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As ian Te lecoms Bus iness and Techno log y l www. te lecomas ia . ne t l Augus t 2011
Published By
LTE’s rise in Asia • Cellcos & social media • Battleground for app stores • ‘White space’ for sale
Inside:
LTE fuels interest in IPXTwo-thirds of global carriers to deploy within three years
DoCoMo’s early-bird gambitIncumbent is first with LTE, but premium offering limits its reach
At Homein the Cloud
Cloud-based services add new dimension of complexity to the connected home
Subscribe to Asia’s best daily telecom news service: www.telecomasia.net
Contents Volume 22 Number 6 August 2011
Coverstory
12 At home in the cloudAs home networking gains relevance in age of fiber and ubiquitous mobility, it also is becoming more compli-cated. And cloud-based services add a new dimension of complexity
Viewpoint
21 Marketing the connected homeOvum says getting the pricing and marketing right has been the biggest obstacle
feAture
IPX Survey
16 Lte fuels interest in IP exchangeAlmost two-thirds of global carriers believe IPX will be essential within three years
App Stores
18 the new battleground for app storesAPAC operators have opportunity to leverage their local market knowledge to drive adoption
Country focus: Japan
22 DoMoCo targets end-high usersThe 4G battle in Japan is set to grow more interesting when KDDI, SoftBank and eAccess launch LTE next year
CoLuMN
tanner
6 ‘White space’ for saleWhat is the real cost of selling unlicensed spectrum?
12
22
16 18
62 August 2011 Telecom Asia www.telecomasia.net
SALeS CoNtACtSAsia PacificGigi Chan Group Publisher, Questex Asia Ltd.tel: +852 2589 1338 fax: +852 2559 7002 e-mail: [email protected]
Jessie Cheung Questex Asia Ltd.tel: +852 2589 1310 fax: +852 2559 7002 e-mail: [email protected]
JapanYoshiomi Okamoto EMS Inc.tel: +81 3 3327 5756email : [email protected]
North America & eMeAZena Coupétel: +44 1923 852537 fax: +44 1923 839765 email: [email protected]
taiwanVirginia Lee Spacemark Media Servicestel: +886 2 2522 2282 fax: +886 2 2522 2281 email: [email protected]
research Note
24 Celcos get a boost from social networking Mobile social networking is now a key ARPU driver for many APAC operators
INDuStrY ANALYSIS
8 Lte takes hold in Asia Pacific
NeWS MAP
10 Asian telecoms this month Asia news round-up
reGuLArS
9 Insight
25 telecom Career
26 events Calendar
Managing Director Jonathan Bigelow [email protected]
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4 August 2011 Telecom Asia www.telecomasia.net
3rd Annual AppsXchange Asia
With mobile apps having evolved into serious business applications, alongside gaming and rich media, they are increasingly being seen as a revenue generation opportunity. Now in its third year, AppsXchange Asia focuses on all aspects of the mobile applications business.
This year’s conference will attract operators, content owners, system enablers and developers to network and share ideas on the future of the app environment.
This comprehensive event covers key business and technology issues that every executive needs to understand, including:
n Moving from Growth to Monetization
n HTML5 - A Paradigm Shift for Operators?
n The Impact of Tablets and Smartphones on the App Economy
n Implications of WAC (Wholesale Application Community) on the App Ecosystem
n And more…
Registration inquiries Speaking opportunities Sponsor this eventJP Chirayath Claire Tranah Gigi Chan
+65 6395 4597 [email protected] +852 2589 1338
[email protected] [email protected]
Organizer
Supporting Media
Building Business Around Mobile Applications and Data Services20 October 2011, Singapore
Seats are limited
Reserve your place now!
See full details at www.appsxchangeasia.com
It seems like I can’t go a month without some story breaking about some gov-ernment or regulator coming up with some proposed regulation, treaty or law
that gives legal protections to one industry at the expense of another.
This time, it’s a new bill being proposed in the US Congress that could potentially trans-form swathes of unlicensed “white space” spectrum into paid-for, licensed spectrum.
The Public Safety Spectrum and Wire-less Innovation Act, proposed by Republican Party lawmakers in July, ostensibly addresses the way in which the FCC handles realloca-tion of around 120 MHz of digital dividend spectrum currently owned by broadcasters. Broadcasters support the bill because it gives them certain protections, such as the ability to move their facilities (with compensation) without losing coverage in the process, and stricter limitations on channel reassignments.
Auctioning everythingHowever, the bill also contains several
controversial provisions, such as allowing broadcasters to waive certain FCC regulations as an incentive to sell, and allowing spectrum buyers to be exempt from net neutrality rules. One of the bigger controversies – and the one arguably the most relevant outside the US – is a section of the bill covering allocation of unlicensed spectrum.
Some background: in September last year, the FCC approved the use of “white spaces” (i.e. the spectrum left over from both digital TV signals and the “digital dividend” spec-trum for wireless broadband services like LTE and Wimax) for unlicensed use. That means companies like Google, Microsoft and Yahoo can use them to offer so-called “Super Wi-Fi” service, which is similar to Wi-Fi, but with much wider coverage because of the lower radio frequency.
The controversy lies in Paragraph 17 of the bill, which requires the FCC to put unlicensed spectrum up for auction. The idea is essen-tially to pit companies that want it for exclu-sive, licensed use (such as AT&T or Verizon)
against companies that want it to stay open and unlicensed. The latter group must pony up an aggregate bid that exceeds the highest licensed bid. In other words, if companies who want to keep white space spectrum open can outbid, say, Verizon (which paid $9.4 billion for 700-MHz spectrum in the FCC’s 2008 auction, incidentally), the white-spaces spectrum gets to stay unlicensed.
Aside from the slim odds for unlicensed-spectrum proponents to outbid telcos with deep pockets – and the puzzling concept of paying the FCC to not sell spectrum to the highest bidder – critics argue that the real value of open unlicensed spectrum is the in-herent innovation opportunities that we’ve already seen with open-spectrum technolo-gies like Wi-Fi.
“The innovation and experimentation we have seen through the use of unlicensed spectrum would screech to a grinding halt,” Harold Feld, legal director of Public Knowl-edge, said in a statement. “Given that unli-censed uses like Wi-Fi come from small and new companies, the future of new uses would be very bleak.”
Obviously, it remains to be seen what final form the bill takes, and whether it gets passed. But it raises some interesting questions for markets in Asia and elsewhere that will also be going through their own digital-dividend transitions in the next few years. The ITU is already looking at the aspects of white-space spectrum as part of its overall work on the digital dividend.
Whether analog-to-digital TV shifts re-sult in usable white-space spectrum in a given market depends on a lot of local factors. But where white-space spectrum is available, both industry players and regulators should take a close look at the question of unlicensed spec-trum and the potential benefits of innovation and competition, rather than simply giving in to the traditional temptation of treating all spectrum as a cash cow waiting to be milked. The success of Wi-Fi alone should be a clue to the potential possibilities of preserving open spectrum. TA
John C. Tanner is global technology editor – [email protected]
The cost of selling unlicensed spectrum
Industry players
and regulators
should stop
simply treating
all spectrum as a
cash cow waiting
to be milked
tANNer l John C. Tanner
6 August 2011 Telecom Asia www.telecomasia.net
Seats are limited
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Registration inquiries Speaking opportunities Sponsor this eventJP Chirayath Sutha O’Connell Gigi Chan
+65 6395 4597 +65 6395 4588 +852 2589 1338
[email protected] [email protected] [email protected]
See full details at telcocloud.questexevents.net
Telco Cloud Forum
Telco operators are uniquely positioned to benefit from a rise in cloud applications, especially on the business customer side. While many operators have focused on VAS services for end users, others have already started the transformation from a telephony service provider to a full host of data center and application delivery.
