Telecom Asia October 2012 issue Telecom Asia | October 10, 2012 In the October Issue Cover: Making money from prepaid data One-to-One: Breaking into the LTE game IP Capacity: Growth still strong, but slowing Country Focus: Indonesia Tanner: Apple starts to lose its bite
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Asian Telecoms Business and Technology l www.telecomasia.net l October 2012 Wholesale consolidation • Apple loses its bite • Regulators dole out penalties Published By Making Money from Prepaid Data Operators prepare to cash in on smartphones in emerging markets Inside: Robust, but slowing capacity growth IP transit price declines accelerate while internet capacity growth continues to slow Breaking into the LTE game SmarTone CEO Douglas Li explains why LTE is about capacity – not speed
Transcript
Asian Te lecoms Bus iness and Technolog y l www.te lecomasia .net l October 2012
Wholesale consolidation • Apple loses its bite • Regulators dole out penalties
Published B
y
Making Money from Prepaid DataOperators prepare to cash in on smartphones in emerging markets
Inside:
Robust, but slowing capacity growthIP transit price declines accelerate while internet capacity growth continues to slow
Breaking into the LTE gameSmarTone CEO Douglas Li explains why LTE is about capacity – not speed
Plans for 2013: Where are the key opportunities and what are the challenges?To gain insight into the most pressing issues facing telcos as they look to the new year, Telecom Asia is holding a one-day Insight Summit for senior-level executives from across the region.
The forum will allow telco decision makers to discuss key challenges and opportunities, and to share their priorities for 2013.
The day will kick off with presentations by two senior analysts/consultants: The first will take a close look at the highlights of 2012, what were the key successes, what were the trouble spots and where were the missed opportunities; the second speaker will take a look ahead, forecasting the growth areas, outlining strategies to slow margin declines and highlighting trends that will have the most disruptive impact on telcos.
In the afternoon two additional panel discussions will be held concurrently. Each panel will bring together five to six telco executives and a senior analyst from a leading research firm. All attendees will be asked to share their ideas on ways to revive growth, boost profits and streamline operations. The objective is to brainstorm and outline the key priorities on how to thrive in 2013 and beyond.
The Summit will be followed by our annual Readers’ Choice Awards, starting with a cocktail reception at 5:30 pm.
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Registration & Welcome Coffee
Opening Remarks by chairmanTony Poulos, TM Forum market strategist and Telecom Asia anchor & columnistOpening Keynote 1A look back: 2012 Highlights -- key successes & the missed opportunities Andrew Hamilton, partner at Value PartnersOpening Keynote 2A look foreword: Growth areas for 2013, strategies for success and the key disruptive trends Amrish Kacker, partner for strategy consulting, Analysys Mason
Presentation by sponsor
Coffee break
Panel DiscussionIf you had a clean palette to start with, what would you do differently?Moderator: Tony Poulos, Panelists: Farid Yunus, Redtone CEO (formerly chief strategy officer at Celcom) Wing K. Lee, YTL Communications CEO Andrew Hamilton, partner at Value Partners
Networking lunch
Panel Discussion 1Business Focus: Key challenges and opportunities for 2013Moderator: Joseph Waring, Group editor
Panel Discussion 2Technology Focus: Key challenges and opportunities for 2013Moderator: John Tanner, Global technology editor
Coffee break
Wrap-up & action plan - Tony Poulos
Telecom Asia Readers’ Choice Awards -- cocktail reception
Telecom Asia Readers’ Choice Awards – awards ceremony
AGENDA
Stay up to date on this Forum: http://tasummit.questexevents.net/
Telecom Asia 2013 Insight SummitNovember 29, 2012 Kuala Lumpur
Subscribe to Asia’s best daily telecom news service: www.telecomasia.net
Contents Volume 23 Number 8 October 2012
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2430
18 20 22
7
Cover
12 Making money from prepaid dataOperators prepare to cash in on the growing popularity of
smartphones in prepaid markets
feAtureS
IP Capacity
16 Growth still strong, but slowingIP transit price declines accelerate – dropping 50% in NY –
while internet capacity continues to expand, but growth slows
to 40%
One-to-One
18 Breaking into the Lte gameSmarTone CEO Douglas Li explains why LTE is about capac-
ity, not speed, and how Hong Kong cellcos have managed to
avoid the dreaded scissors effect
Q&A: Wholesale Outlook
20 Consolidation on the horizonBICS chief commercial officer Nicholas Nikrouyan explains
why multi-service players will come out as the winners in the
transformation to IPX
Viewpoint
22 transforming the network for the digital ageTelcos have an opportunity to transform their networks into
starring roles that today’s customer demands are dictating
Country focus: Indonesia
24 Collaboration: the path to growthOperators have to realize that their competitors are not just
their traditional rivals but a whole army of content providers
Post Show: Asian Carriers’ Conference
28 Wholesale players ponder using bilateral automationWholesale players flock to Cebu, discuss automating process-
ing of interconnect deals
2 October 2012 Telecom Asia www.telecomasia.net
At a time of global economic uncertainty, an unparalleled trillion-dollar blue ocean market awaits savvy movers in the SMB cloud and hosting services sectors.
Cloud Computing has been empowering SmBs in the West with feature-rich applications and other resources previously only available to large enterprises. While SmBs in Asia pacific have been slower to catch onto this trend, cloud adoption rates in the region is expected to grow significantly in the coming years. parallels, a hosting and cloud services enablement leader, estimates the ApAC cloud services market to grow to $19.8 billion in 2015, presenting a huge opportunity for the SmB cloud and hosting services sectors in the region.
leveraging opportunity through an evolving partner ecosystem was a key theme at the opening sessions at parallels Summit 2012 ApAC. idC’s Asia pacific group Vice president Sandra ng kicked off the event by presenting how not all users and businesses are adopting cloud services in the same fashion or pace. this presents rich opportunities for service providers, hosters and it channels, to capitalise on the upcoming differentiation trends imminent in the marketplace.
to this end, parallels CEo Birger Steen outlined his vision of how the hosting and cloud industry here can tap into the parallels partner ecosystem to meet the growing demand for cloud services. Steen provided an update of how parallels’ strategy, together with its preview of next-generation solutions such as the parallels Cloud Server, can help partners tap the trillion-dollar blue ocean market and reach the 148 million plugged-in SmBs worldwide. parallels Chief Architect and Executive Chairman Serguei Beloussov shared how hosting, cloud and it would be the norm a decade ahead, emphasising the need for businesses to be innovative, resilient and flexible if they are to thrive in the next 10 years.
Developed or Developing World?
in line with the event’s central theme of “profit from the Cloud,” a very fundamental growth impediment involving creativity and innovation was addressed via keynote speaker Fredrik Härén, a Singapore-based creativity expert and lauded author.
Härén pointed out that the polarization of the world into “developed” and “developing” nations has unwittingly imposed limits and biases on innovation and creativity. this has wrought spectacular effects in the midst of the internet era, where giant corporate household names have gone bust or lost their gloss; and the fates of entire blocs of “developed” nations hang in the balance. Fredrik propounds a mindset change as simple as wiping the idea of being “developed” off our vocabulary. this will break down cultural isolation and complacence and propel us from being mere consumers of knowledge to being idea foundries. We will then be well placed to serve as global catalysts of out-of-the-box mindsets that will radically reinvent the world.
The Next Killer App
dwindling profits from email and website development are spurring the hunt for the “next big thing” to open up new high-margin revenue streams in the hosted- and cloud-services sector. in a panel discussion, four key executives from infratel, luxCloud, Quest Software and Symantec discussed the nature of a game-changing new “killer app” to revitalize bottom lines. According to the panelists, the next killer-app for the cloud has yet to manifest itself, but would definitely be one that significantly enhances communication and customer satisfaction, CRm, and the intelligent bundling of the right mix of services to the right customer in the most flexible manner – all at low cost and high returns on investment.
Updates Business and Tech Tracks
What do SmBs want from communication and collaboration services, web hosting, virtual telephony services or other cloud-hosted services? Which services are the most popular? Vital clues were provided at the business track of the Summit, where participants learned more about reducing server and labour costs while increasing efficiency. the technical track of the Summit featured deep insights into the new parallels Automation and plesk panel 11 suites; hosted pBX; microsoft lync, and the intel open Cloud Vision & Strategy.
With economic woes clouding the fate of the western blocs, the annual parallels Summit is helping it businesses to identify ApAC as the region where the great opportunity is located. of the trillion-dollar SmB revenue spent worldwide annually, ApAC details the most profitable opportunities for delivering cloud services to SmBs – it’s a region which simply cannot be ignored.
Parallels Summit presents huge opportunity in the cloud
Event highlight brought to you by parallels
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Contributors Canberra: Dylan Bushell-Embling London: Michael Carroll Tokyo: Mike Galbraith Bangkok: Don Sambandaraksa
Editorial and publishing officeQuestex Asia Ltd13/F, 88 Hing Fat Street, Causeway Bay, Hong KongTel: +852 2559 2772 Fax: +852 2559 7002Website: www.telecomasia.netSubscription Hotline: +852 2589 1313 Subscription Fax: +852 2559 2015E-mail: [email protected]
Questex Media Group LLC275 Grove Street, Newton, MA 02466 Tel: +1 617 219 8300President & Chief Executive Officer Kerry C. GumasExecutive V.P. & Chief Financial Officer Tom CaridiExecutive Vice President Tony D’AvinoExecutive Vice President Gideon Dean
TELECOM ASIA (ISSN 1681-181x)is circulated to telecommunications carriers (PTTs) and to the communications departments of businesses, industries and others who use and operate commercial and private networks. It is edited for planning, engineering and operational managers responsible for the design, installation, marketing and mainte-nance of public or private telecom systems and networks.
