Posts Tagged ‘mobile operators’
Broadband: the lack of fixed lines creates a huge opportunity for mobile operators to offer services
Calculations by telecoms advisory firm Delta Partners suggest that revenue from mobile broadband could boom from 1bn today to hit 6bn in the Middle East and Africa, with Africa contributing most of that growth.
The region was developing an insatiable appetite for connectivity, said Daniel Torras, a principal at Delta Partners in Johannesburg, but opportunities came with risks.
The Middle East and Africa is the world’s fastest-growing region for mobile penetration, while the growth of fixed-line penetration has stagnated at 4% across Africa. That lack of connectivity and the high cost of rolling out fixed lines had severely hampered the development of broadband services, and many countries still got much of their connectivity via notoriously expensive satellites.
Torras said the situation would change over time as improved international connectivity arrived through various submarine cables being laid around Africa’s east and west coasts, promising enhanced bandwidth and lower prices.
The Seacom cable will be switched on tomorrow, hugely increasing the bandwidth supply. Yet the effect on pricing remains to be seen as operators buying its bandwidth will decide how much of the saving to pass on to clients.
Torras also said connectivity would improve as mobile operators aggressively developed high-speed wireless networks to go beyond their core voice offerings. Broadband was seen increasingly as their growth driver and the way to create the “stickiness” needed to retain high-value customers, who accounted for 10%-20% of subscribers but 50%-60% of revenue.
Nearly 70% of broadband services in the Middle East and Africa would be delivered by wireless by 2011, up from 38% today. That would trigger a subscriber growth from 2,5-million today to about 40-million in 2011.
The risks come from the high capital expenditure required, particularly for late entrants who struggle to win enough customers to recoup their costs.
Tomorrow’s Seacom switch-on would start a bandwidth revolution by providing faster and cheaper internet connectivity, said Arthur Goldstuck, MD of World Wide Worx. But those great expectations were only feasible in the long run, he said. For now it would be business as usual.
Seacom’s initial capacity would double that of the existing SAT3 cable on Africa’s west coast, but prices would not show immediate disruptions. Moreover, the speed would still be determined by the product being sold to the customer, rather than by the new capacity, Goldstuck said.
One benefit should be that internet service providers would allow users a higher volume of data downloads every month, but probably for the same as fee as now.
Nigeria: an opinion from Vanguard which addresses the challenges of mobile phone registration and political protest
The unrest following the Iranian presidential elections of 12 June (whaoh! June 12 again!) the leading question in media and academic circles is ‘Is Twitter driving the ongoing political crisis in Iran?’ A premature question it seems but the reality is that there is a developing consensus on the centrality of the new medium – Twitter (to a lesser extent, Facebook and YouTube) and the challenge it poses to more established media as an effective means of disseminating information.
Just last week our contacts reliably informed us of the U-turn by South Africa’s mobile operators who have now accepted to implement the Regulation of Interception of Communications and Provision of Communication-Related Information Act, a.k.a. RICA. In a display of corporate muscle by the industry against an ever-shrinking role of the state, mobile operators had met RICA with derision so much so that when it became law, the big players – MTN, Vodacom and Cell C – branded it an intervention too far.
Even President Thabo Mbeki was unsure of the practicalities of implementation when in 2005 he shrugged while signing RICA into law. However four years down the road, they have now fallen in line saying they would implement it especially as a lot of fine-tuning (some may say watering down) has been done to its original requirements.
This U-turn exemplifies a realignment in the balance of power between corporations and government/legislatures where the former often has a vice-like grip over the latter thus aligning with each other against the consumer i.e. the phone users in this case. It would appear that legislators have tested this bias in the court of public opinion and realised that the law must at least be seen to triumph over business.
ICT and mobile telephony as a template – Nigeria v SA
I asked our informant to sniff for information whether or not industry analysts in SA are even using Nigeria as reference point. His response was ‘As if you know, do you know some guys are saying, “if it can work in Nigeria why not here”, and that has done a lot to soothe nerves’. That is where the story starts getting interesting.
