Growth Engine

Voice business continues to dominate the revenue streams of operators in the Saarc region. Most of the service providers are gearing up to launch innovative non-voice services to increase revenue and profitablity. They are looking at doubling income from non-voice services. Operators are betting big on 2G, 3G, 4G, WiMax, etc, to launch data services. The investment is happening at a time when most of the operators are reeling under profitability pressure.

NEPAL

Nepal's mobile phone subscriber base jumped to 9.34 mn in mid-August this year from 8.93 mn a month earlier, according to the Nepal Telecommunications Authority (NTA). Of the total, 7.21 mn were GSM users, increased from 6.9 mn a month earlier, and the remainder are connected to the CDMA network operated by the Nepal Telecom's Sky Phone service.

According to NTA, some 1.54 mn people connect to the Internet using GPRS, followed by 101,406 Internet users that connect through CDMA 1X. Around 48,106 people use ADSL to connect to the Internet, and there were also 32,500 cable Internet users and 27,265 dial-up users.

The year gone by has been quite eventful for the Nepalese telecom market and the future looks promising. Ncell, a subsidiary of Swedish phone giant TeliaSonera, the second largest operator in the Himalayan kingdom, has recently set up a high-speed third generation (3G) phone base station at an altitude of 5,200 m near Gorakshep village in the Everest region. Previously, climbers who reached Everest's 8,848 m peak, depended on expensive and erratic satellite phone coverage and a voice-only network set up by China Mobile in 2007 on the Chinese side of the mountain. This is a great milestone for mobile communications, as the 3G high-speed Internet will bring faster, more affordable connectivity in the region.

Till July this year, Nepal Telecom had 4,099 3G users. Ncell, which has the largest market share in the data services, is committed to giving a new dimension to it in the country. “Our strategy is to provide reliable quality service to the customers, not only in data service but in all the services that we offer. 'Think globally act locally' is our strategy. So, we plan to bring all latest technologies available in the world market and managing them with localized managerial skills for long run sustainability in the market,” says Chandi Shrestha, member of board, Spice Nepal.

Private mobile phone operator Spice Nepal, has now added BlackBerry services to its menu, following a no-objection certificate from the regulating authority, the Nepal Telecom Authority.

Ncell is offering BlackBerry Internet services at NPRs 999 a month, and BlackBerry Enterprises at NPRs 1,499. The company is also providing BlackBerry Bold 700 at NPRs 49,999. Subscribers that already own a BlackBerry handset can avail the BlackBerry services upon paying a registration fee of NPRs 1,000.

Race for Pace

New operators like Smart Tel, Hello Nepal, and STM have entered the mobile domain in Nepal. However, all of them are regional operators. It will take them at least 2 years of aggressive expansion and extension work to have a nationwide coverage.

Established players like Spice Nepal have ambitious plans and right support to execute them. “We have aggressive expansion plans to cover the country. We are worried about the capability of execution and capacity in terms of technology and managerial things, not actually about the source of fund. Even in the execution of our programs, we are fully satisfied with the outcome which we have achieved within a short span of time,” says Shrestha, adding, “The ARPU is comfortably good, and we are devising a different strategy to increase both MOU and ARPU, simultaneously.”

Next Generation

The NTA is working on a broadband policy. One round of interaction on the contents of the policy has already been carried out. “We have asked for written comments and feedback from the stakeholders on the draft with objectives of developing and extending broadband technology infrastructure; to raise public awareness for usage of ICT related services; to provide broadband services at affordable rate and with good quality, and also to interlink and strengthen the government agencies/departments for delivering e-gov services,” says Bhesh Raj Kanel, chairman, NTA.

“The service providers and the ISPs need to focus both on the broadband backhaul, and the access technologies along with the deployment of killer applications that could generate sustainable revenues for them. The service providers and ISPs should complement the e-gov initiatives taken up by the government,” he continued.

Despite a very quick and easy spectrum authorization given to the major operators for deploying 3G services in the country, there has not been an appreciable progress. However, some of the operators have even planned for migration into LTE, and also shown interest to launch WiMax services. “Request for spectrum for LTE and WiMax have been received, and we have initiated studies on these fronts. Regarding the market readiness for such services, sometimes the service should be launched and it will be successful if a supply driven marketing strategy is followed. Consumer awareness and the socio-economic status needs to be considered, while we forecast the market preparedness for accepting a particular type of product or service,” Kanel says.

Commenting on operators' preparedness to hop on the next technology, Shrestha says, “It is, of course, good to have latest technology in the country, but it is equally important to first have a minimum basic telecom infrastructure all over the country. At this point, the expansion and extension to cover the country with 3G may be more prudent, but we could not overlook the possibility of our embarking in 4G.”

AFGHANISTAN

The telecom services in Afghanistan have spread across the country covering more than 80% of the population. The remaining 20% of the population who do not have access to telecom services live in remote rural areas, and are expected to be covered through the 'Universal Access Program'.

