Users 10 to 19 Drive Telekomunikasi Indonesia Growth

PT Telekomunikasi Indonesia operates in a market where there are 250 million mobile subscribers out of a population of  240 million, and its fortunes illustrate the gradual shift to wireless modes of communications among users of virtually all ages, with significant growth form users 10 to 19 years old.

PT Telekomunikasi Indonesia operates fixed wireline, fixed wireless and mobile networks, serving about 130 million subscribers for the year ended 2011.

At the end of 2011, the company earned about 16 percent of revenue  from its fixed wireline business, but total wireline revenues dropped by almost seven percent, largely due to increased smart phone use and a rising mobile penetration in Indonesia.

That is not too surprising, as most fixed network operators face increased product substitution from mobile alternatives.

The company's fixed wireless revenues also declined significantly in the financial year ended 2011. An intense competitive environment in the region, as well as deterioration in voice revenues, led to the 31 percent decrease in fixed wireless revenues. The company is facing competition from local telecom companies, with every company introducing new and cheap packages for its respective text messaging and voice call services.

The company's mobile business also experienced a slight deterioration in 2011 as well, despite the increase in its mobile subscription base, at least partly because prepaid revenue contribution is less predictable than provided by postpaid accounts.

Total subscribers grew by almost 14 percent in the year as compared to 2010.

Mobile data was largely responsible for offsetting the drop in revenues from other segments, growing by almost 21 percent in the financial year ended 2011.

Overall, mobile customer base grew almost 15 percent in 2011, reaching 117 million subscribers with total additions of 10 million, according to Seeking Alpha.

1/2 of all Humans Will Use Internet by 2017

Broadband, computing and Internet access now have taken the place of the older concern about access to voice communications. In fact, almost nobody worries about whether most humans will be using voice communications. These days, it is access to the Internet and computing that occupies policymakers.

Keep in mind that, just a few years ago, five of the the six billion people on Earth did not have access to computing or the Internet. But that is changing very rapidly, as well.

Although Africa, for example, lags in terms of other forms of computing and communications usage with an estimated 100 million Internet users, between 2000 and 2011 the growth of Internet usage in Africa exceeded 2,000 percent, which is more than five times that for the rest of the world.

Some 2.4 billion people across the world now use the Internet on a regular basis, at least once a month, from home, school, work, or any other location using a PC or a non-PC (mobile) Internet access device, Forrester Research says.

This is expected to grow to 3.5 billion by 2017, representing nearly half of the 2017 overall world population of 7.4 billion.

In some countries — mostly developed economies, such as the US, the UK, Japan, Germany, Sweden, and the Netherlands — Internet penetration as a percent of the overall population is very high; more than 80% of the population are regular Internet users.

In other, mostly emerging markets — such as Brazil, Russia, India, China, Mexico, Indonesia, the Philippines, and Nigeria — Internet penetration ranges between 10 percent and 50 percent.

A key point to note is that while higher PC penetration has driven the adoption of Internet in developed economies during the past two decades, faster mobile penetration in the emerging economies is helping increase the Internet population, thanks to “mobile-only” Internet users.

DOCOMO buying Guam Cable Operator

The proposed purchase of Guam's cable TV service provider by NTT DOCOMO, the parent company of Guam-based DOCOMO Pacific, illustrates a couple of themes in the global telecom  business. First, expansion often must come from "out of territory" assets, as most "home markets" are intensely competitive and offer relatively tough growth prospects.

So expansion out of market is a logical step. The other theme is the choice of network platforms out of market that are different from those of the home market. Most out of market expansion tends to rely on wireless, rather than fixed network facilities, for example.

The proposed purchase of MCV Guam Holding Corp., which does business as MCV Broadband, might seem to be out of character. It isn't. MCV Broadband has the largest mobile market share on Guam. Nor is NTT unfamiliar with the Guam market. 

NTT DOCOMO's entry into the Guam market began when it bought GuamCell, SaipanCell and HafaTel for about $71 million in 2006.

Nor is competition in the Japan domestic market unrelated. Many would say MCV Broadband's main competitor is GTA TeleGuam. 

The principal owner of GTA TeleGuam is Advantage Partners LLP, the largest private equity investment firm based in Japan.

