News From Telecom World

Archive for October 2008

The smartphone landscape is changing rapidly with the arrival of the T-Mobile G1, the first phone based on Google’s Android software, and the huge success of Apple’s iPhone business. And if both of these take big slices of the smartphone market, that leaves less for everybody else – unless they can find a way to respond.

Research In Motion (RIM) is already in motion: it has spent the past couple of years moving into the consumer market with hot new products such as the BlackBerry Bold and Storm. Nokia, the world’s largest phonemaker, has targeted high-end users with the E71, N95 and N96 and similar phones. Nokia has also taken control of the Symbian smartphone operating system and is making that open source as well. Meanwhile, Microsoft has … done not very much at all.

“We’re very confident in our strategy, so I don’t think we need a particular response,” says Alex Reeve, who heads up the Windows Mobile business in the UK.

But while Microsoft sold 18m smartphone licences in the year to June, 2m short of its target, Apple says it sold 6.9m iPhones during the last quarter alone. As the iPhone goes global, it’s not hard to see it outselling Microsoft’s 50+ handset manufacturers combined. It’s also not hard to see many of those 50+ handset manufacturers at least trying Android as well.

Microsoft is in a tricky position because, like Google, it doesn’t make phones. It supplies an operating system that anyone can license, but ultimately it’s reliant on partners who may have other ideas.

Taiwan’s HTC, for example, has been a major manufacturer of Windows Mobile phones, but now it’s making G1 Googlephones as well.

Windows Mobile can’t even rely on its parent, Microsoft to give it a market advantage. Phones running Windows Mobile were the first to offer good synchronisation with Microsoft Exchange, which is the standard corporate email server, and this gave Windows Mobile an advantage in the business market. However, Microsoft has since licensed Exchange sync to rival handset-makers including Palm, Nokia and Apple.

Locked market

Reeve says: “We’ve taken the approach that we want as many people to have access to Exchange as possible. We have absolute confidence in our ability to sell our mobile product without locking people in.”

Of course, Microsoft still has advantages for corporate use. Ken Dulaney at Gartner, the leading analyst covering handhelds and smartphones, points out that all the systems that were designed for warehouse and factory floor use run Windows Mobile. Also, companies can develop their own applications using Microsoft Visual Studio – which they already use to develop PC applications – and install those applications however they like.

“We’d never lock people in like the iPhone,” says Reeve. “The whole point of a smartphone, in the Microsoft philosophy, is to make it open to applications, so everybody can build the solutions they really want.”

Google’s Android software is open-source (it’s based on Linux) and free, so it could also challenge Microsoft as an open application platform. But Reeve doesn’t think the G1 is a threat. “It has no integration at all with the enterprise,” he says, and Google has a “kill switch” so it can erase software that you load on the device.

According to Dulaney, Microsoft had a choice with Windows Mobile 6: it could either “defend their enterprise turf against RIM”, or focus on improving the user interface and attack the consumer market where the iPhone was making headway. “In either case, they were going to suffer,” says Dulaney.

“I think they chose the right thing, which was to defend the enterprise area, where they’re strong,” he says.

Reeve, however, rejects the idea that Microsoft has been slipping in the consumer market. “We’re growing very quickly in that area,” he says.

He points to the HTC Diamond, HTC Touch HD, Samsung Omnia and the Xperia X1 – Sony Ericsson’s first Windows Mobile phone – as being stylish designs with consumer appeal. A hit product can change everything, at least for a while.

Stylish hardware does not necessarily come with stylish software, of course, and Windows Mobile has come in for plenty of criticism. Dulaney says Microsoft has “different priorities – a passion for developers”, but lacks Apple’s passion for the user interface (UI). “They just don’t have the genes,” he says.

Face to face

The hardware suppliers and network operators can do something about that by changing the UI, as Palm has done, or by adding their own interface, as HTC did with TouchFLO. So far, however, nothing has come close to the iPhone.

Whether Microsoft will be able to do that with Windows Mobile 7 remains to be seen: Reeve says Microsoft isn’t commenting.

But in the long run, the real question is whether Microsoft cares. If Windows Mobile sells 20m licences a year at a hypothetical $7 to $8 (£4.50 to £5) each, that’s only $140m to $160m, which isn’t as much as a decent Xbox 360 game. It’s a very long way from the $4.6bn that Apple reckons the iPhone generated in the last quarter alone.

Still, Microsoft isn’t likely to drop out of the mobile phone market, for two reasons. First, there’s value in the way Windows Mobile fits into Microsoft’s whole enterprise business, supporting Microsoft Office, Exchange and its Live web sites. Second, Windows Mobile isn’t a standalone system, it’s just one example of a software stack based on Windows CE, alongside PocketPC and Windows Automotive. CE has been used in thousands of products including set-top boxes, petrol pumps, jukeboxes and even sewing machines.

Given the scale of the investment in Windows CE, and Microsoft’s ambitions in the consumer electronics area, Microsoft must surely keep it going.