Telco Cloud 2011 will bring together operators, industry experts and solution providers to discuss the current market situation, business benefits and success strategies for cloud services. This executive-level event will cover topics including:
n Change management and transition strategies for telcosn Cloud services for different target groups (SME, Global, Public Sector, etc)n Service delivery models (SaaS)n Extending existing services beyond traditional telco offeringsn And more…
2011Expanding capabilities and driving new services through cloud technology
3 November 2011 Singapore
Supporting Media Organizer
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place now!
A number of recent develop-ments show that Asia Pacific is getting serious about LTE.
South Korean operators KT and LG U+ both launched LTE ser-vices at the beginning of July, starting in Seoul. The operators are pursuing an aggressive rollout schedule, with SK Telecom aiming for nationwide cover-age by 2013. By this stage, the operator plans to start upgrading its network to LTE-Advanced, according to plans disclosed in April.
LG U+, Korea’s smallest opera-tor, meanwhile, hopes to become the market leader by LTE subscribers, and is targeting 10 million customers within three years.
The launches brought the number of commercial deployments in APAC up to six, with the Korean operators joining Hong Kong’s CSL and Japan’s NTT DoCoMo – which launched late last year – Singapore’s M1 – which went live in June – and the Philippines’ Smart – which commenced services and demonstrations at the popular holiday destination of Borocay in April.
Ovum analyst Nicole McCormick said that these early launches show that
LTE taking hold in APACsome operators are avoiding the traps they fell into with initial 3G rollouts in terms of data pricing. DoCoMo and both Korean operators have moved away from flat-rate pricing to capped data usage models.
By contrast, “big bucket and un-limited pricing dominate LTE offerings across the globe,” she said, including in Hong Kong. This demonstrates that operators are missing the “opportunity to offer new premium pricing schemes.”
While some APAC operators are avoiding the bucket pricing trap, Mc-Cormick estimates that LTE premiums average just 20% in the region, com-pared to over 100% in markets such as Sweden, Finland and Austria.
But this could be beneficial in the long run, because LTE providers with high premiums can’t rapidly reduce tariffs to lure more customers without risking alienating the current crop of high-paying early adopters, she said.
TD-LTE growing upJuly also brought indications
of the maturation of Asia’s home-grown LTE variant. ZTE revealed it had completed the first
demonstration of a TD-LTE to 2G/3G handover, in what it said was an indica-tion that TD-LTE devices will soon hit the market.
The vendor said that as of April, it had deployed 25 TD-LTE trial networks in 15 countries throughout Asia and Europe.
The standard’s biggest operator backer, China Mobile, arranged a deal with Sony Ericsson to develop TD-LTE handsets, and also announced that its R&D division will work with network testing firm Rhode & Schwarz to devel-op testing equipment for the standard.
The operator has been trialing TD-LTE networks in six cities since May and has indicated it hopes to be able to launch services in 2012.
A month earlier, Malaysia’s P1 had signed an MoU with Qualcomm to develop multi-mode TDD and FDD chipsets. P1 plans to roll out TD-LTE in 2013 but wants to ensure its devices
can roam to other operators’ LTE networks.
Also in July, the GSMA took advantage of
the momentum behind both forms of LTE to press Taiwan to
abandon its emphasis on Wimax manufacturing. The association in
July published a report that argues that given the difference in size between the markets for Wimax and LTE, “it is
INDuStrY ANALYSIS
8 August 2011 Telecom Asia www.telecomasia.net
INSIGHt oNe MoNtH’S teLeCoM reSeArCH
>> APAC broadband, IPTV market boomingThe APAC broadband and IPTV market is on track to grow to $79.5 billion in 2016, from $52.5 billion last year. Telcos should see revenue growth of 51%, ABI Research predicts, and are set to take a bite out of cable companies’ revenues with IPTV and operator-provided satellite services. Pay-TV companies’ foray into cable broadband will offset some of this loss, so cable company revenues will decline by around 3%. While operators’ IPTV and fiber revenues will increase significantly, declines in broadband DSL will dampen growth slightly. Foreign companies looking to capitalize on the booming region need to be aware that country-to-country variations and business norms can make success difficult to achieve.
Pay TV and broadband markets in China, India, Japan and Asia-Pacificwww.abiresearch.com
>> Fiber to beat out DSL in Asia by 2014Fiber broadband should overtake DSL as the dominant wireline broadband standard in Asia Pacific by 2014. Ovum estimates that there will be 129 million FTTH and FTTB subscribers in the region by that year, out of a total 285 million wireline broadband customers. What’s more, fiber will grow at a CAGR of 26% over the next four years, while DSL’s growth has stalled and cable broadband’s growth rate will be a mere 5%. China will top the subscriber numbers table with over 74 million customers by 2014, but household penetration will be just 4%. Australian fiber users will meanwhile grow at a CAGR of 180% due to the NBN rollouts.
FTTx market review: China’s dominance www.ovum.com
>> Mobile apps to grab more gaming software dollarsWorldwide spending on the gaming ecosystem, including hardware and software, has been forecast to exceed $74 billion this year. This will be a 10.4% increase from 2010, according to Gartner, which believes the market will reach $112 billion by 2015. Software will continue to dominate spending, with sales worth $44.7 billion in 2011, representing almost two-thirds of consumers’ gaming budgets. The growing popularity of smartphones and tablets means mobile gaming’s share will likely grow to 20% of gaming software spending in 2015, from 15% in 2010. Mobile games are already the most popular category in most app stores. Gaming hardware and online gaming will be worth $17.8 billion and $11.9 billion respectively this year.
Market trends: gaming ecosystem, 2011 www.gartner.com
>> Telcos leading IPTV innovationIPTV service providers are starting to personalize and differentiate their offerings, which could explain the segment’s healthy growth. Over six in ten IPTV providers surveyed by Infonetics support or plan to support multi-screen viewing by 2012. Half intend to use targeted or interactive advertising by that year, and 41% plan to offer social networking over IPTV – up from 26% today. While telcos have been leading innovation in IP video, satellite and cable operators are jumping on the bandwagon, using broadband infrastructure to offer similar services. IPTV operators will thus need to keep a close eye on the competition to ensure they don’t get left behind in any shift in market trends.
IPTV services deployment strategieswww.infonetics.com
in Taiwan’s best interest to focus on the manufac-turing of HSPA and LTE equipment rather than Wimax equipment.”
The government should offer the incentives it currently offers Wimax equipment producers to LTE vendors, the body said.
Despite the GSMA’s call, yet more recent devel-opments show that there is life in Wimax yet.
Wimax still kickingJapan’s UQ Communications staged its first
public trials of Wimax 2 in early July, achieving downlink speeds of up to 150 Mbps. The operator intends to upgrade to Wimax 2 in 2013.
Informa analyst Tony Brown said the upgrade, in combination with a growing Wi-Fi network, could allow the operator to poach customers from the fixed-broadband market. If UQ succeeds in securing a sizable number of converts, he said, “that really would give the Wimax guys something to finally smile about.”
Despite LTE’s early foothold in South Korea, local small-business association Kbiz also an-nounced an ambitious plan to apply for Korea’s fourth mobile license, and if successful roll out a network using the Wimax-based WiBro standard.
Kbiz has proposed to partner with around 900 small and medium-sized businesses in a consor-tium, and also seek substantial outside investment to fund the rollout. But questions remain as to whether Kbiz will be able to secure the significant funds needed for nationwide rollout, which some analysts project could cost up to 2 trillion won ($1.9 billion).
This is also not the first time a consortium has tried to secure a mobile license in Korea. Korea Mobile Internet has already applied and been rejected, with regulator KCC determining that the group had an unrealistic business plan.
Korea Telecom also announced it will lean on its own WiBro network, as well as Wi-Fi and W-CDMA, to stay competitive while it waits to roll out LTE in November. The operator recently an-nounced it had expanded this network to achieve coast-to-coast coverage. TA
– Dylan Bushell-Embling
www.telecomasia.net Telecom Asia August 2011 9
More coverage of
LTE
asian telecoms this month
BeijingFormer China Mobile party chief Zhang Chunjiang is sentenced to death after being found guilty of taking $1.6m in bribes.
