Two New Mobile Operators Authorized in Myanmar, Illustrates Asia Pacific Mobile Growth

Telenor and Ooredo (Qatar Telecom) each have won new mobile licenses in Myanmar, competing against existing providers Myanmar Posts and Telecommunications (MPT) and Yatanarpon Teleport Co.

The awards double the number of mobile service providers in Myanmar and are part of a government plan to dramatically boost mobile phone penetration from the current level of nine percent up to levels more typical of other South Asia nations.

In some ways, the Myanmar move is part of a broader trend, namely the emergence of the Asia Pacific region as the biggest communications market on the planet, measured in terms of subscribers, with the fastest growth rates.

Since the mid-2000s, it has been clear that the Asia-Pacific region will feature the greatest single concentration of communications customers and revenue mass of any region in the world, over the coming years.

So any supplier with ambitions to grow globally has to succeed in the Asia-Pacific region. That is a bit of a change from where growth drivers have been seen for much of the past decade.

Asia already by the mid-2000s was home to almost half the world’s fixed telephone subscribers. It had 42 percent of the world’s Internet users, and with 1.4 billion mobile cellular subscribers, it also had the largest mobile phone market share, according to the International Telecommunications Union.

By mid-2008, China and India alone had over 600 and 280 million mobile cellular subscribers, respectively, representing close to a quarter of the world’s total.

The Asia-Pacific region was the world’s largest broadband market with a 39 percent share of the world’s total at the end of 2007.

Telecoms retail revenue in the emerging Asia–Pacific (APAC) region was predicted to grow at a compound annual growth rate (CAGR) of seven percent between 2011 and 2016, according to Analysys Mason.

Both new service providers must build networks providing a minimum of 75 percent geographic coverage for each region and state, for voice services, five years after the effective licence date.

France Telecom (Orange) and Marubeni Corporation, bidding together, was selected as the alternate licensee, should Telenor or Ooredo not meet the requirements.

The license awards came as Myanmar’s Parliament unanimously voted to delay the process, in view of a proposed bill to revise the country’s telecommunications law, including a provision requiring all applicants to have local partners.

The new telecom bill would require all foreign companies bidding or operating in Myanmar to have a local partner.

Apparently, none of the winning bidders, or the The Orange-Marubeni consortium, have local partners.

Myo Swe, the member of parliament who proposed the vote, said the "industry risked being monopolized" if the winners were announced before a telecommunications law was in place.

Myanmar, with 60 million people, has mobile penetration of less than nine percent.

The 15-year wireless licenses take effect in September 2013 and would represent the largest foreign investment in Myanmar since a semi-elected government took power in 2011, ending decades of military rule.

In a way reminiscent of the 1980s cable franchising wars in the United States, applicants were campaigning for themselves across Myanmar, especially in the commercial capital of Yangon, the Wall Street Journal reports.

SingTel ads appeared on phone booths in Yangon while billboard ads appeared elsewhere.

Digicel was confident enough to have already begun hiring local staff in country.

Regulators Can Set Stage for Mobile Innovation, GSMA Argues

The crucial and strategic requirement for robust wireless, mobile or broadband economic, social and financial results at any given time will vary. Sometimes compelling applications are key. At other times a breakthrough device is the most-important enabler. At other times access to investment capital is the gating factor.

At times viable business models need to be developed, and consumer demand always is ultimately decisive.

But at other times, regulators must act first, before any of the other principal challenges can be tackled. That always is the case for services using spectrum, whether non-licensed, such as Wi-Fi or TV white spaces, or licensed services such as mobile services.

And that is a point the GSM Association now makes. To spur further advances in mobile services, “there is a need for creating a transparent and stable regulatory regime that engages all stakeholders in policy making,” the GSMA now argues.

In other words, stakeholders need stability so they can make long-term investments.

That also means more clarity about license renewals. Incumbents obviously want a presumption of renewal, rather than having to face new rounds of auctions.

“There is a need to create a robust spectrum management approach,” GSMA argues. That would include spectrum availability and pricing, as well as the ability to trade or share spectrum, among other foundational elements.

GSMA also wants timely release of spectrum and release in larger blocks. As you might expect, GSMA prefers the larger blocks because that allows providers to amass contiguous blocks of spectrum, and also reduces operator spectrum licensing cost.

