State of Telecom Industry in Pakistan

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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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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In this post we take a look at the role of advertising in building brand equity, using the case of Wateen’s recent product launch. Advertising is paid form of marketing promotion in which the sponsor is advertised and the message is controlled. Brand Equity refers to the value built-up in a brand. It is measured on a scale determining the extent of customer awareness. Besides awareness, brand equity is also directly related to the consumer’s experience with the brand itself. This experience finally decides the fate of product in terms of success and brand loyalty or failure within the potential target audience.

Within Marketing Mix i.e. Target market and 4P’s (Product, Price, Placement, Promotion), Product refers to the promise made to the customer or solution provided to the customer. Value is the perceived difference between the costs spent by the customer against achieved benefits. The lower the cost in relation to the benefits the lower is the value.

Hence, marketing communication or advertising during the product launch is a strategic decision and must be handled with care. Launching the product or service aggressively without practically placing it or making it available might bring critically negative impact on brand reputation. Such campaign destroys instead of building a brand. It is just like a promise made to the customer and then not being fulfilled. Such mistake at launch stage, specifically in case of a product like WiMax which still have to struggle a lot in getting mass awareness and with delivery issues, can severely disrupt the company’s and brand’s image within early adaptors of the product.

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Adnan Siddiqui pointed out that Wateen has opened pre-registration for their suite of products including WiMAX. For those who have suffered through all the digging on the streets (as in Lahore DHA), this should be welcome news. The link on Wateen’s site mentions that the new site will be the portal for all their services.  The site addresses the 3 major sgements of home, business and operators. Some basic information such as the WiMAX coverage area and technology FAQs are provided there. However as the site stands now, it could use some improvements. Some of the issues I noticed:

1. The approach they are using is to get the customer info through registration and then getting back to them. It means that they are still not ready yet. Now why would people leave their CNIC number with Wateen - especially over an insecure connection? Oh yes here’s an incentive: Be amongst the first 10,000 customers by registering online to receive a surprise gift from Wateen. This offer is valid until 30 September, 2007.
2. The product information is not provided on the registration page. For an ordinary person, more information is desirable with the context. You dont want people to wander around the site to figure out what options are availabel for TV - you put that info right there where users need it. 
3. The site does not list information about the WiMAX packages and prices. For example the business WiMAX section greets you with a “coming soon” message.The package rate inforamtoion is likely to be available in 4-6 weeks according to Wateen.
4. Site navigation is not very user-friendly and easy to bookmark.

 Why do companies have a hard time putting together an informative and user-friendly site which will help consumer become their customers? What’s so difficult about it?

FTTH (Fiber To The Home/Premise/Business) is the new emerging technology for voice, data and media to which home users or commercial institutions in Pakistan can now look forward to. The idea is to replace the existing copper media in order to remove maximum dependency from PTCL network in general and to meet the demand for higher bandwidth with minimal disconnections, latency and security issues in specific. A related benefit is providing “one window solution” for data, voice, media & entertainment at affordable prices.

Some players have taken initiatives in this regard. Key players who have started or laid Optical Fiber Cable (OFC) are Multinet, Wateen Telecom, Mobilink, TWA, Nayatel and Brain Tel. TWA is focused on international connectivity through IPLC (International Private Leased Circuit) over SMW-3 & SMW-4, however they have also laid backbone fiber for Mobilink for domestic connectivity. As a result consumers are and will be enjoying advantages of low LDI tariffs. Nayatel is also offering data, voice and media services over FTTH but they are geographically focused in Islamabad market till yet. Multinet is one major infrastructure player laying 4500Kms Optical Fiber Backbone across Pakistan and also enjoys international connectivity with massive 40% share in SMW-4 through its investment arm Telecom Malaysia. Besides this Multinet has also laid fiber optic redundant rings in Karachi and Lahore. These OFC rings are also called Metronet. Multinet is serving corporate segment on Metronet since last two years.