A government thinktank esti-mates the number of Chinese websites fell 41% in 2010, but denies that political censorship is to blame.
China Telecom’s president and COO, Shang Bin, becomes the latest in a line of executives to leave the company and take up a political post.
DelhiTelecom minister Kapil Sibal urges mobile operators to stop fighting a “war,” warning that cut-throat competition risks destroying the sector.
Bharti Airtel, Vodafone Essar and Idea reach a roaming pact that will allow them to use each others’ networks to deliver 3G in zones where they lack spectrum.
Bharti reveals plans to restructure its Indian and South Asian operations into consumer and business divisions. It also is considering a $1b tower unit IPO.
The government threatens Etisalat DB with a $1.6b fine for allegedly exceeding direct foreign ownership limits.
Kuala lumpurDiGi books a 15% slump in Q2 profit to $92m as a result of depreciation and financ-ing costs.
SingaporeM1 reports a 6.6% profit growth for the June quarter, attributing improved service revenue and handset sales.
IDA Singapore prepares a consumer-fo-cused guide to signing up to the NG-NBN, setting an August publication date.
ShenzenZTE demonstrates a TD-LTE to 2G/3G handover, claiming this as a sign TD-LTE smartphones will soon hit the market.
10 August 2011 Telecom Asia www.telecomasia.net
movements
SeoulSmall business federa-tion Kbiz applies for South Korea’s fourth mobile license, reveal-ing an ambitious plan to roll out a national WiBro network.
LG U+ and SK Tele-com both launch LTE services, while KT says it will launch in November when suf-ficient LTE handsets should be available.
SK Telecom launches tablet-based mobile learning platform T Smart Learning in South Korea, an-nouncing plans for an international rollout next year.
z Cisco swings the ax on some 6,500 jobs, and arranges to sell a manu-facturing plant, in a bid to save $1b in annual costs.
z RIM cuts 2,000 jobs, and announces some management changes – but not the CEO-level change some investors had been lobbying for.
z News Corp becomes embroiled in a fresh phone-hacking scandal, scuttling its planned BSkyB takeover and stirring internal turmoil.
z Apple, Microsoft, RIM, Ericsson, EMC and Sony team up to snatch Nortel’s patent portfolio away from Google with a $4.5b joint bid.
z Rumors circulate that Apple and Google could go head to head over patents again, in a bidding war for wireless technology licenser Inter-Digital.
z Sony Ericsson swings to a $70.6m loss, blaming lingering component shortages from the Japanese quake, as well as a “collapsing” feature phone market.
z ST-Ericsson’s Q2 loss widens to $221m, as the company grapples with what its CEO acknowledges is a “very tough” financial situation.
z Nokia and Siemens abandon the search for a private equity buyer for joint venture NSN, due to a reported lack of interest.
z APAC is said to be driving global IPv6 adoption, motivated by regis-trar APNIC’s warning that it is running out of v4 addresses.
z Start-up Emerald Atlantis commissions what it says will be the world’s first 100 x 100G subsea cable network, linking the US, Canada, the UK and Iceland.
z Google CEO Eric Schmidt is called in to testify at a US senate antitrust hearing into the company’s growing internet dominance.
z Despite healthy gains in APAC, Norway’s Telenor records a more than 50% profit slump to $814.4m.
z LG Electronics launches its first 3D smartphone, the Optimus 3D.
z Gartner calculates that mobile payment take-up is growing slower than expected in emerging nations.
z Akamai cautions that new broadband adopters are the most vulner-able to cybercrime.
z Microsoft makes more inroads in its patent challenges against Android-based device vendors, securing two licensing deals in just two weeks.
z Dell plans a foray into data-center networking with the upcoming purchase of vendor Force 10 Networks.
z Spain’s Telefonica foreshadows layoffs of around 20% of its Spanish workforce – some 6,500 staff – in a cost-cutting drive.
z Gartner forecasts that global IT spending will grow 6.6% in 2011, despite the supply chain issues arising from the Japan quake.
z A Vodafone executive is quoted as saying the company hopes for dividends of $5.5b from its 45% stake in Verizon Wireless, but the telco subsequently insists the quote was taken out of context.
aucKlanDPacific Fibre contracts TE SubCom to build the planned $400m subsea cable linking New Zealand, Australia and the US.
SyDneyAustralia’s NBN Co wins the required 2.3-GHz licenses to roll out the wireless portion of the National Broadband Network.
In response to soaring customer com-plaints, regulator ACMA proposes telcos be barred from using terms like “cap” or “unlimited” misleadingly in advertising.
Telstra implements HD voice across its Next G 3G network, in what vendor Ericsson claims is the world’s largest deployment.
Taipei The GSMA calls on Taiwan to abandon its Wimax manufacturing focus and instead offer incentives to LTE equipment makers.
ToKyoKDDI starts rolling out nationwide Wi-Fi for its 3G subscribers.
Android is estimated to have toppled iOS as the most popular smartphone platform in Japan.
NTT DoCoMo shows its green side, an-nouncing a plan to deploy 10 renewable energy facilities in FY12.
www.telecomasia.net Telecom Asia August 2011 11
At home in the cloudCloud-based services are transforming the home networking paradigm and creating new challenges, from integration issues to content sharing John C. Tanner
CoVer StorY
As fixed and wireless broad-band proliferate across the globe and the hunger for web and video content es-calates, home networking
is becoming an increasingly vital com-ponent of the broadband saga. This is especially true as more and more con-sumer electronics ship IP-ready and consumers become increasingly used to accessing the web by more than just a desktop PC at home or in the office.
For a sign of the times, one can turn to Singapore, where the Infocomm De-velopment Authority (IDA) sees home networking as the next area of develop-ment for its NBN project. At this year’s CommunicAsia event, IDA senior di-rector for next generation infrastruc-ture Philip Heah said that the regulator has been receiving many queries from consumers asking how to network de-vices in their homes, and would kick off a home networking initiative to address their concerns. This month, the IDA will release a home networking guide for homeowners, which will offer a summary and comparison of common options to connect devices in different parts of the house to the NBN’s fiber ac-cess termination point.
But even as home networking gains more relevance in the age of fiber ac-cess and the Internet of Things, it’s also becoming more complicated. Service
providers have typically shied away from becoming too involved in home networks primarily because managing devices sitting behind the home gate-way (which service providers would naturally be expected to do) was a challenge. Even as industry standards groups like the Digital Living Network Alliance (DLNA) have labored to pro-vide protocols and standards to enable devices to connect to home network gateways more easily, a mishmash of access standards (from Ethernet, HomePlug and MoCa to Wi-Fi and WiGig) has complicated device inter-operability.
Meanwhile, there’s a new complica-tion arising – the cloud. If “traditional” home networking was concerned main-ly with enabling devices within a home to share resources and content within that network (such as your iTunes play-list, for example), the cloud adds a new dimension by allowing some of that content to be hosted outside the home network in a way that’s still accessible by all the devices connected to that gateway.
With industry hype growing around streaming content services like Netflix, YouTube and Rhapsody, and content-hosting services like Apple’s iCloud and Amazon’s Cloud Player – all of which tout the ability of users to easily access content via multiple devices – the tra-
12 August 2011 Telecom Asia www.telecomasia.net
What about IPv6?
W ith IPv6 now standard issue from the world’s RIRs, the ques-tion of implementation has taken center-stage in a number of areas. Home networking is now one of them, as little work has been done in the IPv6 space in regards to home
networking devices. An IPv6 implementation standard for broadband CPE was only just released by the Broadband Forum in April this year. And at the end of June members of the Internet Engineering Task Force proposed the creation of a working group specifically to address the issues of de-ploying IPv6 within home networks.
