State of Telecom Industry in Pakistan

Daily Wireless writes about the global wireless data growth trends based on a new research report.  According to this new report from Senza Fili Consulting, vertical services will reach 24% of WiMAX subscriptions and 14% of LTE subscriptions by 2014, and represent a huge growth opportunity for operators facing flat ARPUs.

Enterprises who have historically shunned mobile data applications are warming up to specialized, vertical applications including mobile-to-mobile (M2M), in-vehicle telematics and mobile workforce support.

The report estimates that there will be over 154 million connections supporting vertical applications within 3G, WiMAX, and LTE networks by 2014. That’s more than US$43 billion in potential service revenues. “Vertical services can be very profitable for operators,” says Senza Fili’s Monica Paolini. “They bring in a steady revenue stream generated by a small number of contracts, each with a high number of connections.”

The most widely deployed applications are expected to be vehicle telematics and support for the mobile workforce. They require the bandwidth and wide-area coverage that 3G, WiMAX, and LTE support. Additional mobile broadband market growth will come from emerging consumer applications available in vehicles and in mobile and CE devices that extend mobile broadband beyond individuals to connect the entire environment.

Chairman Pakistan Telecom Authority (PTA) Dr. Muhammad Yaseen talked about a number of upcoming telecom initiatives in Pakistan. The list includes 3G, MVNO, Boradband and Rural communications. I consider such announcements as public relation management. I am skeptical. In my opinion, none of these initiatives are likely to have a major positive impact on the telecom industry or consumers. The government needs to stop treating telecom industry in Pakistan as a cow they can keep milking (through insanely high taxes) forever. The need is to address the fundamental issues and problems, most of which relate to the economy and fiscal policies.

Here are my brief reactions on PTA’s announcements:

• 3G Launch - mobile companies are hesitant to invest.
• Consumer Protection Cell - long overdue, past performance was dismal.
• Mobile Virtual Network Operators - uncertain future because of the low levels of interest shown.
• Strategy and Development Division - how come they did not have a strategy group before? how have they been creating policies till now? Do we need another “Think Tank” ?
• This one takes the cake: PTA is launching Broadband! Actually this is true. The broadband numbers are so low that we can safely say that broadband was NEVER there and start from zero.

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I am pleased to share a report on Telecom Opportunities in Pakistan. It was prepared by Salman Ansari in Aug 2007 for Pakistan Telecom Authority (PTA). I am thankful to Ansari Sahib for sharing this useful report with all of us. I believe that reports like this which present the facts and highlight the progress made in the telecom sector of Pakistan are extremely valuable - especially for those who are from outside Pakistan and are looking for a compact summary of Pakistan telecom sector.

The report provides a concise and fact-based overview of the economy, telecom road map, regulatory environment, telecom infrastructure (broadband, international connectivity), licence and spectrum situation, investment landscape, mergers and acquisitions and of course - the opportunities, as the excerpt below shows:

All this signals opportunities in the Traditional and Value Added sectors for not only creating new businesses by riding on these systems but also to be a part of new licenses which are being reviewed. These include MVNO, Regional Hosting, Call Centers, Telecenters, Video Conferencing, Content aggregation, Converged networks, etc. On another plane, the Regulatory environment permits spectrum trading, Mergers and Acquisitions as well as entry via Private equity arrangements. The market opening has nearly doubled the sector revenues and this trend is expected to grow.

The annex has a list of licensed operators as well. Obviously this an evergreen document and one should keep in mind that the numbers represent Aug 2007 and have changed during the last 12 months.

As LTE emerges, other standards such as WiMAX will have to compete to survive. The observation by Mr. Turner below about the technology brand is really important. Pakistan has become one of the earliest adopters of WiMAX and what happens there in the next 12-18 months will be very important for WiMAX. It might very well be that WiMAX is a success in one region but a fringe technology in other!

Via Communications Blog:

A recent Infonetics press release says “WiMAX has gained such momentum across so many regions that it is no longer sensible to suggest that WiMAX growth will be flattened by the emergence of LTE in the next few years.”

Probably true, but it’s also clear WiMAX will never reach the scale of either mainstream wireless family, i.e., WiFi or GSM/3GSM. By comparison with these giants, WiMAX will be a fringe operation. The critical issue is volume, and what counts is the wireless technology brand, not the technology itself.

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The soft launch announcement about Mobilink Infinity, Mobilink’s Internet and telephony service, is out. This is another milestone for WiMax in Pakistan. Unlimited data usage and voice for Rs. 1200 at 1 Mbps! For the residents of Karachi these are good introductory rates, valid till October 2008. There’s the initial cost of Rs.16K for CPE etc.

Full information and details about this offer is not available so its hard to say if it is just a teaser offer or will it be around for a while. From a marketing point of view it seems that the official media campaing and website were not launched first. Perhaps Mobilink has learned a thing from Wateen’s product launch mistakes. According to the announcement, “Mobilink Infinity is now an operational business arm of Mobilink. Mobilink Infinity will provide high speed and reliable internet connectivity along with access to a landline through VoIP.” Thanks to Uzair for posting the info on TGP!