In the first place it is not as if Nigeria has started implementing the intervention and Nigeria has so far not made a law but chances are that when it does it is likely to sail through with not much stress. Why? In Nigeria of all places? Point is: this is one area that Nigeria has done very well without knowing it.
In spite of what a few antagonists of the Nigerian Communications Commission would want the rest of us to believe, that Commission’s intervention strategy has ever been a model to watch. The Commission is known for what we call, in industry parlance, study-discuss-consult-hit model of intervention. By it we mean that the Commission’s deliberate approach to using Consultants to study an industry issue deserving of intervention and subjecting the Consultants report to executive discussion within the Commission. Then taking the issue to industry players for public discussion before using stakeholders’ reaction to fashion an intervention. Should the legislature then move (would it?) to do a law to back the intervention, it almost gets easy passage within and among the industry players, analysts and critics. Some say it is tactical. Methinks it is professional.
The issue is that there is a difference between the South African and the Nigerian models of intervention in implementing the need to have registration of telephone subscribers for various reasons.
Why register subscribers? Issues such as security, crime prevention, network planning, industry management, name it, are but a few of the advantages which those who clamour for the intervention have cited. Just like in the case of co-location of telecommunication infrastructure, telephone subscriber registration is one simple, easy-to-understand industry requirement which is potentially difficult to implement except when properly managed. It has taken South Africa 4 years to get it on stream.
Reason being that the officials there went headlong to write laws which they never discussed with those who would implement it. In Nigeria, such an issue would have been studied by a consultant. The consultant’s report would have been studied and discussed by the Commission and the Commission would have brought the issue for industry discussion and debate before now issuing an implementation paper. For God’s sake that is how it should be. Not barking down mere populist wishful thinking orders to put things on the right path.
Politics, Reality of Telephone Subscriber Registration in Emerging Markets
Bulgaria: 850,000 broadband connections, but BTC continues to dominate fixed telecoms
However, this has not coincided with an equivalent degree of liberalisation in the fixed-line and ADSL sectors, both of which remain dominated by BTC. Although a number of alternative operators do exist, high prices and other difficulties with regards to access to the incumbent’s network appear to be derailing competition. This has resulted in spritely activity in alternative broadband technologies, with local area networks (LAN) being the most dominant, accounting for around 57% of the broadband market at the end of 2008. There are also a number of wireless broadband technologies available such as WiMAX from operators like Nexcom Bulgaria. At the end of 2008, there were over 850,000 broadband connections in Bulgaria, up from around 560,000 at the end of 2007.
The merger between Bulgaria’s two largest cable operators, Eurocom and CableTEL, has still not been re-established after it was postponed due to the financial crisis. However, reports suggest that the relevant parties are still interested in merging and the report is optimistic of negotiations reigniting. The merger would be of huge benefit to the broadband sector, creating a player large enough to pose a threat to BTC, and helping to drive the cable market forward.
The fixed-line sector has continued to decline in 2008 with BTC reporting a 9% fall in fixed-line sales. At the end of 2008, we estimate that there were just over 2.2mn fixed lines, representing penetration of 29.3% and an annual subscriber decline of 3.7%. Going forward, we expect this rate of decline to slow as several promising factors come together. The regulator seems keen to encourage greater competition, mobile market growth is slowing which should result in less fixed-to-mobile substitution, and heavier marketing of bundled services should help to stem the decline of the fixed-line sector. Nevertheless, we still expect it to fall as broadband access is expanded, spreading the availability of VoIP services and better postpaid mobile tariffs result in customers continuing to drop fixed lines in favour of mobile services.