As you would expect, the GSMA also argues the importance of “regulatory costs of doing business.”  GSMA argues taxes should be aligned to global benchmarks and should not have undue effect on demand (“sector specific taxes,” for example).

GSMA also argues that regulators “need to revisit commitments to the Universal Service

Obligation Fund (USOF),” in part because they may not be needed as much as in the past, and also because of “unprecedented” service provider margin pressure.

GSMA also argues that in the Asia-Pacific region, for example, regulators across the region should harmonize frequency plans for new spectrum, such as that to be created by the switch to digital television, which will free up spectrum across the region.

GSMA supports a  2x45 MHz band plan in the 698-806 MHz range, as a majority of countries already have committed to doing so.

Asia Will Lead M2M Deployments and Revenue by 2020

Asia will by 2020 be the foremost region of the world using machine to machine (M2M) technologies, a study sponsored by the GSM association predicts.

“The mobile industry continues to develop at an unprecedented pace and nowhere is this more evident than in Asia, a region that continues to experience tremendous growth and by 2020 will lead the connected devices and M2M market, both in terms of the number of devices and in terms of revenues,” said Michael O’Hara, Chief Marketing Officer, GSMA.

Machine to machine services will add up to $22 billion in economic productivity in China by reducing traffic congestion and therefore saving time, for example.

In India, M2M will, by 2017, help power the equivalent of 10 million homes by cutting power theft and improving efficiency. India loses 24 percent of the electricity it generates every year, costing the country $17 billion, with power theft accounting for around half of these losses.

Remote monitoring, disease management, and preventive medicine for the elderly could reduce Japan’s healthcare spend by $10 billion in 2017, and much of that benefit will come from M2M-based health care operations.

The Reason for "Mobile First" or "Mobile Mostly"

"Mobile first" or "mobile mostly" have become watchwords for application providers for one very good reason. People are using smart phones and other untethered or mobile devices for a growing percentage of their Internet and application activities.

Looking only at search, some analysts expect mobile search volume to surpass desktop or PC search volume by about 2015. 

Mobile vs. PC Local Search Volumes (BIA/Kelsey Forecast)

The ISP Speed Claim Dilemma

ISPs face marketing issues no different than other providers of goods and services, namely that consumers generally have some expectations about what features and what prices constitute a reasonable offer.

That means every provider wants to appear to have an edge of some sort, and at a minimum, to supply the baseline of features consumers expect.

ISPs have one additional problem, namely that their product is essentially intangible. As with any other intangible product or service, a consumer cannot fully evaluate product claims until after the product is purchased.

But it still is reasonable to argue that most consumers considering the purchase of an Internet access service will evaluate the advertised speed and the advertised price. That means there will always be pressure to advertise the highest possible speeds.

But consumer protection agencies and regulators do not tend to like exaggerated claims. That is why more attention now is focused on how closely ISPs are able to deliver on speed claims. And there might be more work to do on that score in Europe than in the United States.

Actual European Internet access speeds are about 74 percent of advertised speeds during peak hours, a new study sponsored by the European Commission has found. Recent studies by the U.S. Federal Communications Commission have found that U.S. ISPs deliver actual speeds about 96 percent of advertised speeds.

The average download speed across all measured countries was 19.47 Mbps during peak

hours, and this increased slightly to 20.12 Mbps when all hours were considered.

Performance varied by access network technology.

Digital subscriber line services achieved 63 percent of the headline download speed, while cable services managed to achieve 91 percent of headline speeds. Fiber to home or VDSL services delivered 84 percent of headline speeds.

Fiber to home services achieved the fastest speeds in absolute terms, at 41 Mbps. Cable

services achieved 33 Mbps, whilst DSL services delivered 7 Mbps, on average.

In the September 2012 testing period, U.S. ISPs on average delivered 97 percent of advertised download speeds during peak periods, statistically equivalent to the last report, which found that the studied ISPs were able to deliver 96 percent of advertised speeds during peak hours of use, the FCC has reported. Those results were in line with testing conducted in 2011 as well.

On average, during peak periods DSL-based services delivered download speeds that were 85 percent of advertised speeds, cable-based services delivered 99 percent of advertised speeds, fiber-to-the-home services delivered 115 percent of advertised speeds, and satellite delivered 137 percent of advertised speeds, the FCC says.