What I think we are likely to see, under the Windows not Walls slogan, is Microsoft moving to a broader “platform play”. Instead of focusing on particular products, Microsoft could present Windows as a more interoperable offering for the 2010s.

The platform will have three legs – Windows 7, Windows Mobile 7 and Windows Live – with Live Mesh rings automatically synchronising data as required across all your devices. (If you want to play with Live Mesh, sign up for the beta.)

Applications such as email, messaging and word processing will be available on all devices, and also online at Windows Live, with the two working together. You can take your pick about which you prefer at any given time, because they’ll interoperate.

In the ring

It sounds like a good plan – but then, so did the Windows CE strategy in the early 1990s. However, even the best plans can fail if the execution isn’t up to scratch, and sometimes things just don’t work out the way anyone might expect.

For example, starting in the late 1990s, Microsoft has spent the thick end of a decade establishing its own mobile platform. It can’t have imagined being overtaken by a late entrant such as Apple’s iPhone. It surely couldn’t have imagined being challenged by a phone from a search engine company, Google, that barely existed at the time.

Bill Gates met similar challenges in 1995 when he made Microsoft do a U-turn on the internet, performed with unexpected agility and speed. Whether Steve Ballmer can do it remains to be seen.

Source: Guardian


60% stake in telecoms start-up sees Telenor become the latest foreign company to enter India’s mobile market.

Norway’s Telenor ASA said Wednesday it will spend more than INR61.20 billion ($1.2 billion) to buy up to a 60% stake in a startup telecommunications unit of India’s Unitech Ltd., becoming the latest foreign company enter the world’s second-biggest and fiercely competitive mobile phone market.

Under the pact, Telenor will subscribe to new shares in Unitech Wireless, resulting in an enterprise value of INR116.20 billion for the telecom unit, New Delhi-based Unitech said in a statement.

Unitech Wireless will compete with players such as Bharti Airtel Ltd., the largest by mobile users, and Reliance Communications Ltd., the second largest, along with Vodafone for a share of India’s telecom market.

“The market here (in India) is already quite crowded, I admit that. The competitors that we will meet are very professional already. However, with Unitech together, we feel that there is room for another entrant,” Sigve Brekke, executive vice president and head of Telenor Asia, told reporters.

The transaction is subject to approval from regulatory authorities in India, the statement said.

New Delhi-based Unitech is one of India’s leading realty companies by sales, while Oslo-based Telenor is owned 54% by Norway’s ministry of industry and trade.

A partnership with Unitech will help Telenor foray into India’s mobile phone market, where more than 8 million users are added each month. The strong growth potential has led global companies such as Vodafone Group PLC and Virgin Mobile to enter the South Asian country via acquisitions or alliances.

Unitech Wireless, a wholly owned unit of Unitech, has received licenses to operate telecommunications services in all of India’s 22 service areas. It plans to initially start operations in the first half of 2009 under the global system for mobile communications technology, for which it has been allocated spectrum, or radio bandwidth.

“We view India as a huge opportunity. For us, India is not just one country. For us, it is probably like 16 new countries if you look at the size of the regions,” Brekke said.

The country’s mobile phone user base is expected to exceed 737 million by 2012, growing 21% a year from 2008, IT research and advisory firm Gartner Inc. said in a recent report. It had more than 315 million users at the end of September, according to government data.

Telenor’s equity injection in Unitech Wireless will be made by Telenor Asia Pte. Ltd. in four installments to be completed by the end of September 2009, the Telenor statement said. The first tranche of the investment will be equal to a 20% stake in Unitech, Brekke said.

“The investment will be funded through drawdown on existing credit facilities and/or issuance of short-term commercial paper,” Telenor said, adding it intends to raise about NOK12 billion via a rights issue in the first quarter of 2009.

Unitech said it will invest more than $3 billion as part of its plans to become a long-term telecom operator in India.

Unitech, DLF Ltd. and other realty companies in India are diversifying into sectors such as telecommunications and insurance as six-year high loan rates and higher property prices damp demand in the real estate sector.

A Mumbai-based analyst, who asked not to be named, said that initial losses in the telecom business are likely to drag Unitech’s overall earnings.

“The wireless business will be making losses for the next five years when it will try and establish its presence in India,” he said.

The telecom unit currently has 250 employees across the country, the statement said.

Source: Total Telecom

India could be a promising market for e-commerce, with its massive population and history of technology adoption, but so far progress has been slow.

The slow growth of e-commerce in India stands in contrast to the booming market for mobile connectivity. Internet and broadband penetration is growing, yet the explosive growth that is possible in this vast country of 1 billion people has remained elusive.

A report by the Internet and Mobile Association of India (IMAI) estimates the size of the business-to-consumer (B2C) e-commerce industry in 2007 at 92,100 million rupees (US$2.10 billion), up around 30% from 70,800 million rupees (US$1.62 billion) the previous year. The figures include some consumer-to-consumer (C2C) categories such as online auctions and classifieds.