You don’t need me to tell you that Apple’s decision to drop support for Google Maps in favor of its own Maps application has been the big-
gest PR disaster for the company since the AntennaGate hoo-ha with the iPhone 4.
At press time, reports continue to flood in about the app’s various inaccuracies, par-ticularly outside the US. In Japan, for exam-ple, Maps is so riddled with erroneous info that local map service Mapion saw a three-fold increase in downloads for its iPhone app (launched just a few months ago) in the first week of the iPhone 5’s release, according to the New York Times.
Interestingly, this is not the case in China. According to the Wall Street Journal, Apple developed a separate version of Maps spe-cifically for China in partnership with local mapping services provider AutoNavi. And by most accounts, it’s more accurate than in-ternational versions of Maps (as long as you only use it in China, anyway – Chinese users looking for maps outside of China will find some data missing like landmarks and public transportation stops).
Moreover, according to China-based technology blogger Anthony Drendel, Ap-ple’s Maps is a vast improvement over Google Maps in China, especially outside of the big urban cities and tourist centers. (The Chinese government’s tight regulation of mapping services, and its strained relationship with Google, may or may not be a factor.)
Either way, the fact that Apple had to do a separate version of Maps for China illustrates just how hard it is to build a reliable and us-able mapping app – and Maps’ problems elsewhere demonstrates further just how far ahead Google is in the maps game (remember Google Maps has been around since 2005) and how far behind Apple is.
And that matters far more than things like whether, say, the iPhone 5 supports mi-cro-USB. Having to pony up for an adapter is one thing. Being forced to give up an app that works well in favor of a proprietary app that doesn’t is something else entirely, because
we’re not just talking about any old app here. We’re talking about a mapping app that har-nesses one of the key attributes of mobile – location – and has already become central to many users’ lives.
That’s not to say Apple necessarily made a mistake by dropping Google Maps. According to All Things D, Apple really had no choice. Its existing relationship with Google did not include support for voice-guided driving di-rections, which is supported on Google Maps for Android, and Google wasn’t keen to hand that differentiating feature over to a competi-tor unless Apple offered certain concessions, which Apple found unacceptable.
Fair enough. But it doesn’t change the fact that Apple still replaced Google Maps with a decidedly substandard service. And if Apple wants to be in the services business at all (see: iTunes, FaceTime, iMessage, iCloud, etc), it deserves to get hammered for that, even if it does ultimately see services and content as means to the end of selling hardware.
The irony, of course, is that the iPhone 5 may still be another record-setting winner, in which case Apple has little incentive to take services as seriously as it takes devices.
Second bestThe thing is, Apple can only get by on so
much goodwill these days because the iPhone is no longer the king of the smartphone hill. Samsung overtook Apple in global smart-phone market share in Q4 last year and has been widening that gap ever since. And while it’s true that Apple’s product strategy is de-signed to be a high-end niche that isn’t con-cerned with market share, that strategy only really works if you maintain the standards that people expect from the high end.
Apple failed to do that with Maps, and it failed in the face of a competitor that had something more seasoned and, for the most part, just better. Apple has enough problems trying to convince everyone that the compa-ny’s mojo didn’t pass away with Steve Jobs. It can’t afford more glaring failures like Maps.TA
Apple replaced Google Maps with a substandard service, and if Apple wants to be in the services business at all, it deserves to get hammered for that
www.telecomasia.net Telecom Asia October 2012 7
INDuStrY ANALYSIS
8 October 2012 Telecom Asia www.telecomasia.net
Singapore LTE market heats up
S ingapore’s 4G market became a three-horse race in Septem-ber, with both
StarHub and M1 launching commercial LTE services.
M1 launched its dual-band 1800/2600-MHz LTE service covering 95% of the city state. This gave it a wider reach than SingTel, despite the latter’s nearly 10-month headstart.
SingTel’s 4G network is not scheduled to reach 95% coverage until early next year. The operator launched dongle-only LTE services in December 2011, introduced its first smartphone plans in June and its first tablet plans in August.
M1 selected Ericsson to upgrade its backhaul infrastructure to support the LTE network. Ericsson will become M1’s primary mobile backhaul provider over the next several years. Under the deal, Ericsson will be provid-ing microwave and optical systems as well as network management solutions from its product portfolio. Deploy-ment has already commenced, the vendor said.
Not to be outdone, StarHub commenced its LTE service on the 1800-MHz band. The LTE network initially covers Singapore’s central business district, as well as Changi Airport and Singapore Expo, and will be expanded to reach more than half of the island by the fourth quarter. Nationwide LTE network coverage is
scheduled to be completed by 2013.
To complement the LTE launch, StarHub is upgrading its 3G network to DC-HSPA+, doubling its 3G downlink speeds to up to 42 Mbps.
SingTel, M1 and StarHub have all adopted 4G pricing strategies that abandon “big bucket” plans in exchange for tiered pricing options. All three have settled on similar prices for the lowest 2GB data plans – around S$40 ($32.50) and the largest 12G plans – around S$200. This 12GB allocation is a significant reduction on the previous data bundles for operators’ premium 3G plans.
But there is some jostling for position in the middle, with both M1 and StarHub attempting to undercut SingTel with their respective mid-range plans.
According to Tolaga Research’s Dianne Northfield, “the outcomes of Singapore’s experiment with tiered data pricing plans are of interest both in terms of their impact on the overall uptake of LTE services, and specifically as a direct strategy by mobile operators to [convince] exist-ing 3G customers to migrate to 4G.
“In the case of Singapore the decision for consum-ers will likely come down to whether advertised and actual 4G speeds, along with the – yet to be proven – reliabil-ity of the new 4G networks, provide compelling triggers to switch plans or indeed opera-tors.” TA
STATSNAP
The average smartphone depreciates in value by 34% during a 24-month retail lifespan, but wide disparities exist between price brackets and brands.
Research from Strategy Analytics attempts to shine a light on depreciation rates for the fast-moving smartphone segment, figures which are traditionally hard to quantify.
The data, compiled from pricing points across 105 channels in 37 countries, highlight the impact of a smartphone maker’s ap-proach to its brand image on handset retail values.
For example, iPhones depreciate at a substantially slower rate over their first 18 months on the market than their rivals, due to Apple’s focus on a premium brand image. Instead, iPhones slide in value by 25% once they reach between 22 and 28 months of age.
According to Stuart Robinson, director for Strategy Analytics’ PriceTRAX services, “iPhones have upheld a clear price differential compared to their counterparts.”
As one of the first high-spec iPhone competitors, Samsung’s Galaxy S1 also held its price over the early parts of its life-cycle due to having fewer competitors to contend with.
HTC’s low-priced Wildfire S had an extraordinarily low depre-ciation rate, suggesting that entry-level smartphones are more resistant to price declines than their higher-end peers.
Second-generation smartphones including the Samsung S2, Nokia N8, LG Optimus and BlackBerry Curve 3 8520 have mean-while all depreciated at a similar level, as competition kept pressure on prices.
Strategy Analytics said a future study will address the impact of a smartphone maker’s portfolio refresh rate on retail prices of their older-generation products.
Average smartphone depreciates 34%
Smartphone depreciation: Down by one-third
Source: Strategy Analytics
www.telecomasia.net Telecom Asia October 2012 9
INSIGHt ONe MONtH’S teLeCOM reSeArCH
>> Regulators risk stifling the internetProposals to impose regulations on the global internet would harm growth and innovation worldwide, with flexible governance required to maximize the economic advantages of the technology. Analysys Mason warns in a report that proposed International Telecommunications Regulations (ITRs), which are being readied for the ITU’s World Conference on International Telecommunications (WCIT) could impede investment in the infrastructure required to support the growing internet population, which is projected to reach 3.5 billion by 2020. The internet as it stands has evolved based on commercial considerations not regulatory dictates, and investments are best achieved without internationally sanctioned regulatory intervention, the report argues. Another problem with imposing regulations on the internet is the issue of sovereignty. An estimated 98% of internet content can be stored in servers, and is often spread across multiple countries for caching purposes.
Internet global growth: Lessons for the futurewww.analysysmason.com
>> VoLTE may help cellcos fight OTT playersMobile operators are banking on VoLTE to make up for declining traditional voice minutes. Average MoU fell more sharply in APAC in Q2 than in any other region worldwide, with a decline of 7.36%, ABI Research estimates. In this context, SK Telecom, LG U+ and MetroPCS have introduced the world’s first VoLTE services, in a bid to counter the competition from OTT services such as Skype, Viber, Whatsapp and FaceTime. The ability of VoLTE to overlay rich media content over voice, and the cost savings of sending voice over packets, could help operators stay competitive against OTT VoIP providers. In contrast to declining voice minutes, mobile data traffic is surging worldwide. Overall 4G traffic is expected to swell at a CAGR of 147% through to 2017, compared to a CAGR of just 70% for 3G data traffic. Messages sent stayed relatively stable in Q2, increasing 0.16% in APAC.
