23 Jan 2009

Middle East markets: regional players prevail in mobile licence auctions

At last month's GSM>3G Middle East conference in Dubai, at which I had the pleasure of moderating a number of the sessions, the panel of speakers included Farid Lekhal, Chief Commercial Officer at Vodafone's Partner Markets business unit. I hope his comments on mobile broadband added a useful perspective for an audience largely representing telcos headquartered in the MENA region. MENA operations in which the Newbury, UK-based giant cellco has equity currently only number two. Vodafone Egypt is an established outpost of the company's global empire. Much newer is the operation in oil and gas-rich Qatar, where I believe services are expected to be launched in March this year.

Notwithstanding Vodafone's recent foray into Qatar, My guess is that across the Middle East the entry of a group with European roots to any market selling further licenses will be comparatively rare going forward. It looks far more likely that MENA-based groups will continue to grow their footprints in the region. One recent example: Saudi Telecom acquiring Bahrain's third mobile licence for USD 230 million, according to yesterday's report from Gulf News. The story indicates that three other firms had registered interest in the auction, something which Global Mobile Daily told me only eleven days ago in a piece which led me to infer that the Bahraini regulator was planning to launch a lengthier tender process. However, yesterday's Gulf News piece suggested that STC's bid was the only one received. The story also reveals the previously unknown prospective bidders, indicating that Mohammed al-Amer, Chairman of the Telecommunications Regulatory Authority of Bahrain, had said these named Bahrain's TwoConnect and Mena Telecom as well as a consortium including France Telecom subsidiaries Orange and Jordan Telecom.

Another major intra-regional move was the recent win in Iran by the Etisalat, where the UAE-based telco has snapped up the country's third national mobile licence. My colleague Matthew Reed, Editor of our Middle East and Africa Wireless Analyst publication, feels the deal was a bargain, noting that the license fee was only US$399 million, of which Etisalat is paying 49%, in line with its 49% stake in the consortium that won the license. Etisalat’s local partner is Tameen Telecom, an Iranian public-sector investment fund. Matt notes that the new operator will reportedly pay 23.6% of revenues to the Iranian government, though MCCI and MTN Irancell pay 28%.

Matt feels that Etisalat's new operation will enjoy - and exploit - the significant competitive advantage conferred by its licence, which confers the right to be the only 3G operator in Iran for two years. Matt notes that "perhaps more than any of its peers, Etisalat has put new technology at the heart of its strategy, saying that in this way it can future-proof itself because it will be able to offer the most up-to-date services and because the latest systems are cheaper in the long run."

Matt points to the example of Egypt, where Etisalat launched a 3.5G network on its debut in the country in May 2006, becoming the country’s first 3G operator. In Egypt, Etisalat had the 3G market to itself only briefly, since Vodafone launched its own 3G network within a couple of weeks, and Egyptian market leader Mobinil launched a 3G network in September. In Iran, Etisalat will look to make the most of a much longer period of 3G exclusivity.

Matt notes that "when Etisalat launches services - in six to nine months, according to company executives - it will most likely offer HSDPA services from the outset, as it did in Egypt." Matt feels this will enable Etisalat to offer data services such as mobile broadband and target Iran’s largely untapped broadband market, without any meaningful competition.

21 Jan 2009

Spetrum caps set to hamper mobile broadband development in Latin America?

Given that I am currently tweaking the draft agenda for the annual Americas Com conference (this year: Rio de Janeiro, 31 June & 1 July), one of the lead stories in today's Global Mobile Daily is especially useful food for thought. GMD notes that the GSMA is urging Latin American regulators to relax spectrum caps which the Association feels to be hampering the development of mobile broadband services in the region.

According to a study commissioned for the GSMA, spectrum caps in Latin America are among the most restrictive in the world: a maximum of 40MHz is allowed per operator in Colombia, 50 MHz in Argentina, 60 MHz in Chile, 65 MHz in Mexico and 80 MHz in Brazil. This compared with over 300 MHz of spectrum available in most North American and European markets. Assuming this continues to be an inhibiting factor for the region's MNOs, I daresay it will be a major topic for discussion at the conference. I will encourage colleagues to consult with the good folks at 3G Americas in order to get a sense of how much discussion time is merited by this particular issues. At the event, 3G Americas President Chris Pearson will lead the usual Executive Briefing his organisation has traditionally offered to delegates.

20 Jan 2009

Informa bullish on mobile data during the economic downturn

During my time with Informa Telecoms & Media I have not had the opportunity to consult with Mark Newman, our Chief Research Officer, anything like a regularly as I would have liked. The last time I had cause to do so was in the lead-in to December's GSM>3G Middle East conference in Dubai, at which Mark was in the Chair, sharing the stage with heavy-hitters from the likes of Etisalat, Zain, Turkcell and Nawras. At that event, all of these companies made very positive noises about mobile data services in the context of the markets which they serve.

Yesterday, in Informa's telecoms.com blog, Mark reported a general feeling of optimism around mobile data worldwide. Mark began by noting the "widely held view that the mobile content sector is failing to live up to expectations, 3G has disappointed and mobile operators have thrown away an opportunity to develop a revenue stream that could ultimately surpass the voice business."

Mark feels that "if 2008 is remembered for one thing, it should be for being the year that this notion was dispelled. Until last year, the non-voice business was dominated by SMS. For a typical European operator, SMS accounted for up to 80% of non-voice revenues in previous years. But this figure has started to fall sharply. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues. Investment in 3G - or 3.5G - is now generating payback."