According to an IETF announcement proposing the working group, the increasing diversity and scale of the number of internet-ready devices sitting behind a home gateway that can connect directly to the internet, as opposed to connecting indirectly via NAT (Network Address Transla-tion) is creating new requirements for IETF protocols for IPv6 implemen-tation.
One issue cited by the IETF is the introduction of multiple subnets to home networks, which will become increasingly crucial not only to support private and public (guest) networks, but also to accommodate networks that use Layer 3 (i.e. Ethernet) as well as link layers designed for low-powered sensor networks (i.e. home energy management systems). That level of segmentation may also be necessary in situations where building control has to be separated from the internet access network.
Another issue is the trade-off of home networking devices with di-rect internet connectivity: exposure to unwanted traffic. “Firewalls that restrict incoming connections may be used to prevent exposure, however, this reduces the efficacy of end-to-end connectivity that IPv6 has the po-tential to restore,” the IETF proposal says.
“Home networks need to provide the tools to handle these situations in a manner accessible to all users of home networks. Manual configura-tion is rarely, if at all, possible, as the necessary skills and in some cases even suitable management interfaces are missing,” the document says.
The Internet Engineering Steering Group (IESG), which oversees the IETF, had not yet approved the working group proposal as we went to press. TA
– John C. Tanner
www.telecomasia.net Telecom Asia August 2011 13
More coverage of
IPV6
CoVer StorY
Cloud-based services concentrate complexity in the cloud. Home networks concentrate complexity in the home”
ditional paradigm of home networks is arguably changing, says Jim Wil-liams , president of consultancy Media Strategies and Solutions.
“The continuing expansion of cloud-based services will definitely im-pact how home networking deploys and evolves,” he tells Telecom Asia. “Each in-stance of a cloud-based service chips away at the complexity that would oth-erwise be required of a home network for that application. Cloud-based ser-vices concentrate complexity in the cloud. Home networks concentrate complexity in the home.”
Integration disincentives
One of the issues presented by cloud-based content services, particu-larly on the mobile side, is that it poten-tially lowers the incentive for consum-ers to integrate wireless devices with their home networks.
Kevin Burden, mobile device prac-tice manager at ABI Research, points out that new cloud services offered by Amazon, Google and Apple allow con-sumers direct access to both user-gen-erated and licensed media.
“If they are easier and more conven-ient for consumers, mobile cloud ser-vices could completely bypass the need for integration with home networks or entertainment equipment,” he said in a research note.
The irony is that certification pro-grams for DLNA and Wi-Fi Direct now make it easier than ever for consumers to integrate smartphones and tablets into their home networks, adds ABI senior analyst Victoria Fodale.
“Wi-Fi Direct enables a device to connect directly to another de-vice without a wireless network. DL-NA-certified devices discover other certified devices, eliminating the need for a consumer to configure the con-nection,” says Fodale. “Both programs help mitigate the difficulties that con-sumers often face when connecting devices at home, and both bring wire-less technology further into the main-stream market.”
But figures from ABI indicate that while Wi-Fi Direct- and DLNA-ena-bled smartphones will grow strongly, at CAGRs of 63% and 23%, respectively, through 2016, home networks will grow at only 4% in that time frame – il-lustrating “a clear disconnect” between smartphone capability and home net-work usage, Fodale says.
“Although Wi-Fi connectivity is ubiquitous in smartphones, and the number of wireless home networks is growing steadily in developed markets, network configuration remains chal-lenging for the average consumer,” adds Fodale.
DRM issuesThat’s not to suggest that the home
network will be an either/or proposi-tion of home vs cloud. Williams of Me-dia Strategies says there’s already a con-tinuum of possible solutions between the two models in play.
“An example of a hybrid approach is a whole home PVR that serves mov-ies and television to lightweight STBs throughout the home,” he explains. “Now imagine connecting the whole home PVR over the internet to a cloud-
based service like [digital rights authen-tication and cloud-based distribution system] Ultraviolet. Additionally, imag-ine that one of the devices in the home is a portable device with its own storage that could load a movie from the PVR to watch while traveling in a plane. This architecture is an amalgam of the cloud and home network approaches where devices take on different roles at differ-ent times for different purposes.”
Shawn Ambwani, VP of Intertrust, notes that the extent of a hybrid ap-proach will depend on the network, the business models and how people con-sume content.
“For something like Netflix, for ex-ample, it’s in the cloud, but you have to be connected to watch it, and it has to be a good connection, otherwise it’s useless and has no value,” he said. “If you want to watch a movie from iTunes, you have to download it first and that takes awhile – you have to wait an hour to watch it. There’s all these different combinations that make it complex.”
That’s becoming especially true in the case of content from multiple devic-es inside and outside the home network because of multiple DRM standards, Ambwani adds.
“Service providers want to be able to offer different types of services – streaming video, downloads, or a hy-brid of the two. Users want to be able to access that content on different devices, or they want to access iTunes or other services,” Ambwani says. “All that con-tent needs DRM, but if they all have a different DRM standard, it limits your ability to get content on all of your de-vices.”
14 August 2011 Telecom Asia www.telecomasia.net
Proprietary DRM is already a prob-lem within home networks themselves, he adds. “You can’t have an Xbox, an Apple TV box and a TV set in your liv-ing room with different DRM stand-ards.”
Williams observes that the differ-ence for cloud-based systems and home networking systems is where the rights management function is located: in the cloud or in the home. Either way, he says, “the same essential problem must be solved. And since the eventual sys-tems that are successful in the market-place will likely be an amalgam of the two approaches, both the cloud and the home networking content protection problems need to be solved.”
Ambwani’s company Intertrust is one of a community of developers ad-vocating Marlin, an open-standards DRM platform that promises to not only lower costs for service providers, but also enable a practical solution for protecting content across different de-vices and services. To date, Marlin has been adopted in a handful of markets, including Japan (for its national IPTV standard), the UK, France and Italy. It’s also supported by the Open IPTV Fo-rum and Ultraviolet.
Beyond content sharingHowever the DRM issue plays out,
broadband service providers are still looking at other ways to leverage the cloud for home networking services. The Home Gateway Initiative – an in-dustry group of broadband service providers and vendors that publishes requirements for “digital home build-ing blocks” (hardware and software) to
connect with each other – has recently begun work on protocols to help broad-band players develop services that can take advantage of both cloud technolo-gies and home network resources.
HGI president Duncan Bees offers home energy management as an exam-ple. “We’re already developing the home gateway to serve as a platform for that, but another approach is to put some of that application awareness and intelli-gence in the network,” he says.
From there, Bees adds, “We can build that to home automation, moni-toring and security, and those types of things.”
Bees says HGI is also looking at home network resources that might need to be managed from the cloud and “manage that in a more active way than the typical TR-69 management. For ex-ample: firewall management on your home gateway, statistics, user profiles, file resources, phone books – all kinds of things in the home you might need access to in the cloud, and how to en-able communication between the home network and these cloud based services. There’s all kinds of things like this once you start getting in to it.”
HGI is also looking at things like media sharing (to include user-gener-ated photos and video), although he notes that they “haven’t really looked at the DRM issues for sharing content across the cloud yet, but we probably will.”
Bees says that while bringing cloud-based services into the home network-ing mix does add new complexity, “the counterpoint is that the home gateway or the set top box is a good application
platform. So a lot of these things can be done in the home or reside in the cloud and so it becomes a question of the tradeoffs.”
Williams agrees, noting that while cloud-based services can shift complex-ity from the home to the cloud, “The trade-off is the need to have always-on, high-speed broadband and coming to grips with the associated privacy and control issues. These issues alone will likely ensure a continuing role for home networking as the cloud-based model continues to grow.”
Meanwhile, the IEEE is working on a technology standard that can help ease the complexity somewhat, at least in terms of transport. IEEE P1905 aims to enable connection of fixed-line home networking devices and mobile devices by creating an abstraction layer that provides a common interface for apps and upper layer protocols. Those apps and protocols would then be agnos-tic to whatever underlying home net-work transport technologies they come across in the home network, be it pow-erline (IEEE P1901 and HomePlug AV), Wi-Fi, MoCA or Ethernet.