Telco Venture Arms are Quite Traditional, in Some Ways

It is not a secret that tier-one telcos have not been the fastest-moving firms where it comes to rapid creation of new services and applications. In fairness, very large organizations built on global standards, with many legacy systems to support and lots of government and regulatory oversight, have lots of reasons to move more slowly when making changes, only to avoid the danger of inadvertently “breaking something” that was not planned.

Historically, telcos have essentially outsourced technology and services innovation to third parties, be they AT&T Bell Laboratories, Bell Communications Research, leading industry suppliers and global standards groups.

So the recent trend of large telcos creating new venture capital organizations is not out of character.

T-Venture, the venture fund owned by Deutsche Telekom, has a total budget of about 450 million euros ($566 million) for investments.

Deutsche Telekom's T-Venture so far has assets worth 750 million euros invested in about 80 companies. But Deutsche Telekom now wants T-Venture to make faster decisions and take majority stakes in firms.

Aside from any internal discussions about the speed with which any of the larger telcos is “getting to market,” there always are going to be questions about how any smaller app or service is going to “move the revenue needle” for any entity that routinely books scores of billions in annual revenue.

In Spain,Telefonica runs a program dubbed “Wayra,” which nurtures companies in Europe and Latin America. Telefonica receives a 10 percent stake in each business and a preference right to buy a successful product.

Telefonica has also started Amerigo, an international network of technology venture capital funds, supported by the governments of Spain, Colombia, Chile and Brazil, as well as financial institutions, the company said in a statement today.

Though it certainly is correct to note that telcos might do better by insulating venture efforts from the day to day operating units, it also is correct to note that this is the traditional way larger telcos have innovated in the past.

The perhaps growing issue, as more such activity occurs, is how fast the innovations will have a significant revenue impact for the sponsoring telcos.

Android Builds U.S. Market Share lead in July 2012

For the three-month average period ending in July, 2012, 234 million Americans age 13 and older used mobile devices, with Samsung ranked as the top manufacturer with 25.6 percent of U.S. mobile handset users, followed by LG with 18.4 percent share. 

Samsung and LG experienced slight share drops, but Apple gained share, up to 16.3 percent.

Top Mobile OEMs 3 Month Avg. Ending Jul. 2012 vs. 3 Month Avg. Ending Apr. 2012 Total U.S. Mobile Subscribers (Smartphone & Non-Smartphone) Ages 13+ Source: comScore MobiLens
	Share (%) of Mobile Subscribers
	Apr-12	Jul-12	Point Change
Total Mobile Subscribers	100.0%	100.0%	N/A
Samsung	25.9%	25.6%	-0.3
LG	19.2%	18.4%	-0.8
Apple	14.4%	16.3%	1.9
Motorola	12.5%	11.2%	-1.3
HTC	6.0%	6.4%	0.4

More than 114 million people used smart phones during the three months ending in July, 2012, up seven percent over April 2012. Google Android ranked as the top smart phone platform with 52.2 percent market share (up 1.4 percentage points), while Apple’s share increased two percentage points to 33.4 percent. 

RIM ranked third with 9.5 percent share, followed by Microsoft (3.6 percent) and Symbian (0.8 percent).

Top Smartphone Platforms 3 Month Avg. Ending Jul. 2012 vs. 3 Month Avg. Ending Apr. 2012 Total U.S. Smartphone Subscribers Ages 13+ Source: comScore MobiLens
	Share (%) of Smartphone Subscribers
	Apr-12	Jul-12	Point Change
Total Smartphone Subscribers	100.0%	100.0%	N/A
Google	50.8%	52.2%	1.4
Apple	31.4%	33.4%	2.0
RIM	11.6%	9.5%	-2.1
Microsoft	4.0%	3.6%	-0.4
Symbian	1.3%	0.8%	-0.5

Galaxy S III Sales Surpass Apple's iPhone 4S

For the first time since it launched last October, Apple's iPhone 4S was not the top selling smartphone in the U.S., as the newly released Samsung Galaxy S III took the top spot in the month of August, according to  Canaccord Genuity. 

A Look at U.S. E-Commerce