While pointing out the erroneous nature of the idea that North America is a laggard in terms of mobile data adoption, Mark notes that Japan and South Korea continue to be the real hotbeds of enthusiasm for data services. This has been a well-worn truism for as long as I've been attending conferences and workshops themed around boosting the acceptance and profitability of mobile content, data and value-added services. I recall being asked to take over the running of a London conference about five years ago and hearing all kinds of actors in the mobile VAS value chain complaining about revenue sharing arrangements with operators and MNOs' 'walled garden' approaches. The participants were at least 90% European and content providers and aggregators were much better represented than network operators. Everyone seemed to be casting envious glances at their Japanese and Korean counterparts, speaking warmly about how the likes of NTT DoCoMo were enabling the growth of a healthy mobile content ecosystem.

Only last week, when I was asked to make a presentation on mobile social networking at the most recent Mobile Monday Istanbul meeting, I found myself referring constantly to the greater success of some of these services in the Far East. Quoting from an Informa Telecoms & Media report, I told the Turkish audience that according to a Sydney Morning Herald article published in December 2007, half of Japan’s top 10 works of fiction are now written on mobile handsets. These works, called keitai shousetsu’, each sells an average of 400,000 copies and are written entirely on cell phones complete with emoticons and common SMS abbreviations.

Today, according to Mark Newman, the ratio of prepaid subscribers to postpaid goes a long way toward accounting for the differences among markets in mobile content adoption and usage. Postpaid subscriptions account for 99% of all subs in South Korea, 94% in Japan and 90% in the US. Mark points out that these are the countries with the highest mobile data ARPUs.

Overall, Mark feels that even if the most pessimistic scenarios for the economic downturn come to pass, it seems unlikely that the mobile content sector will stop growing. Mark points out that 2008 saw a switch to flat-rate and mobile Internet models and believes that 2009 will see this trend continue and will see the arrival of more-affordable mobile Internet devices. For Mark "the bigger uncertainty is whether mobile operators will accept a role as dumb pipes rather than continuing to invest in their own services and smart-pipe strategies. "

Today I should complete handing over my notes to colleagues who will be developing our annual Russia & CIS Com conference, set to take place in Moscow in early June. With the Russian MNOs having now deployed 3G networks in most major cities, our research respondents have expressed the desire to use the event to debate how best to accelerate the process of getting a return on these investments by encouraging customers to accept mobile data and content services.

19 Jan 2009

More on (mobile social) networking in Istanbul

Last week I had the great pleasure of visiting the shiny new Microsoft MEA office in Istanbul, which was the venue for this month's local Mobile Monday meeting. Part of the pleasure was being reminded of the warm hospitality I always experience when meeting telecoms people from Turkey. The pre-meeting drinks, nibbles and chatter session yielded lots of interesting new contacts. Among these were representatives of the country's three mobile operators and owners/directors of a number of value-added services companies. Mobile banking solutions seemed to be quite a well represented area so perhaps this is something set to gain traction in Turkey.

Ostensibly, I was there to speak on behalf of Informa Telecoms & Media, making a presentation on the theme of mobile social networking. This was drawn from a comprehensive report on that subject, an updated second edition of which is currently being prepared. With a 25-minute time slot, I was only able to offer a few of the ideas covered in the report. A number of those present were kind enough to indicate that they had found the presentation helpful. Judge for yourself. Natali Yeşilbahar, the Mobile Monday Istanbul organiser, has made the slides available here. If you want the notes which I used to provide examples and expanded comments, please let me know any time.

Mine was one of two speeches made that evening, the other being offered by Mehmet Arslantunalı, General Manager of Mobilife magazine, a telco sector publication in the local vernacular. Mehmet's presentation was also made in Turkish so I was not able to gain from it. Those of you who do understand that language are invited to have a look at the slides and fill me in on what I missed!

I understand that Microsoft is a new member of the roster of companies that have hosted Mobile Mobile Monday Istanbul meetings. I believe that the privilege usually falls to one or other of the MNOs - Turkcell, Avea or Vodafone. I am pleased that Informa Telecoms & Media will be joining this exalted company in April, at which time we will be providing the meeting facilities and laying on the catering. The venue will be the city's Mövenpick Hotel, which will also be the home of this year's Eurasia Com conference and exhibition - our annual gathering of senior telecoms people not only from Turkey but also from the CIS markets of the Caspian and Central Asian regions (Azerbaijan, Georgia, Kazakhstan, Uzbekistan etc.). Natali was kind enough to allow me drum up further local support for the event.

A number of the meetings which I arranged during the rest of my short stay should have a positive impact on the conference element of the Eurasia Com event. One which is very straightforward is the addition of a further speaker from Turkcell. Given the extensive coverage given to the issue of MVNOs possibly hitting the Turkish market in the near future, I am delighted to welcome Dr. Deniz Tunçalp to the panel of speaker. Deniz is in charge of the market-leading cellco's discussions with prospective MVNOs and as well as outlining his thoughts on barriers and opportunities for potential virtual operators in Turkey, he has offered his assistance with encouraging these companies to attend. It is my understanding that these players will come from an interesting mix of non-telecoms brands.
All in all, another useful and enjoyable trip to Istanbul - but I still haven't found time to do more than scratch the surface in terms of really enjoying the city's countless tourist sights, historical treasures and entertainment. Next time, I hope...