 million of  the approx 20 million new subscribers in first 8 months of this year in Pakistan. Paktel has been barely able to reverse the negative trend of subscriber losses.

Here’s the month-to-month change analysis.

Some of the reasons for Mobilink’s continued success include useful services such as Jazz Advance and smart marketing moves which has reinforced its brand. Mobile number portability - for one reason or another - did not do much to impact its subscriber count.

Of the many challenges that our nation faces, educating and training of our youth is one of the most important. We need to prepare the next generation of information and communication technology professionals who are skilled, knowledgeable and competitive. We need to cultivate leadership from the next generation who can solve problems through research and innovation.

Currently we face a shortage of skilled engineers and researchers. Even if you combine the graduates of all tiers of universities and colleges, the numbers are far below the need. But there’s an even bigger challenge - are we producing the right quality of  resources? The answer is a definite NO.

There is work to be done in many areas. Funding the right programs, education policy, quality of existing education, training fresh graduates to transition to a professional life etc. I get plenty of mails and comments from students looking for internship or ideas for projects. It is evident from these interactions that many do not have the training to do fundamental research. They also lack the necessary communication skills which are critical to meet the global workforce standards.  The lack of information about what opportunities are available to them further hinders their prospects.

On a positive note there are groups and agencies which are working to make a difference. I recently heard about a promising effort: The National ICT R&D Fund. Here are  some excerpts from an email from the General Manager Solicitation and Evaluation, of this Fund.

National ICT R&D Fundwas created in January 2007 by Ministry of IT with the vision to transform Pakistan’s  economy into a knowledge based economy by promoting efficient, sustainable and effective ICT (IT and Telecommunications) initiatives through synergy of industrial and academic resources. We have significant funds available for proposals that are geared towards  creating ICT related technologies. We have a very positive and nurturing attitude and would like to fund projects that enhance the state of the art and create opportunities by solving industrial problems.

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We have often talked about the sad state of affairs of Broadband in Pakistan here. Well, KO wrote an open letterto Internet Service Providers (ISPs) of Pakistan in Dec 2004 which was published in Spider magazine. I wanted to share it here because as KO says, Sadly, it’s just as valid today.Yes, most of it is, though for some of us things have improved a tiny bit with increased competition and lower prices. Since broadband situation varies significantly by location, the digital divide within Pakistan is huge as well.

My summarized version of the Wish List follows. Read the full and original version at Wired Pakistan.

1)Reliable and fast Internet service

2) My concern is not the means through which you offer that service, but the quality of the service which I receive 

3) Future plans – I want broadband in the future at lower prices

4) Offer high speeds for LOCAL usage. For example, if I want to transfer data between two computers connected to your local network, I should be able to do so at a minimum of 1MBPS

5) Provide mirrors and local content servers.

6)The days of 15MB and lower mailboxes are long gone. Look into providing larger sized mailboxes and/or web space.

7)Provide a page on your website with the status of your Internet links

8) Provide some sort of customer forums, or online support system

9) Your policy regards VOIP should be clear

10) Start thinking about Video (conferencing) and how your network will cope under video traffic load

11) Provide more Pakistani content

12) Wireless is the only way to provide service to the poor, what are you doing about it?

Do you have anything to add to this list?