The mobile sector grew by just 6.5% in 2008, a poor performance after the 24.7% growth rate seen in 2007. The market saw a large net loss in the first quarter of 2008, which we believe resulted from the mobile operators discounting inactive SIMs. At 3.5%, growth in the final quarter of 2008 was strong compared to the rest of the year, with 383,000 net additions. However, going forward we expect to see growth rates continuing to decline. As well as penetration being among the highest in the region, at 142.8% at the end of 2008 and the risks of further discounting of inactive SIMs, the country’s two largest operators are concentrating on migrating their prepaid customers to postpaid contracts. Mobiltel, the market leader, and second largest operator Globul both saw the proportion of postpaid customers in their subscriber bases breach the 50% mark in Q408. This chase for higher value customers will result in less concentration on subscriber growth, leaving room for Vivatel and mobile virtual network operators (MVNOs) such as Petrol Mobile to sweep up prepaid customers. However, as competition for postpaid customers increases, tariffs will fall, resulting in fewer prepaid growth opportunities.
At The End Of 2008, There Were Over 850,000 Broadband Connections In Bulgaria
Tanzania: Strong growth in mobile has caused the fixed incumbent to shrink
Second ranked Zain had a particularly strong Q408, and managed to gain a little on Vodacom, ending the year on a 29.0% market share, which was an improvement on 27.5% in June 2008. This operator’s market share has been generally fluctuating just below 30% for the last couple of years, and does not seem to be seeing the gradual decline that Vodacom is experiencing. Tigo, still the third ranked operator, saw a slight faltering to its progress in the final quarter of 2007, seeing a reduction in market share for the first time in over six quarters, while Zantel continues to make steady progress in its bid to catch it. The other operators remain very minor players.
2008 saw new operators added to the market, and even more being licensed. In November 2008, locally backed companies MyCell and Egotel were licensed as mobile operators. In addition, several other companies received licences to provide fixed-line services, probably over fixed-wireless technologies, since investing in fixed-line networks is so costly.
2008, especially the second half, saw a dramatic drop-off in the number of fixed lines in service.
According to the telecoms regulator, the Tanzania Communications Regulatory Authority, Tanzania’s fixed-line incumbent Tanzania Telecommunications Company (TTCL) lost over 41,000 subscribers during 2008, which, given the very small size of the market as a whole, makes up a not inconsiderable portion of its subscriber base.
Tanzania’s broadband market is underdeveloped, even for East Africa. Low levels of internet usage suggest the technology is yet to have an impact on the population. New investments in WiMAX and 3G mobile broadband may yet be key to increasing the influence of the worldwide web.
Tanzania Telecommunications Company (TTCL) Lost Over 41,000 Subscribers During 2008
Mobile: NTT DoCoMo planning investments in Asian carriers to sustain its growth
DoCoMo’s recent foreign investments include a 26 percent stake in Tata Teleservices, India’s sixth-largest mobile operator, a 30 percent stake in telecom operator Axiata’s Bangladesh unit, and a 16.5 percent stake in Malaysian operator U-Mobile.
“Our main target is Asia, and there are some other (promising) countries there. We are in contact (with carriers in those countries),” NTT DoCoMo Chief Executive Ryuji Yamada told Reuters in an interview on Thursday without elaborating.
DoCoMo is also seeking technological cooperation, rather than capital ties, with Chinese mobile operators such as China Mobile and China Unicom, Yamada said.
“Those are real giants and buying a stake of only a few percent could cost us several hundred billion yen (several billion dollars), and acquiring such stakes would not make much business sense for us,” Yamada said.
In a bid to enhance the appeal of its cell phone lineup and better compete with rivals KDDI Corp and Softbank Corp, DoCoMo on Friday plans to launch the first handset in Japan using Google Inc’s Android operating system.
On top of the smartphone made by Taiwan’s HTC Corp, DoCoMo is considering adding some more Android phones to its handset lineup by early next year, Yamada said.
Yamada added that he has also not given up on the possibility of offering Apple Inc’s iPhone to its subscribers.
In Japan, Softbank is the only carrier that offers the popular handsets at the moment.
Softbank, Japan’s third-largest mobile carrier, outran its bigger rivals in winning new signups minus cancellations for the 26th straight month in June, helped by the popularity of iPhones as well as an aggressive ad campaign and low-cost price plans.
Following Yamada’s comments, shares in NTT DoCoMo closed down 1 percent at 140,600 yen, outperforming the benchmark Nikkei average, which fell 1.4 percent.