Comments on: Is the Telecom growth story over? http://www.telecomcircle.com/2009/10/telecom-growth-story/ Telecom Circle analyses the latest trends and services within the Wireless and Internet space. Fri, 03 Feb 2012 20:56:32 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Praveen Sadalage http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1346 Praveen Sadalage Mon, 30 Nov 2009 19:52:25 +0000 http://www.telecomcircle.com/?p=1092#comment-1346 We have different situations in different markets, while growth rate might be low in established/developed markets, it is a different story in emerging and underdeveloped markets like S.Asia and Africa, where users are getting exposed to having a phone and internet. The growth story is not over yet. A serious look at the growth drivers like coverage and cost of usage to subscribers in these markets will definitely matter. We have different situations in different markets, while growth rate might be low in established/developed markets, it is a different story in emerging and underdeveloped markets like S.Asia and Africa, where users are getting exposed to having a phone and internet. The growth story is not over yet. A serious look at the growth drivers like coverage and cost of usage to subscribers in these markets will definitely matter.

]]> By: Robert Syputa http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1144 Robert Syputa Mon, 26 Oct 2009 16:36:09 +0000 http://www.telecomcircle.com/?p=1092#comment-1144 The easy stages of subscriber growth that developed upon basic voice and messaging communications is at a high saturation rate for much of urban-suburban organized societies. At the basis of this growth has been the inherent utility and productivity gains delivered by extending communications between people and organizations. However, what remains are several new frontiers that extends benefits of the pervasive, personal nature of wireless networks to multiple devices and applications. Roughly defined, these will deliver a combination of a) social networking and entertainment value, and b) Increased personal and organizational and group productivity gains. Some factors that drive growth/benefits: > Multiple device attach rates: in developed countries/regions subscribers now have over 1 device per citizen. While the subscriber saturation rate may be lower than 100%, some subscribers have 2 or more devices. Typically this includes a USB dongle or embedded mobile data plus a mobile phone device. > Applications drive use of mobile for universal and specialized device applications: These include SmartPhones, eBook readers, music players, video camcorders, medical devices, and several MtM, machine to machine applications. > Several new categories of uses require widespread proliferation of devices that can support common access and applications before they become major contributors to revenues. Some of these, such as LBS, location based services, may by now seem whimsical pipe dreams: Promises of huge revenues just beyond the next horizon. While much has occurred in mobile payments, for example, the location based services awaits the unfolding of common program capabilities that run on various vendors devices across all networks. Similarly, social networking is still in its infancy. This is likely to develop into richer capabilities that includes video and common interface that is tied to the user rather than a specific device or operating system environment. In other worlds, applications will shift to 'cloud' environments and devices to alternative interfaces. The relative stage of wireless is similar to the introduction of networking as part of IT environments: At the time Ethernet was first made commercially available some thought it would simply connect dumb terminals to mainframe computers and, thus, would have little impact on organizations other than extending the access to computing resources within the IT environment. But from networking has sprung the proliferation of the server and PC environment which led to thousands of useful programs, new ways to conduct business, and, down the line, to the Internet and subsequent developments in wireless data networks. Similarly, while much of the benefits of combining wireless with broadband information technologies is yet to be realized, the advantages are hypothesized from several directions: business productivity and organization, personal productivity studies, network optimization theory, environmental benefit/impact observations and research to name a few. -Robert Syputa Partner, Maravedis cloud4G The easy stages of subscriber growth that developed upon basic voice and messaging communications is at a high saturation rate for much of urban-suburban organized societies. At the basis of this growth has been the inherent utility and productivity gains delivered by extending communications between people and organizations. However, what remains are several new frontiers that extends benefits of the pervasive, personal nature of wireless networks to multiple devices and applications. Roughly defined, these will deliver a combination of a) social networking and entertainment value, and b) Increased personal and organizational and group productivity gains.