But India lags a long way behind other countries in the Asia-Pacific region when it comes to e-commerce transactions (see box below).

In many ways, India should have been an ideal market for e-commerce. The country is vast, and getting timely supplies to tens of thousands of retail outlets spread across the hinterland is never an easy task. The movement of goods through several layers adds to costs and can easily be disrupted by weather or the poor infrastructure across the nation.

Yet retail trade is booming in towns and cities, and malls are the flavour of the season. Indeed, most of the country’s leading business groups, including Reliance Industries, the Tata group and the Aditya Birla group, are all investing in huge brick and mortar retail businesses.

The online retail market has received comparatively less attention. “Online sales are a small fraction of retail sales in India…less than 1%,” says Dr. Subho Ray, president of IMAI.

Conventional reasoning cites poor penetration of broadband, the building block of e-commerce, as a key reason for poor online sales. India has just 4.57 million broadband subscribers, up from 2.47 million a year ago, according to the Telecom Regulatory Authority of India (TRAI). The growth in these numbers is nowhere near the boom seen in mobile telephony, which boasts almost 300 million subscribers, up from under 200 million a year ago (Total Telecom, September, p.12).

But Dr. Ray reasons that, conversely, broadband penetration is not picking up because the supply side has not yet seen value in selling online in India.

“Because there is very little e-commerce happening, penetration isn’t increasing fast enough,” he says. Most of the bigger retail brands do not sell directly and prefer to sell through dealers and retail stores, he adds.

India has not had a tradition of mail order selling, and so the entire business of selling to end consumers is built around a system of dealers, sub dealers and traders that distribute products to the remotest stores with marginal cost additions. Traders form a powerful and highly competitive group, and have virtually taken over the distribution system. On the one hand they have rid manufacturers of the trouble of getting products to market on time, but on the other they have made manufacturers highly dependent on the trader community to reach out to the corner shop.

Dr. Ray sees this as one reason why sellers are not pushing online. “One part of the story is that you do not wish to antagonise your dealers and so prices are often not indicated online. This has to do with the way retail marketing is organised in India. The other side is our complicated array of taxes, like local sales tax and octroi [city municipality fees] that vary from state to state, and even city to city,” he says.

Traders would sometimes circumvent these with local contacts and intelligence: for example, sometimes billing some goods with an address on the outskirts of, say, Mumbai to save local area taxes, and hand delivering the products from Thane city next door.

But perhaps the most critical barrier to e-commerce is the lack of credibility and confidence in the process of buying online. This is made worse by reports of just how poor service can be. And since there is no provision for escrow intermediaries under Indian law, there is little that consumers can do to redress a grievance. Complaints like late delivery, delivery of wrong products and outright misrepresentation are far too frequent to be ignored by prospective buyers.

“In the EU, the law has a big chapter on the escrow service,” says Vamshi Mokshagundam, senior analyst for Technology Research & Analytics at Datamonitor. “The escrow companies are themselves regulated and this is the reason that e-commerce, particularly B2B, is mature in Europe and the US.”

Another major hurdle is logistics. “We do not have any integrated logistics system for seamless movement of goods. This is as much true for offline sales as it is for online,” Mokshagundam says.

In addition, consumers are often unsure of product quality, timely delivery, and worried about online security when paying by credit card. A report published earlier this year by eMarketer, which researches e-business and emerging technologies, says India’s “online payment system lacks credibility”. Worse, there appears to be no immediate perceived benefit in buying online, because prices can often be higher than in physical stores where discounts can be had through dealers.

A litany of bad experiences has been recorded by the Consumer Online Resource & Empowerment (CORE) centre, which runs with the support of India’s Ministry of Consumer Affairs to help consumers resolve complaints of deficient goods and services.

“There are many cases where the order is booked, the money is gone out of the bank and the goods have not reached [the consumer],” says an official at CORE near New Delhi. “Some of the [online businesses] run customer care services that can keep you on hold for more than 30 minutes at a time.”

However, rising incomes and busy schedules mean India still is a fertile ground for growth. Indian online research firm JuxtConsult says 80% of all Indians with online services now “shop” online: they either window shop or actually buy online. It says 23% bought products in the past six months, and of these 92% have bought a travel product online.

Wireless broadband could also boost uptake. WiMAX proponent Intel in August announced support for the “Connected Indians” programme by government and industry in India to facilitate the provision of Internet access. Intel also signed an MOU with India’s largest telco BSNL to help deliver WiMAX solutions across India.

The Indian Railway Catering and Tourism Corporation (IRCTC) and several other travel portals are among those now offering solutions on mobiles, reasoning that wider penetration of mobile services could lead to more deals happening through handheld devices. But mobile-based e-commerce is yet to catch on in a big way. Only a very small number of railway tickets, for example, are booked through mobiles says IRCTC.

