14 Aug 2008

Vendors and operators show one-size does not fit all across the Middle East

This morning I had the pleasure of meeting a marketing contact with responsibility for the Middle East, Pakistan and Africa, representing one of the major network infrastructure vendors. The purpose of the meeting was to work out the timing and topic for the presentation to be made by the company's speaker at our December "Towards a Broadband World" event in Dubai.

It is always gratifying when a sponsor's thoughts about selecting a value-adding topic are not too far from my own. In this case, we wanted to urge our customer to talk in quite broad terms about the range of competing and complementary broadband wireless access technologies being evaluated by mobile, fixed and integrated operators in the region. I felt this was important for a number of reasons. Firstly, we are working hard to broaden the focus of the conference well beyond issues concerning either pure-play mobility businesses or the mobile-specific business units of carriers with both cellular and wireline assets. I am confident we will be successful, so I was keen for our customer to take advantage of speaking in a plenary sessions, when the themes addressed need to be broader than the issues tackled in technology-specific breakouts. Secondly, I felt that a more holistic look at all forms of broadband access made sense in the light of what I was told by a colleague who represented me a few weeks ago in face-to-face meetings with a number of operators in the Middle East.

Aaron Boasman, who works in our Networks & Infrastructure team, came back from a quick tour of the region armed with interesting insights. He was told by the GM of Corporate Affairs at one country's incumbent operator told Aaron that the company was more bullish about the prospects for fixed broadband access than the mobile version on the grounds of the robustness of the service. Certainly at the time of that meeting, the company had not deployed WiMAX, unlike its principal competitor in the mobile space. On another leg of the journey, Aaron was told by one operator that WiMAX deployment has been signidficantly delayed mainly as a result of the country's unsatisfactory regulatory regime. In that particular meeting, HSPA was given a very favourable review due to the country's poor quality copper network and very under-developed FTTx.

These snippets confirmed for me that when telecoms industry watchers attempt to speak in broad terms about trends in a given world region, they need to be mindful that these regions are not always neatly homogenous. A look at Zain, whose footprint extends across and beyond the Middle East, support this view.

Matthew Reed, writing for our fortnightly Middle East & Africa Wireless Analyst research service this month flagged up Zain's imminent market entry in Saudi Arabia. Matthew writes that this new market's huge potential for high-speed Internet-access services is sparking interest in the group's wider wireless broadband strategy. The MEAWA story reports that Zain has had Nokia-Siemens Networks and Motorola deploy HSPA in key cities in anticipation of high demand for beoadband services with mobility, the pent up appetite for which has possibly been frustrated by slow DSL rollout by incumbent STC.

The MEAWA story goes on to note that Zain has embarked on a number of different technology paths across its footprint. For example, in Kuwait, Zain's original 'home market', the operator has launched a 7.2Mbps HSPA network that enables video calling, streaming TV and sports footage and movie-clip downloads. Customers there use a Huawei HSDPA dongle. This seems to work well in tiny Kuwait, which accounts for only 3% of the group's subscription count but one-fifth of its revenues.

MEAWA notes that in Suadan, Zain has launched a 3.5G network in the capital capital, Khartoum, and runs both HSDPA and WiMAX networks in the tiny Gulf state of Bahrain.

In the longer term, writes Reed, Zain plans to deploy wireless-broadband services in many more countries, and is looking out for WiMAX licenses in several African countries.

It is proving very enjoyable to navigate my way around these varied market. I am confident that those of you who join us in Dubai in December will see the diversity of market conditions and operators' technology choices fully reflected in a compelling conference agenda.

13 Aug 2008

Middle East market liberalisation offering opportunities for strategic investors

Most of my attention is on the Middle East right now - we are working hard to improve further one of the two largest events in the Com World Series, our annual conference and exhibition in Dubai, at which we gather telco execs from all over (and beyond) the region. This year's iteration will take place 15-16 December. So I find myself paying most attention to news items relating to the Middle East this week.

Telecoms.com reported yesterday that the Government of Oman has opened bidding on a new fixed line telecommunications licence to be made available in the country, opening up the market to overseas investors. As the report notes, this may be an attractive opportunity for some, given that Oman's fixed line penetration rate is approximately 10%, with even lower broadband penetration. There is clearly ample room for growth. However, we will watch with interest to see if the overall scale of the opportunity catches the attention of major regional and global players.

As the telecoms.com story point out, Oman is not a very large market, with a population of approximately 2.75 million. While that population enjoys good living standards, the county's oil reserves are limited in comparison with those of some of its neighbours, which may make for an uncertain economic outlook.