The number of phone users has been growing rapidly and had reached 13.5 mn users by the end of March 2010, which is equivalent to over 50% penetration.

The country that boasts of 8 mn fixed and mobile telecommunications subscribers across 4 GSM based networks and 1 CDMA based network throughout the country, today covers 75% of the population as compared to 1% of the population in 2002.

Gul Ahmad Rastman, CEO, Afghan Telecom Corporation says, “Afghan telecom industry has witnessed a tremendous growth in urban areas where almost every individual is currently using two mobile connections and may be more in the coming years. We strongly believe that this practice and trend will be soon followed by rural consumers too.”

Altaf Ladak, chief operating officer, Roshan Telecom says, “By extending coverage and rolling out to rural areas, Roshan is making mobile telephony more accessible to customers. This is not only about the main cities. By investing in rollout of networks in the country's rural areas, we have made our presence felt on a local level. We are taking an increasingly regionalized approach to the business to better serve customer needs.”

The country's Internet market appears to be growing (if the available statistics are accurate), with a major surge in Internet users reported in 2009 and the likelihood of this continuing through 2010

Challenges

Building a communications system in a country with battered infrastructure comes with heavy costs. Each of the 4 mobile phone operators that now hold government GSM licenses made initial investments of upto $300 mn.

The major issues and challenges ahead of the Afghanistan government in the development of a proper telecom infrastructure are uneasy peace and security conditions; lack of education, trained skilled manpower; non-prioritization of capacity building companies and transportation facilities in Afghanistan.

The coming 5 years is expected to be a period of broadband Internet revolution in Afghanistan. By the end of 2014, mobile phone penetration will be at least 100% and broadband Internet penetration will be 50%. The major programs for realizing this vision include issuing of 3G and WiMax licenses, expansion of optical fiber and digital networks, using the 'Telecom Development Fund' to expand services into rural areas and villages, expansion of ICT services and applications in government agencies, creation of world-class electronic 'National Identity Card', expansion of ICT for healthcare and education services.

BANGLADESH

The government of Bangladesh endeavors to build a digital Bangladesh by 2021 and use ICT as a tool to fight against poverty. “We are committed to create an environment to foster the growth of ICT and wish to work along with relevant partners to build necessary policy and institutional framework for the purpose,” said Raziuddhin Ahmed, minister, Ministry of Posts and Telecommunications, delivering a speech at the ITU's World Telecommunication/ICT Development Report 2010, held in India recently.

The total number of Mobile Phone Active Subscribers has reached 65.14 mn at the end of September 2010. Till September, Grameenphone maintained a lead in the market with 28.65 mn active subscribers on its network, followed by Robi Axiata, that had about 11.71 mn subscribers. Orascom Telecom Bangladesh (Banglalink) and PBTL (Citycell) recorded 18.11 mn and 1.91 mn subscribers, respectively. Teletalk Bangladesh (Teletalk) and Warid Telecom International (Warid) ended the month at 1.18 mn and 3.58 mn subscribers, respectively.

Internet penetration in Bangladesh is quite low at 4.4%. Positive changes could be expected to take place in the near future. A coordinated program had been put in place to develop the ICT backbone infrastructure and has already laid 14,000 km of fiber optic lines. Moreover, two private operators would roll out Wi-Max facilities throughout the country shortly, and expect that 3G services would be introduced by this year.

Under MD Michael Kuehner's leadership, AKTEL plans to invest Tk 480 mn in network modernization and expansion, which will improve its customers' experience when making calls and using wireless Internet facilities.

3G and More

The Bangladesh government had plans of issuing licenses for 3G by August, the Telecom Minister had created waves when he said 3G licenses will be awarded via a qualitative 'beauty contest' procedure rather than a straightforward monetary auction. The minister said the state did not want to repeat mistakes made in the country's WiMax auctions, where licence prices were pushed up too high. Market leader GrameenPhone however raised concerns about the potential for non-transparency when using selection methods other than a highest bidder auction. Eyes are set on the Bangladesh market. Only time can tell if the government will be able to make money from the 3G spectrum auction as India did.

BHUTAN

Bhutan's telephone penetration stands at 12.2% in urban areas and a mere 4.9% in rural areas. In the most connected community, Internet connections are present in less than 4% of households with most communities under 1%.

Thinley Dorji, CEO of Bhutan telecom believes that the biggest success of BTL has been reaching mobile service to the much needed rural communities in the kingdom. Despite all the difficulties in terms of establishing network infrastructure in the tough terrain of the country, Bhutan Telecom has managed to connect most of the remote villages and communities some of which are 3 to 4 days' walk away from the nearest motor road.

