Posts tagged ‘3G’
4G still ways off
In spite of the massive 4G hoopla the world over, our estimate suggests that LTE-based 4G is still a good bit ways off. We expect 2011 when we see some sporadic strength in 4G business models where real money starts coming in with customer adoption. Although carriers like Verizon, Sprint, MetroPCS in USA and others in Europe and Asia are planning LTE based 4G launches beginning this year, customer adoption may remain low and return on 4G investment will take time. 2012 is a good bet where we see LTE 4G beginning to take hold.
Till then, the “other” 4G technology ie WiMAX does have a time to market advantage. We expect substantial uptake in WiMAX until LTE comes around. However, we think that ClearWire and Sprint (and telecom equipment makers) will ultimately find a way to marry WiMAX and LTE and in 5-10 years we may have either a single dominant standard or at least cooperating WiMAX and LTE environment where devices and networks communicate at the IP layer easily.
As to 3G, China has just now come out with 3G licenses and countries like India are way behind on 3G – the license auction for 3G in India got postponed to later this year due to economic turmoil and upcoming General Elections. So WiMAX and LTE on a mass scale still look like distant dreams. Fact is that 3G and HSPDA is very good for many high speed apps which the customers want today. The business models around 4G are not even visualized so far. Of course all our thoughts exclude countries like Japan and Korea – where wireless is generations ahead….
iPhone 3G Increased Revenue, Hurt Profits of AT&T
Declines in AT&T’s fourth-quarter income show the company was both helped and hurt by the iPhone 3G, the subsidies for which cut into profits despite bringing in the majority of new subscribers and boosting revenue.
AT&T said that new customers accounted for about 40% of iPhone activations. With the device’s average revenue per subscriber 1.6 times higher than for the company’s other devices, the iPhone continues to deliver significantly higher ARPU and lower churn than the company’s other postpaid subscribers.
Overall, the company saw a 3.9% ARPU growth in its postpaid wireless segment, to $59.59. Postpaid data ARPU grew 35.7% compared to the year-earlier period.
Despite rosy figures in its wireless segment, the company’s wireline segment posted ongoing declines. Thus, despite the growth in its largest segment, AT&T’s guidance for 2009 reflects difficult macroeconomic conditions. The company said it expects growth to be in the single digits over the next year and plans to cut annual capital expenditures by 10% to 15%.
In India however, iPhone has still not been adopted by most as in absence of 3G, its just a device for show-off. Most people who carry iPhone also own another phone for recieving calls as many a times it has been seen that there are multiple missed calls when they keep iPhone for recieving calls. Even when 3G deployment completes in India (which it self is a distant dream as of today), I feel iPhone will loose its sheen by then. Hence Indian operators may never face such a situation.
(Excerpts from Wireless Week)
AT&T’s femtocell 3G MicroCell
Rumours say AT&T 3G MicroCell should provide up to 5,000 square feet of 3G coverage in a home or small office.
IPhone – an operator’s friend or a foe…
Strand Consult laid out, why having the Apple iPhone on your network might not be the best thing in the world. In their own words:
Strand Consult is not in the business of creating hype around technology, our business is to explain to mobile operators how the future market will evolve and how to make money for their shareholders.
…so their ten points on the iPhone are well worth reading in this article. You can read the details here, but their main topics are given below, with little notes of my own thoughts on each area.
1. The iPhone attracts a limited market segment, Apple’s goal was a global market share of 1%. But despite this, the iPhone is not a mass-market product; it is a product that attracts a niche segment. In India too, there are not many serious takers of iPhone. Many just carry the same just as their style statement while carrying a second phone to make or recieve calls. I have personally come across many who are out of reach when somebody sitting next to them tries to call them.
2. Marketing the iPhone takes away staff from more profitable sectors.
3. Customers not interested in iphone have been the neglected lot. Could some of those customers that are not interested in an iPhone feel more welcome with operators that do not carry the iPhone and is not it likely that focusing on a niche product will result in neglecting customers that are the actual foundation of an operator’s existence?