A far larger market which will pique the interest of some in 2008 is the Islamic Republic Iran, home to over 70 million people. Earlier this year, I heard first-hand about a number of investment opportunities in Iran. Both our Eurasia Com conference in Turkey and our Russia & CIS Com conference in Moscow were attended by an Iranian Government delegation keen to flag up these opportunities. Infer what you will from the fact that the Iranian group was speaking to an audience drawn in part from Russia's 'big three' mobile operators (MTS, MegaFon, Vimpelcom) on each occasion.

At both event, I heard about how mobile penetration of only around 40% means that the new licensee will enjoy access to a market with a high level of pent-up demand. In the short term, the Iranian Government expects the new operator to acquire over 5 million subscribers by 2010. One attraction of the new licence may prove irresistible - the new operator will enjoy two years' exclusivity in the provision of 3G services.

This is just one of three opportunities in Iran, the sale of WiMAX-friendly spectrum/licences and the privatisation of incumbent fixed-line carrier TCI being the others.

In the next few weeks, I will be working to secure the participation of a high-level Iranian delegation at our Dubai event in December. Delegates from around and beyond the Middle East are sure to be interested to keep abreast of these developments.

It is exciting to be working on one of Informa Telecoms & Media's most important events and it's been gratifying to receive unsolicited expressions of interest from companies like Vodafone and Turkcell. The UK-headquartered global cellco will be represented on the panel of speakers by Hatem Dowidar, CEO the company's Partner Markets unit. Vodafone made the news earlier this year by confirming it's entry to the Qatari market, purchasing that country's second mobile licence. Turkcell, represented at our conference by Tayfun Çataltepe, Chief Corporate Strategy Officer and International Expansion Officer, was reported earlier this year to be interested in acquiring a stake in Syrian MNO SyriaTel, albeit with a background of US Treasury Department pressure to drop out of the deal.

With so much going on in the region, it is proving very absorbing to be studying developments and working to get the big players on board for our conference.

12 Aug 2008

Looking ahead to insights from Ecuador at this year's Americas Com

Yesterday's Cellular News arrived in my inbox, bringing to my attention another WiMAX deployment in Latin America, this time by Ecuadorian state-owned carrier, Pacifictel. Airspan are supplying the base stations and CPE. I would be interested to know if there are plans for Pacifictel's sister company Andinatel to select the same kind of equipment and offer similar services, mainly because of a few snippets my team picked up while trying to secure the participation of Ecuadorean telcos at our imminent Americas Com conference and exhibition (September 9-10, Rio de Janeiro). We try to avoid asking telco executives to talk on very generic subjects, preferring to link each prospective speaker with something genuinely novel and value adding for the hundreds of telecoms sector delegates we gather from across South and Central America.

In the case of these two state-owned telcos from one of only two countries in South America not to share a border with the host country of the conference (ten points for telling me the other one without using Wikipedia!), we learned that plans are afoot at least to investigate the logic and processes around merging what are currently quite separate businesses. In case it's not obvious from the companies' names, Andinatel serves the Ecuadorean interior region while Pacifictel offers services in the ten coastal provinces. The companies are also aligned with Alegro PCS, a CDMA mobile operator (also state-owned), which lags far behind its two GSM rivals in terms of market share. According to Informa Telecoms & Media's invaluable World Cellular Information Service, Alegro's share of subscriptions shrank from 4.03% down to 3.00% in the period March 2008 to June 2008, losing further ground to Telefonica-backed Movistar Ecuador and América Móvil-owned Porta, whose website seems to be announcing the availability of 3G services.

When talking to industry-watchers about what Andinatel and/or Pacifictel might add to an already compelling conference agenda, we picked up on merger talk. Confirmed by a Telegeography story, we learned about about reports in the country's La Hora newspaper detailing a strategic planning consortium/council which plans to design a unified corporate policy and manage the operators' infrastructure. These plans apparently include integrating the mobile business into a future merger.

Back in April, I had the considerable pleasure of visiting telcos in Argentina, Venezuela, Bolivia and Paraguay. In the latter two countries, we visited a number of cooperative-owned LECs and the state-owned incumbent fixed-line operator respectively. I was struck by the relatively modest scale of these organisations and wondered privately whether the Bolivian telecoms sector especially might not benefit from some level of consolidation. Currently, the competitive landscape in wireline looks like this: Entel is the incumbent long-distance carrier (and is associated with Entel Movil, an MNO), but the co-ops do better in terms of the local exchange market. Each major city/region is home to its own telecoms co-op. We visited two of the more significant ones away from the country's capital. Given that we've enjoyed some success in attracting the Bolivian co-ops to this year's Americas Com, I thought it might be instructive for them (and other relatively smaller telcos from similarly fragmented markets) to learn more about the proposed Andinatel-Pacifictel-Alergo merger.