“The aim is for consumers or opera-tors to be able to combine these differ-ent connections to maximize a home system’s overall performance and ro-bustness,” explained Rethink Research analyst Caroline Gabriel in a research note. “Packets can arrive and be trans-mitted over any of the network types according to quality of service (QoS) priorities. P1905 also supports com-mon set-up procedures for adding de-vices, ensuring security, implementing QoS and managing the network.” TA
www.telecomasia.net Telecom Asia August 2011 15
Two-thirds of global carriers plan to deploy within three years
Michael Carroll and John C. Tanner
SurVeY: IPX
Operators are starting to prick up their ears at mention of IP exchange (IPX), as IP core networks become the norm and looming mass
market LTE services make adoption of the GSM Association-defined traffic exchange mechanism a more urgent concern. How-ever, carriers say more clarity over what constitutes an IPX network and the ser-vice-level-agreements that underpin them is needed before the market can truly take off.
Almost two-thirds of global operators plan to deploy IPX services in the next one to three years, with the shift to LTE a ma-jor driver of interest in the exchange net-works, research by Telecom Asia reveals.
The study – conducted for IPX pro-vider Sybase 365 – found that 63% of global carriers plan to launch the net-works within three years, with the major-ity believing the networks will become an essential component to offering LTE ser-vices during that period. Factors turning
operators on to IPX include the security, ease of deploying end-to-end IP services, promises of lower costs, and the potential to ease the migration to next-generation networks.
More than 50% of the operators sur-veyed rated all the elements as key ben-efits of IPX currently, however, a break-down of the numbers shows that many operators see the ease of IP deployment element as the chief purpose of IPX (see Figure 1 below).
While IP deployment and service qual-ity top the list, carriers are also attracted by the potential to lower costs using IPX. Justin Middleton, intercarrier commercial manager at Vodafone Hutchison Australia (VHA), explains one of the main cost sav-ing measures is reducing the number of IP exchange hubbing partners from the 10-12 VHA has currently, to potentially just one. “I’m curious to see what results we’ll derive from that,” he notes.
Despite the current benefits, it is for LTE networks that IPX holds the greatest
IP exchange poised to soar
Best describes an IPX platform
Source: Telecom Asia
Figure 1
16 August 2011 Telecom Asia www.telecomasia.net
appeal. There is a clear correlation be-tween the number of operators planning to deploy IPX in the next three years and those that consider the networks essen-tial for LTE services. And many opera-tors also see the exchange networks as a means to shore up relationships with fixed-line carriers and over-the-top ser-vice providers.
Relationship building aside, operators rank roaming, IP signaling and streaming as the principal services IPX will bring to next-generation networks. In the longer term, they will also expect their IPX to handle fraud detection.
Paul Hodges, executive VP of corpo-rate, wholesale and international at Hong Kong-based CSL, believes it will be up to IPX carriers to implement the new ser-vices offered by the networks. His view is echoed by Bernd Hoogkamp, mobile data sales manager at TeliaSonera’s interna-tional carrier division, who says his firm will expect the IPX to offer new services rather than build services to suit the new networks.
IPX todayAll the talk about the future potential
of IPX overshadows the fact that 34% of carriers surveyed have already deployed IP exchange networks. The networks are currently most popular among integrated operators, followed by wireless providers and wholesalers (see Figure 2).
However, these early deployments have flagged some problems in terms of implementing IPX – not least of which is whether current networks truly live up to the GSM Association’s definition of an IP exchange.
At its simplest level, IPX is the modern version of the GSMA’s GPRS Roaming Ex-change (GRX) specifications. The associa-tion has laid out common specifications for the end-to-end delivery of IP traffic and the quality of service operators can expect, but it has left the market to decide how to implement those specifications.
CSL’s Hodges notes the specifications are necessary, particularly for the data roaming traffic that is expected to domi-nate early IPX deals. “When you are talk-
ing about data speeds up to 100 Mbps, without guaranteed quality of service in the underlying MPLS network, the con-nectivity we are used to such as the con-ventional GRX simply would not be able to support this kind of data speed.”
The problem, though, is a lack of clar-ity on how to achieve the service level agreements (SLAs) that underpin IPX, Hodges notes. He says defining SLAs cov-ering Diameter and SIP proxy, and voice hubbing have “yet to be clearly defined in the IPX ecosystem.”
Despite that lack of clarity, Hodges says the main hindrance to IPX deployment currently is a lack of compatible networks to hook up with. “For basic IPX data con-nectivity, we’re ready now. The schedule for implementation of other services such as voice and signaling largely depends on the readiness of other mobile operators.”
Assessing that readiness is one of the major stumbling blocks to IPX currently, says Telia Sonera’s Hoogkamp. He notes the phrase has become another industry buzzword, which makes it hard to assess which carriers are ready to roll. “A lot [of carriers] have an IPX, but how do you as-sure end-to-end quality of service?”
The uncertainty makes Hoogkamp wary of Asia-Pacific operator’s claims to have launched high-level IPX networks covering end-to-end service delivery, and he says more specific regulations are need-ed to clarify the situation.
Hoogkamp’s views are not shared by
the GSMA. Dan Warren senior director of technology at the association, stands by the view that it is for the market to decide how interconnection works, noting that IPX is similar to the GRX agreements al-ready in place for GPRS traffic. As such, no new standards should be needed to cover the in-depth details of commercial agree-ments, he says.
Mitigating the potential spat is Mark Dioguardi, executive VP and head of net-work and technology at Maxis. He told Tel-ecom Asia the solution is for operators to agree a clear implementation strategy for IPX. “The challenge is in working closely with different vendors to establish the full range of possible benefits which stem from IPX’s current applications, while as-sessing the need for a certain amount of investment in things such as session bor-der control equipment.”
While LTE interconnect may currently be hindered by small number of 4G net-works, Deutsche Telekom spokesman Ralf Sauerzapf says that doesn’t stop IPX being a commercial reality. “IPX transport is a reality today and will increase with RCS-e and Diameter signaling over the next 12 months.”
Warren concedes “some technical work” is necessary for future and emerg-ing services, including RCS-e and VoLTE, to ensure “operators are working in the same way.” He says the association has the task in hand, and expects to finalize the work in the next six months. TA
Operator deployments by carrier type
Source: Telecom Asia
Figure 2
www.telecomasia.net Telecom Asia August 2011 17
APAC emerges as new battlegroundSuccess revolves around quickly establishing a large developer community and engaged subscriber base by taking advantage of their deep understanding of the local market
App stores have been around since the turn of the cen-tury. Yet, they have only started to garner broader interest since June 2008
and the launch of the most successful app store to date. Since then, operators, operating system (OS) vendors, and de-vice manufacturers have launched their own application stores.
An app store offers operators an alternative distribution channel for mobile content and an opportunity to boost data revenues. Yet, the success of operators’ app stores has been mixed and operators are now re-thinking their approach to building and launching app stores, with an increased focus on the eco-system.
Operators in Asia Pacific (most no-tably in Southeast Asia) have a unique opportunity to engage and grow their subscriber base by leveraging their knowledge of local market specificities given the lack of established OS or de-vice manufacturer app stores with a lo-cal footprint. This is further supported by the emergence of cross-platform and multi-device standards as defined by Wholesale Application Community. Asia Pacific is therefore becoming a new battleground for app stores.
Why have so many failed?
Only a handful of operators have seen their app stores generate signifi-cant growth since their launch, with some of the largest and most well es-
www.telecomasia.net Telecom Asia August 2011 19
tablished operators failing to capture sufficient interest from both the devel-oper community and consumers, de-spite multiple launch attempts. Five key factors have contributed to this lack of success: 1. The dominant market share of the
largest device manufacturers and OS vendors in the mature North American and European markets have made these app stores the channel of choice for consumers to download mobile content.