Mobile data traffic & usage www.abiresearch.com
>> SDP better suited to B2B than consumer marketOperators will spend a projected $24 billion on service delivery platform (SDP) software and services between 2012 and 2016. According to Infonetics, operator interest in SDP is increasing across both emerging and developed markets. Operators in developing markets remain focused on enabling consumer application ecosystems via app stores and API exposure strategies, while in developed markets, telcos are investing in SDP to address the enterprise and SMB segments. B2B offerings such as enterprise app stores have greater promise for ROI than consumer-facing offerings and – perhaps more importantly – operators still have an advantage over consumer app giants such as Apple and Google in this segment. Oracle lead the market for SDP software and services in 2011, but had a mere one point of market share on second-placed Huawei, while Huawei itself was just one point ahead of Ericsson.
SDP software and services www.infonetics.com
>> Tablet display shipments to jump 56%Booming tablet shipments will drive a 56% surge in tablet display shipments this year to 126.6 million units, IHS iSuppli predicts. Tablets are increasingly becoming the biggest growth market for small and medium displays. While the 9-inch segment dominated by the iPad will continue to account for the majority of tablet display shipments this year - with an expected 74.3 million units due to be shipped - the fastest-growing market segment will be the 7.x-inch screens used in products like the Samsung Galaxy Tab, Amazon’s Kindle Fire and other Android-based tablets. The 7.x-inch segment will increase its share of the total market to 32% this year, up from 27% in 2011. Just 9% of shipments will be for 8.x-inch screens, and less than 1% will be for 5.x-inch screens.
IHS iSuppli small and medium displays service www.isuppli.com
Regulators dole out penalties for outages
F ines imposed on SingTel and Thailand’s Dtac in September underline the potential financial impact that even brief service outages can have.
IDA Singapore fined SingTel S$300,000 ($244,000) for a disruption of the operator’s
“lio Voice” service last year, due to teething problems at service launch.
The disruption affected SingTel’s then new mio Voice digital fixed-line telephone service in parts of Tampines, Changi and Pasir Ris for varying periods over October 28 and 29, and in parts of Bukit Panjang, Bukit Timah and Woodlands on November 4.
The regulator’s investigation narrowed the fault down to a hardware capacity limitation of the optical line terminals (OLT) at the Tampines exchange and the Bukit Panjang exchange.
Explaining the decision to impose the fine, IDA said that as the cause of the service disruptions was a hard-ware limitation in SingTel’s equipment, the regulator was not satisfied that SingTel had taken adequate steps to ensure sufficient hardware capacity was provided.
But the fine follows a S$400,000 penalty imposed by IDA on SingTel in May for a service disruption in September 2011 – despite the problems lasting less than a day and no actual outage occurring. SingTel custom-ers did report difficulty making and receiving calls, and accessing SMS, MMS and mobile data services during the day in question.
Dtac, meanwhile, accepted a 10-million baht ($320,000) fine from regulator NBTC for a 65-minute partial network outage on August 28.
Dtac CEO Jon Eddy Abdullah accepted the fine without challenging it. However, he noted that only an estimated 1.6 million users were affected out of the total customer base of 24 million.
The operator had already authorised the allocation of free airtime or data worth 100 million baht in com-pensation for its disrupted users.
In Dtac’s case, the NBTC decided to impose the fine in part because this was the operator’s fifth network out-age in less than a year.
But Abdullah has stressed that the outages do not form a pattern, with prior outages caused by the cutting of two cables and hiccups during the migration to an all-IP network.
But both fines will add fuel to the debate over whether APAC regulators should take a heavy-handed or a light-touch approach to overseeing their respective telecom markets. TA
– Fiona Chau and Don Sambandaraksa
asian telecoms this month
BeijingChina Mobile signs off on a plan to procure over 200,000 TD-LTE terminals – mostly smartphones – for 2013.
BT sets up a new joint research lab in Beijing with China’s Tsinghua University. The pair are considering a number of research projects, in areas including business applications for the cloud.
BangkokThe board of state-owned operator TOT resigns suddenly amid controversy over a rogue exchange and political interfer-ence in its 3G expansion project.
Dtac is fined $320k by regula-tors, after suffering the latest in a series of mobile service disruptions.
Ericsson Thailand warns the nation’s opera-tors to ready their networks for an explosion in smartphone sales, and the attendant mobile data demands.
AIS launches 50,000 free Wi-Fi access points, to support the government’s Smart Thailand free public Wi-Fi initiative.
ColomBoSri Lanka Telecom’s Mobitel contracts Huawei and ZTE to expand and upgrade its mobile network, as it prepares for the introduction of LTE services.
10 October 2012 Telecom Asia www.telecomasia.net
Hong kongSmarTone reports a 36% increase in profit to $131m for the year ending in June, attributing strong demand for mobile data services.
PCCW spinoff HKT picks up $13m worth of communications ser-vices contracts from Hong Kong’s Transport Department.
Australia’s Telstra appoints former Telstra Global executive director Phil Mottram to lead up Hong Kong mobile subsidiary CSL.
DelHiThe Department of Telecom presses on with plans to abolish lo-cal roaming fees within India some time in 2013, despite warnings from operators that they will have to raise rates to compensate.
The government issues orders to operators including Bharti, Voda-fone and Idea to call off their 3G roaming pacts, under which they have been offering services in areas where they lack 3G licenses.
Norway’s Telenor is cleared to find a new partner in India, over the objections of Unitech, its es-tranged partner in the Uninor JV.
Vodafone hints it may be willing to pay the initial $1.47b tax bill the government demanded from the 2007 acquisition of its Indian unit – if the government forgoes the larger interest and penalty bill.
manilaThe Philippines’ Smart extends its LTE network to the 1800-MHz frequency band, to accompany the 2100-MHz services which launched in August.
SeoulSK Telecom reaches the 5m subscriber milestone for its LTE network, which launched in September 2011.
SK Telecom unveils two-way handover technology it has devel-oped that supports both FDD and TD-LTE in a single device.
z Apple’s new maps service provokes a wave of criticism over errors, distorted satellite maps and a lack of detail, prompting CEO Tim Cook to issue a public apology – and suggest alternative services to use.
z Google overtakes Microsoft by market valuation to become the second most valuable technology company behind Apple.
z Microsoft wins a German patent lawsuit against Motorola Mobility, covering alleged infringement of a method of interfacing with an app. The disputed functionality is built into Android.
z Samsung wins a court order overturning a US sales ban of the Galaxy Tab 10.1, awarded to Apple in its patent lawsuit against the company. But Apple also files an appeal seeking a permanent US ban of the 10.1 and eight Samsung smartphones.
z Qualcomm lends its weight behind TD-LTE, introducing a China-specific version of its Snapdragon S4 processor supporting the standard, as well as UMTS, TD-SCDMA and CDMA.
z Texas Instruments announces it will start pulling back from the wireless business, concentrating on embedded processors for cars and consumer electronics.
z A report into international cybersecurity finds that APAC governments are not collaborating effectively enough with their counterparts in other nations on security policies.
z Nokia unveils its first Windows Phone 8 smartphones, the Lumia 920 and 820. The former is set to support wireless charging technology and come in pentaband LTE and HSPA+ variants.
z Huawei and Intel sign an MoU to strengthen their engineering efforts to jointly develop new cloud and IT solutions.
z AMD reaches a deal with software company Bluestacks to enable Windows 8 laptops and PCs powered by its chips to run Android apps through AMD’s AppZone player.
z Two major telecom standards groups team up, with the Open Mobile Alliance (OMA) joining the oneM2M Partnership.
z China Unicom expands into Canada, with the aim of providing a backbone between the nations, as well as services to Canadian compa-nies with a Chinese presence and vice versa.
z Samsung reveals plans to debut the Galaxy S4, the latest in its flagship line of smartphones, in February.
z Telstra Global opens a new data center in Singapore, its sixth in the region, to provide colocation services for financial, media and technol-ogy enterprises.
z Ericsson acquires Canadian OSS/BSS software provider ConceptWave for an undisclosed sum.
z Research shows LTE users have finally overtaken Wimax subscribers in the key 4G markets of Japan, South Korea and the US.
z RIM posts a quarterly loss that is far narrower than analysts had ex-pected, due to a less severe than anticipated decline in shipments as the company waits to launch the first BlackBerry 10 devices.
SyDneyNBN Co introduces a range of tailored packages for wholesale custom-ers of Australia’s NBN fiber network to resell to businesses.
www.telecomasia.net Telecom Asia October 2012 11
SingaporeStarHub and M1 both launch LTE networks, around a year after rival SingTel first went live with – at the time dongle-only – LTE services.
M1 contracts Ericsson to upgrade the backhaul infrastructure to sup-port its new LTE network.
OpenNet reveals it has doubled the number of homes connected to the NG-NBN fiber network in the last eight months.