This compares to July 2012 results showing largely the same performance levels: 84 percent for DSL, 99 percent for cable, and 117 percent for fiber. These results suggest that many ISPs are meeting established engineering goals for their respective technologies.

It isn’t immediately clear why DSL networks in the U.S. market were able to deliver real-world speeds more nearly matching advertised speeds, compared to European DSL networks.

But a reasonable guess is that the gap is explainable almost entirely by ISP marketing claims.

The EC study says two countries did not achieve 50 percent of advertised speed. Those two countries primarily use DSL networks, but more importantly “advertised their services

using only a handful of very high headline speeds.”

Hungarian ISPs delivered actual speeds that were 94 percent of advertised.  DSL services also achieved over 90 percent of advertised speeds. So it appears the difference is the marketing of service, not something inherent in the networks.

Since DSL performance is directly related to loop length, experienced speeds for consumers closer to the central office will increasingly diverge from speeds experienced by consumers further away from the central office.

It makes quite a difference whether the typical speed at 1,000 meters is used as the reference, compared to 5,000 meters.

But loop length is not the only consideration for DSL or other providers. Contention ratios and the degree of sharing also will affect performance. ISPs simply need to market services that reflect all the known limits, if they want to deliver on promised speeds.

But that is the dilemma. A more-realistic set of claims might mean forfeiting an advantage to other providers.

SK Telecom Launches LTE Advanced at 150 Mbps

SK Telecom is launching Long-Term Evolution-Advanced service in South Korea, a move that will about double Internet access speeds over the existing version of LTE SK Telecom now is running.

The new network is theoretically capable of download speeds of 150 Mbps, using the amount of spectrum SK Telecom will have to support the new network.

LTE-Advanced, if enough spectrum is available, can deliver up to 1Gbps of downlink and 500 Mbps of uplink.

SK Telecom’s LTE-Advanced network will pair two blocks 0f 10 MHz to provide a 20 MHz carrier capable of 150 Mbps.In the future, SK Telecom says it will aggregate multiple 20 MHz carriers to achieve download speeds of 300 Mbps or more. To begin with, the service is available in Seoul, 42 other cities in the provinces of Gyeonggi-do and Chungcheong-do, and 103 universities. 

SK Telecom Launches LTE Advanced at 150 Mbps

SK Telecom is launching Long-Term Evolution-Advanced service in South Korea, a move that will about double Internet access speeds over the existing version of LTE SK Telecom now is running.

The new network is theoretically capable of download speeds of 150 Mbps, using the amount of spectrum SK Telecom will have to support the new network.

LTE-Advanced, if enough spectrum is available, can deliver up to 1Gbps of downlink and 500 Mbps of uplink.

SK Telecom’s LTE-Advanced network will pair two blocks 0f 10 MHz to provide a 20 MHz carrier capable of 150 Mbps.In the future, SK Telecom says it will aggregate multiple 20 MHz carriers to achieve download speeds of 300 Mbps or more. To begin with, the service is available in Seoul, 42 other cities in the provinces of Gyeonggi-do and Chungcheong-do, and 103 universities. 

Telefónica Adds Windows Phone 8 to Firefox OS Support, Wants Alternatives to Apple, Android

Telefónica is among global tier one mobile service providers that are acting to support mobile devices running on operating systems other than Apple and Android, by announcing a new program to boost sales of Windows Phone 8 devices.

Initially for a period of one year, Telefónica will enhance marketing activities in support of its Windows Phone 8 devices in the U.K., Germany, Spain, Mexico, Brazil and Chile.

Telefónica also is supporting devices running the Firefox operating system. In any part of the Internet ecosystem, there are natural tensions between participants, over revenue shares, influence or control.

Mobile service providers naturally believe app providers and device providers have too much influence, compared to the service providers, in large part because of end user affinity for certain apps or devices, which gives app or device suppliers leverage.

The long term issue is whether mobile service providers, who do have much sway over packaging and pricing, can really shift consumer preferences in a significant way, where it comes to device choices. People want what they want, when they want it, how they want it and why they want it.

And though it would be a very-serious step, tensions within the ecosystem sometimes can break out in more serious ways. Channel conflict is a perennial problem in technology businesses.

Branded ISP operations by Apple or Google could be an example of how natural tensions could become inflamed to a more significant degree.

