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?

Guest Post From Umar Farooq

Telecom Infrastructure Sharing is an important concept in emerging telecommunication markets. Here’s an extract from a GSM World report

Commercial considerations, rather than regulatory mandates, appear to be driving the increasing trend for Mobile Operators to adopt a variety of infrastructure models. Examples of mobile network sharing can be found in both mature and developing markets, with 3G providing an added impetus to assess the commercial and regulatory viability of network sharing. Network sharing may take many forms, ranging from passive sharing of cell sites and masts to sharing of radio access networks (RANs) and other active elements such as network roaming and the core.

In Pakistan, this concept’s utilization has taken place. However, we still have to see an effective regulation from PTA on this one (Editor’s note: See this link on PTA website for consultation paper on Infrastructure sharing - the pdf is also available here). We have seen different operators having their towers erected on the same roof top and at times within feet from each other on ground. Why couldn’t they use the same tower to place their antennas and share the cost ?

Infrastructure sharing has been taking place where Telenor did strike a lease deal with Wateen Telecom to use their Fibre capacity for their core transmission ring. But here, Wateen established the Fibre to sell its capacity to telecom operators. Infrastructure of RAN or Core Transmission has still some grounds to cover, before telecom operators in Pakistan become mature enough to operate shared structures while reducing operations costs.

The element of operator maturity is key here, because infrastructure sharing, does reduce costs if it is operated efficiently. If not operated efficiently, additional operational costs plus the reduced QOS loss, makes it useless for an operator.

From an end-user’s point of view, you see less number of towers and operators competing on their services rather than coverage.

Here’s a view of how the mobile companies stack up against each other. In terms of the subscriber growth from Jan-Mar of 2008, Telenor is at the top.

In terms of total number of subscribers (see the chart on the right), Telenor (16.7 million) is closing the gap with Ufone (17.2 million). I am interested in hearing views about the drivers of this growth.

By end of Q2 it will be interesting to re-visit this and see whether Zong lived up to the buzz it created!

Telenor and Mobilink have started offering in-flight cell phone. These services are roaming with and come with a few conditions. For those who find long flights boring or unproductive this can be a great way to pass time and be productive. But there’s a down side to this. I’m sure you have been noticed what happens moments after when a plane lands? Most people ignore the requests from staff to stay seated and quiet. Instead they whip out their phones and start calling their friends and families.  Usually this gets over quickly as people are in a hurry to get out. Now extend this scenario to a long flight. Imagine a chatty person sitting close to you talking for hours during your flight. I tell you, it can be an absolute nightmare!

Here’s a bit of description from the companies about their service:

Mobilink
Partnering with Air France and Emirates through our partner networks OnAir and AeroMobile, Mobilink offers GSM network onboard aircraft; providing not only voice calls and text messages but also data over GPRS. Currently, this service is being provided on one Emirates and one Air France aircraft with plans to roll out across fleets and other airlines in future.

Telenor
Telenor Pakistan proudly launches In-flight mobile phone services onboard International flights collaborating with AeroMobile exclusively on Emirates Airline.

In the US this stirred up plenty of noise — Congress even considered passing a law to ban voice calls on the plane. Then FAA clarified that it was not going to allow cell phones aboard the planes in near future. It is clear that airlines want it and the phone companies want it too. However some powerful consumer groups (read politicians) loathe the idea of a noisy flight. It is the ultimate conflict between businesses and those who don’t like technology intrusion in every aspect of life.

In Pakistan it is less of an issue. People may not even think of it as an issue at this point. But it will be interesting to see the proliferation of cell phone use in Asia and Europe and how people react to it.

Here is a very interesting post about mobile video from Brough Turner, whose blog I close follow. Brough makes a very good point that mobile video on demand is what makes sense for most cases - not live TV. It also provides one more reason why mobile TV offering from Telenor did not take off (in addition to the fact that it was pricey).

I have an article, Going Mobile TV(pdf), that’s recently been published by MobileIN, a wireless and mobile information site. In it I basically argue that major investments in mobile TV broadcast capability are less likely to pay off than investments mobile video-on-demand.

The biggest trend in commercial television viewing is personal video recorders like TiVo. People want to watch TV content when they want, not when broadcasters schedule it. The only exception is major sports events (the Superbowl or World Cup matches). Even the evening news is frequently rescheduled for later in the evening.

The second relevant trend is growth in YouTube and similar web-based video content. Broadcast TV went from 2-3 channels in the 1950s to hundreds of channels on a typical cable system today. But consumers are also interested in the long tail of millions of videos that can only be served over the Internet today and, potentially, over the mobile Internet in the future.

Finally, survey’s of early adopters of mobile video show music videos, movie trailers, weather, sports action clips, comedy videos, cartoons and amateur video shorts – typically a few minutes long at most – are the most popular content. In addition, it appears 85 percent of mobile video viewers watched viral videos (content sent or pointed out by others) rather than content they found themselves.

All and all, mobile consumers are looking for video -on-demand, not pre-scheduled broadcast TV.

So what’s the logic for massive investments in spectrum, followed by even more money in new wireless infrastructure, followed by the need to sell everyone new handsets that can receive the new broadcast mobile TV channels?

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 PicDeck™
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

No matter whether one is a business executive or a technology expert, personal face-to-face networking is an important aspect of professional development. In Pakistan we are beginning to warm up to this approach. Warid recently arranged a CIO forum in Lahore, which seems to be limited to Warid’s executives and business partners (details are below). It will take a while to build the trust which brings competitive companies together to discuss solutions to common issues. I hope that in near future CIOs from all major telecom companies in Pakistan can come together and promote indigenous solutions.