Some factors that drive growth/benefits:

> Multiple device attach rates: in developed countries/regions subscribers now have over 1 device per citizen. While the subscriber saturation rate may be lower than 100%, some subscribers have 2 or more devices. Typically this includes a USB dongle or embedded mobile data plus a mobile phone device.
> Applications drive use of mobile for universal and specialized device applications: These include SmartPhones, eBook readers, music players, video camcorders, medical devices, and several MtM, machine to machine applications.
> Several new categories of uses require widespread proliferation of devices that can support common access and applications before they become major contributors to revenues. Some of these, such as LBS, location based services, may by now seem whimsical pipe dreams: Promises of huge revenues just beyond the next horizon. While much has occurred in mobile payments, for example, the location based services awaits the unfolding of common program capabilities that run on various vendors devices across all networks. Similarly, social networking is still in its infancy. This is likely to develop into richer capabilities that includes video and common interface that is tied to the user rather than a specific device or operating system environment. In other worlds, applications will shift to ‘cloud’ environments and devices to alternative interfaces.

The relative stage of wireless is similar to the introduction of networking as part of IT environments: At the time Ethernet was first made commercially available some thought it would simply connect dumb terminals to mainframe computers and, thus, would have little impact on organizations other than extending the access to computing resources within the IT environment. But from networking has sprung the proliferation of the server and PC environment which led to thousands of useful programs, new ways to conduct business, and, down the line, to the Internet and subsequent developments in wireless data networks.

Similarly, while much of the benefits of combining wireless with broadband information technologies is yet to be realized, the advantages are hypothesized from several directions: business productivity and organization, personal productivity studies, network optimization theory, environmental benefit/impact observations and research to name a few.

-Robert Syputa
Partner, Maravedis
cloud4G

]]> By: Sudeep Tandon http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1139 Sudeep Tandon Sun, 25 Oct 2009 11:37:13 +0000 http://www.telecomcircle.com/?p=1092#comment-1139 "I agree with the view that the telecom growth story is far from over. Just last year, Etisalat (a telco active in MEA region, with growing presence in West and South Asia) entered the Indian market. Voice revenue growth may be slowing, but there's a lot still to come in data services especially mobile based financial transactions." “I agree with the view that the telecom growth story is far from over. Just last year, Etisalat (a telco active in MEA region, with growing presence in West and South Asia) entered the Indian market. Voice revenue growth may be slowing, but there’s a lot still to come in data services especially mobile based financial transactions.”

]]> By: suman kumar http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1136 suman kumar Fri, 23 Oct 2009 05:44:37 +0000 http://www.telecomcircle.com/?p=1092#comment-1136 Interesting article. There is potential for Mobile Voice penetration in Asian and African countries which in volumes will be huge from industry standpoint. Potential for data / commerce services is huge. I agree to your views that industry has to collaborate to tap these opportunities as these are not only high technology innovations, but also to be implemented with right customer experience Interesting article. There is potential for Mobile Voice penetration in Asian and African countries which in volumes will be huge from industry standpoint. Potential for data / commerce services is huge. I agree to your views that industry has to collaborate to tap these opportunities as these are not only high technology innovations, but also to be implemented with right customer experience

]]> By: Cristina http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1132 Cristina Wed, 21 Oct 2009 12:05:56 +0000 http://www.telecomcircle.com/?p=1092#comment-1132 great piece of analysis Mohit, thanks for sharing your thoughts wondering now how are these guys doing on R&D and, more importantly, partnering approaches great piece of analysis Mohit, thanks for sharing your thoughts
wondering now how are these guys doing on R&D and, more importantly, partnering approaches