Regulator IDA fines SingTel $245k for a brief disruption to its fixed digital voice service last year – the second fine it has imposed on the operator this year.
jakartaA former supplier for PT Telkomsel succeeds in having the company declared bankrupt, due to an Indonesian law stipulating this for companies that have not paid their debts. Telkomsel, which hasn’t paid the debt due to a contract dispute with the supplier, is appealing.
PT Indosat hands Ericsson a three-year contract to upgrade its radio and core net-work infrastructure, in a bid to improve mobile broadband speeds and coverage.
kuala lumpurMaxis and media entertainment group Astro team up to co-develop and market customer packages combining Astro’s IPTV offerings with Maxis’ fiber, wireless internet and ADSL services.
tokyoSoftbank announces it will pay around $2.3b to buy smaller rival eAc-cess, in a deal set to move it up to second by mobile market share and provide substantial assets for its LTE network.
Operators prepare to cash in on the growing popularity of smartphones in prepaid markets
Joseph Waring, John C. Tanner
Making money from prepaid data
Smartphone penetration in developing markets in APAC is estimated at just 5%. But that’s projected to increase by more than four-fold be-tween 2011 and 2016, according to Strategy Analytics. There are already smartphones available for under $100, and in some cases under $50.
Meanwhile, the smartphones that have already reached Asia’s de-veloping markets represent a huge market opportunity for mobile data services as affordable smartphones become available to people whose first internet experience has been – or will be – with mobile devices.
However, operators in developing markets can’t simply look to their developed-market counterparts for business models targeting smartphone users – at least not beyond the small percentage of wealthy urban users. It’s not a question of what “G” the network supports so much as the fundamental differences between the market segments themselves, says Warren Chaisatien, strategic marketing manager at Ericsson.
COVerStOrY
Ajay Sunder, Frost & Sullivan’s senior director for telecom, Asia Pacific, says operators are devel-oping innovative bundles of voice, SMS and data to target the growing population of smartphone us-ers. He says there is a huge potential for prepaid data services, and operators are just starting to tap this segment.
“The growing number of prepaid data and bundled plans and their popu-larity are a testimony of this opportu-nity.”
A recent study from Ericsson’s Con-sumerLab covering Southeast Asia re-ports latent demand for mobile data services that not only conform to the prepaid experience – top-ups, passes (either time-based or session-based), boosters (i.e. paying a bit extra for a better game or video experience) and cross-service bundles – but also are ap-plication and/or content-specific when-ever possible (i.e. Facebook, YouTube, Twitter, etc), allowing users to buy the exact services they want.
Flexible plansMany operators are offering free
data access services for specific content to get prepaid customers to try out data. For example, Openet marketing man-ager Martin Morgan says free Facebook access is often used by operators to get customers to use apps. Most operators also are testing both volume-based and time-based packages.
Tekelec CTO Doug Suriano says in the short term operators can let subscribers pick plans based on their preferences and budgets. For example, operators can offer application-based service tiers with flat monthly rates, or access by the day, week and month. In both of these scenarios, pricing is flat so subscribers don’t have to risk bill shock.
Multiple Telefónica properties, he says, price data plans by application type, offering one rate for a social me-
14 October 2012 Telecom Asia www.telecomasia.net
dia tier and another for a stream-ing data tier. And by offering data plans by shorter increments than a month, operators can entice subscribers who aren’t ready to commit to monthly data plans, but who need occasional ac-cess. Behind the scenes, operators could set fair usage limits for the day or week, and throttle speeds when that limit is reached – with full disclosure to sub-scribers.
“In the longer term, getting smart-phones into millions of more people’s hands gives service providers additional data valuable to third parties, including over-the-top providers and potential advertisers. As with postpaid subscrib-ers, operators have the opportunity to learn more about prepaid subscriber usage patterns and offer them more personalized plans,” Suriano says.
Some work is already being done to show the way forward. For example, in the Philippines, Smart Communica-tions is offering a package that allows subscribers to access Facebook for a 24-hour period at 50 cents a pop.
“Those kinds of small packages with very low price points are well suited the micro-payment environment, and will encourage new smartphone users to try data services,” says Chaisatien from Er-icsson.
Frost & Sullivan’s Sunder points to a number of other success cases in APAC. Telkomsel in Indonesia offers daily or weekly Facebook packages starting from 10 cents/day with a data-cap of 3 MB (Kartu Facebook) and unlim-
ited browsing (without video/media streaming), BBM and access to social networks on a daily/weekly/monthly basis (Blackberry Socialite).
Airtel’s Internet Data Pack gives pre-paid customers 500 MB on 2G and 500 MB on 3G networks with validity of 30 days from the date of recharge. The cost is 151 rupees (about $3) and customers need to switch manually between 2G and 3G networks.
Transparency crucialSunder argues that one main obsta-
cle to the adoption of data top-up bun-dles by prepaid consumers in emerging economies is the non-transparency or lack of visibility on usage. “Billing for data is not something that can be pre-measured/pre-calculated by user, be-cause you do not know how data-inten-sive a website/app is before loading. So this typically means if a user is browsing web applications, he cannot predict the usage.”
For voice and SMS the user of course can roughly calculate the cost based on minutes of use or number of messages sent.
Tekelec’s Suriano says the lack of integration between policy and real-time charging remains a barrier. Many vendors use proprietary interfaces or policy systems that have difficulty scal-ing to support many transactions and so much Diameter traffic.
it. “To accomplish operators’ desire to create two-sided business models and provide sponsored and toll-free appli-cations requires a solution that allows operators to securely expose APIs.”
He also points out that the defini-tion of “end-to-end” is changing, with operators desiring to control policies to the handsets themselves. This would open up new avenues of cost control and revenue for all subscribers.
For example, he says, service provid-ers could offer sponsored mobile data over a carrier-owned Wi-Fi network at a sporting venue if a third party ran advertisements on top of the content. Or, the operator could limit the signal-ling messages that chatty applications send to radio towers, maintaining RAN resources and giving operators some defense against poorly-written applica-tions.
In terms of commercializing such services, Ericsson’s Chaisatien recom-mends an end-to-end approach to policy control, which requires deep interaction between the policy control-ler, core and radio networks, as well as integration of OSS/BSS and the service layer, and orchestration between con-tent provisioning and customer-facing functions. The payoff is the flexibility to enable new services as new smartphone applications emerge.
Put another way, it will give op-erators the flexibility to innovate – and that’s going to be a key capability in competitive markets. TA
We’re seeing is a second wave of policy, whereby old systems that supported only a small number of use cases, are being replaced with more sophisticated systems
“The process to top-up data plans, change plans in mid-month or do a try-and-buy approach all require a scalable and reliable Diameter network. Also, the Diameter routing market is in the nascent stages, meaning Diameter traf-fic is often a complex mesh that limits the possibilities of creative new rate plans.”
For telcos to be able to move into prepaid data, says Openet’s Morgan, the key is back-office flexibility. With data services, he noted that new plans and tariffs often have a shorter shelf life than traditional voice and text bundles. “Therefore, having BSS support rapid product development is important. And the pace of change is only going to in-crease. When operators start to further roll out direct operator charging, where they charge for third-party content, then the need to offer system flexibility will only increase.”
The number and sophistication of new bundles, price plans and offers will increase while time to market will fall. Morgan said the result of this will be increased complexity in an operator’s product marketing department and the supporting BSS solutions.
“To succeed with data and content, operators will need to understand that they have many more usage variables than they’re used to dealing with for voice and texts, and so the opportu-nities for delivering more segmented and personalized offers are increased. Through personalization customers will get offers that suit them. However, it is only by having a flexible and agile BSS, which can quickly support the new levels of complexity that data and con-tent will drive, that simplification and personalization can be delivered to cus-tomers,” Morgan says.
Suriano noted that most operators now can handle the basic policy and charging use cases, like tiered services by volume and throttling for overages. But he says new use cases are still lag-
ging in APAC and other regions.“For one, policy and charging inte-
gration and scalability keep operators from quickly introducing new use cases. We’re starting to see some movement on the postpaid side, like with shared data plans. As prepaid smartphones grow, it’s only natural that offers for that market also will expand,” he says.
Policy controlMorgan insists that policy control
is essential to giving operators the flex-ibility to innovate with new services. He agrees that almost all operators have some degree of policy management – ranging from fairly straightforward fair usage controls to advanced tiered ser-vice offers.
“However, what we’re seeing is a sec-ond wave of policy, whereby old systems that supported only a small number of use cases, are being replaced with more sophisticated systems. This new level of sophistication is required as opera-tors roll out new services and look to policy, not just as a method of control-ling network usage, but as an enabler of product and service differentiation. For example, providing differing QoS for different applications, prioritization for certain customers and offering a vari-able network experience as a marketing offer all need to be supported by a flex-ible policy management system.”
Suriano suggests that data plan in-novation can only be as flexible and powerful as the policy server behind
www.telecomasia.net Telecom Asia October 2012 15
Robust yet slowing growth
16 October 2012 Telecom Asia www.telecomasia.net
International internet capacity con-tinued to increase at a brisk rate – aggregate backbone bandwidth more than doubled in the past two
years – but the growth rate slowed for the fifth consecutive year, dropping to just 40% from just under 70% back in 2008.
According to a recent report from TeleGeography, international internet capacity jumped from 37 Tbps in 2010 to 77 Tbps in Q2.