Business-to-business e-commerce services have also been slow to take off. “The B2B e-commerce sector, even more reliant on seller volume than the B2C market, has been slow to gain followers in the Indian market,” say Datamonitor analysts in a recent research note. “However, with India pushing to become a major manufacturing outsourcing destination, the B2B e-commerce market is experiencing an upswing thanks to sunrise sectors such as pharmaceutical manufacturing, construction and equipment manufacturing. Lack of market leaders both in the B2B exchange and escrow space, however, may dampen prospective growth.”

But leadership is slowly coming. China’s online marketplace at the end of April signed a strategic partnership with Indian B2B player Infomedia India limited, which publishes Yellow Pages directories among other products. Alibaba has several spots running on television, inviting small and medium-sized enterprises to sell products via its B2B portal.

Arthur Chang, vice president of global sales for Alibaba, said the alliance would help his company address Indian small and medium-sized enterprises not only for exports but also to boost domestic B2B sales. “[India] is our fastest growing operation: it is growing at 100%. That is five times faster than our US business,” said Chang in an interview in The Hindu newspaper.

As a result, the only international channel Alibaba has now is its India-specific site, which also has inputs from Infomedia. There are over 10,000 registered Indian suppliers, with textiles and jewellery the most popular items exported, the paper said.

India lags behind in Asia Pacific

An eMarketer report this year, Asia-Pacific B2C E-Commerce: Focus on China and India, says India had the lowest e-commerce sales in 2006 of the five major Asia Pacific countries it surveyed—India, Japan, Australia, China and South Korea—with just a 1.3% share. The bulk of the pie was with Japan at 62.3%, followed by South Korea with 16.2%, Australia with 16.1% and China with 4.1%.

According to eMarketer, B2C sales in India were US$0.8 billion in calendar 2006 and 1.2 billion in 2007. That compares to sales in Japan of US$36.8 billion in 2006 and 43.7 billion in 2007, the highest in the Asia Pacific region. (The figures include all purchases made on retail Web sites, including online travel, event ticket and digital download sales.)

In fact, eMarketer gives cautious cause for optimism in Indian e-commerce services. “Sales [in India] are forecast to nearly quadruple by 2011, reaching INR200.2 billion (US$5.6 billion). From 2006 to 2011, online sales will grow at a 42.2% annual rate,” says the report. By 2011, India’s share of online B2C sales among the countries covered will be 3.3%, but the rankings among the nations will remain unchanged.

“A growing middle class [in India] is turning to online shopping,” the report continues. “The first purchases online are for travel services. As online buyers gain confidence in the online-shopping process, and its shortcomings are addressed, consumers will likely extend their online purchases into more complex product categories. Movement is already evident from the strong growth in online sales, albeit from a small base.”

Morgan Stanley says Asia Pacific had the world’s largest population of Internet users in 2007: 547 million, amounting to 42% of the world’s total Internet users.

On track: e-commerce progress in India
The bulk of B2C e-commerce business in India comes from the travel segment, pushed by the emergence of low cost carriers. The runaway success story comes from an unlikely player, part of a government-owned giant that moves the Indian economy on its tracks: the Indian Railways that runs the second largest railway network in the world and is spread over 108,700 track kilometres. Its subsidiary, the Indian Railway Catering and Tourism Corporation (IRCTC), stands out as one shining example of just how much e-commerce can achieve in India.

The IRCTC ticket booking site records more than 100,000 transactions a day. It issued 3.3 million tickets in the holiday season in July this year; and it reported turnover of 17,000 million rupees (E269 million) in its last fiscal year and is on track to double that this year. “It is all about providing value,” says IRCTC’s general manager, operations, Sanjay Aggarwal. “There are many disadvantages for a consumer booking online: we ask him to spend to use the Internet, the transaction can be interrupted because of power or connectivity failure and there could be disturbance in delivery of the ticket. So the value we provide should be greater than the inconvenience of all this.”

Long queues are common at ticket counters in India, and it is not possible to check as many options as it is when you are surfing the IRCTC site, says Aggarwal. In addition, IRCTC has appointed some 30,000 agents to enable those without Internet access to book tickets.

Aggarwal says the average transaction size is less than 800 rupees, and over 70% of its customers book non air-conditioned class of travel. In addition, IRCTC’s payment reversal system means a wait listed ticket—issued if another customer cancels—that is not confirmed by the date of the journey is automatically refunded in full.

Total Telecom

Mobile operator stresses importance of brand value in monetising social networking.

Vodafone on Wednesday proclaimed online social network Facebook to be “bigger than porn.”

“At Vodafone we have 269 million customers in 25 countries, plus we have partner markets which gives us presence in a further 40 countries,” said Sacha Tuéni, group marketing manager for social networking, Vodafone.

“So you could say we’re quite a big communications provider,” he said.

“But then I look at social networks which between them have around 800 million passionate customers, and are present everywhere the Internet is,” he commented.

Tuéni then said that in an average week more than 40,000 Facebook-related Web searches are run, whereas less than 7,000 pornography-related searches are made.

“Facebook is bigger than porn,” he said.

When it comes to generating revenue from social networking applications such as widgets, Tuéni said operators are well-positioned to leverage the value of their brands.