The telecom major is also in the process of implementing the fiber based NGN transmission network which would cater to common Gigabit backbone for both voice and data. As though 3G was introduced in the Capital city of Thimpu but the technology still needs certain addressing before it goes on the roll to the rest of the country.

The kingdom even did not churn out much in terms of revenue and growth on the 3G front. Though the country launched 3G services in 2008 and yet has still not launched it at a pan-Bhutan level. Though it has provided a good alternative in particular when it comes to high-speed data connectivity but still nothing much has been done at this front.

Jigme Wangdi, head, radio communications, Bhutan InfoComm and Media Authority says, “Though the launch 3G didn't see an overwhelming response, but we are optimistic to see its impact in the future.”

Meanwhile, the state-owned BTL has also planned an investment of over BTN 2 bn (almost $44 mn) in the networks over the next 4 years.

The country has also seen a rise in number of Internet service providers over the years but despite appreciable growth, ICT penetration rate remains low compared to other developing countries. Just about 0.5 for every hundred inhabitants have Internet connections. By December 2009, there were 145 leased-line Internet subscribers.

Broadband services, however, are becoming popular with the number of subscribers increasing from 1,425 in 2008, when the services were first launched, to about 15,264 at the end of 2009. Thus, growth in most segments of ICT has been comparable with other developing countries while it is not as much certain in other aspects.

Though, the present condition of telecom industry in the country may be a far cry from other Asian countries, which are experiencing the use of 3G/4G technology and video conferencing, but it has made a world of difference in many Bhutanese lives.

MALDIVES

The Maldivian telecom space boasts of a mobile teledensity of 153.5% (till Aug 2010). The region has grown considerably in the last few years. Till August 2010, it had 48,112 users of fixed-line connections. Its mobile subscribers stood at 457,136 lakh. However, broadband penetration (ADSL) was limited to 12,248. The outstanding growth of the region can be easily gauged from the fact that the region has more mobile connections than its total population-highest in the Saarc region.

The biggest achievement for the year 2010 has been Dhiraagu's introduction of 3.5G services in Maldives. 3G Plus services are now available in Shaviyani Milandhoo, Baa Eydhafushi and Laamu Fonadhoo to Alifu Dhaalu Mahibadhoo, Alifu Dhidhdhoo and Gaafu Alifu Villingili, Fuvah Mulah, Kulhudhuffushi and Dhaalu Kudahuvadhoo and many more islands.

In 2009, Wataniya Telecom decided to improve the network further and provide the latest 3G Plus services via its nationwide network. Microwave was the only option as 99% of the population is surrounded by water. Maldives is also in the Indian Ocean's typhoon zone, meaning that network resiliency is vital. In partnership with Aviat Networks, Wataniya overhauled its atoll-hopping communication network to create a state-of-the-art, wireless backbone for 3G and broadband leased services.

The Communication Authority of Maldives is taking policy initiatives to bridge the ICT gap. Broadband is a key area which attracted a lot of focus in the last fiscal. The Maldives Telecommunications Policy 2006-10 was issued in 2006, which aims to expand the national telecom infrastructure to provide broadband services to all parts of the country without any discriminatory charges.

3G-A Hit!

Third generation technologies have found a good base of subscribers in Maldives. Consumers are responding very positively. 3G Plus with HSPA technology was rolled out by both Dhiraagu and Wataniya. In areas where fixed broadband is available, it is complementing the fixed-line broadband. And in areas where there is no fixed broadband or comprehensive Internet, 3G is filling the gap.

WiMax is currently targeted at areas where there is no fixed broadband as yet, and it is doing a good job. However, there is demand for high speed and a need for reduction in the price of services, both of which present challenges.

With the younger generation accounting for 60% of Maldives' total population, the trend would be towards the development of applications that require more bandwidth, and enabling more features in gaming, music, video, networking, to name just a few.

One of the major achievements of last year includes the rollout of mobile broadband and WiMax services in the country. All telecom services continued to grow in the last year both in terms of numbers and usage. And despite the high rate of inflation, prices of all telecom services were maintained or even lowered in some instances.

Says Jitendra Choudhary, regional director, South Asia, Aviat Networks, “As global trends and high bandwidth consuming devices and applications keep getting popular, Maldives would also see the migrations for 4G networks capable of handling more data and content.”

The broadband space in the Maldives has been a challenging one. Penetration till 2008 stood at 2-5%. However with technologies like Wi-Fi, 3G, and WiMax, the scene has slightly improved although a lot still remains to be done.

Broadband is expanding rapidly with ADSL technology since its introduction in 2002. Currently, broadband is primarily served with ADSL, HFC, and leased lines on the fixed access side. These are available in the major population centers. Wireless technologies like WiFi, 3G, and WiMax are complementing the fixed broadband and gap filling in areas where there is no fixed broadband. At the end of 2009, there were 17,880 subscribers on the fixed broadband, representing a penetration of 6%. This may look small as it only considers the registered subscribers. However, considering all the users actually using the subscribed connections, the estimated overall fixed broadband user penetration is at around 25%. The broadband figure will be even higher when wireless users are included.