4. While the data usage of the iPhone is promoted, most people are switching to the iphone from other data handsets, not coming into the network specifically for that, so the actual educational effect of the iPhone is minimal. Perhaps operators should take a closer look at these customers voice ARPU rather than their data consumption?
5. Having iPhone customers using large data volumes sounds good, but when data is being sold at a flat rate, a high data consumption results in high production costs without the corresponding increased revenue. You could compare the operators’ attitude towards the iPhone’s data consumption with a restaurant owner that has a “all you can eat for 10 Euro” buffet and that is proudest of the customers that eat the most! In this business the idea is to generate revenue for the shareholders, not to increase the production volume and costs, while at the same time minimising revenue.
6. When you examine the iPhone data consumption, you will see that iPhone customers use their browser to view ordinary websites and that they often choose not to view the websites in XHTML – optimised for low bandwidth and mobile phone sized screens. In practice this results in that when an iPhone user browses a typical news site, an ordinary web page will be around 1 MB, while the mobile version of the same page will often be less than 100 Kb. It is significantly cheaper for an operator to produce 100 Kb data than it is to produce 1 MB data and it is much more fun to deliver 100 KB rather than 1 MB when you are selling data at a flat rate.
7. Apple’s App store gives no fees to the operator (in the same way as Nokia share revenue via the N-Gage on device store), and has a kickback from the data tariffs. In short they regard networks as dumb bit pipes.
8. Strand’s research shows that there is not one single Apple partner in the world among the mobile operators that has increased their overall turnover due to the iPhone. So apart from the press coverage, what value has the iPhone actually created for the shareholders of the operators that have chosen to become Apple iPhone partners?
9. The unlocking handset market worldwide is huge for unofficial handsets. These phones are most often used on other non-Apple partner networks thus depriving the apple partner networks off the revenue.
10. Other Operators and MVNO’s are directly benefiting from (9) without having to invest in all the other iPhone structure requested by Cupertino.
The conclusion is simple. This is not good business for shareholders of operators that are Apple and iPhone partners – on the contrary it is far better business not been an Apple and iPhone partner. Operators that choose not to carry iPhone products have an increased probability of serving their shareholders interests over those that move their management’s focus, subsidies, marketing and distribution power on a product that is as beautiful as Paris Hilton, but increases production costs and where there may not be a relationship between revenue and costs.
India’s 3G License Auction Confirmed – Starts Jan 16th 2009
India’s government has finalised the plans for its 3G and WiMAX auctions – with the 3G auctions starting on January 16th next year. Auctions for WiMAX licenses will commence two days after the 3G licenses are sold – presumably to give the losers a chance to pick up a consolation prize.
Confusions over 3G Auctions in India
So many talks and discussions all over India and some parts of the world regarding 3G roll out in India. Some time back, one of the biggest mobile operators announced that they will roll out the spectrum by Dec’08 against speculations of Jun’09. Then came the news that due to global melt down, it will get delayed to Jun’09.
Just yesterday, I read that some minister has said that 3G auction won’t be delayed by global meltdown. This is again surprising as just before this news, I heard some highly placed telecom professionals say that India will not be able to roll out 3G until atleast end of next year. And also just after minister has said the above, there is yet another news from IANS that Indian telecom authorities are searching for better spectrum technology as the country looks to achieve its target of having a 500-million strong mobile subscriber base by 2010.
A top official from department of telecom, told IANS in Dubai recently that they are visiting the ongoing Gulf Information Technology Exhibition (Gitex)-2008, the largest technology show in the Middle East, and said that India needed better spectrum technology to boost its mobile subscriber base. ‘We are here in Gitex for two reasons. First, we are searching for better spectrum technology,’ he said. The other reason, according to him, is that the government wants to promote India’s telecom sector to potential investors in this region.
Somehow, I did’nt understand the meanng completely. Does this mean that India indeed is facing the brunt of global turmoil? If so, then how can 3G be rolled out with financial crunch? Will the operators be able to pay without allowance of paying the bid price in installments?