“When it comes to spending money on social networking applications, people trust Vodafone as a brand that won’t abuse their personal information,” he explained.

During the same panel session Tuéni also commented that consumers are more likely to send a poor quality photograph to their friends if the context is relevant.

“A picture taken on a mobile might not be interesting enough to upload it to an online photo service like Flickr, but when you send it to someone it becomes relevant and suddenly the quality isn’t as important,” he said.

Source: Total Telecom

Mobile is set to play a bigger role in social networking as operators look to build on fixed-line services.

Mobile phones are a logical platform for online social networking services: both have become popular with consumers as tools for communications and multimedia sharing.

But there is still no common consensus over whether to incorporate features specific to mobile social networking on handsets, as well as doubts over the quality of the user experience. Concerns also remain over how operators will generate revenues from services.

That has led to different social networking approaches from mobile operators, with own-brand offerings still in the starting blocks.

M:Metrics says there was 86% growth in the number of consumers accessing social networks on their handsets in the year to the end of March, in the markets it researches. That equates to 17.1 million consumers in total in six countries.

“Mobile social networking is one of the strongest growth areas we’ve seen,” maintains Paul Goode, senior analyst at M:Metrics. “The UK has been one of the stand-out markets: there has been almost 180% growth in usage in the last year.”

But in an average month that only equates to 4.9% of all mobile users in the UK. “It’s a small percentage, but it’s showing healthy growth,” says Goode.

In May, Vodafone UK revealed that Facebook was the most visited site by its mobile Internet users, with MSN, Bebo, MySpace and YouTube all appearing in the top 10. The operator was the global launch partner for Facebook’s mobile platform, a set of applications enabling mobile operators to integrate their services with social networks, unveiled in February ahead of Mobile World Congress in Barcelona.

“Our customers who go online on their mobiles want the same experience as on their PCs,” says Vodafone spokesman Jakub Hrabovsky. “Therefore our mobile Internet services—and this includes social networking—are an extension and continuation of that.”

He sees Vodafone’s role in social networking as more of an aggregator than an originator of content: “It’s important for us to offer access to the widest variety of social networks for our customers as possible, and make it simple to use in terms of pricing and data charges.”

Last month Vodafone acquired Danish social networking company ZYB, for E31.5 million. ZYB operates a social networking and online management tool that enables users to share and back up their handset’s calendar and contact information online.

Some carriers have built their own social networks to move deeper into the space. SK Telecom was the first operator in Korea to launch social networking both on fixed and then mobile platforms. It has operated a mobile blogging service called Cyworld since 2004, and in February this year launched Tossi, a social network for use on mobile devices and PCs.

“We felt that with social networking services such as Tossi we could create a popular service, build a new market, and also bring about a constant and loyal user base that would continuously be motivated to use our wireless network,” explains Park Jung Min, leader of Tossi’s service team.

Cyworld’s average mobile monthly page views now stand at around 350 million, according to SK Telecom, meaning users are accessing the service up to 11 times per day. That is impressive when you consider that MySpace Mobile has 150 million page views per month, according to Datamonitor/Ovum in a new report, Social Networking: Competitive Differentiation Strategies.

“Currently, fixed-line Cyworld has 25 million users—over half the population of Korea—and mobile Cyworld has 1 million users,” says Yeojin Lee, a manager at SK Telecom’s Internet Business division.

But in general opinion is divided over whether other mobile operators can still capitalise on the growing popularity of mobile social networking services by building their own versions.

“Behaviour on the mobile Web reflects demand on the fixed side,” says Goode at M:Metrics. “I wouldn’t recommend that operators build their own social networks. Users aren’t defined by the mobile network they use.”

And Katrina Bond, principal analyst at Analysys Mason and author of a recent report on the US mobile media and entertainment sector, comments: “Belonging to a social network that is operator specific isn’t going to help you share and communicate. Users want to connect to friends regardless of their mobile network.”

But others argue that SK Telecom’s model could be replicated in other markets. “It’s not too late for operators looking to launch their own solutions,” says Matt Hooper, executive vice president of marketing at mobile instant messaging firm Colibria. “They have a huge addressable market and the infrastructure. They just need to concentrate on how they would package these services.”

Nonetheless, analysts suggest that the leading fixed-line social networking sites will also dominate the mobile space.

Datamonitor/Ovum analysts Charlie Davies and Eden Zoller say nearly 70 million people viewed more than 2.5 billion videos on last year and more than 38 million people viewed around 360 million videos on Going forward, they say mobile will play an important part in the revenue mix for companies like MySpace.

“Despite its recent success (it generated over $500 million in revenues from ad sales in 2007 and doubled its ad sales team), MySpace knows it has to up its game in light of fierce competition. It regards its number two position in video streaming, combined with its global footprint and mobile reach (MySpace mobile has 150 million page views per month), as being crucial in pulling in big advertisers.”