The research firm’s annual survey of internet backbone operators found that the decelerating network capacity growth rates are mirrored in declining rates of peak and average international internet traffic growth.
TeleGeography reported that aver-age international internet traffic grew 35%, down from 39% last year, and peak traffic grew 33%, well below the 57% in-crease recorded in 2011. The firm noted that global average and peak utilization rates dipped slightly in 2012, as the rate
IP CAPACItY
of bandwidth growth outpaced increases in underlying average and peak traffic levels.
The report said the modest decline in utilization rates is not unusual. In the past five years, peak utilization rates have fluctuated within a fairly narrow band.
While some operators have predicted that soaring traffic would overwhelm networks, TeleGeography noted that this has not proven to be true on interna-tional links. “Steady investment in new capacity has contributed to remarkably stable levels of average and peak traffic utilization on international networks.”
The question is if the steady decline since 2008 will continue for the foresee-able future or will it be reversed by say a surge in mobile video traffic.
TeleGeography research director Alan Mauldin told Telecom Asia that forecasting growth rates is tricky. “I’m not sure I’d say it’d be the same rate of decline. I suspect the slowing rate of
growth will continue in many countries, but annual growth can be lumpy with strong growth in one year followed by slower growth the next year.”
He says that while mobile video is certainly growing quickly, it’s not any more likely to generate international traffic than video accessed from fixed connections. A large amount of video (whether accessed by mobile or fixed networks) is served locally from cach-es or from CDNs, so each time a user watches a video, international traffic is not always created.
Global IP transit prices continued to fall as declines accelerated in most regions. The median GigE port price in New York fell 50% from Q2 2011 to Q2 2012, compared with a 28% CAGR de-cline over the past three years.
TeleGeography reported that median prices of GigE ports over the past five years dropped at a CAGR of 22% in New York and São Paulo, 26% in Hong Kong and 31% in London.
Mauldin reminded us that IP transit prices only go in one direction – down. He says the underlying cost of transport capacity continues to get cheaper on a per unit basis. “But as the major interna-tional backbone operators expend their networks into new markets, prices in these cities tend to drop quickly as well.”
Despite sharp price drops glob-ally, significant geographic differences persist. For example, the median Hong Kong GigE price has remained 2.3 to 5.1 times the price of a GigE port in London over the past seven years.
The latest survey found that the low-est 10-Gbps port prices have fallen to 50 cents per Mbps or less in the US and western Europe. The report said: “Cave-
IP transit price declines accelerate – dropping 50% in NY – while internet capacity continues to expand, but at a slower growth rate
ats usually apply to such rock-bottom prices, such as short-term promotions, non-standard terms and conditions, and potentially sub-optimal performance levels. Beyond these exceptional prices, high-volume transactions between cus-tomers with significant buying power and sellers with a particularly aggressive pricing strategy can establish new price floors, which eventually become avail-able in more common transactions.”
The lowest rates can draw attention but can vary sharply by carrier. For 10-GigE ports in London in Q2, the price ranged from $1 to $6 per Mbps per month.
While Africa, the Middle East, East-ern Europe and South Asia have high average and peak traffic growth rates – ranging from 75% to 92% – Mauldin doesn’t see any change in what carriers plan to invest beyond what has been tak-ing place in recent years.
“IP backbone operators will contin-ue to add capacity to their networks as demand requires, but they will also use caching technologies and CDNs as well to reduce the amount of new interna-tional capacity they need to purchase,” he says.
To the extent possible, he says, opera-tors seek to keep traffic off the interna-tional portion of networks and for uti-lization rates to remain at manageable levels.
Africa had been one of the few re-
gions with somewhat high levels of utilization given limited and expensive transport capacity. Mauldin says that as prices continue to tumble there and the new capacity becomes more readily ac-cessible, operators will be able to incor-porate more capacity to lower utilization rates.
The four regions, which have posted more than a 75% CAGR in internet traf-fic over the past four years and have ex-tremely low broadband penetration, will no doubt fuel strong capacity growth for many years.
While the three highest-capacity in-terregional routes are connected to the
US and Canada, the report found that in-ternational network capacity has become less centered on the North American re-gion due to the development of rich re-gional networks, coupled with a need for diversification.
The shift is the most pronounced for Africa, where the region’s share of capac-ity connected to the US and Canada has dropped from 40% in 2003 to just 4% this year. Asia has seen its share fall during the same period from 68% to 42%.
Mauldin explains that the change in Africa is not really due to a rise in regional African capacity but rather far greater in-ternet capacity linking Africa to Europe. Since the price of IP transit in Europe is the same as in US, he says there is no need for an African operator to connect direct-ly to the US given it’s more expensive for the transport for Africa-US compared to Africa-Europe.
“Multiple new submarine cables link-ing both coasts of Africa to Europe have entered service in the past few years, which has increased competition, lowered prices and brought connectivity to many places for the first time.”
Looking at Asia, he expects the share connecting to the US and Canada to de-crease for two reasons – continued growth of intra-Asian IP capacity and more rapid growth in Asia-Europe capacity. TA
Median GigE IP transit prices continue to fall
Average and peak traffic by region (2008–2012 – CAGR)
LTE is about lowering costs for operators and enabling new service innovation, says SmarTone CEO Douglas Li. “At the end
of the day, it’s not about speed. Ca-pacity is actually more important than speed – it’s the rationale for LTE.”
Because SmarTone had new spec-trum, by installing the next-generation technology “we could double our ca-pacity overnight.”
Li says SmarTone moved to LTE be-cause over the long term, after the wide adoption of LTE, its cost base is going to come down. “The cost of equipment is going to come down, the cost of devices is going to come down and new service innovation will be more likely because everybody is moving to it.”
He says he’s worried that by touting the superior speeds of LTE customers could be disappointed when they find that many apps only run slightly faster. “There should be little or no difference in the customer experience for most use cases between 3G and 4G – except for large file downloads and speed tests.”
He asks, do operators really want phones to indicate 3G and 4G? Because operators won’t tear down their 3G net-works anytime soon, he suggests mov-ing to stating simply “narrowband” or “broadband”, noting that the intention from the start was for 3G and 4G to work together interchangeably.
“Actually, I’ve told my team that we will continue investing in HSPA to make sure the gap between the two isn’t material in terms of the customer expe-rience in most use cases. Why? Because I intend to use that full capacity since users won’t be on 4G all the time.”
Depending on the LTE spectrum band deployed, many operators need to continue to boost their in-building cov-erage with 3G.
“The reality is that even if I’m will-ing to make the payments, can I change my 2100-MHz spectrum to 4G now? No. There is no equipment available because there is no demand for it in the global market. No operator wants to tear down its 3G network, therefore there is no demand and I can’t get the equipment. I’m only in Hong Kong – the vendors won’t give you the time of day if you ask for 2100. Not for many years to come in fact.”
He admits that if you’re not heav-ily invested in 3G you can think about
switching earlier and if you want to gain the 30% increase in spectral efficiency, then that’s the way to go in the long run.
Looking at the key lessons learned from the first wave of global LTE de-ployments, Li says the industry is re-learning the same lessons it learned before.
“Normally any new technology, no matter what people say, takes time to get the bugs out. That has been going on for more than 18 months. Things have moved along, but it means someone had to bare the brunt of going through that with the vendors and ironing things out.”
The second issue, he says, is that de-vice availability has always been a big bet. This is especially true with LTE with the proliferation of frequencies being used across the world.
“I have no doubt that in time 4G LTE, in terms of scale in acceptance in global markets, will obviously be great-er than 3G. But the fragmentation of frequency bands will clearly pose a tech-
SmarTone’s Douglas Li
Breaking into the LTE gameSmarTone CEO Douglas Li explains why LTE is about capacity, not speed, and how Hong Kong cellcos have managed to avoid the dreaded scissors effect
Joseph Waring
www.telecomasia.net Telecom Asia October 2012 19
I’m only in Hong Kong – the vendors won’t give you the time of day if you ask for 2100 MHz
nical as well as an economic challenge.”He notes that vendors will certainly
want to come up with chipsets that sell in the greatest numbers. “Fragmenta-tion creates a variety of SKUs. I’m not sure if they can condense every band into one chip. They probably can, but it takes time and money. But does it make sense for the players in the eco-system?”
This means the choice of frequency, he says, is quite critical for operators un-less you are a very big operator – like in the US – and you can influence things a lot more. “But if you’re not able to influ-ence the supplier community, then you need to make some bets.”
The third lesson, he says, is master-ing the learning curve in the technical implementation of a new technology. “As an operator we do a lot of things to enhance performance, so we have to learn to fit that into the LTE environ-ment. And there are things to develop on the OSS side and the BSS side, in terms of monitoring the customer ex-perience better in real time and display-ing in a meaningful format to be used by different parts of the organization.”
He says there is a lot of work there.LTE is clearly faster than HSPA when
looking at the pure specs, with twice the download speed and 5-7 times the up-load speed.
“Everything being equal, on a theo-retical basis that’s the gap between LTE and HSPA+ dual carrier. With large file downloads where the network is just a big pipe and the operator has few op-portunities to tweak the network, that is kind of difference you’ll get, subject to local conditions.”