]]> By: Jignesh Purohit http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1131 Jignesh Purohit Tue, 20 Oct 2009 05:22:04 +0000 http://www.telecomcircle.com/?p=1092#comment-1131 "Not exactly, considering that the domestic tele density is pegged at 40%, Yes it would be fair to add that the measurement parameter has taken a paradigm shift with focus on Revenue rather than Gross numbers becoming the criteria to arrive at a Valuation of a Telecom Company. The recent tariff wars triggered with per second billing has certainly taken a toll on Company's Revenue and ARPU's, But it would be interesting to see if these tariff's are the hurdles for the new yest to be launched companies Vying for the Share in the telecom Market which is already ower crowded. The Growth would continue with all the Telecom Companies forming strategies to capture the share in the untapped rural India which would be on top of agenda!!" “Not exactly, considering that the domestic tele density is pegged at 40%, Yes it would be fair to add that the measurement parameter has taken a paradigm shift with focus on Revenue rather than Gross numbers becoming the criteria to arrive at a Valuation of a Telecom Company. The recent tariff wars triggered with per second billing has certainly taken a toll on Company’s Revenue and ARPU’s, But it would be interesting to see if these tariff’s are the hurdles for the new yest to be launched companies Vying for the Share in the telecom Market which is already ower crowded.
The Growth would continue with all the Telecom Companies forming strategies to capture the share in the untapped rural India which would be on top of agenda!!”

]]> By: Arapat Sangklab http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1130 Arapat Sangklab Tue, 20 Oct 2009 04:25:22 +0000 http://www.telecomcircle.com/?p=1092#comment-1130 Hi Mohit, I believed we need to look at the basic drivers and factors behind the growth of Telecom beyond simply more populations and affordability to see clear values. The first gen of Telecom, we have connectivity thanks to the "phone". "Mobility" give birth to second gen and we have extend this connectivity to any time and anywhere. The third gen claimed ability to do "networking" enhancing our social and work collaboration thanks to the "internet cloud" Since many years ago, all the operators and consultants have been working on analyzing subs behavior and lifestyle to properly cater for right promotion of voice and data services. From this clear value view Telecom is not that much different from other way of life industry e.g. Housing and Car that the professional just need to present more convincing value to customer to keep growing.. We are in the age of becoming more and more personalization so no wonder, camera, remittance, whatever can be made more friendly would be drawn into Telecom world. BR, arapat" Hi Mohit,

I believed we need to look at the basic drivers and factors behind the growth of Telecom beyond simply more populations and affordability to see clear values.

The first gen of Telecom, we have connectivity thanks to the “phone”.
“Mobility” give birth to second gen and we have extend this connectivity to any time and anywhere.

The third gen claimed ability to do “networking” enhancing our social and work collaboration thanks to the “internet cloud”

Since many years ago, all the operators and consultants have been working on analyzing subs behavior and lifestyle to properly cater for right promotion of voice and data services.

From this clear value view Telecom is not that much different from other way of life industry e.g. Housing and Car that the professional just need to present more convincing value to customer to keep growing..

We are in the age of becoming more and more personalization so no wonder, camera, remittance, whatever can be made more friendly would be drawn into Telecom world.

BR, arapat”

]]> By: James Walker http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1128 James Walker Mon, 19 Oct 2009 17:47:26 +0000 http://www.telecomcircle.com/?p=1092#comment-1128 Not being one who's intimately involved yet still affected by telecom I'd have to say you can chalk it up to convergence. You have users partaking in mobile services only available on their personal computers a few years ago. The revenue drop is likely due to a slow worldwide recession that's been going on for at least 2 years. For providers to stay afloat they've had to bundle lower cost packages and move away from expensive "pay per use" plans. Once we saw the advent of VOIP in the enterprise and long distance communication over facilities like Skype the convergence was complete. I don't really see telecom as an entity separate from data anymore. I don't think it's over, you just have to look in more places than you used to Not being one who’s intimately involved yet still affected by telecom I’d have to say you can chalk it up to convergence. You have users partaking in mobile services only available on their personal computers a few years ago. The revenue drop is likely due to a slow worldwide recession that’s been going on for at least 2 years. For providers to stay afloat they’ve had to bundle lower cost packages and move away from expensive “pay per use” plans. Once we saw the advent of VOIP in the enterprise and long distance communication over facilities like Skype the convergence was complete. I don’t really see telecom as an entity separate from data anymore.
I don’t think it’s over, you just have to look in more places than you used to