But Hooper at Colibria suggests that even if operators choose to focus on providing access to existing Web-based social networks, their role doesn’t necessarily need to end there. “Mobilising an Internet service doesn’t preclude the operator from building extra features and functionality,” he says.

In particular, Hooper says there is scope for mobile social networks to work with operators to enhance the user experience using features such as presence and location-based services (LBS). “Communication is becoming much more about context,” he says.

One such company that bases its offering on context-centric mobile social networking is GyPSii. Using GPS, or a carrier’s network depending on the handset’s capabilities, GyPSii provides a platform for consumers to share information about a specific location on top of the standard social networking features of messaging and multimedia.

“From an operator’s point of view, they get to know their customers better and it drives higher usage of their [data] network,” says Dan Harple, CEO and co-founder of GyPSii. “Plus, to be competitive you need to have compelling reasons to stay on your network.”

SK Telecom sees potential too: “We think mobile social networking services that are linked to LBS technology would be of interest to customers,” says Park Jung Min.

But not everyone agrees that location services are the best way forward.

“In our experience location-based social networking was a negative for our users. They don’t like the idea of other people knowing where they are,” says KF Lai, CEO of BuzzCity, which runs MyGamma, a mobile social network aimed generally towards cheaper handsets.

A user survey carried out at the end of 2007 by BuzzCity found that the majority of MyGamma users accessed the service from a fixed location, and didn’t use it exclusively to communicate with people living nearby. The company says the network is now accessed daily by some 2 million users from 60 countries.

M:Metrics points out that at the moment there are also market penetration challenges to overcome with location-based services. “Right now with GPS you’re looking at a low install base in terms of the number of handsets in the market, and in terms of using the cellular network operators still haven’t worked out the cost model for making repeated location calls,” says Goode.

What’s more there is widespread agreement on two limiting factors that need to be addressed before mobile social networking services are widely taken up: pricing and usability.

“There is a big trend towards mobile data bundles, but most people are still paying vague ad hoc charges, while accessibility is one of the key barriers to mobile social networking growth today,” says Analysys Mason’s Bond.

She believes operators and handset vendors need to co-operate closely to make it quicker and easier to access social networks—something that Vodafone claims it is already working on.

“Bringing social networking closer in terms of reducing the number of clicks needed on the user interface to gain access is something we co-operate on with our partners, which includes handset vendors,” says Vodafone’s Hrabovsky.

“Several things are necessary to help drive the uptake of mobile social networking,” says Park Jung Min at SK Telecom. “First would be mobile Internet payment plans that give less financial burden to customers. Also, the usability of mobile [social] networking services needs to be improved.”

And the social networking companies point to still high mobile charges. “Data tariffs have not been lowered enough; they’re still just too high,” says MyGamma CEO KF Lai. “When operators lower their data prices they will generate scale.”

But lowering the cost to the end-user would mean operators would need to find other revenue sources from their social network offerings.

“On the fixed side, social networks have the advantage of an established base of online advertisers, whereas on the mobile side they will have to start building up advertising all over again or find other ways to monetise the service,” says Bond at Analysys Mason. “But a subscriber model only tends to work when you’re targeting a very niche audience.”

She expects mobile media and entertainment services, including social networking, to contribute more than 12% of US carriers’ non-voice revenues by 2012, but direct revenue from mobile social networking will only make up a very small proportion of that.

Carriers will also face fierce competition for such revenues. MySpace Mobile, launched at the end of 2006, has struck deals with 23 carriers in 13 countries.

“In five years the bulk of operator revenues are still going to come from voice services,” says Bond.

But mobile social networking services could help to drive other data offerings.
“Social networking gets more people surfing on the mobile Internet, which means operators sell more data plans,” says KF Lai. “Operators benefit from a greater range of attractive incentives to use the mobile Internet.”

Source: Total Telecom

WAP services haven’t received the same kind of coverage as Apple’s iPhone and other browsing platforms recently. But WAP proponents say it is gaining momentum.

It took almost nine years to resolve WAP’s usability issues and shortcomings. Then along came the iPhone and Web browser-based companies such as Opera and Access to deliver a Web-based experience on mobile devices similar to the fixed Internet.

These latest developments have cast doubt over WAP’s role within the context of the mobile Internet, and have raised questions about future investment in the technology. But the WAP community continues to grow.

Mobile operators still dominate traffic through their own portals, but off-portal proponents are playing an increasing role as more companies launch WAP sites. Furthermore, as more users browse off-portal, the expanded choice of sites is creating the perception that usage is declining as page impressions per WAP site is fewer.

“The traffic to mobile sites is not declining, it’s actually exploding,” says Paul Nerger, vice president of advanced services and applications at mobile Internet services company dotMobi. “ESPN, for example, routinely will drive more traffic from than”

For example, ESPN says that for one 24-hour period earlier this year its wireless NFL section had 4.9 million visits, compared with 4.5 million visits on its PC equivalent. At the start of 2008, ESPN said it had over 9 million unique users on its mobile site and was experiencing year-on-year usage growth of 200%.