2. Burdened by the capital expendi-tures required to upgrade existing network infrastructure, operators cannot afford to invest as much in app store technology as OS ven-dors or device manufacturers that are able to source funds from their healthy and sustainable OS or de-vice sales revenue streams.
3. Telco’s organizational structure is not aligned to a dynamic internet business that requires a much leaner operating model to respond to con-stantly changing customer and part-ner needs.
4. The “walled garden” approach maintained by some operators can
hinder app store success unless an operator has attained sufficient scale or dominance in its market.
5. The lack of innovative pricing strat-egies and attractive business models for partners.Despite these challenges, operators
continue to launch app stores, hoping to build attractive eco-systems for the developer community, advertisers and content providers, as well as for their own subscribers.
Avoiding dumb-pipe scenario
Over the last decade operators have seen their ARPU shrink as voice became more commoditized. ARPU continues to decline as subscribers move from tra-ditional VAS toward more freely avail-able content supplied through web or native apps. Amidst this shift, app stores present a opportunity for operators looking to stem the drop in ARPU and declining traditional revenues.
Telcos aim to increase ARPU through higher data revenues under-pinned by a low-cost smartphone strat-egy adopted by many Southeast Asian operators to increase mobile data usage.
Operators cannot afford to invest as much in app store technology as OS vendors or device manufacturers”
Luc Grimond and Guillaume Sachet, Accenture
App stores have the potential to reduce churn by offering a compel-ling portfolio of applications that will make switching to a competitor much more costly given the subscriber’s in-vestments of time and money into the existing operator’s applications. They can create additional indirect revenue streams from advertising, billing or provisioning services. They also can generate revenue associated with the purchase of applications using multiple innovative pricing mechanisms (in-app purchase, subscriptions, pay per down-load, etc.)
In addition, telcos can derive sig-nificant intangible benefits such as in-creased brand exposure through having an operator’s app store readily acces-sible from the subscriber’s handset. An app store may also improve the percep-tion by major OS vendors and device manufacturers of operators located in small geographical markets.
The success of Asia-Pacific opera-tors revolves around quickly establish-ing a large developer community and engaged subscriber base by taking ad-vantage of their deep understanding of local market specificities (e.g. language, culture) to ensure applications are rel-evant to subscriber needs and localized. Incumbents of course can leverage their
historically strong brand presence.Operators can also use their ex-
panding 3G/4G infrastructure that is fueling the adoption of smartphones to create significant opportunities to create mass-market applications. The limited exposure to large global OS ven-dors and device manufacturers in some countries can give the operators a first mover advantage in creating a sizeable app store ecosystem.
The capacity to provide integrated billing, as many Asia-Pacific markets remain largely unbanked, provides op-erators with a unique competitive ad-vantage and positions them to become preferred partners for OS vendors and device manufacturers looking to access these markets.
WAC momentumFormed in 2010 as a collaborative
effort between a handful of network op-erators, OEMs and other industry play-ers, WAC aims to create a standard for the development of mobile apps that will allow seamless development across different platforms and different device hardware. Collectively, they represent a subscriber base of more than 3.3 billion, of which 425 million use devices with an open operating system.
Although many skeptics question
the speed at which WAC will be able to approve standards internally given the composition of its membership, WAC offers operators the opportunity to tap into a much larger developer communi-ty by enabling cross-platform applica-tion development and several operators have recently launched WAC enabled app stores. WAC’s standard for mobile apps allows developers to write code for their applications once only, before de-ployment across multiple operating sys-tems and devices. WAC could generate a richer portfolio of innovative applica-tions, ultimately enabling operators to attract a sizeable user community.
While the Asia-Pacific market diver-sity and WAC provide operators with the opportunity to attract develop-ers to build applications for their own branded app stores, several challenges still face operators.
First, operators need to define an ap-propriate business model, determining what monetization methods to adopt and what portfolio of applications to offer. It also should include any strategic partner-ships that may be required from content, device and operations perspectives.
They also need to build a support-ive operating model, either as a spin-off organization or an integrated division within the existing organization to al-low for flexibility and speed. They then need to adopt the right enabling tech-nologies, sourced either in-house or outsourced to a third party.
Despite multiple challenges and competition from OS vendors and de-vice manufacturers, app stores should remain at the core of operators’ mobile data strategy moving forward. As smart-phone penetration continues to grow in emerging markets, and WAC standards become more widely adopted, a grow-ing community of developers will be attracted to create innovative applica-tions that will drive the consumption of mobile content by subscribers through operator app stores in APAC. TA
Luc Gremond is a senior manager for strategy and Guillaume Sachet is a partner for strategy at Accenture
20 August 2011 Telecom Asia www.telecomasia.net
APP StoreS
2011 WAC partner operator addressable subscriber base
Non-WAC
Latin America
WAC Closed OS
Middle East & Africa
Asia/Pacific
North America
Eastern Europe
Western Europe
WAC Operator PartnerSubscriber Base
3.3 Billion Subscribers
WAC Closed OS Subscribers2.9 Billion Subscribers
WAC Open OS Subscribers425 Million Subscribers
Time to get the marketing rightMichael Philpott, Ovum
to incorporate as a value-add to cre-ate stickiness with their customers and to identify those it can charge a premium in order to increase ARPU. Ovum warns service providers to look at their own market when developing this strategy though, as our data clearly shows that different markets are pre-pared to pay for different things, so simply copying thy neighbor will not work in all cases.
It is broadband service providers that have eyed the connected home market for the past ten years. How-ever, as the connected world converges, broadband service providers are far from being the only consumer brand with presence in the connected home. Although coming from completely dif-ferent backgrounds, going forward it will become increasingly hard for the consumer to distinguish between a pay-TV operator, a broadband service provider, an online company, or even, in some cases, a consumer electronics vendor.
As some connected home services are related to a core product (just as media sharing may be linked to an on-line music offering, for example), it will seem natural for consumers to take such services from the suppliers of those core products. The more powerful brands in these core areas will have the advantage of either increasing their stickiness and/or ARPU. As offerings start to look sim-ilar, however, players will have to work harder to make sure they retain their position as one of these key brands. TA
Michael Philpott is practice leader the consumer segment at Ovum
The connected home concept is not new. It has been around ever since fixed broadband was first launched, and over the years numerous service
providers have tried, largely without success, to launch connected home ser-vices into the mass market. And yet here we still are in 2011 still talking about the same services, same opportunities, and to a certain extent the same problems, as we were ten years ago.
So are connected home opportuni-ties real, and is now the time to realize them, or will we be simply repeating this conversation in another ten years’ time?
The connected home promise is not a myth, the opportunities are real and demand is growing. There are numer-ous reasons why connected home ser-vices failed in the past, but they largely come down to: unrealistic pricing, bad marketing and services aimed at the niche rather than the mass market.
The latter is the most important. It is difficult to sell a product or service when the customer doesn’t see the need for it – the connected fridge is perhaps the best and most well-known example. But even when real mass-market op-portunities such as content backup have sprung up, connected-home solutions have then been badly marketed and priced too high for customers to see or understand their real benefit over sim-pler and cheaper consumer electronic solutions.
There is currently a shift in the mar-ket, however – one that will prise open the mass market for cloud-based, con-nected home solutions. This shift is caused by the rapid adoption of port-able, more personal connected devices, which is loosening our dependence on the desktop PC as our internet por-
tal. As this shift takes place, connected home services increasingly start to make sense, as they suddenly start to meet a real need.
The need for media sharing and re-mote content access for example, only starts to become important when we own and regularly use a number of con-nected devices on which we would like to access the same content. According to Ovum’s Consumer Insights data, the av-erage number of connected devices we use on a regular basis in the developed world is 3.2.
As the mass market continues to be-come more “connected”, a greater range of connected home services will start to also appeal. It is then down to service providers to get the pricing and market-ing right.