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The annual conference of CTIA, the wireless association, was held last week of March 2007 in Florida. The CTIA annual event is said to be ”the world’s largest technology event dedicated exclusively to wireless, broadband convergence and mobile computing technologies”. It is a great place to showcase new technologies, network and socialize with top decision makers and create buzz about upcoming work. For example the much awaited voice search applications from Google and Yahoo were announced here.

The event covers the entire industry from network infrastructure to microprocessors to applications to content to end-user hardware. More info at the CTIA site.

The covered topics for 2007 conference include:
- The Quadruple Play
- Mobile Enterprise
- Mobile Payments
- Mobile Entertainment
- Social Networking & Mobile Communities
- Advertising
- Globalization
- WiMAX

See the webcasts of the conference here.

One of the major highlights is the Emerging Technology Forum track at the conference. The forum focussed on the following four tracks:

For detailed roundup of the conference see this post.

This post is first in a series in which IPTV services in Pakistan will be discussed.  First an introduction to IPTV: in simple terms IPTV is television content that, instead of being delivered through traditional formats and cabling, is received by the viewer through the technologies (IP) used for computer networks. IPTV provides multimedia services via a broadband connection with the help of a set-top box (STB) which resembles a traditional cable box. A single connection (fiber optic, copper or cable) coming to your premise can serve phone, TV and Internet service - terms such as FTTH or FTTP are used when fiber optic cable is being used for higher bandwidth transmission.

Why IPTV? IPTV is an imporant piece of the Triple Play puzzle. Many telecom companies are using it to create a sticky bundle for customers, the idea is that if a customer gets all services from a provider he or she can be offered a better deal and therefore is less likely to switch providers. I, for one, use bundles at home and find it convenient to have one bill and one phone number for customer service.

Triple play is also great for offering enhanced and converged services (not all are feasible, though) such as :

• TV and video services such as video-on-demand (VoD), subscription, live TV channel lineup packaging and scheduling, and network-based digital video recorder capabilities
• Additional “blended” communications applications such as get an alert of phone call on your TV, text chat, live traffic information (even using your cell phone as a remote - seriously!)
• Personal media applications such as uploading of photographs and video clips and sharing of music and video content across multiple in-home devices

What is the situation of IPTV in Pakistan’s market today? It is all about broadband availability and affordability and till now Pakistan has miserably lagged behind on this. I am hopeful that things will change for better in the next 2-4 years. The policy and regulatory framework is set by PTA. Pakistan Electronic Media Regulatory Authority (PEMRA) monitors and regulates the electronic media and it issues IPTV licneces as well.  I know about the following companies which can/will offer IPTV: PTCL, Wateen and Nayatel. There is little information available about PTCL plans (see some discussion here) but it is likely that they will offer IPTV over DSL using technologies from various foreign vendors (see below); for Wateen I’ve previously written here. Recently Brain has also advertised limited launch of IPTV service.

According to some resources PTCL may launch IPTV service on 23rd March 2007 to pilot users -with a broader launch to 20,000 subscribers in the first half of this year. In terms of its strategy IPTV must be a top priority for PTCL. It all comes to execution and creating a value package. PTCL launch is supported by Chinese telecom equipment giant Huawei and Irdeto, the Netherlands-based content security company. Huawei will provide the servers and set-top boxes (see Hua wei’s IPTV architecture below) and Irdeto will provide content security solution.

The Irdeto IPTV security solution integrated into the Huawei IPTV system provides for a full video product and service offering, including broadcast TV, video on demand, PVR and Time Shift TV. Within the Irdeto IPTV security framework, content is securely stored and distributed across any broadband IP network and the corresponding content rights can be managed on an individual subscriber and/or device basis.

