Com World Series: What is most affecting profitability for operators in the region and how are you working to improve it?Jacek Nieweglowski: Profitability of the mobile industry in Central and Eastern Europe is affected by mainly by:
- Level of in-market competition which has increased compared to other markets due to arrival of score of new entrants. Increased level of competition drives prices down in number of market. We can observe back-book re-pricing on part of industry incumbents and convergence of retail pricing within particular national markets and between national markets.
- Favourable developments in the handset ecosystem with declining barriers to entry in handset / tablet manufacturing. Increasing intensity of competition in turns keep prices down and allows operators to maintain or even boost their paybacks on subsidies. It is important to note that in markets with low disposable income are often handset subsidies frequently are a single biggest driver of profitability.
- in Long run flawed retail pricing policies create arbitrage opportunities for OTT providers in cross-network voice and messaging services. Excessive pricing of cross-network, international or roaming services protect short terms revenues of mobile operators but in long term drive the usage away from traditional services to OTTs and reducing overall service revenues. While these “self inflicted wounds” apply only to certain markets and some operators, the problem can largely be mitigated by proper retail pricing strategies such rebalancing of tariffs to connection oriented fees, unlimited cross-network packages, pro-active re-pricing of international roaming services.
- Development of smartphone usage and mobile broadband is a big driver of margins in the mobile industry in the region due to poor availability (coverage) of fixed broadband networks.
Com World Series: How is the demand for data impacting your business and how are you taking advantage of it?Jacek Nieweglowski: So far a strong uptake of smartphones has allowed to drive retail ARPU up by up-selling mobile customers with data packages on top of existing and new contracts. Also CEE markets have seen strong demand for mobile broadband products driven to large extend by a modest coverage of fixed broadband infrastructure, e.g., in Poland only 50% of households enjoy a to fixed broadband connection . [JaNi] Therefore despite high mobile penetration exceeding 140% we still see demand for additional SIM cards in households be it for tablets, laptops and for dedicated substitutive mobile broadband products
Com World Series: What is still needed in terms of networks and infrastructure across the region?Jacek Nieweglowski: Industry needs a prudent regulatory environment which provides balanced regulatory obligations and very importantly investment friendly roll-out and permitting regulations. Increasingly important is the need to harmonize limits of electromagnetic radiation. Industry also needs and calls for more operator-friendly frequency allocation policies. Also pace of development and quality of networks and services is increasingly dependent on availability of fibre- and IP-based backhaul networks.
Com World Series: How is LTE changing the market and what is your company’s strategy in regards to this technology?Jacek Nieweglowski: Even though LTE is neither a revolution nor disruption for mobile industry it is important evolutionary step for the industry. LTE gives operators not only more capacity to serve broadband demand but also provides more flexibility to differentiate services by capacity vs. speed vs. coverage trade-offs. Finally LTE further reduces industry’s incremental costs of production of data services (cost per GB of traffic served).
Com World Series: What do you hope to get out of participating in EurasiaCom?Jacek Nieweglowski: Meet industry insiders, exchange ideas, learn about other operators, draw attention to success of my company.
Attend EurasiaCom to hear Jacek Nieweglowski take part in the Opening Keynote - Panel Discussion on “Affordability and quality for customers & profits for providers: The balancing Act ”, taking place on Day 2 at 09:10.