Mobilink Merger with Warid Creates New Pakistan Mobile Market Leader

VimpelCom (operating as Mobilink) and Warid Telecom Pakistan will merge their Pakistan telecom businesses, creating the largest mobile company in Pakistan, with about 45 million customers.  

The companies believe the transaction will to lead to savings with a net present value of approximately US$500 million. The combined revenue of the companies for the 12 months ending in September 2015 was US$1.4 billion.

Warid’s Long Term Evolution 4G network will help the new company compete with Zong, the only other operator running an LTE network.

source: Apni Voice

source: Central Asian Cellular Forum

Internet Adoption is Not Simply a Case of Network Investment

Increasing use of the Internet in India will be driven by smartphone adoption, higher use of 3G and 4G networks, lower devices costs, more-affordable subscription prices and greater understanding of the value of Internet apps.

In other words, higher rates of Internet use will require investments and innovations both in the policy, business and technology realms. Networks reaching all potential users are necessary, but not sufficient.

Supplier business models arguably need to become more sustainable, consumers need to better understand the value of Internet apps and retail prices will need to be more affordable. And growth itself will cause new problems.

As has been the case recently, higher usage means more stress on networks, dropped calls being one clear example. That will be the case for Internet access quality of experience as well as usage climbs.

That will require more investment in spectrum and networks, which also means government policies that encourage investment will matter. And only government can release the additional required spectrum.

At the same time, consumers need to be convinced they need the Internet, and that is not universally the case, today.

By 2020, more than half of India’s people still will not regularly use the Internet, according to The Mobile Economy: India 2015 report. Most of the excluded population will live in rural areas.

The gender gap will remain, as well. Women in India are 36 percent less likely to own a mobile phone than men, which equates to 114 million Indian women.

Also, nearly 70 percent of the Indian population lives in villages, where network costs are higher than in urban areas, and sustainable business models are more much more difficult.

According to the Ministry of Communication and Information Technology, nearly 10 percent of Indian villages had no mobile coverage from any of India’s mobile operators as of March 2015.

A combination of a difficult terrain, characterised by mountains and sparsely populated farmlands, high energy costs and low income levels often makes it uneconomical for mobile operators to expand coverage to rural communities using conventional network deployment strategies.

A recent report by the GSMA analysed three broad strategies to address the coverage gap, namely network sharing, government support and alternative technologies (such as drones, balloons or satellites). The first two are particularly relevant to the Indian market, GSMA argues.

A study organized by a major mobile trade association might be expected to say that.

The cost of ownership of a mobile phone (which covers all the costs associated with both owning a phone and accessing mobile services) is a key factor in mobile internet adoption, particularly in India where nearly one-third of the population (360 million people) lives below the poverty line.

Data tariffs in India, at 0.5 to 0.7 cents per MB, are among the lowest in the world, but a significant proportion of the population is unable to afford this for regular internet use due to low disposable incomes.

A recent report by GSMA Intelligence found that many non-users lack awareness of Internet uses and available content. They do not feel the Internet is relevant or useful to them.

Creating awareness around the benefits of the internet and the availability of useful services covering a wide range of subjects, such as agriculture, education and healthcare, is crucial to bringing more people online.

Not coincidentally, that is why Facebook’s “Free Basics” program is viewed as so significant by Facebook and many others.

Most agree that mobile will be the primary Internet access platform in India. But that does not mean mobile will be the only platform. Fixed networks will have a role to play, both for access and backhaul, while new backhaul platforms might be more significant than some assume.

India Will Drive Nearly Half of Asia-Pacific Mobile Subscriber Growth, Driving Internet Access

India is on track to surpass half a billion mobile subscribers by the end of the year, according to a new GSMA Intelligence study. By 2020, India will account for almost half of all the subscriber growth expected in the Asia Pacific region.

The Mobile Economy: India 2015 notes that 13 percent of the world’s mobile subscribers reside in India. At the  end of 2014, India’s mobile subscriber penetration rate was about 36 percent of the population, compared to a 50 percent global average.

But that is going to change, fast.

The subscriber penetration rate in India is forecast to reach 54 per cent by 2020 as many millions more are connected by mobile.

India had 453 million unique mobile subscribers at the end of 2014, but is forecast to surpass 500 million by the end of 2015 and add a further 250 million subscribers by 2020 to reach 734 million.  

That matters for reasons beyond the ability to communicate using voice and text. Fixed broadband penetration in India is about 2.5 percent, and will not increase much more than that, for business model reasons.