Choosing a strategyAccording to our Consumer Insights
data, the biggest opportunities today are focused around advanced home moni-toring and security, device security, advanced parental controls, and media sharing with automatic content back up. However, creating the right go-to-market strategy will be critical to maxi-mize these, and other, connected home opportunities.
Trying to charge for each individu-al application separately, which is often what has been attempted in the past, is certainly unlikely to work. Consumers have become too used to value-added services coming for free or as part of a bundle to suddenly start paying for individual applications. However, giv-ing everything away for free does lit-tle for ARPU growth, which must be a priority for service providers going forward.
Service providers will need to be canny enough to know which services
VIeW PoINt
www.telecomasia.net Telecom Asia August 2011 21
NTT DoCoMo’s early-bird gambit
by Marc Einstein and Eriko Jitsukata, Frost & Sullivan
CouNtrY foCuS: JAPAN
Last December NTT DoCoMo became the first Asian opera-tor to massively deploy LTE service under the Xi (pro-nounced “crossy”) brand. The
massive LTE launch is the latest in a se-ries of firsts for the operator, and repre-sents a fundamental shift in the opera-tor’s strategy in the market. As operators across the region prepare their own LTE networks for commercial launch, look-ing at the DoCoMo case can offer some tips for operators looking to formulate their product and pricing strategies.
Some might question the wisdom of
being a first mover in the LTE space (per-haps maybe for CDMA players) and many other operators in the region have taken a wait-and-see approach to LTE such as Korea Telecom and CSL’s competitors in Hong Kong. Only time will tell if there is really a first-mover advantage. Irrespec-tive, it is clear that DoCoMo needed to revitalize its strategy in the midst of trou-bling times in its home market. While the operator has found initial success in its Indian tie-up with Tata, the Japanese mobile market is facing a recession along with the overall economy.
As shown in the table below, Do-
22 August 2011 Telecom Asia www.telecomasia.net
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 (Est.)
Wireless revenue 4,314.1 4,165.2 3,841.1 3,776.9 3,746.9 3,737.0 (JPY bn)
CAPEX (JPY bn) 934.4 758.7 737.6 686.5 668.5 705.0
CAPEX/revenue 21.7% 18.2% 19.2% 18.2% 17.8% 18.9%
EBITDA margin 32.9% 34.8% 37.7% 36.6% 37.1% 37.2%
Mobile market 50.5% 49.1% 48.4% 47.4% 46.9% 46.4% share
NTT DoCoMo selected KPIs
CoMo has seen its service revenue fall by 13% over the last five years in local currency terms while its mobile market share has also fallen below 50%. Profit-ability has increased largely due to a re-structuring of the handset subsidy sys-tem and the capex for the LTE network rollout remaining below 2007 levels. DoCoMo has largely banked on LTE to revitalize its domestic market strategy.
DoCoMo decided to price its LTE services at a premium, offering 37.5 Mbps at 1,000 yen for 2 GB of data and 6,510 yen for 5 GB of data with addi-tional blocks of data being available for purchase on both two-year con-tract plans. In comparison, its largest competitor in the dongle space eAccess charges 3,880 yen for unlimited service on its 42 Mbps HSPA+ offering. UQ Communications, a Wimax operator partially owned by KDDI has a similar offering priced at the same rate and has recently launched Wimax-2 to increase its competitiveness.
DoCoMo is trying to attract the high-end users with its LTE offering before getting aggressive in the mass market. In terms of its overall strategy, the company has already announced
www.telecomasia.net Telecom Asia August 2011 23
An often overlooked fact about the Japanese market is that smart-phones are not as prevalent in the feature-phone dominated market”
its intentions to make its LTE network available to other telecom companies, as there are certainly several other ISPs, ca-ble operators, tablet manufactures and automotive companies keen to enter the potentially lucrative data-MVNO busi-ness. DoCoMo will have a considerable head start in this market as rivals KDDI, SoftBank and eAccess aren’t expected to deploy LTE services until next year.
DoCoMo has been less aggressive than other LTE operators such as Ve-rizon in deploying smartphones and VoIP using LTE, but the company has demonstrated other LTE-based services such as a real-time translation service and an augmented reality service.
DoCoMo has added 120,000 sub-scribers to its network in roughly six months, or about 20,000 new subscrib-ers per month. As far as data-only sub-scriptions are concerned, DoCoMo is actually loosing market share as eAc-cess still has clear market-leadership in the space, with UQ Communications gaining the most market share. This compares to Verizon Wireless in the US which alone sold 1.2 million LTE-ena-bled devices in the second-quarter due to the wide-range of LTE tablets and
smartphones already on the market. Verizon, however, is looking to promote mobile broadband usage and differenti-ate its network from domestic competi-tors and charges the same data rates for 3G as it does for LTE.
The 4G battle is set to grow even more interesting in the Japanese mar-ket. Frost & Sullivan predicts that the market for mobile voice and data com-munication services will fall by an av-erage of 2% per year for the next five years, causing competition to intensify. This will be compounded by the pos-sibility of more handset unlocking,
which would lead to higher churn rates (currently less than 1%). Another of-ten overlooked fact about the Japanese market is that smartphones are not as prevalent in the feature-phone domi-nated market (DoCoMo sold fewer than 2.5 million smartphones last year) and therefore networks have truly not yet been put to the test and all-you-can-eat plans may face the same fate as such plans in the US and Western Europe. TA
Marc Einstein is an industry man-ager and Eriko Jitsukata is an associate analyst, both are based at Frost & Sul-livan’s office in Japan
More coverage of
JapanMore coverage of
NTT DoCoMo
Social networking drives data revenueGenerating prepaid data revenue is daunting, but Asian operators find a sweet spot
reSeArCH Note
rapid price erosion in its handset portfo-lio. According to reports, the operator is selling 4,500 units a day of its ZTE Blade V880, a smartphone introduced in June.
Chinese operators are also benefiting from the country’s home-grown social networks such as Sina Weibo, Renren, Kaixin001, QZone and Pengyou. As of March, ISP Tencent had 504.8 million active user accounts on Qzone and 101.4 million on Pengyou. Renren is believed to have 31 million active users per month while Weibo boasts 140 million.
Tencent reported that revenues from its mobile value-added services increased by 6.8% sequentially in the first quarter to $120 million, and represented 12.3% of total revenue. This growth was pri-marily driven by the company’s bundled SMS packages as well as an increase in revenues from mobile social networking sites and mobile games.
“The consumer craze for social net-working apps is helping operators to encourage users to stay online longer,” said Joss Gillet, senior analyst at Wireless Intelligence.
“Yet, operators taking a ‘home-grown’ approach should be cautious to retain engagement with end-users,” Gillet added. “With the recent arrival of Google+ onto the global social network landscape, operators will be able to lever-age consumer choices for some time.” TA
The consumer craze for social networking apps is helping operators to encourage users to stay online longer”
Mobile social networking is becoming a key driver of mobile data revenue in several fast-growing but low-ARPU markets
in Asia Pacific, according to new research from Wireless Intelligence.
The increasing use of social network-ing mobile apps in markets like Indo-nesia, Thailand, Malaysia and China is enabling local operators to target price-sensitive, prepaid consumer segments with mobile data services.
At Indonesia’s XL (Axiata), for exam-ple, revenue from data and value-added services grew by 44% year-on-year and contributed 16% to total revenue in the opening quarter of the year. This was mainly driven by the increasing popu-larity of RSS news feed and applications such as Facebook, Twitter and instant messaging. XL launched its prepaid mi-cro-SIM card for smartphones and tab-lets to accommodate increasing demand from prepaid users for these devices.
Similarly, Thailand’s AIS reported that the growth drivers behind mobile data usage included the increasing adop-tion of smartphones and dongles (“air-cards”), as well as the growing trend of social networking and the operator’s device-data bundling package. AIS is of-fering a wide portfolio of aircards with speed-based pricing (3.6 Mbps and 7.2 Mbps download speeds) for both Edge and 3G networks.