From a press release sent to me by Warid’s public relations team.

Wateen Telecom and Warid Telecom under the Warid Telecom International umbrella are quickly evolving as major players in the emerging markets of South Asia, Africa and now Eastern Europe. The exponential growth and addition of complex set of services also poses CIOs with a number of challenges. Effective use of technology, alignment with business goals, standardization and recognition of emerging trends are just some of these challenges.

WTI CIO Forum has been created to address these challenges. The main objective of this forum is to bring together the IT management from across the group to share their experiences, discuss the technology roadmap, talk about various emerging industry trends and try to leverage a synergy that exists in various projects and operations.

Along with other top-level industry executives from major companies, Mr. Marwan Zawaydeh, Board of Director and CEO of Warid Telecom, Mr. Salman Khurram, Head of IT at Wateen Telecom, and Mr. Mohammad Ali, GM IT Warid Telecom, spoke at the forum. The forum partners included International Turnkey Systems, TechAccess, and Cisco.

The recent BlackBerry security concerns raised by Indian Govt have been reported widely in press. To me it seems that governments around the world are struggling with controlling technology. Just a few weeks ago Pakistan made the headlines when PTCL inadvertently caused the youtube outage. Some wondered if the BlackBerry problems could spill over to Pakistan. I remember reading at TGP that security was the reason for the delay in introducing BB services in Pakistan … so hopefully we are past this obstacle.

Obviously the old-school bureaucracies have a hard time keeping up with the fast pace of technology. It seems that one fine day the Indian government realized that there’s a threat, reacted hastily and scared the market! To be fair, most government agencies tend to work in that mode.

Excerpt from WSJ:

Indian telecommunications operators are negotiating with the government on a framework for BlackBerry usage that will allow the Indian market to expand but also meet concerns for national security.

India’s government isn’t comfortable with the way information transmitted via BlackBerry is encrypted because it’s too complex to be monitored, according to one industry official. The fear is that information can’t be monitored and that this could be a security risk.

These worries had caused some to speculate that India’s government might opt to block BlackBerry messages. But India’s telecommunications secretary Siddhartha Behura downplayed the prospect, saying Friday that “there is no question of banning at this point,” according to Reuters. He said the government is talking to telecom operators and to BlackBerry manufacturer Research In Motion Ltd. of Canada.

According to LIRNEasia’s latest comparative study of price and affordability indicators in eight South Asian countries, Pakistan is near the top in terms of affordability. For Pakistan the study used Jazz Budget (Prepaid) and Indigo Freedom Plan 1(Postpaid). See an example comparison chart.

Overall the study concluded that “Bangladesh had the lowest average monthly cost of using a mobile at all levels of use (low, medium and high) for different tariff plans (prepaid and postpaid). Pakistan, India and Sri Lanka follow closely, while Bhutan, Maldives and Afghanistan are seen to have significantly higher average monthly mobile costs.” 

Here’s some background on how the study was done - should be interesting for business & economics students:

The study compares mobile tariffs in South Asia using price baskets, derived from those used by the Organization for Economic Co-operation and Development (OECD). The baskets are calculated for low, medium and high users for pre- as well as postpaid tariff plans, factoring in usage charges (voice and SMS), line rental, connection charges (depreciated over a three year period), and applicable taxes.

For further information see the original article at LIRNEAsia site or read the Full Report (pdf)

One of the premiere events of mobile and wireless industry, GSM annual meeting is a place to watch for trends. In the event hosted at Barcelona last month, Yahoo got the award for mobile portal, Grameenphone for social cause (note the familiar logo) and SonyEricsson got the award for mobile device. The full list of winners for 2008 can be viewed here.

Best Mobile Handset or Device
SonyEricsson: W910 Walkman Phone
3UK: 3 Skypephone - Highly Commended

Best Use of Mobile for Social & Economic Development

Grameenphone: CellBazaar

Best Mobile Game

Cellufun: Call of the Pharaoh
Glu Mobile: My Hangman

Best Broadcast Commercial
Safaricom: M-PESA ‘Send Money Home’ campaign

Best Mobile Advertising
Crossmedia Avenue: AMF Pension – the MMS campaign

Best Use of Mobile for Social & Economic Development
Grameenphone: CellBazaar

Best Network Quality Initiative
RAD Data Communications: LA-130 Cell Gateway - Cost-Effective HSPA Backhaul

Best Service Delivery Platform
Aepona: Aepona Telecom Web Services Platform

Best Billing and Customer Solution
Bharti Airtel: mChek on Airtel – Mobile Payments Service

Best Mobile Music Service
Omnifone: MusicStation

Best Mobile Video Service
mywaves

Best Mobile Social Networking Service
BuzzCity: myGamma.com

Best Mobile Infotainment Portal for News/entertainment
Yahoo! Connected Life: Yahoo! Go for Mobile 2.0

Best Mobile Enterprise Product or Service
Microsoft: Windows Mobile 6

Best Mobile Messaging Service
Seven: System Seven 7.0

The GSMA Chairman’s Award
Sunil Bharti Mittal, Founder, Chairman & Group CEO Bharti Enterprise

Saw this report in the US media about an interesting new approach for providing Internet access to remote areas which lack infrastructure. The idea is to send balloons which soar 20 miles into the stratosphere, each carrying a shoebox-size payload of electronics that acts like a mini cellphone “tower” covering thousands of square miles below. WSJ reports that Google is partnering with Space Data, the company behind the balloon idea, and may even buy it.

Watch the video - by the way hinterland is the part of a country where only few people live and where the infrastructure is underdeveloped. In the context of third world countries entire provinces are hinterlands!

Additional excerpts from WSJ article.

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