Quiet a confusion here…
Vishal
Indian Telecom Industry
Lately, I went through quiet a bit of mobile related events. Today, I am trying to sum-up the main points from some of them.
According to one of the largest mobile operators in India, there are five pillars in innovation space i.e. Music, Bollywood, Sports, Games and M-Commerce. These five are 80% need of Indian customers. If these are served by ay operator, they will be quiet successful now and more when 3G comes into play in India.
One of the top executives from the above operator mentioned that they had recieved 200,000 interested consumers for 3G iphone when they were expecting price to be around US$199 as was in USA. But finally when the phone was launched in India, the number of actual buyers fell sharply. He, however declined to give the exact figures. But, he also said that in first phase of roll out of 3G, top 10% of the market will be the first ones to adopt the iPhone. This, however is untrue in the west where it has been seen that iPhone is more popular amongts the lower salaried people then the higher salaried ones. This is quiet a contrast.
According to some operators VAS is picking up very well in India. But still, it only contributes about 10% to the overall revenues of the companies. And amazingly, some people in India feel that SMS will not last long. But off the total of 10% revenue, about 5%+ revenue comes from SMS only. Many operators in India are highly focussing on revenues out of SMS business as this is ones of the core components of revenues being generated out of rural areas.
The top three issues on which call centres of operators recieve the most number of calls are network, billing and VAS. These are the top three areas which require improvement and innovation on every operator’s part and each operator is putting it’s best efforts to achieve highest efficiency upto 2010 before the start of Common Wealth Games.
Vishal
Talking of 3G spectrum when even 2G is not sufficient in India
Today’s front page news article “Call drops, busy routes: What’s wrong with cells?” in Delhi’s print edition of Times of India , one of the National dailies here shows just that.
According to this article, mobile users are growing at the rate of approx. 40% year on year and thus there are complains of customers like there are frequest call drops, disconnections, route congestion messages etc. Ultimately when customers are not able to talk on mobile, they switch to land line. Most operators cite scarce spectrum as the key reason. But amazingly, even after knowing the problem they don’t do anything on their infrastructure front. They should first increase their infrastructure to strengthen the 2G space instead of blindly trying to get 3G spectrum. This will only add to customer frustation.
One good solution that I can think of is operators brining in Femtocells fast. They can leverage the existing situation as anyway customers are using their broadband internet as well as landline for calling due to spectrum crisis. So these operators can very well promote femtocells to these customers as an alternative to cell-towers and get them to switch back to mobiles and use their broadband for femtocells instead. This will help operators in following ways:
- De-congest the macro network at both work and residential sites as when femtocells are their calls will be travelling from mobile to femtocells to broadband to mobiles
- Reduce infrastructure installation and maintenance costs.
- Be more environment friendly.
- Be accessible to more subscribers on current infrastructure in interiors of the country too.
Femtocells will help the customers in the following ways:
- Minimisation of bills as calls are going through braodband route.
- Better clarity.
- Better connectivity.
- Better data speeds.
- No call drops.
- No busy routes.
Operators should soon do something about this issue or else the day is not far when somebody will invent some technology that bypasses the operators…
Vishal
Revenues from Mobile Data Services to see Continued Growth inspite of Global Meltdown
The collapse of the mighty global financial system has triggered a series of chain reactions in India, but one sector stands strong and that is Telecom according to Mr. Prem Behl, a high profile personality from Telecom domain, I was speaking to, earlier this week.
Big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS). Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term. In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.
According to Mr.Behl, Telecom is the only sector in India which stands strong and has not been affected much apart from slight lowering of the Average Revenue per User (ARPU). A new report from Juniper Research supports his statement and states that Increasing adoption of messaging and content services, aided by increased availability of 2G and 3G-based mobile networks, is expected to push operator-billed data revenues in the mobile markets of Brazil, Russia, India and China (collectively referred to as the BRIC economies) from $26.2 billion in 2008 to more than $48.3 billion by 2013.
Cell Life 