According to analysts and telcos, mobile subscribers on both sides of the Atlantic are increasingly using mobile Internet services. Latest figures from Nielsen Mobile claim that 15.6% of mobile users—approximately 40 million—browse the Internet in the US. And Geraldine Wilson, vice president of Yahoo!’s Connected Life division in Europe, claims that 16% of mobile subscribers are browsing on their mobile in the UK. “Operators are starting to get excited now because they are seeing mobile Internet traffic growing,” she says, although she says the mobile Internet has yet to experience explosive growth.

“We’ve seen in the last few months a 50% increase in the number of accesses to sites [globally],” says Anil Malhorta, co-founder and senior vice president of alliances and marketing at mobile Web technology company Bango, although he did not give further figures.

The fact that the cost to develop a WAP site has lowered means there are more sites. Rich Holdsworth, chief technology officer of Wapple, says WAP site development historically cost upwards of £7,000 (E8,900) per site and that this was prohibitive. When Vodafone Live! launched back in 2002, it is believed to have cost in excess of €50 million, according to one source, including the platform and product development. Today, Wapple charges a base rate of £200 for the development and launch of a simple commercial site.

WAP site providers now range from established players such as Mobile IQ or Trust5 to the media/technology buyer-planners like Yahoo!, AKQA and Publicis, to do-it-yourself companies like Wapple.

“People are spending less now per site because they don’t have to spend as much,” says Holdsworth. “But on the whole, the amount of spend is going up because more companies want WAP sites.”

Holdsworth highlights MTV as a pioneering force in the mobile Internet world. “They are continuously changing and adding new content, which generates a continued flow of traffic.”

But not everyone is wholly upbeat. The challenge now for the mobile industry, and mobile Internet in particular, is how to grow the browser base. Fran Heeran, chief technical officer at digital commerce solutions company Valista, claims WAP has hit what he describes as a “stagnant period” in terms of growth. “WAP still has an important role to play,” he says, “but WAP’s role is more about the pull-discovery model, interesting content attracting users, that takes the user through a very defined user experience.”

Jayanthi Rangarajan, president and CEO of Novarra, says previous incarnations of WAP sites were designed for the lowest denominator of handset to ensure mass-market availability. Despite the rise in mid- to high-end devices, mobile Internet solutions providers like Novarra can now automatically “dumb down” a page—that is, transcode the site to suit the requirements of the device.

Rangarajan believes that major content providers such as the BBC must cater to a global audience and consider the handset capability of users outside the UK where 2G/2.5G could be the foremost mode of access. “The BBC creates a great WAP site for the UK market, but it has a massive following in India and is not designed for the Indian market,” she says.

Although some of the leading mobile operators have international brands, each of their mobile portals is focused domestically. Nevertheless, they have long seen the potential of having a mobile portal, even if they have largely failed to exploit its direct link to the consumer to generate revenue.

“The portal story largely started when operators thought they should make it easier to access certain content,” says Mike Short, vice president of research and development for O2 and chairman of the Mobile Data Association. “But the need to do that has been seen to be less relevant over time.” The rise of off-portal spaces in the UK, in particular, has allowed users to access content via SMS shortcodes and WAP push links and eased the burden on operators’ portals.
Yahoo!’s Wilson says mobile operator portals continue to attract significant traffic, but the rising tide is undoubtedly with chat services and communities.

Orange in July announced a deal to enable its users to view their profile updates—such as emails, comments and recently uploaded pictures—to social networking services such as Facebook, Bebo, MySpace, Skyrock, Pikeo and Flirtomatic on the Orange World portal. The service has already launched in France and will be rolled out in the UK, Switzerland, Spain and Portugal shortly.

“Lots of our customers are members of multiple communities, so we have built a service that combines that functionality,” says Gerard Grech, Orange Group’s head of strategy and business development. “We are providing a service that gives an aggregated view of all your sites.”

3 UK says it provides customers with access to a range of services. “We are focusing on Internet communications as a whole and how to meet the consumer demand,” says Charlotte Blanchard, head of growth products and services marketing at 3 UK. “On top of voice and messaging we include VoIP using Skype, instant messenger and social networking, such as Facebook, as tools for certain people to communicate.” It sees the growth of the fixed Internet as the natural progression for its customers to use Internet-based communications services on their terms, and that includes mobile. “We are tapping into that group of consumers that are high communicators,” Blanchard adds.

But some suggest operators could find it hard to expand beyond a captive but limited audience. “The challenge with social networks is that they have a concrete set of users and attract the ones that would use the mobile Internet anyway,” says Oren Glanz, CEO of mobile service adoption solutions company Olista. “So the challenge is making the mobile Internet a mass-market service. At present, mobile operators are using mobile Internet to create an extension of the social networks.”

Signs of growth
Opera Software says Opera Mini users viewed more than 3.2 billion pages in June (see graph above). Each person using Opera Mini viewed 223 pages on average.