But for more common uses – brows-ing, streaming video, downloading apps from app stores – Li says there are op-
portunities for operators to squeeze performance out of the core specs of 3G and 4G.
“We’re talking about the service net-work layer to link the telecom system to the content wherever that content is on the internet to customers on the device of their choice.”
He notes that by doing real-time network optimization, an operator can shave time and resources here and there, which means it can squeeze more capacity out of what it has.
“Clearly the greater the capacity you have to serve a given number of cus-tomers, the more you can enhance your performance over the chain of interac-tions triggered by customers.”
Asked about how SmarTone is deal-ing with the so-called scissors effect – the large gap between the required net-work investment and the revenue gains from mobile data subs – Li claims the Hong Kong market is slightly different from the rest because it became super competitive a lot earlier.
“We’ve gone down the route of cheap voice and bundled packages with thousands of minutes and free intra-network SMS long ago. When data came along with dongles, we priced it at a point we thought was reasonable, and it yielded better profit margins than our tradition voice and messaging busi-ness.”
With the gradual adoption of mo-bile broadband, data usage surged, but given the economic model based on the original pricing that all players coa-lesced around, he says, the industry in Hong Kong somehow found a way to “get out of the valley” of low prices and low margins on data.
“I don’t believe we’ve had that scis-sors effect. But if there is any more com-pression on operators’ earnings, it will go back to pure competitive dynamics in the marketplace. If others decide to drop prices, we’re not talking about the same thing. But the pricing works here, and in fact data is priced in a way that allowed the industry to lift its profitabil-ity from a very low level.”
He noted that competition in Hong Kong is so severe that coverage is far better than in most places.
“We sunk that cost [in infrastruc-ture] and went through that pain early on with 2G and 3G. Hong Kong opera-tors took a beating on the revenue side then, and now with data they’re reaping the benefits. Ultimately, profitability now is more based on pricing – that’s where the competitive dynamics are be-ing expresses.”
But he says he’s never happy with his overall margins. “Why am I investing so much and getting so little in return compared to all the other guys over-seas?” TA
Consolidation comingBICS chief commercial officer Nicholas Nikrouyan explains to group editor Joseph Waring why multi-service players will come out as the winners in the transformation to IPX
Q&A: WHOLeSALe OutLOOk
20 October 2012 Telecom Asia www.telecomasia.net
Telecom Asia: How is IPX going to transform the way carriers do business?
Nicholas Nikrouyan: One of the first things it’s going to do from a commer-cial model is to change the parameters and the way we look at our P&Ls and our balance sheets today in terms of the profitability of each product line and the way we define it today, which is very much segmented by product and so forth.
IPX is going to create an environ-ment where a lot of the retail operators today, where the bundling effect comes in, are going to look at one bundle of pricing from a pricing structure and various levels of service going through it. I think it’s going to impact fragmen-tation in industry, because IPX is an en-vironment where multi-service carriers are going to be the ones who come out as winners in terms of how the market is going to evolve within the next few years.
Why do you see the multi-service operators coming out on top?
It’s going to be difficult for opera-tors and carriers that are very much focused on a particular product line. Multi-play carriers that are not only in the voice domain or the data domain and carriers that have a global reach from a capacity perspective are go-ing to have an advantage. So basically, [it’s] the carriers that are on their own and are multi-service providers today or those that through partnerships can create an environment of multi-capillarity and multiple service provid-ers. It’s an environment where bilateral relationships are going to change to a hubbing model, where it’s going to be one to many relationships.
From that perspective operators around the world are going to look for providers that can do this seamlessly and not have too many providers. Today you see a lot of operators, for example, being interconnected in some cases to hundreds of carriers to be able to man-
age their voice activities and their mes-saging and mobile data activities.
It is going to go into more of a con-solidated view, and operators are going to want to deal with up to a maximum of five carriers that can, from a service level, provide all services.
I think we will not see as many car-riers in five years time as we do today. It’s going to be basically though invest-ments, organic or inorganic activities, that they [the winners] can create an environment where there is one seam-less product offering to the custom.
How can wholesale carriers help mobile and fixed-line operators improve their customer satisfaction and profitability in international roaming?
With more people roaming around the world, mobile operators and fixed operators in general can make their operations a lot more effective and ef-ficient in terms of how they provide services to the end-user customers. At
BICS’ Nicholas Nikrouyan
www.telecomasia.net Telecom Asia October 2012 21
BICS we invest a lot of money, time and energy in making sure we provide the services so that the operators out there don’t have to do the investment on their own. There is no longer the need for every operator out there doing individ-ual investments to be able to serve their end-user customers.
The basic principle for any operator is to provide the best service possible to the customer, which is seamless and at the right pricing structure. Carriers such as BICS can provide those types of services.
By doing what I call smart partner-ships, where we invest in creating the products and in making sure that the products work and that the mobile and fixed operators don’t have to do the same investment on their own, I think those types of partnerships can create a lot of value for the end-user customers.
And the service that they get is also at the highest level, because we are not competing in the same market for the same customers.
As a wholesale player, what can you do to mitigate continuously declining margins?
Partnerships are very important in that aspect. The fact that we all don’t need to do the same level of investments and repeating, creating and inventing the wheel over and over again. There is no doubt, especially in the voice do-main, that you see declining margins. When you look at retail operators in lo-cal markets with triple-play and quad-ruple-play and bundling effects, a lot of them see voice as a value-added solu-tion that is given away basically for free. When we talk about IPX, for example, there is a lot of discussions as to how voice in that environment is going to be priced and monetized.
The declining margins are going to continue, there is no ifs, ands or buts about it, and the more competition there is the more it’s going to take place. We need to make sure we move up the value chain.
From our perspective we continue
to invest and develop new products that serve the mobile community. We tend to create a lot of services that add on top of the basic layer of voice in terms of re-porting and making sure the operators understand the behavior of the custom-ers. Any type of value-added services we can put on it and new product lines that we can add on top of what the industry has today I think is going to be mitigat-ing that decline.
It’s going to be very difficult to mitigate some of the declines that we’ve seen in voice. The other thing is that the more consolidation that takes place, where there is going to be a few very large players out there, I think that should also mitigate to a certain extent the consolidation of the finances as well.
But it’s investments in a new prod-ucts, it’s being creative and basically making sure that we respond to the customers’ requirements and needs and provide services that they see value in using and trying to monetize that in the end. TA
By doing what I call smart partnerships, we invest in creating the products and in making sure that the mobile and fixed operators don’t have to do the same investment on their own”
Transforming the network for the digital ageTelcos have an opportunity to transform their networks into starring roles that today’s customer demands are dictating
By Geoffroy Deschamps, Luc Grimond, Monte Hong – Accenture
VIeW POINt
22 October 2012 Telecom Asia www.telecomasia.net
We live in a digitally demanding world, especially as the thirst for data continues to grow. To support new
data services communications service providers (CSPs) need to transform their networks in ways more profound than the analog switch off, the creation of the cellular network or the transfor-mation to all-IP environments.
It isn’t going to be easy. And as de-mand escalates, tremendous constraints will be placed on networks, impacting the entire end-to-end network life cy-cle, from network planning to opera-tions. CSPs will learn how to transform their networks and their support sys-tems, which will take them into the next generation, by using powerful tools for infrastructure, delivery and operations.
The changes will be monumental, since, as operators upgrade their net-works to fiber and 4G, they have to plan for the all-IP transformation, sun-set their legacy voice network (such as POTS or plain old telephone service),
and converge their internet access (such as IP DSL and fiber), IPTV and wireless networks.
In addition, CSPs will need to en-hance their current networks with real-time measurements, data correlation and prediction, and customer-specific profile and behavior and location-based information. They will need to improve coordination across network planning, delivery and operations to get network organizations to work together.
To address all these challenges, CSPs will have to master three types of net-work capabilities.
pacity requests, operators should man-age both the supply and demand side and find alternative ways to offload traffic from the bandwidth-constrained networks such as the cellular backhaul.
On the demand side the ability of networks to deliver high-bandwidth media content, combined with the in-crease in screen size and resolution of
consumer devices, has dramatically impacted data consumption of wire-less subscribers. Some CSPs have had 8,000% growth on their networks over the last three years. If they have not already done so, operators will have to stop unlimited data plans, increase the per-gigabyte price of data plans, and monitor these outsider customers and implement fair-use policies.
On the supply side, operators should increase capacity to capture the value generated by the extraordinary demand for data, upgrade to next-generation networks and install fiber networks all the way to the cell sites or to the curb. Additionally, operators should find al-ternative ways to offload traffic in stra-tegic areas.
One solution is to deliver mobile data traffic through the Wi-Fi access network, which improves the quality of service and user experience, and avoids localized network congestion issues. Using Wi-Fi offload is becoming an important part of many carriers’ net-work strategy to improve network per-
formance in busy areas. CSPs should consider strengthening this strategy and adapt it to various environments, such as stadiums, airports or residences, using home-based Wi-Fi routers and femto-zone services.
CSPs should also consider creating separate strategy and planning func-tions to identify emerging technologies (mainstream and otherwise), define the serve strategy and specify the required supporting network architecture. In addition, CSPs should consider the op-portunities available through a well-ex-ecuted network-sharing venture.