]]> By: Mithun Ravindranathan http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1127 Mithun Ravindranathan Mon, 19 Oct 2009 16:47:28 +0000 http://www.telecomcircle.com/?p=1092#comment-1127 1. Wireless Data: We're still at the tip of the Iceberg when it comes to Wireless Data numbers. With the steady increase in sales of Laptops YOY, there is scope for operators to leverage Wireless data at an affordable cost. 2. Consolidation: With increase competition such in today's scenarios comes Consolidation. The player with the strong fundamentals and numbers will rule. 3. Innovation: The good ole cellphone has come a long way from simply making calls and then on texting and now checking emails. Hi-Speed Internet access coupled with the fact the the Internet is every changing, can give birth to lot many innovative ideas to make a Cellphone more than a Cellphone. Summing it up, the Telecom growth story may have gone flat for now..but not for long :)" 1. Wireless Data: We’re still at the tip of the Iceberg when it comes to Wireless Data numbers. With the steady increase in sales of Laptops YOY, there is scope for operators to leverage Wireless data at an affordable cost.

2. Consolidation: With increase competition such in today’s scenarios comes Consolidation. The player with the strong fundamentals and numbers will rule.

3. Innovation: The good ole cellphone has come a long way from simply making calls and then on texting and now checking emails. Hi-Speed Internet access coupled with the fact the the Internet is every changing, can give birth to lot many innovative ideas to make a Cellphone more than a Cellphone.

Summing it up, the Telecom growth story may have gone flat for now..but not for long :) ”

]]> By: Sudershan Banerjee http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1126 Sudershan Banerjee Mon, 19 Oct 2009 16:18:12 +0000 http://www.telecomcircle.com/?p=1092#comment-1126 "Hi Mohit, The ownership levels in India are still in low two digit numbers, ARPUs are also very low, so there is enough headroom for growth in numbers and in value." SB “Hi Mohit,

The ownership levels in India are still in low two digit numbers, ARPUs are also very low, so there is enough headroom for growth in numbers and in value.”

SB

]]> By: Roland Orlie, P.Eng. http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1125 Roland Orlie, P.Eng. Mon, 19 Oct 2009 13:57:19 +0000 http://www.telecomcircle.com/?p=1092#comment-1125 Mohid: I would not look at it this way at all. Business is there to generate a profit and that happens when the consumer receives REAL or PERCEIVED value. He is then willing to pay. This brings you quickly to the value-chain analysis. During the previous meltdown of the ICT business, companies went under or almost because they were investing in the links of the value chain that simply did not produce any value. Mobile communications, for example, has done well because it provided value through ACCESS, meaning mobility for them. When you then do the kind of studies we have done you will quickly discover that the two dominant value generators are ACCESS and CONTENTS. If you then look at where in the ICT there has been growth in those two and you can easily find the winners and the losers. We have very long way to go for both of these though!!!! Anybody who can provide convincing access and contents thus is the growth engine of the industry, full stop. Therefore I suggest do NOT look at things from a service point of view, it will lead you nowhere. Engineers (I am one too) have to learn to listen to the market and find and understand those two chain links and work with them. Look at AT&T, BT, C&W, a lot of Baby Bells, Verizon, etc, etc, etc and it is all there to see. NO rocket science!!! The days of the technology-only engineer are dead, the market-focused ones move and shake the world today. Those with an MBA are therefore far more useful than those without. So those are my views. Thanks for your food for thought. RKO Mohid:
I would not look at it this way at all. Business is there to generate a profit and that happens when the consumer receives REAL or PERCEIVED value. He is then willing to pay. This brings you quickly to the value-chain analysis. During the previous meltdown of the ICT business, companies went under or almost because they were investing in the links of the value chain that simply did not produce any value.

Mobile communications, for example, has done well because it provided value through ACCESS, meaning mobility for them. When you then do the kind of studies we have done you will quickly discover that the two dominant value generators are ACCESS and CONTENTS. If you then look at where in the ICT there has been growth in those two and you can easily find the winners and the losers. We have very long way to go for both of these though!!!! Anybody who can provide convincing access and contents thus is the growth engine of the industry, full stop.