In contrast, 60 percent to 90 percent of the population have access to at least a 2G mobile service.

That means the mobile network will become the dominant means of getting access to the Internet. The number of individuals accessing the internet over mobile devices had expanded from less than 100 million subscribers in 2010 to nearly 300 million at the end of 2014.

Although India only launched 3G services in 2009 and 4G deployments are at an early stage, the move to mobile broadband networks is set to gather pace over the coming years.

Mobile broadband networks (3G/4G) accounted for only 11 percent of Indian mobile connections 1 in 2014, but are expected to make up 42 percent of the total by 2020.

One factor driving the migration to mobile broadband networks is the increasing adoption of smartphones, made possible by low-cost devices.

More than half a billion new smartphones connections are expected in India between 2015 and 2020, bringing the total to 690 million, up from 149 million in 2014.

The penetration of mobile Internet has reached 24 percent of the population by mid-2015.

This figure will almost double again in the next five years to reach 44 percent of the population by 2020, with around 600 million mobile internet subscribers.

Millennials Will Buy Video, Audio Entertainment. News? Not So Much

Some 93 percent of Millennials buy some form of content, a study by the American Press Institute finds. The bad news for “press” entities is that most of that spending is for video or audio entertainment products, not “news.”

The two most popular types of paid subscriptions or content regularly used by Millennials are those that access online movies and TV (77 percent) and cable television (69 percent).

A majority of Millennials also use paid content for music (54 percent) and video games (51 percent).

The most popular paid news subscriptions or content regularly used by Millennials are print magazines (30 percent) and print newspapers (29 percent).

Fewer than 20 percent of Millennials regularly use paid access to a digital news app (19 percent), a digital newspaper (15 percent), a digital magazine (15 percent), or an email newsletter (15 percent).

source: Business Insider

Why Spectrum Sharing Matters

A new white paper on What is Spectrum Sharing and Why Does it Matter? is posted on the Spectrum Futures blog. 

Spectrum sharing matters because communications spectrum is a scarce asset, and demand is growing very fast, both because billions of new Internet access users will come online, and because new Internet apps and devices consume vastly more bandwidth.

Spectrum sharing martters, in large markets, because there is, for example, almost no uncommitted communications spectrum available in the sub-2-GHz range.

Though there is an expectation that much spectrum in millimeter bands (3 GHz to 300 GHz) can be allocated for communications purposes, most of that spectrum will be severely “short range,” and hence best suited for indoor or small cell applications.

Global mobile data traffic grew 69 percent in 2014, and each succeeding mobile generation seems to grow consumption by an order of magnitude, according to Cisco estimates. Long Term Evolution (4G) devices consume an order of magnitude more data than a non-LTE device, for example.

Any smartphone tends to lead to consumption of 37 times the data of a feature phone, according to Cisco. And smartphones are becoming the standard global device. Where today 28 percent of customers use smartphones, that will grow to perhaps 52 percentby 2018.

Use of Internet access plans might reach 84 percent by 2020, according to Ericsson.

In other words, smartphones will be as common as toothbrushes.

To be sure, spectrum sharing also introduces a new element of business model uncertainty, because spectrum sharing can replace a large measure of scarcity with a large measure of abundance.

Blue Origin (Jeff Bezos Company) Makes First-Ever Landing of a Reusable Rocket Booster

Blue Origin, a company owned by Jeff Bezos, has successfully, for the very first time, managed to land a rocket booster.

Once repeatable, that reuse of boosters could dramatically slice the cost of launching payloads. Some think a reduction to about 20 percent of today's launch cost is possible.

 

Mobile Money is Among Key Telco Innovation Successes

Some telco efforts to enter new markets succeed, while others fail.

Mobile money businesses appear to be a clear example of the former, while over the top voice and messaging services appear to be an example of the latter.

At least so far, there is optimism about Internet of Things initiatives. It is unclear whether cloud computing might become an example of the latter, as well.

Mobile success in banking-related services might come as a bit of a surprise, even if “financial inclusion” is a major problem.

As of 2014, 40 percent of the global adult population did not have any kind of formal financial account, bank based or otherwise, and as such were considered financially excluded, according to GSMA.

Emerging markets led the growth of global non-cash transactions between 2009 and 2013. The volume of non-cash transactions grew 13 percent compared to mature markets at six percent, driven by emerging markets in Asia, Central and Eastern Europe, Middle East and Africa, which saw growth rates of 20 percent per year.

As of June 2015 there were 255 live mobile money services around the world, with a further 102 services planned, according to GSMA.