While we remain unsure of whether any of this trio will be sending representatives, we did manage to secure the participation of ETAPA, a telco based in the country's third largest city, Cuenca. ETAPA General Director Boris Piedra will join the panel of speakers, speaking about the company's efforts to bridge the digital divide between the information society haves and have-nots. I really look forward to learning about this in more detail at the event - and I must admit, I'm also looking forward to another benefit of attending Americas Com in Rio - getting away from this thoroughly miserable on-off English summer...

11 Aug 2008

Americas Com: fixed, mobile and integrated telcos converge on Rio de Janeiro

I was interested to see Cellular News today picking up a recent Signals Telecom Consulting report on the implementation and effects of Mobile Number Portability across Latin America and the Caribbean. This is a timely read for me as I gear up for our Americas Com conference next month in Rio de Janeiro. We ran the conference successfully as 'GSM Americas' for 12 years, working to gather delegates from all over South and Central America for two days of networking and the opportunity to benchmark strategies and technology choices with colleagues from comparable markets. I have only been personally involved in the conference since mid-2007 and really enjoyed last year's iteration, which we held in December, also in Rio. If Americas Com is at all typical of a South American telecoms industry conference, I'd say that visitors from outside the region would be pleasantly surprised at how readily delegates there get stuck into the post-presentation Q&A sessions, the offline networking in the exhibition - anything which presents an opportunity to discuss rather than merely absorb the words of the great and the good up on the conference podium.

While much of the value of the region's telecoms sector continues to be in mobile, our analysts' excellent output reminds us that cellular markets in Latin America are maturing fast towards the point of saturation. Mobile operators may soon find it tougher to grow their businesses by acquiring wholly new customers, even in some of the region's less affluent countries. It remains to be seen whether there will be a good level of solvent demand for ARPU-boosting value-added services. Many operators must believe there will be.

Given the scale of recent investments in 3G networks and HSPA in markers such as Argentina, Brazil and Chile, operators will be hoping that lower levels of fixed-line teledensity and PC penetration will enable them to position 3G devices as the most pervasive means of accessing the Internet and participating fully in the information society. I'm not in the business on this blog of making predictions. My role as a facilitator of networking between telecoms operator execs worldwide (and their suppliers, partners etc.) does not really qualify me to to do so. However, I do need to be mindful of for how long it will be relevant (and profitable!) for us to assemble a group drawn solely from the celluar space. My reasoning is that with 3G networks already deployed and markets becoming quite mature, we need to watch out for any possibility of a future period of slower mobile operator CAPEX - or even just a dearth of hot topics around which to hang a compelling conference agenda. So we have needed to find a way of connecting our event sponsors with BOTH our loyal, core group of mobile sector execs AND a potentially much larger group from every other kind of telecoms service provider.

Happily, a logical and topical conference agenda is possible under these circumstance. All over the world (albeit moving at different speeds) we see the blurring of the once very sharp distinction between the mobile and fixed line worlds. We see telecoms operators with both fixed and mobile networks/business units seeing opportunities not only to make cost savings but also to achieve effective differentiation by blending their wired and wireless offerings. We see 'mobile only' players looking for partners in the wired world in order to compete in this new FMC space. We see 'fixed only' service providers wondering if they can survive long-term with no mobility proposition. All of this is made possible by the development of convergence-friendly IP core networks and the coming together of wireless access technology standards.

It has therefore been quite straightforward to gather speaker panels and groups of delegates which reflect these convergence trends at our Com World Series events. Americas Com 2008 is no exception. We will be welcoming the usual great speaker line-up from major mobile operators such as TIM Brasil, Ancel, Movistar Chile, Iusacell and Claro Brasil. What's new for 2008 is the presence of a really diverse spread of other kinds of telco:

  • state or co-operative-owned telcos from Andean markets - such as Bolivia's COTEL and Ecuador's ETAPA
  • cablers such as Mexico's Cablecom
  • competitive broadband/voice carriers such as Mexican Alestra

Rio de Janeiro and Buenos Aires have been among the better locations for this annual conference, but one effect of hosting the event either in Brazil or a Conosur location has been making it challenging to draw participants from Andean countries and Central America. So it has been really gratifying to confirm the participation of companies from both these important regions.

So with about 4 weeks to go before Americas Com 2008, we are excited by the diversity of the audience we have assembled - and to see that numbers are tracking ahead of the delegate booking pattern for 2007.