Based on Accenture’s experience, a well-executed network sharing venture has the potential to reduce standalone run costs by 20-40%. From one-third to two-thirds of those benefits are root-ed in cost avoidance while the balance results from actual cost reductions. Also, network sharing can help CSPs significantly accelerate deployment speed, plug coverage gaps and ultimate-ly improve the customer experience and grow revenues without increasing net-work costs.
2. DeliveryFinding ways to monetize their net-
work assets is undoubtedly at the top of most CSPs’ lists. One way to do so is by making the network itself “intelligent”, converting raw network data in a sim-ple format for marketing and commer-cials purposes using network analytics. There is huge value to dynamically link customers to their products and servic-es. Network analytics, used effectively, can enable CSPs to proactively respond to quality of service issues, improve the user experience and allow the network itself to be a core competitive advantage and differentiator.
While network analytics enables CSPs to leverage information from the network to improve customer profiling, it is also possible to use data gathered to develop customer-focused offers aligned with their needs and history. Data analytics aggregates and analyzes network data, based on things like lo-
CSPs should recognize that consider-able value can be extracted from ex-isting products, which may be used by millions of customers. As a result, CSPs should consider restructuring their product portfolio in a way that allows the network and IT organiza-tions to streamline their operations and processes and take cost out these high fixed-cost businesses.
Ordinarily, the marketing organiza-tion sets the requirements for the net-work and IT organizations to support their growth agenda. In this case, the roles should be reserved, with the net-work and IT organizations setting the requirements for the marketing organi-zation to support their cost-reduction agenda. Systems and network invest-ments should be capped and limited to solving critical issues or to develop-ments that will facilitate product ra-tionalization and customer migration to next generation of products.
The outsourcing optionCSPs that want to transition to a
more efficient, revenue-generating op-eration should also consider outsourc-ing as a strategy that can both reduce costs and improve operations. By out-sourcing a spectrum of network opera-tions – such as planning, engineering, provisioning and management. One North American CSP achieved 40% cost savings and experienced improved service in a number of areas, including the percentage of orders meeting the customer-desired due date.
It’s certainly not an easy time for CSPs and their strapped networks. However, by taking appropriate actions, they can take hold of a unique oppor-tunity to place their networks into the starring role that today’s customer de-mands are dictating. TA
Geoffroy Deschamps is a manager and Luc Grimond is a senior manager with Accenture’s communications, me-dia and technology strategy practice; Montgomery Monte Hong is Accen-ture’s managing director for the com-munications industry group
cation, device type, demographics and payment history.
Using the data, CSPs could, for ex-ample, offer a service to credit card companies for their high-limit credit customers, sending alerts to both cus-tomer service representatives and cus-tomers when a purchase or debit is made in Singapore using a card while the person’s cellphone locates them in Bangkok.
3. OperationsCSPs, of course, need to effectively
control their operational costs while dealing with an increasing number of complexities, such as interconnected and converged services, and the pro-liferation of technologies and devices. This requires streamlining operations, redesigning their organizations, pro-cesses and systems, and finding ways to lower the cost of operating existing networks such as 2G and POTS. At the same time, they should transition the costs of planning, building and operat-ing existing and new networks and ser-vices to next-generation networks.
One way to achieve this is by stream-lining operating models with well-defined, functional “building blocks” that standardize processes. One North American CSP used this modular ap-proach to reduce order cycle time from 30 to 60 days, to 21 days, while sustain-ing a 60% volume increase and reduc-ing costs by 22%.
Other CSPs balance operation ex-cellence by including in their operating model a set of measurements that work across a range of apparently conflict-ing key performance indicators (KPIs) in functions that include expenditure (capex/opex), customer experience, network and service quality, or adop-tion of new technology. Still other high performing CSPs operate their growing products and markets differently than existing products.
When considering products such as 2G, ATM DSL or POTS, CSPs should think with the end goal in mind – typi-cally “platform retirement”. However,
www.telecomasia.net Telecom Asia October 2012 23
Collaboration: The path to growth
Serene Chan, Frost & Sullivan
The Indonesia mobile commu-nications market is known for being intensely competitive. The market remains highly promising with abundant
upside opportunities. However, with mobile penetration approaching 120%, there is increasingly less room for sub-scriber growth.
During the most recent financial dis-closure, a number of operators reported further downward pressure on ARPU. Clearly, the market conditions signal an urgent need to shift from a subscriber-based model to a revenue-generating one to achieve future growth.
Smaller operators’ primary strategy has been to aggressively cut prices. As all players retaliate it has become clear that competing primarily on price is not sustainable even if the market is still expanding. Despite having more than ten mobile operators for years, the big three players maintained their strong
foothold with a 75% share of the mar-ket. Clearly, the established players have the financial muscles and brand equity to counter price-cutting measures from the smaller operators.
However, the competitive landscape and value chain are changing with the emergence of over-the-top services and numerous content providers offering voice and messaging services for free. In a price-sensitive market like Indonesia, we can be certain that consumers will jump on them. The innovativeness of operators will be put to test.
The smaller players have been re-sponsive to market challenges as they prove their resiliency through mergers and acquisitions. Notably, Mobile 8 and Smart Telecom last year integrated their assets and created a new brand identity and tag line – “I Hate Slow” – that struck a chord with consumers. Axis, another fast growing operator, received $1.2 bil-lion in support for its network expan-
sion from the Saudi Telecom when the key stakeholder raised its shareholding to 80%. More recently, Bakrie Telecom and Sampoerna Telekomunikasi started working toward a share swap to inte-grate the two businesses under a single management.
The consolidation of resources and scale are accompanied by a greater em-phasis on the customer experience, with moves to improve the quality of calls, connections and mobile internet speeds key to driving growth.
The strategy comes as no surprise given that Indonesia’s smartphone pen-etration rate of 12% is causing mobile operators to feel the competitive pres-sure from over-the-top players. The Android operating system is well po-sitioned to overtake RIM in Indonesia. With Android smartphones priced be-low $300 and getting cheaper, mobile operators are bracing themselves for unprecedented challenges.
24 October 2012 Telecom Asia www.telecomasia.net
COuNtrY fOCuS: INDONeSIA
Greater collaboration would enable operators to focus on brand commu-nication and educating consumers on their value proposition”
www.telecomasia.net Telecom Asia October 2012 25
Although the emergence of afford-able smartphones is arguably a contrib-utor to declining voice and messaging revenue, the rising adoption also gives operators the opportunity to differen-tiate themselves in a way that was not possible in the past. First of all, the pro-liferation of white-label smartphones offers the opportunity for mobile oper-ators to subsidize smartphones at a low-er cost. Secondly, an effective bundling strategy comprising devices, voice, mes-saging, data and value-added services would enable operators to generate small-screen revenue streams. Higher data usage could be encouraged with the additional bundling of multi-SIM cards for smart devices to cater to the market’s multi-SIM culture and grow-ing popularity of tablets.
While bundling seems like an obvi-ous strategy, an operator’s success de-pends heavily on its ability to identify and assess its target segment’s data con-
sumption needs, including their choice of mobile apps and content and usage pattern at different times of the day to develop a pricing model around those characteristics.
At the same time, in delivering on their promises for better internet speeds and wider coverage, the operators’ cur-rent priority would be to enhance their networks to cope with exploding data consumption coming from a larger number of subscribers. But given that ARPU has remained tight for many op-erators, capital expenditure would be a strain on their resources.
With these challenges in mind, a few questions arise. Is the network in-frastructure key to differentiation and generating higher returns? Would a collaborative approach be a viable busi-ness model? Would the sharing of next-generation infrastructure bring about a win-win outcome to lower costs and accelerate network deployment?
We believe that greater collabora-tion would enable operators to focus on brand communication and educat-ing consumers on their value proposi-tion using non-technical jargon that consumers could relate to. It has barely been a year since the government had to cancel all mobile value-added ser-vices to address mounting complaints from subscribers who were shoved with unwanted value-added services. To re-gain consumers’ trust, operators need to launch a range of attractive mobile commerce applications and services.
Although years of fierce price com-petition has generated a sense of mis-trust among operators, they have to re-alize that their competitors are not just their traditional rivals but a whole army of content providers offering a plethora of services for free. TA
Serene Chan is an industry analyst in Frost & Sullivan’s ICT practice, Asia Pacific
Robert Vrij has become president of global sales and marketing while Stephen Carter has been appointed managed services president and EVP of corporate restructuring. Philippe Keryer is now president of networks and platforms business.
Thuraya taps media services head
Mobile satellite services operator Thuraya Telecommunications has named John Huddle as its new head of market development for media services. He will oversee the development and execution of the company’s global market strategies, pricing and operations of its MediaComms suite.
Small Cell Forum appoints chairman and CEO
The Small Cell Forum has named Gordon Mansfield as its new chairman and Graham Wright as CEO to handle the day-to-day management of the Forum’s activities.
Mansfield, currently executive director for small cell solutions and RAN delivery at AT&T Mobility, succeeds Simon Saunders, who is moving on after founding the Forum in 2007.
The Forum has also announced its new executive board which includes representatives from: Airspan, Alcatel-Lucent, AT&T, Cisco Systems, Ericsson, InterDigital Communications, ip.access, Mindspeed, NEC Europe, Nokia Siemens Networks, Qualcomm, Radisys, Softbank, Ubiquisys and Vodafone.