More than half of the live services are in Sub-Saharan Africa, where mobile money has become a popular service not only for fund transfers but also for other transactions such as airtime top-ups and bill payments.

There are 300 million mobile money accounts globally and 2.3 million agent outlets extending mobile money services to customers who do not have access to a bank branch network, GSMA notes.

There also are more than 100 million active mobile money accounts in service. Some 21 services have more than one million active accounts, and in 16 countries the number of mobile money accounts is greater than the number of bank accounts.

source: GSMA

source: GSMA

High Consumer and Supplier Taxes Affect Mobile Adoption

Direct taxes on consumers for using mobile services. Taxes and fees likewise represent a huge percentage of operating costs for many mobile service providers.

In Pakistan, taxes represent 32 percent of the total cost of consumer mobile ownership and 33 percent of the cost to consumers of using mobile services.

In India, consumer taxes represent 23 percent of the total consumer cost of mobile ownership and 23 percent of the cost of using mobile services, according to the GSMA.

In India, “total outflow to the government in the form of all fees (spectrum, license, upfront, deferred) is an astounding between 25 percent to 35 percent every year,” says Parag Kar, Qualcomm VP, government affairs, India and South Asia, quantifying the impact of operator-specific fees. “This will impact operator’s ability to invest in networks and electronics.”

source: GSMA

In Emerging Markets, Mobile IS Internet Access, Says GSMA

With low fixed network Internet access availability in most emerging markets, mobile is increasingly becoming the key method for Internet access, the GSMA reports.

Coverage levels of 3G and 4G networks in emerging markets are expected to increase to 84 percent and 65 percent of the population respectively by 2020.

Given the increased availability of high-speed internet and the growing supply of sub-$50 smartphones, smartphone adoption will increase significantly to 2020, to account for 60 percent of total connections or more than 4.5 billion connections.By 2020, mobile Internet access will reach 100 percent in East Asia, 106 percent in South America and 131 percent in Central and Eastern Europe.

By 2020, mobile Internet access will have climbed from the 2014 level of 24 percent in the Middle East and North Africa to 71 percent. In Sub-Saharan Africa mobile Internet access will grow from 13 percent to 53 percent.

In South Asia, mobile Internet access will rise from seven percent to 41 percent, growth of nearly 600 percent.

source: GSMA

The growth of mobile Internet access will be propelled, in substantial part, by huge increases in use of smartphones.

source: GSMA

Have Some Telcos Lost Battle for Relevancy in Cloud Computing?

U.S. incumbent telcos rationally thought operation of data centers would be a natural fit for their high capacity transport services. That arguably remains the case in other markets. The U.S. market, though, is home to the likes of Amazon Web Services, Microsoft’s Azure, Google and IBM cloud computing efforts.

In other words, telcos face unusually visible and formidable competitors with leading mindshare and scale.   

For telcos building cloud computing businesses, several major challenges have emerged, says David W Wang, a business development consultant based in Washington DC and author of the new book “Cash in on Cloud Computing.”

Melding acquired assets is one issue. Though Wang says “lack of strategic vision” is an obstacle, the more likely problem is integration of various acquired cloud assets to create seamless national offers, and change the value proposition.

Alignment of sales and marketing efforts also have been problematic, he says. “Unfortunately neither the legacy telco sales nor newly joined cloud sales seem to be ready to cross-sell the new services,” says Wang.

Customer resistance arguably is a bigger problem. Buyers are accustomed to buying transport from one set of suppliers, while information technology services are sold by a different set of suppliers.

To the extent that sales forces try and sell the new products, they necessarily must sell to the IT decision makers, who might be different from the connectivity decisions makers.

Even when the right decision makers are reached, IT buyers have tended to discount telco cloud offers, Wang argues.

Perhaps the biggest challenge is simply the domain competence and scale of the acknowledged cloud computing leaders such as AWS.

“The AWS brand is becoming too strong for public instant cloud applications and storage for the telcos to compete with,” says Wang.

That reality arguably is at variance with past expectations, when telco brands might have been deemed bigger players in the cloud services market.

Simply put, none of the brands currently bought or considered most frequently are “telco” brands.

source: STL Partners

source: Rightscale

Mobile Ecosystem Value and Revenue is Shifting to App Providers

Most of the revenue growth in the U.S. mobile ecosystem arguably is going to application providers, one might argue after reviewing estimates made by Chetan Sharma. Voice service revenue was down between 2013 and 2014. Access revenue (mostly mobile data) grew significantly. But total mobile service provider revenues did not grow as much as app provider revenues.  