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Till recently voice and data used to be transported on separate networks. With advances in network technologies this separation is no longer there. Next Generation Networking (NGN) is a term which refers to the technology where a single network is capable of transporting all information and services (voice, data, video) by encapsulating these into packets. NGNs are commonly built around the Internet Protocol, and therefore the term “all-IP” is also sometimes used to describe the transformation towards NGN (adapted from Wikipedia NGN page). The IP Multimedia Subsystem, IMS, is a related concept to NGN. Technologies such as WiFi and WiMAX  belong to the NGN area.

The NGN illustration below is from Cisco Systems (get full paper in pdf or html).

ITU Definition of NGN - A NGN is a packet-based network able to provide telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It enables unfettered access for users to networks and to competing service providers and/or services of their choice. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users. 

The interesting thing is that countries like Pakistan were able to adopt (or should I say import?) NGN without too much difficulty as they did not have a hefty investment in old technology infrastructure. The US companies, for example took considerable time to make the change. Only in 2001 the move beyond 2G was made which allowed the US companies to go from circuit switching to packet switching.

As ITU points out, the concept behind NGN is a shift away from an era of separate networks (such as narrowband fixed, broadband fixed, cellular mobile, cable TV), bearing different services (voice, video, text, data) to multiple devices, e.g. fixed handset, mobile handset, PC. NGN moves towards a unitary IP-based network in which the common features of the user environment (for example user preferences, contacts, databases, files and so on) are accessible as the user moves around, say between home, car and office, or between desk and meeting room. From a regulation point of view Next generation networks (NGNs) are likely to require next-generation regulation as the problems of scarcity are replaced by dilemmas of abundance and complexity.

Per ITU the NGN functional architecture should incorporate the following principles.

Alcatel, Nortel, Huawei, Siemens and Cisco are a few of the major companies who dominate NGN. Many of them are suppliers for service providers in Pakistan. As a case study, lets take a look at Wateen’s network which is poised for triple play in Pakistan.  Wateen’s website provides the following information about their NGN and other networks.

Wateen’s Next Generation Network (NGN) Core

• IMS enabled converged IP/MPLS core multi-access network based on layered architecture designed to provide quad-play services (voice, data, multimedia and limited mobility) and much more
• Robust class 4 and class 5 soft switches with a host of applications and value-added services to provide depth and breadth to our product offering

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Pakistan is one of the early adopter of WiMax technology and Wateen has made ambitious announcements for WiMax rollout in 17 cities. Wateen is using the technology to provide fixed wireless broadband data services for residential use, and through its 5,500 kilometre long haul optical fibre, metro optical fibre rings and FTTx, the company will offer total communication solutions (Triple Play) including voice services, video conferencing, broadband internet and TV viewing. Others such as Dancom and Burraq are also implementing WiMax. For an overview of Wimax in Pakistan see my previous posts, especially this. Despite all this buzz around WiMax there are still many who express doubts about it, especially when 3G is out there.

An article in THE ECONOMIST says that for the 60,000 people attending the 3GSM trade show recently in Barcelona, WiMax was everywhere … on huge banners, on the lips of executives, and on products in display cases.. everywhere, that is, except in the real world. The article says that even as mobile operators start to upgrade their networks to the latest enhanced 3G equipment, WiMax boosters say their technology is superior … and now that WiMax networks are starting to pop up around the world, the industry will soon find out if they are right. I think that startups such as Meraki which is developing low-cost wireless mesh technology and routers, can make a big difference in WiMax adoption.

As discussed at ZDNet here, the market for high-speed connectivity has split into two camps: one stands by wireless standards such as WiMax and Wi-Fi, while the other supports mobile technology 3G and HSDPA. Motorola which is one of main Wimax provider thinks that Wimax can replace wired broadband in 20 years. The GSM camp disagrees. The truth is probably somewhere in between: both mobile and wireless (wimax) technology segments are complementary and can co-exist in the market (see illustration above - source: Alcatel / Forrester). In my opinion, it is the local economics and demand which will favor one technology over the other.

