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.
 

First Global TeleCON conference was held in Karachi Sheraton on April 29-30. The organizer’s website has full agenda details and the summary is provided below. The organizers, Shamrock Conferences, deserve credit for sharing the agenda and making the presentations available online. The impressive thing about this conference was that there were many senior level speakers representing all stakeholders (industry, government, academia, consumers) in Pakistan telecom. The discussion was organized along the following tracks:

• Policy & Regulatory Framework
• Connectivity & Mobility
• Putting Customers First
• Converging Technology & Infrastructure into Business
• Preparing Today for Tomorrow
• Role Playing in Telecom Industry

I browsed through a few presentations and found the presentations on policy issues, consumer protection and challenges for emerging markets to be educational and interesting. In the coming days I’ll write more about them. There were of course some other talks (for example by PTA and mobile companies) which fell in the category of self-promotion. I wonder if this conference was a mere networking event or was there some other purpose to it?

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.

This is related to the series about linux and mobile devices / phones. I believe 2008 will be the year when linux for mobile devices will hit big, partly thanks to android. But Linux has some formidable challenges. This post takes a look at one of them - Symbian (48% owned by Nokia), which is one of the top OS makers for smart phones.

As many know, phones based on Nokia S60 uses Symbian’s proprietary operating system. Nokia N82 is the latest phone (more of a gadget actually because of its slick camera) which is based on S60 and Symbian. Symbian is also behind Motorola (MOT) Z8 slider. The user interface of Z8 was positively reviewed by bloggers. Some of the improvements are attributed to a recent upgrade of the OS by the company.

The graphic above shows the market share of smart phone operating system (source: GigaOm) by various region. Overall Symbian is in high gears and ready to take on its competitors.

Recently Symbian posted good results with 56% year-on-year rise in third-quarter product shipments to device manufacturers and said that its revenue had increased by 30% in the same period.

Symbian’s technology has now shipped in 165 million devices. However, average royalties per unit dropped in the period to $4.8 per unit from $5.2 per unit a year ago.

Symbian reported that shipments of its operating system were up to 20.4 million units, from 13 million units a year earlier, in the three months ended Sept. 30, while revenue increased to GBP52.4 million from GBP40.3 million.

An audio report from Economist.com on the trends in wireless technologies. It is based on the article “When everything connects - The coming wireless revolution“. Towards the end there is talk about how developing countries catch up in terms of technology but face the much severe problems of governance and political instability etc. Sounds familiar, doesn’t it?

The Coming Wireless Revolution

I have previously discussed the explosive growth of media captured on mobiles and the need for sharing it, to make it work without putting too much burden on the users. A few interesting trends have emerged in the last few months. PixSense has picked up momentum and their solution was implemented by Telenor - great news for this Pakistani startup. At the same time, Nokia has been on a roll, acquiring soical networking and mobile ad startups such as Enpocket. Nokia has also introduced Ovi, a set of services for mobiles, which needs a post of its own. Twango, a media sharing application, is one of the companies Nokia bought for around $100 million. Naturally that caused headlines and prompted many (including myself) to take a look at Twango’s services.

With so many photo and video sharing sites (photobucket, snapfish, mobango etc) it can be hard to compare and select one. What is it that makes one media sharing site better than others? I believe its a combination of a few factors. Usability and presentation. Features such as online editing, tagging, time lines, subscriptions etc. Ease of sharing with people (without forcing them to register) and at blogs and networking sites.  There’s the reliability and trust element as well; many don’t want their personal stuff uploaded to a random startup with sketchy privacy policies.

TM has posted a detailed analysis of Telenor’s Picshare launch and gave it a 6/10 rating. I recommend read the full review and the related commentary at TGP. In this post I’ll review Twango, its features and how it works. My usage scenario is simple and typical. I want to be able to share my media easily with friends and family anywhere in the world.

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There are a lot of new voice services around these days. Some promise international calls with no extra charge than using your mobile minutes, others take your voice calls and convert them to text. Financial Times recently did a good review of the various services to bridge the gap between voice communications, text messaging and mobile web.  In Pakistan we have a few similar services such as voice 2 text. Some (edited) excerpts from the FT article are presented below:

JAXTR
Jaxtr, which is free, is designed to link your fixed or mobile phone to the web, so you can hear from callers worldwide while keeping your number private. You need to sign up for a free Jaxtr account.