U.S. Mobile Will Consolidate into 3 National Providers

The U.S. mobile market will consolidate into three providers, analyst Chetan Sharma predicts. There just is not enough margin to support the four leading national providers.

In 2015 so far, Verizon and AT&T have earned roughly $17 per account per month while T-Mobile US and Sprint have collectively lost $0.39 on every subscription per month, according to Chetan Sharma Consulting.

Us wireless market_q3_2015_update_nov_2015_chetan_sharma_consulting from Chetan Sharma

T-Mobile US Launches "Un-carrier Unwrapped" Promotion

T-Mobile US has launched a new “Un-carrier Unwrapped” promotion, starting with three full months of unlimited LTE data for T-Mobile US postpaid Simple Choice customers at no extra charge.

The promotion will feature a different gift coming each week. customers. T-Mobile US also teases that will be offering holiday gifts to Sprint, AT&T and Verizon customers as well: one carrier per week.

“But that’s not all….we know that Verizon, AT&T and Sprint customers need some holiday cheer, too - so we’ve got presents coming for them. Just wait!” said John Legere, T-Mobile US president and CEO.

Cable TV Could Lead Future Fixed Networks Business

There are a number of reasons to speculate on future roles of cable TV companies in the broader telecommunications business, and equally important reasons to sugg est that legacy telcos might not forever be the dominant providers. Some might argue they already have lost that role.

U.S. cable TV companies already are the dominant suppliers of high speed Internet access and entertainment video, and share the fixed network voice market with telcos.

But there are other reasons to wonder. A traditional rule of thumb for telephone networks serving consumers is that suppliers make money in the suburbs, lose money in the rural areas and break even in the urban areas.

With the caveat that services for business customers make a difference, those rules of thumb largely remain useful.

What sort of services provider historically concentrated first on rural areas, then moved to suburban areas and only lastly on urban areas? Cable TV networks is the answer.

Networks first were created to import distant TV signals from urban areas to rural areas, meaning network economics had to account for the high cost of building fixed networks in low-density areas.

Later, when the business model changed from “signal access” to “provide more choice,” the suburban areas were wired. The last stage was extension to urban cores, something that happened in the 1980s.

The point is that network economics were tweaked, from the start, for the worst business case. That tends to extend to every other part of the business.

In the end, network economics always are a balance between expected revenue and expected capital investment to garner those revenues.

So if gross revenue starts to be an issue, as it now is, the lower-cost provider is going to have advantages. Since all triple-play providers now sell the same products and services, that matters.

Network economics plays a role in fixed service provider strategy, the perhaps longest-running example of that being the decision when and where to invest in fiber to home platforms and when to use some other next generation network platform, for the moment.

In that regard, cable TV hybrid fiber coax networks have an advantage: they do not yet require as intense a fiber deployment as do fiber to home networks, but can deliver services that might otherwise require FTTH.

For example, Morgan Stanley surveyed 2,500 U.S. households during August 2015 and September 2015 on broadband and TV services, and found "U-verse and AT&T DSL had especially weak satisfaction results," compared to cable TV customers.

Cable customers reported an average speed of 38 megabits per second, while DSL subscribers said they had 21 Mbps service on average.

Verizon Communications FiOS customers on average had nearly 30 Mbps service and were happier, despite price hikes, says Morgan Stanley.

There are new questions we might raise. As customers increasingly find they can substitute use of one platform for another, and as new suppliers enter existing markets, market positions can change.

Substitution of mobile for fixed voice and messaging provides one example. Use of mobile Internet access does affect demand for fixed Internet access. And a coming shift to mobile video likely will provide another challenge.

At the same time, new suppliers are entering and reshaping the market, especially gigabit-providing independent Internet service providers such as Google Fiber and a growing number of third-party suppliers.

It no longer is absurd to consider a future where former telcos are unable to compete in fixed network markets.

Apple Still Earns Most ot the Money in the Smartphone Business

Apple had about 13.5 percent of shipments, but accounted for as much as 94 percent of profits in the smartphone business, in the third quarter of 2015. That is a problem for all the other suppliers, as sooner or later, profits must be made or the effort is not sustainable.

To be sure, some firms are deliberately pricing to take market share, with the expectation that profits can be generated later. That is a workable strategy, up to a point.

At some point, smartphones likely will be the only phones sold, globally. So, sooner or later, sustainable pricing levels must be reached. There simply is not room, long term, for all the current providers, in a market where most suppliers do not generate sustainable revenues.

source: Business Insider

source: Mobile News Archive