Singapore is Looking at Authorizing 189 MHz of White Spaces Spectrum

Singapore’s Infocomm Development Authority now is working on the framework for enabling use of former broadcast TV spectrum (TV white spaces) in Singapore, making Singapore among the first nations (United States, Canada and United Kingdom also are among the early movers) looking to commercialize use of TV white spaces for Internet access services.

The U.S. Federal Communications Commission  is allowing white spaces operations on a license-exempt basis, with the management of such devices through a database.

The Office of Communications in the United Kingdom is adopting a similar approach. IDA is also considering adopting the same approach to facilitate the initial deployment of white spaces in Singapore.

The IDA also seeks input about whether some white spaces spectrum should be licensed, however, allowing those licensees to gain more certainty about spectrum for services that require something more like a traditional mobile service.

The IDA has allocated the VHF spectrum between 174 MHz and 230 MHz and the UHF spectrum between 494 MHz and 790 MHz for white space operations. A total of 21 MHz in the VHF band is available, including 181 - 188 MHz, as well as 209 MHz to 223 MHz.

There is more spectrum in the UHF band, including 502 MHz to 518 MHz, 614 MHz to  622 MHz, 630 MHz to 710MHz, 718 MHz to  742 MHz, 750 MHz to  774 MHz and 790 MHz to 806 MHz, representing a total of 168 MHz.

In all, 189 MHz will be made available, a huge amount of spectrum in highly-desirable frequencies.

IDA also is inviting views on allowing operation of white space devices in the 694 MHz to 806 MHz band until IDA allocates these frequencies for IMT deployment, set for 2020.

What Does Network Element Unbundling Promote?

Unbundling of network elements (either of full loops or parts of local access networks) has been touted as a reasonable way to enhance competition in markets where only one broadband access network dominates. Many will argue it has, in some markets, done so. 

But there also is new thinking that unbundling of network elements, and allowing competitors wholesale access to those network elements, at healthy discounts, has had a downside: namely reducing next generation network investment.

Perhaps oddly, some in the U.S. policy community have advocated adopting unbundling policies prevalent in the European Union, precisely at the point that the EU is moving away from some of the features of such policies, such as the amount of wholesale discounts, for example. 

Some of us might argue the shift in thinking is because new problems emerge in new periods of communications policy. Solutions to older problems might actually be problems in newer periods. 

In essence, that is why new questions are being raised in markets where widespread unbundling policies are seen as having succeeded in promoting competition. It is hard to solve new problems with yesterday's solutions, especially when the older solutions are directly related to the reasons the new problems exist.

Competition remains an issue, but is not the chief issue. The main problem is that the risk of investing lots of money in next generation networks is higher than ever before, because the returns from such investments are smaller and more uncertain that similar investments have been in the past. Investors dislike higher risk and uncertainty. 

The new issues are the ways unbundling and investment are related. U.S. regulators have supported mandatory narrowband service unbundling, but not mandatory broadband access unbundling. 

European policymakers, on the other hand, have applied mandatory wholesale rules to broadband and narrowband services.

The implementation of unbundling requires European regulators to make a challenging decision on access prices, balancing short-term consumer benefits (from low prices) and long-run benefits from investment and innovation, argue Martin H. Thelle and Dr. Bruno Basalisco of 
Copenhagen Economics.

"Several European fixed telecom incumbents have refrained from investing aggressively in next generation access networks due to regulation affecting the business case for 
fiber investments," they say. 

The problem is that the "unbundling approach does not suit the challenge of promoting investment in fiber-based infrastructure," they say.

Unbundling has created retail competition, but has not been effective at creating incentives for investment in next generation networks, said Roslyn Layton of the Center for Communication, Media and Information Technologies, Aalborg University Department of Electronic Systems.

Gigabit Squared to Launch in Some Seattle Neighborhoods in 2014

Gigabit Squared plans to launch service in some neighborhoods of Seattle in 2014, featuring free 5 Mbps service for five years, 100 Mbps download/100 Mbps upload for $45 per month or a gigabit for $80 a month.

The Gigabit Squared fiber network will initially be made available to neighborhoods located within the University of Washington West Campus District, First Hill, Capitol Hill and Central Area of Seattle as part of a program called Gigabit Seattle.

Installation charges will be waived for customers signing a one-year contract for 100 Mbps service or greater.  Otherwise, a $350 installation fee is required.