And Visiongain forecasts revenues from mobile social networking and user generated content will grow to US$70 billion globally in 2012. It says that growth will be driven by developments such as Facebook’s recent launch of a platform for operators designed to make its social networking application work better on portable devices. Vodafone is the first operator to use the platform, Facebook for Mobile Operators, and has started services in the UK and Germany.

In the UK, social networking sites Facebook, MySpace and Bebo lead the way when it comes to mobile traffic, with mobile-only WAP dating site Flirtomatic one of the leaders in the chasing pack. Flirtomatic says it amassed around 130 million page impressions per month in 2008 in the UK and is still growing.

The downside from a mobile operator’s traffic perspective is that links to social networking sites are directing traffic off-portal. Novarra, which determines the browsing experience on Vodafone Live!, as well as for T-Mobile, Telefonica and Turkcell, claims that 70% of the operator’s off-portal traffic goes to the long tail, where a user’s behaviour cannot be monitored. The user’s movements can only be tracked if they remain on-portal, or off-portal with the operator’s partners, such as Facebook.

But despite off-portal growth, operator portals continue to be the starting point for mobile Internet users’ browsing experience. As long as operators can drive unique users to their mobile homepages—Orange World has 2.64 million unique visitors in the UK each month according to the operator—they stand to create significant revenues through data traffic and advertising.

TeliaSonera’s experienced mobile surfers go off-portal, says Bengt Olsson, director of communication, but they frequently start or finish their browsing session on the operator’s portal. “That’s why we think the portal is extremely important,” he says. “The portal is about educating the consumer about the mobile Internet, and when that is complete they can then go off-portal.”

TeliaSonera says it is paying off: the operator says it has experienced an increase in surfing time when users go off-portal, although the company is unable to provide figures.

Olsson also says that marketing has an immediate impact on TeliaSonera’s portal traffic, provided it is combined with either an initiative or event with which the operator is associated. In TeliaSonera’s case, the most recent example was the Eurovision Song Contest in May.

Wapple’s Holdsworth is also an advocate of investing in marketing. “This isn’t a field of dreams, and ‘if you build it they will come’ does not hold true as mobile search just isn’t there yet,” he says. “A portal provider can do SEO [search engine optimisation] to assist to a degree, and the sites can be spidered OK in a Google organic search. But the best way to grow the site is to market it ‘off mobile’. Using Admob or similar companies is only marketing to people that already use mobile [Internet services].”

Source: Total Telecom

Arpu expected to continue decline as operators expand into low income rural areas in bid to win more users.

Indian telecommunications service providers are likely to post strong revenue growth in the fiscal second quarter, getting a boost from robust subscriber additions.

But higher costs and a weak rupee may weigh down net profit growth.

Average revenue per user, a key operational indicator, is likely to continue its downward trend in the July-September period as companies – looking to add subscribers – expand into lower income generating rural areas, say analysts.

The telecommunications industry is adding more than 8 million subscribers every month in India – the highest pace in the world – helped by low tariffs and rising income levels.

Companies to watch:

Bharti Airtel Ltd. – Reporting Oct. 31

Market Expectations: Eleven analysts polled by Dow Jones Newswires on average expect net profit to grow to INR21.32 billion, up 32% on year from INR16.14 billion, on revenue of INR90.50 billion, up 43% from INR63.37 billion a year earlier.

India’s largest telecommunications company by subscribers posted a net profit of INR20.25 billion on revenue of INR84.83 billion in the first quarter.

Key Issues: Mumbai-based brokerage Motilal Oswal expects derivative losses due to foreign exchange fluctuation worth INR1.5 billion in the second quarter, limiting net profit growth.

Earnings before interest, tax, depreciation & amortization, or Ebitda, margins should be flat on quarter, due to higher costs on network operations, customer acquisition and brand promotion, said analysts.

Motilal Oswal expects ARPU to fall about 3.7% on quarter to INR337.

Reliance Communications Ltd. – Reporting Oct. 31

Market Expectations: The average forecast of 11 analysts polled by Dow Jones Newswires has the company posting a net profit of INR14.32 billion, up 9.7% on year from INR13.05 billion. Revenue is likely to be up 24% to INR56.94 billion compared with INR45.79 billion a year earlier.

Quarterly net profit, however, will likely fall below INR15.12 billion in the first quarter, with revenue up sequentially at INR53.22 billion.

Key Issues: After a worse than expected decline in ARPU in the first quarter, that parameter will again be the focus, while comments on minutes of usage and revenue per minute will also be tracked. Motilal Oswal expects an ARPU fall of about 3% on quarter to INR273.

While revenue is likely to be helped by the acquisition of U.K.-based virtual network operator Vanco Group Ltd. in May, net profit growth will likely be muted by the rupee’s depreciation and higher costs, including finance costs.

Motilal Oswal expects finance costs of INR1.40 million, compared with a gain of INR2.34 billion in the previous quarter.

The Ebitda margin is likely to be flat on quarter as a margin improvement in the global business is likely to be offset by higher operating costs, said analysts.

Source: Total Telecom


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