PAKISTAN

The total teledensity declined in the Q1 of FY 2009-10. However, it started picking up in the second quarter of the same year. The decline in teledensity in the Q1 of FY 2009-10 is attributed to the decline in cellular mobile numbers by major operators-Mobilink and Ufone-which dropped their numbers due to some definitional changes.

Talking about some of the issues that the industry in Pakistan has been facing, Ahmad Nadeem Syed, director, interconnect and regulatory economics, Mobilink says, “Faced with too much competition, all segments of the telecom industry, including fixed line, WLL, mobile phone, and broadband are facing financial difficulties. The ARPUs are the lowest in the world. The costs are increasing mainly due to the increased use of diesel fuel for gensets as a result of acute shortage of electricity, high inflation, and devaluation of currency.”

Talking along the same lines, Mudassar Hussain, director, telecom and wireless, Ministry of Information Technology and Telecommunication (MOITT) said, “The telecom landscape in India works a little differently than most countries. While there are circles for fixed lines, there is nothing fixed for broadband and mobile segments. We find ourselves at loggerheads with local government while making an inway into different areas of the country. However, the major challenges lay with finding ways and means to bring in next generation mobile telephony in the country, which includes the emergence of 3G and better Internet connectivity.”

The Road Ahead

Adding to that future growth in broadband could be wireless forms-with Pakistan Telecommunication Company (PTCL) reporting that it has extended its nascent wireless broadband service to hundred major cities and towns nationwide, delivering affordable basic telephony and broadband services to urban and rural subscribers, not already targeted by alternative fixed network and mobile cellular operators. The network is based on CDMA EV-DO Rev B technology, often used to provide 3G mobile telephony services, despite the fact that formal 3G operating licences are yet to be issued in Pakistan.

Talking about what lays ahead for the industry in Pakistan, Syed explains, “The fixed telecom sector of Pakistan was deregulated in 2003, with an open licensing regime for local loop and long distance international traffic. This resulted in the entry of a very large number but relatively small operators in the market having limited capital base. The government awarded 2 more licenses in the mobile sector bringing the total to 6 operators, which proved to be much more than the actual demand. The glut in the market has created a situation, where market consolidation is the need of the hour. It is, therefore, anticipated that number of mobile operators will reduce to 3, LDIs to 5, and LL to less than 10.

Elucidating on the same, Hussain says, “The focus for the government now is to increase network coverage, subscriber base, and fix the holes in the industry. The challenge is to develop telecom for socio-economic development in the country, which includes m-health, tele-medicine, etc. With the launch of 3G becoming imminent, operators are interested in value added services, that will be both revenue generating and also help people in the long run.
Hussain believes that currently all countries in the Saarc region are not reinventing themselves, and they should share resources in order to develop telecom in the region in a better way. “There is lot of cross-border frequency interruption and interferences that needs to be resolved. Together, the countries can build joint disaster management platforms that will come in handy in case of emergencies. More so, if needed, these platforms can be deployed at a global level as and when required. Applications that are being developed can be shared for improving the socio-economic situation in different Saarc countries,” he concluded.

SRI LANKA

From only 256,655 subscribers in 1999, total telephone connections have rocketed to 14,095,346 in 2009 in Sri Lanka, implying a CAGR of 34%. Consequently, composite telephone penetration has risen from just 5% in 1999 to 85% in 2009. So, mobile telephony penetration has now reached around 45-48%.

The technology available to consumers is at par with most developed nations, ranging from ADSL fixed wireline services to WiMax fixed wireless broadband access, GPRS mobile telephony Internet to HSPA mobile broadband Internet connectivity (both for mobile telephones and desktop/laptop computers).

According to V Ravishankar, CEO, Tata Communications Sri Lanka,“Sri Lankan telecom is much more advanced as compared to any other country in this region. 3G has been operational since 2007. Data usage through mobile connections has grown substantially.”

By the end of 2009, broadband Internet market comprised of around 170,000 ADSL fixed wireline connections, 7,000 WiMax fixed wireless subscribers, and 63,000 HSPA mobile units. Sri Lanka Telecom, being the only fixed wireline telecom operator, is the sole ADSL Internet service provider in the country.

Meanwhile, Dialog is the only telco currently offering WiMax fixed wireless Internet access, in addition to its HSPA mobile broadband Internet connectivity. However, Sri Lanka Telecom will start commercial operations of its own WiMax broadband network in the 2nd half of 2010. Mobitel and Airtel are the other operators offering HSPA mobile broadband Internet access.

With so much of development and boom in the telecom sector in Saarc, data services will take off in a big way.

Team V&D
vadmail@cybermedia.co.in