Tuesday, 25 July 2017

Friday Review: Part of the furniture

By Mary Lennighan, Total Telecom, in Hong Kong
Friday 19 November 10

Comment from top Asian telecoms executives on LTE, spectrum allocation, cloud services, and the diversification of business models.

It's not unusual to hear telecoms operators talk about diversifying their business to generate new revenue streams. But it is sometimes surprising to learn what lengths they could go to. “Mobile operators will change the way they do business,” said Peter Chou, chief executive of handset maker HTC, at the opening session of Mobile Asia Congress in Hong Kong this week. “They can enable new business, new income,” thanks to their “powerful” relationship with the customer, he said. “Maybe in the future they will be selling furniture... or vegetables!” The mobile operators themselves were behind the idea of diversification, but understandably stopped short of the furniture salesman approach. Ryuji Yamada, CEO of Japan's NTT DoCoMo said he sees more convergence of services in future and a great deal of potential to collaborate with external industries in areas such as financial services…

It's not unusual to hear telecoms operators talk about diversifying their business to generate new revenue streams. But it is sometimes surprising to learn what lengths they could go to.

“Mobile operators will change the way they do business,” said Peter Chou, chief executive of handset maker HTC, at the opening session of Mobile Asia Congress in Hong Kong this week.

“They can enable new business, new income,” thanks to their “powerful” relationship with the customer, he said. “Maybe in the future they will be selling furniture... or vegetables!”

The mobile operators themselves were behind the idea of diversification, but understandably stopped short of the furniture salesman approach.

Ryuji Yamada, CEO of Japan's NTT DoCoMo said he sees more convergence of services in future and a great deal of potential to collaborate with external industries in areas such as financial services, health, education and security.

“[We will] try whatever possible to penetrate into all kinds of industries,” agreed China Mobile's new CEO Li Yue, speaking through an interpreter. “We are the connecting bridge with all kinds of industries.”

Li added that telcos could get involved in the furniture trade “through the e-commerce environment,” but confirmed that his company will not start manufacturing furniture any time soon.

Naturally most telcos are looking at adjacent businesses to their own. China Unicom, for example, revealed at the show that it is keen to tap into the machine-to-machine (M2M) space as penetration of mobile subscribers approaches, and in some cities exceeds, 100%.

The Chinese operator is looking in particular at environmental monitoring services and smart metering, according to Zhang Zhijiang, the head of China Unicom's technology and research institute.

However, M2M will not constitute a magic bullet for operators. Consultancy firm TMNG believes that telcos are unprepared to enter the M2M space, not having invested enough in marketing to educate end users.

China Unicom is not the only mobile operator experiencing saturation in its core market.

According to Rob Conway, chief executive of industry body the GSMA, which organised Mobile Asia Congress, mobile penetration “will [soon] exceed the global population.” The GSMA predicts that mobile subscribers worldwide will surpass the 6 billion mark in the first half of 2012; it puts the global population at 6.9 billion.

Conway was the first of many speakers at this week's show to remind the audience that as of mid-2010 there are 5 billion mobile subscribers in the world. In fact, there were very few MAC presentations that did not include that statistic.

Speaking of statistics, Wireless Intelligence predicted that the number of connections to LTE networks in the Asia-Pacific region will pass the 120 million mark in 2015. China will lead the way with 57.9 million customers, followed by Japan with 26.5 million, Indonesia with 13.1 million and South Korea with 9.8 million.

Mobile operators were keen to talk about LTE. We had hoped for an LTE network launch from Hong Kong's CSL, which is in the process of rolling out its network in conjunction with ZTE, but the company is not quite ready. However, the telco was running a live demo of voice-over-LTE (VoLTE) on the exhibition floor and CEO Joseph O'Konek said he “can't wait” to launch commercially.

Russian WiMAX operator Yota is making the transition to LTE in its home market, having deployed an LTE network in the city of Kazan. The company is also looking at overseas expansion and Yota's director of business development Yegor Ivanov announced at MAC that it is seeking international partners that own mobile spectrum suitable for LTE services.

Meanwhile, Japan's KDDI reiterated a warning we have heard before: LTE alone will not solve mobile network operators' capacity issues. Tadashi Onodera, president of KDDI, said the answer lies in handing off between LTE and a number of alternative access technologies, including WiFi and WiMAX.

In a similar vein, KT Corp of South Korea called for free WiFi roaming in a bid to ease the strain on mobile networks. Hyun-Myung Pyo, president of the operator's mobile division, also spoke of the need for small cells, such as pico and femtocells, and explained that as of September, 67% of KT's mobile data traffic – around 2,500 Terabytes per month – is offloaded onto WiFi.

There was a strong focus on cloud services at the show, with a number of speakers suggesting this is where mobile operators should be focusing their attention.

NTT DoCoMo's Yamada noted that the move to LTE will facilitate the development of cloud services thanks to its superior latency. “Functions on the handset will no longer have to be [on the handset],” he said.

However, Japanese vendor NEC told Total Telecom that it believes telecoms operators lack the IT expertise required for successful cloud services. “Most operators don't have a clue about how to combine IT services with their network and then operate it as a [cloud computing] business," said Toshiyuki Mineno, senior vice president of NEC.

Other highlights from Mobile Asia Congress included Qtel CEO Nasser Marafih urging telecoms operators to develop their role as service enablers; Telenor and Bharti Airtel discussing the best ways to offer mobile services in India; Globe Telecom chief executive Ernest Cu sharing his experience of pricing mobile broadband services in the Philippines; Alcatel-Lucent's Asia-Pacific president Rajeev Singh-Molares predicting a 32-fold increase in mobile device density in urban areas; and the GSMA calling on governments in the Asia-Pacific region to allocate the 700-MHz spectrum band for mobile broadband services.

Our news service from Mobile Asia Congress is still online here. And, as always, all the news from the telecoms industry outside MAC this week is also on the Website.

With that, the Total Telecom team is packing up and heading home. We'll be back in the U.K., reporting on the key events in telecoms, on Monday.

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