As noted in ZDNet, Wi-Fi and WiMax have been largely confined to facilitating high-speed connectivity to laptops and PDAs, while 3G and HSDPA have focused on mobile phones. However, there are now suggestions that 3G can be extended to laptops, particularly as the data speeds offered by these mobile standards catch up to those provided by WiMax.

Mobilink CEO Zouhar Khaliq has been reported to state that Mobilink had trialled WiMAX in the past but said that no trials were currently underway. “Our main aim is to continue to be the dominant cellular and telecoms player in Pakistan, offering services beyond the cellular space,” Khaliq added.

“Over 80 percent of the world’s population has GSM coverage, but I don’t think that’s true for WiMax ,” a GSM Association officer said. “Why then would you want to invest some millions of dollars building up a WiMax network when you have a [GSM] network that already covers 80 percent of the world’s population?”

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The mobile companies in many regions of the world do not enjoy the subscriber growth witnessed today in Pakistan, India and China. Therefore they have to work on new strategies to spur the growth and increase the revenue per subscriber. A recent paper in Alcatel Telecommunications Review (3Q 2006) summarized the challenges of high growth mobile markets and provided some suggestions to increase revenue.  The paper “Innovating to maintain momentum in mobile penetration” is available at Alcatel’s site. In this post I’ll share a few key points and figures from their paper.

Figure 1 is a summary of key challenges (click to see larger resolution image). The mobile companies in Pakistan will soon face many of these challenges.

Figure 2 is a graphical representation of growth markets vs. mature markets in terms of digial access index (see my earlier post on digial opportunity index). 

Figure 3 presents a view of how the telecom companies can use IP based networks to converge and optimize their solution offerings and at the same time increase their penetration by offering new services such as micro-payments. The next generation networks will play a key role in this growth. Of course some of the technologies shown here - WiMAX for example - are so new that their success or failure is still an open question. Still the point remains that current products and services can take these companies only so far. Companies such as WATEEN are already moving in this direction by providing triple play and mobile services.

Source: Alcatel.

Triple play made its way to Pakistan. Triple Play service is a marketing term for the 3 services: high-speed Internet, Video (TV, Video on Demand) and telephone service - all over a single broadband connection. Wateen, PTCL and Nayatel are a few examples for which services are already or soon to be available in some parts of Lahore and Islamabad. The important question is if these services will be affordable and reliable?

Wateen’s triple play offering was recently unveiled with its services for DHA Lahore, scheduled for commercial launch in January 2007. With all the digging work going on in DHA, it will be a relief for the public. According to the press release by Wateen:

This project will provide DHA residents access to a breadth and depth of 21st century telecommunication and media services through fiber optic and wireless WiMAX networks. Services provided will include innovative telephony calling plans for local, nationwide and international routes, video conferencing/video telephony, true broadband internet (both fixed and wireless), DVD quality TV viewing and Value Added Services such as security & surveillance and interactive gaming.

Pakistan Telecommunication Company Limited (PTCL) was awarded the country’s first IPTV operating licence in November 2006 and will be an major competitor. PTCL has yet to announce a timetable for rollout of the service. “We have some exciting plans that we will be announcing soon,” was all PTCL CEO Mohammad Bamakhrama would tell local press. According to discussion forums, PTCL will use Alcatel IPTV solution which is based on partnership with Microsoft.

Alcatel (NYSE:ALA) also helped NayaTel  of Pakistan to supply the region’s first fiber-to-the-home (FTTH) solution to deliver a high bandwidth triple play (voice, video and data) services to over 30,000 subscribers in the capital city of Islamabad. More on this here. Sample rates for Nayatel’s Internet service are:

Now that we have these services available to select few, let’s monitor their success rate in 2007. Price is the main factor here and the one-time cost of the equipment (i.e. ONT) is likely to be the hurdle. If companies can asborb the equipment price in exchange for a contract, it can speed up adoption.