Also see the welcome letter.

CIO Magazine has covered Wateen’s WiMAX launch and its partnership with Motorola in Pakistan. The article is very brief and falls short of mentioning link dot net and WiTribe.

Wateen has placed an order with Motorola to provide more of 198,000 more CPE units for the accelerating markets. This order has been recognized as one of the largest orders for WiMax CPEs in the world.

The CPE, or Customer Premises Equipment, enable consumers, small businesses and Pakistan’s largest enterprises to access wireless services — a vast range from basic telephony and fast internet access to high-end data services such as virtual private networks.

Whether or not the solution is something that the Pakistani market is ready for, is yet to be seen. however the ‘proof of concept’ of the subscribers in Pakistan is right here, and has already opened the door to two other competitors launching services in the market in the past two months.

Salman Munir writes at Green & White about his unexpected high bill from Wateen. The reason? the bill included line rent which should have been zero according to Wateen’s campaign. For background see posts about Wateen’s tarrifs and product launch.

I very clearly remember their sales representative (wateen’s, not franchise) hammering it on my head that, I would only be charged Rs. 1350/- Per Month for a 512KB /10GB cap package. And for that I was required to give 11 months post-dated cheques and first month in advance with equipment cost. Now, if you look at exhibit A, they have managed to bring out Rs. 891.50 worth of charges, i’m liable to pay.

Its the 3rd billing month and this is the first bill i’m receiving. What’s interesting to note is the line rent for telephone service, their IVR hold music also very clearly announces “telephony services for ZERO line rent!”

I was not yet satisfied with their falsified claims by Wateen’s support staff about why they are charging me Rs. 1350 and every billboard out their announcing that I should be paying Rs. 799/- for the same. Now, they have sent me unjustified bill.

What you guys think about Wateen’s policies? Do we, consumer have any say in this? What we, as consumers can do about it?

An optimistic point of view, reported at WiMAX.com.

According to Juniper Research, half of all mobile WiMAX subscribers will be located in Asia by the year 2013. This half will account for roughly 40 million subscribers concentrated mostly in Korea, Pakistan, Taiwan and Australia.

The reason? It is believed that WiMAX’s growth will initially be spurred by areas where wired access was not a viable option. WiMAX’s ability to deploy quickly and efficiently in areas that were previously underserved will make it an attractive option for such countries and locales.

Top markets for 2013, according to the research, include the United States, Japan and South Korea. The caveats? Spectrum and devices. In order to reach a potential 80 million subscribers licenses must be acquired in a timely fashion. Furthermore, in order to utilize the WiMAX network, WiMAX-enabled devices will be an obvious necessity. Future projections on the success of WiMAX are hinged on these two elements. Therefore, as more spectrum is allocated and more devices are developed the likelihood of these future projections will continue to increase.

Looking at the comments on this site about “tower sites for sale” it appears that cell phone tower related  business transactions are a major contributor to the telecom sector in Pakistan. And this seems to be true for Asia in general. I came across this article from Financial Express, India:

Ugly steel towers, with oblong boxes stuck on their sides. No brand ambassadors and no branding either. But, as mobile telephony majors rush to expand their network across India, the 15-metre tall towers that pick up and relay signals from one place to the other are becoming one of the hottest business activities in the information and communication space. Even a year back, few among investment bankers would buy the idea that passive infrastructure like towers could create value for the shareholders of telcos. New technologies like WiMax could today add to the bonanza and widen the scope of the passive infrastructure business. The towers in future will not only be rented by GSM and CDMA service providers, but also telcos who adopt WiMax technology. With 1,20,000 tower sites in the country and a demand for a pan-India telecom footprint extending beyond the semi urban landscape, there would be an increase of at least 200% in the number of sites, industry people say.

Investments to the tune of Rs 66,000 crore wil be required for setting up an extra 2,20,000 towers over the next three years, going by the current cost of Rs 30 lakh for a cell site, according to estimates from Cellular Operators Association of India (COAI). If the number of wireless subscriber base in India is to reach 577 million by the end of 2017, the network would require 3,75,000 towers, given an average tenancy of 2:1, say Kotak Institutional Equities Research estimates. First, it was the third party independent service providers like GTL Infrastructure, who sensed a business in creating the passive telecom network. GTL hopes to have 25,000 towers in the country by 2011. At present, its towers are rented by five operators in several places, mostly in non-metro cities and semi-urban areas. And their business model does not stop at GSM and CDMA telecom service providers. “We hope that in future, internet service providers (ISPs) and WiMax vendors will also rent our towers,” says Rupinder Singh Ahluwalia, executive vice-president of GTL. Their plans include use of land near the towers to set up communication kiosks for e-governance, wherever there is an opportunity. Rolling out infrastructure in one of the world’s fastest growing telecom market requires heavy investments.

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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.

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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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.