Therefore I suggest do NOT look at things from a service point of view, it will lead you nowhere. Engineers (I am one too) have to learn to listen to the market and find and understand those two chain links and work with them. Look at AT&T, BT, C&W, a lot of Baby Bells, Verizon, etc, etc, etc and it is all there to see. NO rocket science!!! The days of the technology-only engineer are dead, the market-focused ones move and shake the world today. Those with an MBA are therefore far more useful than those without.

So those are my views. Thanks for your food for thought.
RKO

]]> By: Vivek Vadakkuppattu http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1124 Vivek Vadakkuppattu Mon, 19 Oct 2009 13:49:09 +0000 http://www.telecomcircle.com/?p=1092#comment-1124 As a guy who attends standards meetings and has lots of customer interaction I can put my salary on the fact that the telecom growth story is far from over. Operators and equipment manufacturers are putting in millions each year and for good reason. There is lots of untapped market especially in emerging economies like India and China. Also lets not forget the fact that people are expecting more services from their phones and operators. In a recent poll, 35% of the people told they were willing to give up even basic necessities instead of a cell phone. As quite a few of you mentioned, the market might be getting closer to a saturation point. However, one way to grow even under these conditions is by taking market share from the fixed line sector. This was one of the reasons for the development of the Femto Cells/Home Node-Bs in LTE. The whole idea behind by femto cells is to reduce churn over for mobile subscribers by providing improved QOS at home and by actually making subscribers use more of their Mobile minutes than minutes on their land line. Agreed that VOIP connections with a fixed rate for unlimited calls would be a challenge; However, it is a different market segment that we are trying to address with this. Of course, the other part of all this is the associated cost and this is something that has been addressed (at least to a certain extent) in LTE. Overall, I think there is lots of potential for growth in the telecom sector going forward. P.S: Incidentally, operators are thinking of 3.9G (LTE) and not about 4G. 4G (LTE-A, WiMax) is still being speced out. With 3G still being deployed, operators would definitely want to get some returns out of their investments before they start investing in equipment. I would think 2014 (give or take a few years) to be a more realistic time for 4G deployment As a guy who attends standards meetings and has lots of customer interaction I can put my salary on the fact that the telecom growth story is far from over. Operators and equipment manufacturers are putting in millions each year and for good reason. There is lots of untapped market especially in emerging economies like India and China. Also lets not forget the fact that people are expecting more services from their phones and operators. In a recent poll, 35% of the people told they were willing to give up even basic necessities instead of a cell phone.

As quite a few of you mentioned, the market might be getting closer to a saturation point. However, one way to grow even under these conditions is by taking market share from the fixed line sector. This was one of the reasons for the development of the Femto Cells/Home Node-Bs in LTE. The whole idea behind by femto cells is to reduce churn over for mobile subscribers by providing improved QOS at home and by actually making subscribers use more of their Mobile minutes than minutes on their land line. Agreed that VOIP connections with a fixed rate for unlimited calls would be a challenge; However, it is a different market segment that we are trying to address with this.

Of course, the other part of all this is the associated cost and this is something that has been addressed (at least to a certain extent) in LTE. Overall, I think there is lots of potential for growth in the telecom sector going forward.
P.S: Incidentally, operators are thinking of 3.9G (LTE) and not about 4G. 4G (LTE-A, WiMax) is still being speced out. With 3G still being deployed, operators would definitely want to get some returns out of their investments before they start investing in equipment. I would think 2014 (give or take a few years) to be a more realistic time for 4G deployment