Plan A offers 5 Mbps download/1 Mbps upload at no charge for five years. After five years renters or owners can convert to a 10 Mbps download/10 Mbps upload service plan for $10 a month.

Plan B offers 100 Mbps download/100 Mbps upload for $45 per month, with no installation charge with one- year contract

Plan C is a symmetrical gigabit connection costing  $80 per month with no installation charge with one-year contract.

The Gigabit Squared plans show the Google Fiber model is spreading.

Dynamic Spectrum Alliance Launches

Some 23 companies and organizations announced the launch of the Dynamic Spectrum Alliance, which will focus will be on policy and regulatory advocacy.

Dynamic spectrum sharing allows radio communications devices to transmit on any available radio spectrum assigned for such sharing.

Almost by definition, the Dynamic Spectrum Alliance will tend to be disruptive, allowing service providers to get ot market with lower barriers to entry.

That does not necessarily mean “non-licensed” or “no fee” access, but should lead to more efficient, lower cost spectrum costs.

Members include Microsoft and Ruckus Wireless, Taiwan’s Computer and Communication Research Center, Japan’s National Institute of Information and Communications Technology (NICT), the Singapore Institute for Infocomm Research, and White Space Technologies Africa.

Also members are 6Harmonics, Adaptrum, BSkyB, Carlson, Council for Scientific and Industrial Research – South Africa, Indigo Telecom, InterDigital, MediaTek, Network Startup Resource Center (University of Oregon), Neul, RealTek, StarHub, Strathclyde Centre For White Space Communications, Tanzania Commission for Science and Technology (COSTECH), Taiwan Institute for Information Industry, UhuruOne and WaveTek.

Internet Exacerbates "Competition" Issues, But Competition Still is the Key Market Change

It appears that IP messaging app WhatsApp has passed 250 million users, enough to put WhatsApp in the same league as Twitter (200 million users) and Skype (280 million), in terms of user base.

Others might say the real impact is that IP-based instant messaging services are becoming, for many users,  the primary social graph. That means a potentially important new revenue vehicle is being created.

“For whom?” is the issue, as seems always the case for service providers.

Seemingly endless amounts of speculation and argument will continue to be expended by executives, pundits and analysts about “what service providers should do.” That’s a fair enough question.

What should by now be abundantly clear is the strategic impact on service providers, no matter what they decide to do tactically (participate by buying into the business, create branded versions of such services, fight back by enhancing the value of any existing substitute products, or essentially ignore the attackers).

The analogy and historical precedent is the advent of competition within the facilities-based telecom business, even before the advent of over the top competition. A look at addressable market illustrates the primary change of strategic context.

Back in the monopoly days, a national carrier’s business case was fairly simple. Whatever other assumptions one might have made, the potential addressable market was nearly “100 percent of homes and business locations.”

That had implications for the “cost per subscriber” or “cost per customer” metrics. At very high customer penetration, “cost per customer” and “cost per passing” are fairly closely related metrics.

That is a relatively simple business exercise. Build out network, passing 10,000 new locations, and sign up 70 percent to 90 percent of those locations as customers.

All of that falls apart in a competitive environment. Assume just two strong contestants with networks, equally skilled and with some advantages (telcos with mobile or cable TV with video).

In that case, the math is quite different: build or upgrade a network and sign up perhaps half of those locations as customers. That can nearly double the “cost per customer,” based strictly on payback on network capital.

The other likely effect is an increase in marketing expense.

In other words, the effect of competition is a fundamental change in network economics and profit margin.

Over the top services pose the same sort of challenge. By now, it should be obvious that one clear implication of IP-based competition is that profit gets wrung out of any service or application that formerly was immune from such competition.

So whatever tactical response a service provider chooses to make, it will be within the context of radically-different gross revenue and profit margin assumptions.

India Illustrates Principle: Competition is Good, Excessive Competition Is Not

Mobile and fixed network service providers sometimes point out that excessive competition or excessive regulation actually can depress willingness to invest and upgrade networks. And mobile service providers have learned the hard way that overpaying for spectrum likewise can create stress that limits investment into network infrastructure.

That seems to be the case in the Indian mobile market, where Indian service providers will invest a substantially lower percentage of their revenue back into their networks, compared to service providers in China, Indonesia and the Philippines, according to research from ratings agency Fitch Ratings.