Trend Micro gets new country manager
Trend Micro has named David Siah as country manager to lead its Singapore operations. Siah joined Trend Micro from Orion Health, a provider of clinical workflow and integration technology for the healthcare sector.
OpenCloud names CTOTelecom software supplier
OpenCloud has appointed former Vodafone and Airwide executive Phillip Stubbs as its new CTO. Stubbs replaces David Ferry, who assumes a newly created role of chief engineer with the company’s R&D division in New Zealand.
has named Chee W. Kwan as VP of worldwide sales and Uri Yaffe as VP of business development.
Prior to Altair Semiconductor, Kwan was VP of worldwide marketing and sales at BroadLight. Yaffe previously founded and served as the CEO of Cellular Bridge, a business development and consulting company focused on the telecom and internet industries.
Clarity hires global sales VP
Jon Collins has joined Clarity as SVP for its global sales and alliances team.
Before joining Clarity, Collins has 30 years of experience and held senior roles in leading telecoms technology companies including Telcordia Technologies, Syndesis, AT&T, Contel ASC and Comsat UK.
He also served on the board and the executive committee of the TM Forum for 6 years.
IDC appoints telecom lead Charles Reed Anderson has joined
IDC as associate VP and head of the telecom practice. Anderson will head the firm’s telecom research and co-lead its mobility practice in APAC. Previously, he was head of innovation for APAC at BT Global Services.
CSL appoints CEOTelstra has appointed
Phil Mottram to lead its Hong Kong mobile subsidiary, CSL.
Mottram is currently executive director of global sales at Telstra Global. He joined Telstra from BT where he was director of sales for BT’s Openreach.
Han Willem Kotterman, currently CSL’s acting CEO, has been promoted to executive director for strategy and business development at Telstra International Group.
Separately, Bill Xiang, former CEO of ZTE Australia and New Zealand, has been named executive VP for mass market at CSL.
New head for BT Global Services
BT has promoted Luis Alvarez to CEO of BT Global Services.
Alvarez will take over from Jeff Kelly, who will continue to be part of the BT team, becoming a senior executive advisor to BT in the US in a part-time capacity.
Alvarez has been with BT for 12 years in a variety of roles, and is most recently president of BT Global Services Europe, Middle East, Africa and Latin America.
Alcatel-Lucent reshufflesAlcatel-Lucent has
announced a series of management changes, as part of a restructuring that will be effective from January 1.
Paul Tufano will take on the newly created position of COO role in addition to his current role as the company’s finance chief. He takes responsibility for global supply chain and procurement, and for three individual focused businesses: enterprise, strategic industries, and submarine.
POSt SHOWAsiAn CArriers’ ConferenCe • september 3-7 • Cebu, the philippines
The wholesale sector may be suffering, with prices plum-meting and volume growth slowing, but you wouldn’t know it by the 1,200 execu-
tives who spent the better part of a week in Cebu, Philippines, in early Septem-ber ironing out bilateral deals with their many partners.
Judging from discussions with a number of telcos, that’s a lot of voice and a bit of data. A common question when people would meet was “do you handle voice OR data?” So much for convergence.
Doy Vea, chief wireless advisor at Smart Communications, set the tone for the wholesale gathering by boldly stating that: “It’s the end of the world for old business models”. He said that according to Ovum, 75% of voice traffic now is VoIP. Margins are continuously being squeezed and increased volumes can only make up the gap for so long.
Vea said the future is to “go retail,” which was the theme of the eighth Asian Carriers Conference – “Transfer-
Wholesale players ponder bilateral automation
ring to a new telecom wholesale-retail ecosystem.”
Telstra Global’s Jim Clarke said in his presentation that as the line be-tween wholesale and retail gets blurred the need for quality networks only be-comes more important. “Dumb pipes in the future will be very important.”
A common theme among the five plenary speakers was the im-portance of IPX in enabling wholesale players to move up the value chain. Clarke said IPX will allow mobile operators to offer faster speeds, higher capacity bandwidth and introduced new services and apps.
While IPX is expected to help operators innovate more rapidly, Edwin van Ierland from iBasis point-ed out in the panel discus-sion that it won’t slow the decline in prices and by
no means will fix telcos’ main
problems, which will continue into the future.
Epsilon Telecommunications CEO Andreas Hipp said that the rise of global exchanges, such as network hubs, is cre-ating new ways to interconnect, which is driving a move away from the legacy approach. Expanding volumes, lower prices of traditional wholesale services, short lead times and increasing techni-cal complexity, he claims, make it more difficult to manage everything in-house.
“It is difficult to maintain your own infrastructure and interconnect base at the required cost points to remain competitive and flexible due to a lack of scale,” Hipp said. Epsilon’s recommend-ed response to the crunch, naturally, is to outsource to reduce the required in-vestment and the risks.
Verizon Enterprises Solutions’ Carl Roberts emphasized that telcos’ core as-set is the network, but “we have to rein-vent ourselves”. He believes operators are in a position to fundamentally transform the way businesses operate today.
28 October 2012 Telecom Asia www.telecomasia.net
Telstra’s Jim Clarke
Epsilon’s Andreas Hipp
With their global networks and ad-vanced connectivity strategies, Roberts said carriers have the opportunity to improve operational models in indus-tries such as health care and transpor-tation.
Ian Watterson from CSG Interna-tional – who spoke on “How to swim with the sharks and survive” – said telcos need to learn that they “can’t do it all” and need to partner, in relation-ships where both parties benefit. “In the content supply chain it’s all about how to work out equitable revenue sharing deals, which requires treating your part-ners as customer.”
Given all the talk of the urgency of moving to all-IP networks, it comes as a bit of a surprise that just 61% of telcos say they already have live voice traffic on migrated IP interconnections. One in ten say they haven’t yet or aren’t ready/willing to start a migration project.
In his presentation, Philippe Mil-let, chairman of the i3forum, said while 63% have a clear, aggressive IP-migra-tion strategy, 25% don’t really have a migration strategy. These numbers were based on a small survey of done at ITW in May.
A representative for a large US telco told Telecom Asia there’s no econom-ic reason for an operator with TDM switches to replace them with IP con-nections (for fixed voice). He reckons ten years from now, there still will be plenty of TDM switches around.
Manual processing?The ACC has quadrupled in size
since it was started eight years ago. In that time carriers’ methods for working out interconnect agreements, some-times with more than 100 other telcos,
haven’t changed much and re-main largely manual.
The Cebu shindig isn’t a one-off negotiation mara-thon. The wholesale crowd meets at PTC in Hawaii in January and ITW in Chicago in May – and many will also be at BARG in Greece this month.
But help apparently is on the way. A handful of carriers have set up the Global Business Exchange for Telecom, or GBET, which held a workshop at the event. The founding members are Ve-rizon, TeliaSonera, Deutsche Telekom, PCCW, iBasis and Telarix.
The association’s goal is simple: improve back-office efficiency by auto-mating the currently cumbersome pro-cesses of working out agreements and getting signoffs. The first step is setting standards. GBET aims to announce a contract management support system at ITW next May.
GBET chairman Margaret Morosi,
who is with Deutsche Telekom, said that addressing these pain points will be a lengthy process but “a new approach to old problems” is essential as the ex-change of data between carriers has be-come increasingly complex and costly.
Verizon’s Henrik Liungman said that the telecom industry “has a ways to go in its level of maturity in streamlin-ing processes. The banking industry has SWIFT for international transactions.” He noted that no one could imagine banks handling these manually. TA
– Joseph Waring
www.telecomasia.net Telecom Asia October 2012 29
Verizon’s Carl Roberts
CSG’s Ian Watterson
Wrong number – again
BACkPAGeBrIefING
Sex lands Google in hot water
Authenticate images – at a cost
Google is facing accusations of political interference for refusing to run adverts for sex in Australia.
Political group the Australian Sex Party has made a formal complaint alleging the search giant refused to run its publicity in the run up to a recent by-election. The party claims the refusal constitutes unlawful interference that benefitted rival political groups.
Google claims the ads were refused because of the party’s tax status. TA
A picture used to tell a thousand words, but these days it’s more likely to be made up from a thousand sources.
Now you can tell if your eyes are being deceived thanks to a US startup, which has released software that probes the meta data in digital snaps to prove their authenticity.
Fourandsix Technologies is the brainchild of a digital forensics boffin and a former Adobe Photoshop executive, but its
software is likely to appeal only to security personnel as it costs $890. TA
30 October 2012 Telecom Asia www.telecomasia.net
Ex-lovers keep tabs on Facebook
If you’re worried about authorities monitoring your every move via social networks, think again.
Fresh research suggests you should be more worried about your ex keeping tabs on you via Facebook than the police or secret services. The research claims up to 50% of the social network’s users utilize the site to monitor their exes, with potentially damaging consequences to their emotional recovery. TA
Vodafone has pulled a TV advert in New Zealand after twice posting a phone number that was too similar to those of private customers.
The operator first changed the number quoted in the ad after one New Zealander was bombarded with calls and texts seeking more details of a new data plan.
However, the carrier made the same mistake with the new number, resulting in a second citizen receiving around 100 unwanted calls. TA