]]> By: ankur maheshwari http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1123 ankur maheshwari Mon, 19 Oct 2009 13:47:31 +0000 http://www.telecomcircle.com/?p=1092#comment-1123 Hi Mohit, World over the voice revenues have witnessed a decreasing trend and data revenues are increasing. Western Europe, where penetration of mobile handsets have crossed more than 100% ( e.g. in Italy its nearly 130%) the markets are saturated, as a result companies are looking for alternate ways of revenues (more focus on innovative data services to increase ARPU) and newer markets (India, China, Africa and the Latin Americas). The Asian countries like India and China which have perhaps the lowest ARPUs are attractive destinations because of huge volumes involved. China Mobile has the world's largest subscriber base in spite of the fact it caters only to one nation. India is also graduating in the use of mobile phones like other countries. Working in business strategies for telecom clients, we have come across many roadblocks that are currently hampering the expected growth in telecom industry in India. In order to increase Data ARPU indian operators need to focus on the Value added data services. Revenue sharing model by the operators and content developers do not leave a good share for content developers (a revenue sharing ratio of 70:30) as a result VAS players are discouraged from producing anything worthwhile in Indian markets. many indian content aggregators, mobile game developers and other software providers are focusing on exports rather than domestic market only for the reason that business models are not viable in India for value added content (e.g. mobile games produced by Dhruva interactive and Indiagames which focus on global audiance and have sold millions of copies world wide on single titles. The improvement in revenue sharing model could give a boost to Data ARPU and hence overall industry. With the advent of 3G and mobile number portability in India, we expect things to change. A healthy competition would result in innovation, better services and more use of services. Regards, ankur." Hi Mohit,
World over the voice revenues have witnessed a decreasing trend and data revenues are increasing. Western Europe, where penetration of mobile handsets have crossed more than 100% ( e.g. in Italy its nearly 130%) the markets are saturated, as a result companies are looking for alternate ways of revenues (more focus on innovative data services to increase ARPU) and newer markets (India, China, Africa and the Latin Americas). The Asian countries like India and China which have perhaps the lowest ARPUs are attractive destinations because of huge volumes involved. China Mobile has the world’s largest subscriber base in spite of the fact it caters only to one nation.
India is also graduating in the use of mobile phones like other countries. Working in business strategies for telecom clients, we have come across many roadblocks that are currently hampering the expected growth in telecom industry in India.
In order to increase Data ARPU indian operators need to focus on the Value added data services. Revenue sharing model by the operators and content developers do not leave a good share for content developers (a revenue sharing ratio of 70:30) as a result VAS players are discouraged from producing anything worthwhile in Indian markets. many indian content aggregators, mobile game developers and other software providers are focusing on exports rather than domestic market only for the reason that business models are not viable in India for value added content (e.g. mobile games produced by Dhruva interactive and Indiagames which focus on global audiance and have sold millions of copies world wide on single titles. The improvement in revenue sharing model could give a boost to Data ARPU and hence overall industry. With the advent of 3G and mobile number portability in India, we expect things to change. A healthy competition would result in innovation, better services and more use of services.
Regards,
ankur.”

]]> By: Jeff Henry http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1121 Jeff Henry Mon, 19 Oct 2009 13:24:04 +0000 http://www.telecomcircle.com/?p=1092#comment-1121 The traditional Telecom story is clearly on the decline. However, with innovation and an open mind should be no limit to where we can go. Clearly need some new thinking and that won't come from within. This is the type of work that I do. http://whatsnext-jefferylhenry.blogspot.com/" The traditional Telecom story is clearly on the decline. However, with innovation and an open mind should be no limit to where we can go. Clearly need some new thinking and that won’t come from within. This is the type of work that I do. http://whatsnext-jefferylhenry.blogspot.com/“

]]> By: Hemanth Rao http://www.telecomcircle.com/2009/10/telecom-growth-story/comment-page-1/#comment-1118 Hemanth Rao Mon, 19 Oct 2009 04:49:17 +0000 http://www.telecomcircle.com/?p=1092#comment-1118 "Agree on your views of revenues dipping and operators having to shift their focus from voice to data and VAS. Yes there are still quite a few virgin territories which are to be explored on the mobile application front. I have a feeling that there is a growing focus on this from operators across, Face book, You Tube, Twitter it all there is it not? Its just a matter of time before the a large chunk of the PC/laptop market is sucked away too like the camera and radio. But yes data tariffs will be the key to fuel this move." “Agree on your views of revenues dipping and operators having to shift their focus from voice to data and VAS. Yes there are still quite a few virgin territories which are to be explored on the mobile application front. I have a feeling that there is a growing focus on this from operators across, Face book, You Tube, Twitter it all there is it not? Its just a matter of time before the a large chunk of the PC/laptop market is sucked away too like the camera and radio. But yes data tariffs will be the key to fuel this move.”

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