Also, AIS launched its Google Chrome-branded aircard in the first quar-ter – a dongle preloaded with the Google Chrome browser and an application to check remaining airtime and price plan changes. AIS is developing a number of applications to encourage consumers to
stay online longer, including location-based promotional services and deals via a GPS-enabled aircard that can connect to a network of 5,000 local partners.
AIS has reportedly 7.5 million ac-tive data customers, 86% of which are on feature phones, 10% on smartphones and 4% on dongles. Its Wi-Fi facility supports network capacity as it expands from 15,000 hotspots to 50,000 by year-end.
Malaysia’s Celcom (Axiata) launched its home-grown social network Kolony, which has already attracted 1.8 mil-lion users less than three months after launch. This helped Celcom generate a 20% year-on-year rise in data revenue in the first quarter. Data now contributes 36% of total revenue, up from 30% a year ago. Data revenue, excluding SMS, increased by 37% over the same period.
Meanwhile, 3G connections at China Unicom more than tripled year-on-year, passing the 22 million mark last May. China Unicom launched more than 100 customized 3G handsets in 2010 as well as its application store, WO Store. The consumption of content such as mobile newspapers, mobile music and mobile TV has led to a monthly average data us-age per subscriber of 178 MB.
China Unicom’s 3G adoption is ex-pected to gain strong momentum com-pared to its competitors due mainly to
24 August 2011 Telecom Asia www.telecomasia.net
He replaces Xi Guohua, who left the MIIT late June to take up the position of vice chairman and secretary of the Communist Party committee at China Mobile Communications.
Telstra International taps North Asia head
Andrew Wildblood has assumed a new role as head of North Asia at Telstra International to lead the company’s sales strategy and activities in China, Hong Kong, Ja-pan and Taiwan.
Based in Hong Kong, Wildblood was previously the VP of sales for Telstra International EMEA. He has over 10 years of experience with-in Telstra and held a number of senior leadership and sales positions in Europe and Australia.
Nokia hires commercial business head
Nokia has appoint-ed Michael Halbherr as EVP to lead a new business unit, called Location & Commerce, which will be created from the merger of the vendor’s Navteq map-ping business with its social location services operations.
Halbherr, who has been at Nokia since 2006, will report directly to Nokia CEO Stephen Elop. Most recently he has been leading the product unit in Nokia’s services business unit, based in Berlin.
Huawei Australia selects first directors
Huawei Australia has appointed John Brumby, Alexander Downer and John Lord as independent directors on the company’s newly-established board.
John Lord will act as chairman of the board, which comprises the three inde-pendent Australian directors, along-side Huawei Australia CEO Guo Fulin, Huawei South Pacific president Jeff Liu,
and two members from Huawei’s global board – global director Chen Lifang and global executive director Li Jie.
TM appoints EVP for SME segment
Telekom Malaysia has named Azizi A Hadi as EVD of its SME segment with immediate effect.
In his new role, Azizi will oversee all aspects of the operator’s efforts to cap-ture more SME business in Malaysia.
HP appoints senior execsHP has appointed
David Caspari as SVP of enterprise services for Asia Pacific and Japan. Previously Cas-pari was HP’s VP of enterprise services for South Pacific.
Colin Png has joined HP as VP of enterprise marketing for Asia Pacific and Japan. He will be responsible for creating awareness for the Instant-On Enterprise and HP solutions offerings, while leading key strategic enterprise marketing initiatives across the region. Prior to joining HP, Png was VP of mar-keting for SAP Asia Pacific and Japan.
HTC names president for global sales
HTC has promoted Jason Macken-zie to the newly-created position of president for global sales and market-ing. Mackenzie joined HTC in 2005 and has led HTC North America and Latin America since 2007. He will continue in his role as president of North America and Latin America until a replacement is announced.
Telstra CFO to resign at end of year
Telstra said its CFO and board member John Stanhope will retire at the end of the year after spending for more than 40 years with the Aus-tralian incumbent.
Stanhope joined Tel-stra in 1967 and has held a number of op-erational roles and senior financial man-agement positions including director of finance. He will also retire as a director of the Telstra board on December 30.
Bridge Alliance appoints chairman
Asian mobile group Bridge Alliance has named Hui Weng Cheong as its new chairman.
Hui is currently CEO International of SingTel. He succeeds Lim Chuan Poh, who has been the chairman since the inception of the Bridge Alliance in November 2004.
Thaicom hires new CEOSuphajee Suthumpun
has taken over as CEO at Thailand-based satellite operator Thaicom.
Suthumpun replaces Arak Chonlatanon, who continues to work with Thaicom as chief advi-sor from August until the end of September.
Suthumpun has more than 23 years of experience in the IT industry, work-ing for a multinational company. Before joining Thaicom, Suthumpun held the positions of MD of IBM Thailand and GM of global technology services group at IBM ASEAN.
China Telecom COO steps down
China Telecom president and COO Shang Bin resigned in July to become a vice minister at China’s Ministry of Industry and Information Technology (MIIT).
John Stanhope
Suphajee Suthumpun
Andrew Wildblood
Michael-Halbherr
Colin Png
teLeC
oM
CA
reer
Contacting telecom Career
Advertising: Gigi Chan Tel: 852 2589 1338 Fax: 852 2559 7002 E-mail: [email protected]
Editorial: Fiona Chau Tel: 852 2589 1333 Fax: 852 2559 7002 E-mail: [email protected]
www.telecomasia.net Telecom Asia August 2011 25
eventscalendar
Networking opportunities
across Asia
For full details of the events, visit www.telecomasia.net To list an event, contact Candace Ho at [email protected]
Date Event Location
August 02, 2011 M2M Asia Pacific Summit Singapore
September 06 – 07, 2011 LTE Asia Summit Singapore
September 06 – 07, 2011 Broadband Traffic Management Asia Singapore
September 07 – 09, 2011 Mobile Financial Services Asia Pacific Summit Singapore
September 20 – 22, 2011 Submarine Networks World 2011 Singapore
September 26 – 29, 2011 Mobile Money Southern Asia Conference & Expo Mumbai, India
September 26 – 30, 2011 P&T/ EXPO COMM China 2011 Beijing, China
September 27 – 29, 2011 Smart Grids Asia Summit Singapore
September 27 – 30, 2011 Asian Carriers’ Conference Cebu, Philippines
October 11 – 12, 2011 IP&TV Forum Eastern Europe & EurAsia Istanbul, Turkey
October 20, 2011 AppsXchange Asia Singapore
October 24 – 27, 2011 ITU Telecom World Geneva, Switzerland
October 25, 2011 Managed Services 2011 Hong Kong, China
October 31 – November 03, 2011 CASBAA Convention Hong Kong, China
November 01 – 02, 2011 Capacity Asia Kuala Lumpur, Malaysia
November 01 – 03, 2011 Connecting The Next Billion Jakarta, Indonesia
November 02, 2011 Asia Cloud (Forum) Conference Singapore
November 03, 2011 Telco Cloud Singapore
November 15, 2011 Indonesia Telecoms International Summit Jakarta, Indonesia
November 16 – 17, 2011 Mobile Asia Congress Hong Kong, China
November 16 – 19, 2011 Vietnam Comm/ Vietnam Internet & IT/ Vietnam Electronics 2011 Hanoi, Vietnam
November 30 – December 01, 2011 Cloud Computing World Forum Hong Kong, China
November 30 – December 01, 2011 CDN World Forum Asia Hong Kong, China
November 30 – December 02, 2011 Carrier Ethernet APAC Singapore
January 15 – 17, 2012 PTC 2012 Honolulu, US
January 26 – 27, 2012 Management World Asia Singapore
February 27 – March 01, 2012 GSMA Mobile World Congress Barcelona, Spain
26 august 2011 Telecom Asia www.telecomasia.net