To call your friends with Jaxtr, you click on their Jaxtr link using a PC and enter your phone number. Jaxtr connects the call by dialling their number and calling you back on the number you entered. If they do not have an account, you can invite them to sign up.

Calling Jaxtr numbers is free from any long distance or international toll charges if Jaxtr supports local numbers in your area - currently it has numbers in the major metropolitan areas of 51 countries (including Pakistan). Each account comes with unlimited voice and text messages, and the service allows you to forward up to 100 minutes of incoming calls to your phone a month, depending on your country and the kind of phone.

GRANDCENTRAL
Although its application is not limited to mobile phones, GrandCentral, a start-up recently acquired by Google, is worth taking a look at though the service is currently only available as a beta or trial service by invitation.

GrandCentral lets users consolidate all their phone numbers, including home, office and mobile numbers, into one new number provided by the service. New voicemail messages on any of the old lines are forwarded to your GrandCentral number and kept as audio files and consolidated into a single online mailbox.

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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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This view of convergence caught my attention. This is from the recently released research work by Ofcom, the regulator in UK. Obviously the text in this diagram has references to UK providers and services, but nonetheless it is a good snapshot. Despite the late start and domestic problems, Pakistan got in the game at a good time and has caught up with others.

 The report (page 20 of part 1) mentions the 3 major areas where convergence changes the playing field:
• Content – offering an opportunity for content producers to create use mixed-media formats (e.g. TV/interactive/web) and new ways to distribute existing content;
• Networks – upgrades that widen the capabilities and capacity of historically separate and single-purpose distribution infrastructure; and
• Devices – the creation of equipment that offers functionality typically delivered on stand-alone devices.

There’s plenty more in the 187 page report, in case you are interested.

In my last post I referred to an article about broadband prices in terms of average salaries. As readers pointed out the numbers there were not a good representation of broadband costs. In case of Pakistan the $106 figure for 100kbps was too high. The fine print mentioned that the data used in Wired illustration was from ITU. I am sure it outdated, and the broadband prices have fallen significantly in the last year in Pakistan. There are other considerations as well which were not taken into account in that comparison.

For one, broadband prices are not fixed in a country but vary. As shown in the chart below, based on the OECD data, the range can be significant. (Source)

Second, there are many other factors which should be taken into account when comparing the broadband prices for different countries. A recent report from the UK communicaitons regulator OFCOM writes about this with the title:

The complexities of quantifying broadband prices

A recent OECD report compared the lowest prices for broadband, on a cost per Mbit/s basis, across 30 countries, of which the UK ranked 16th. The UK data came from three ISPs (BT, HomeChoice and Telewest). As such it excluded pricing data from several leading LLU operators which are gaining market share as a result of their low-priced offerings. The report also looked at broadband prices in isolation, despite the fact that so many consumers now buy broadband as part of a bundle of services.

In the OECD’s analysis, Japan, which has implemented fibre to the home (FTTH) offering speeds of up to 100Mbit/s, had the lowest cost per Mbit/s. However, it is difficult to make a direct comparison of broadband packages between countries; differing topographies and population distributions mean that a service which is economically viable in one country may not be in another, due to the level of infrastructure investment required. UK
broadband providers have not yet seen a rationale for the rollout of FTTH, meaning it is unlikely that the UK will be able to challenge the cost per minute of those nations with FTTH in the near-to-mid term.

There are also problems with using cost per Mbit/s as it fails to take into account that many consumers have yet to see the need for broadband speeds in excess of those already available in the UK.

Although international comparisons of broadband offerings and prices, such as the OECD report, can be useful, more complex analysis, taking into account service bundling and other points of service differentiation (such as data caps) is required.

Sources:
OFCOM Report from UK (Part 3 of the pdf reports)
OECD Report - Over 100 pages PDF

Just a word of caution about this post - Research companies come up with plenty of trends and forecasts. Without knowing all the assumptions and studies behind their work, it is impossible to tell whether the trend is real, the analyst’s preferences or something else. Having said that, I was expecting more about the mobile advertising trend.

Here’s the news as reported here.

Pyramid Research, global telecommunications intelligence firm, presented 10 key trends that will take place in the Asia-Pacific telecom sector in 2008 at its second annual Asia-Pacific Telecom Summit. Senior Analyst Marc Einstein presented the following 10 critical developments in the Asia-Pacific region for 2008:

1. Subscriber growth
Indonesia’s broadband market will have the highest growth rate in Asia at 45 percent per year for the next five years, leading the region’s subscriber growth. China, India, Indonesia, and Pakistan will hold 80 percent of Asia’s mobile subscribers in 2012, when regional subscriptions total 2.2 billion. Expect higher churn, less revenue, and consolidation in 2008 in developed markets. Low ARPUs will facilitate a transition to IMS.

2. Mobile data
Asia-Pacific mobile data revenues will almost triple over the next five years to $110 billion, but increased broadband penetration and flat-rate plans will create significant threats to this growth. The mobile data market will grow, but the spending per user will start to decrease as broadband becomes more available in emerging markets.

3. Mobile advertising
Competition from free advertising models will serve as a litmus test for future business models in the region.

4. WiMAX
The scale of WiMAX deployment remains elusive in the region. Market activities in the US, Japan, and Korea will determine the ultimate role the technology will play in the pre-4G environment.

5. IPTV
Despite healthy take-up of IPTV in markets such as Hong Kong, Western Europe, and Korea, profitability with remain elusive. For established operators like PCCW and Telefonica, 2008 will be a crucial year.

6. Handset devices
China, India, and parts of Southeast Asia will be the few remaining markets driven by organic handset device growth in the Asia-Pacific region. Expect higher churn, less revenue, and consolidation in 2008 in developed markets.

7. Capital expenditures
Capex by the top 15 global mobile network operators will reach $71 billion in 2007 and gradually decrease by 2 percent per year. Like the number of mobile subscribers, Capex has peaked in most markets. Despite high profitability, emerging market operators must further reduce capex and opex spending as ARPUs dip below $5. Vendors will rely less on large legacy accounts and increasingly look to markets like India, Indonesia, and Bangladesh.

8. Mergers and acquisitions
M&A opportunities will be limited in the region, and multiple bidders will drive up prices quickly. While diversification is important, beware of overbidding and regulatory issues in emerging markets.

9. Convergence
Convergence will be a driver of merger and acquisition activities. The entrance of telecom operators into the convergence space, however, has driven up the price of content, and expensive content can quickly ruin margins.

10. Mobile virtual network operators
Despite some major failures in the MVNO space, Pyramid Research still sees a niche for the business model. Above all, consumers are price-sensitive, and handsets are crucial. Pyramid Research predicts global MVNO subscribers to reach 129 million by 2011.

Address books and keeping them current and accessible has been a problem for a long time. With the electronic revolution the paper address books have gradually went out of fashion, replaced by stand-alone PDAs, spreadsheets, online contact management services  and yes, mobile phone lists. But do people usually use their phone lists as THE primary address book? What are the various ways by which people keep the lists current and share that data with other applications and people?

The question is answered in part by a recent report. In a recent post, Ajit Jaokar of Open Gardens blog recommended a study: Mobile Life 2006 which looks at the social impacts of mobile phones in Europe. There are some interesting behavior studies there - and I believe that we need similar work in our part of the world. Going back to the topic of this post, on page 10, there is some interesting data:  

“Most people only regularly contact 10 people or less on their phone list”.
Allied to the texting revolution is another: the phone list revolution, namely the ability to store many phone numbers in a mobile phone. This has effectively become the modern address book. Overall, 36% of mobile phone users store at least 50 numbers on their phones; but, again, that overall figure disguises the significance of the impact of mobile phone technology on the young. 64% of under 25 have more than 50 numbers stored on their phones – compared with just 12% of the over-60s. 7% of men aged 18-24 store more than 200 numbers on their phones – compared to just 1% of women.

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