Will TD-LTE make a difference for YTL Comms?

  • Once touted as next-gen wireless tech, WiMax has gone the way of the Dodo
  • Extra spectrum would give YTL Comms an edge, but still easier said than done
Will TD-LTE make a difference for YTL Comms?LAST week, an article in theSun daily with the bold headlineYTL Comms says No to WiMax, Yes to LTE’  caught my eye.
 
The article quoted Hong Leong Investment Bank analyst Tan J. Young, whom the daily said believes that YES – the brand name for YTL Communications’  WiMax (Worldwide interoperability for Microwave access) service in Malaysia – has started trial runs and is preparing to roll out Time Division-Long Term Evolution (TD-LTE) services soon.
 
“LTE trials are currently conducted not only on the 20MHz of 2,600MHz spectrum, which was awarded by [the] Malaysian Communications and Multimedia Commission (MCMC) in 2012, but also on its 30MHz of 2,300MHz spectrum, which is presently occupied by its commercial WiMax business,” Tan was quoted as saying.
 
The article goes on to claim that YTL Communications (YTL Comms) is currently conducting trials on Asiaspace Broadband’s 30MHz WiMax spectrum, which was awarded to the latter in 2007.
 
Tan implied that this move could mean that YTL Comms could be indirectly eyeing taking over Asiaspace's spectrum, which is currently idle as the latter's WiMax business did not materialise.
 
While the headline appears catchy and is certainly designed to elicit a double-take from most readers, I wouldn’t quite summarise it the way the title suggested.
 
The thrust of article isn’t that YTL Comms is already turning its back on WiMax, but is possibly making plans to transition itself from the former technology to LTE, and how that will make it a stronger challenger to competitors.
 
Still, the analyst makes a valid point when he alluded to the fact that YTL Comms’ eventual exit from WiMax was “an anticipated move as the technology is widely believed to be phasing out and LTE is the only logical technology progression for telcos.”
 
For the record, WiMax as a technology isn’t bad. In fact, it works and is quite reliable when deployed correctly. But its popularity has been affected by several factors, including a delay in the evolution of mobile WiMax standards which would have supported mobility for WiMax players.
 
Also, it lacked a clear migration path as faster, more advanced technology came to the fore, although one could argue that TD-LTE could be its saviour.

But perhaps its greatest weakness was that it lacked a vibrant device ecosystem to bring the similar economies of scale that 3G (Third Generation) technology brought to consumers.
 
In Malaysia, the two largest WiMax operators, YTL Comms and Packet One Networks (P1), have only done marginally well within the niche market of nomadic Internet and fixed-network replacement subscribers.
 
And while they did fly the underdog flag as Tier-2 operators which made a gallant challenge against market leaders, they were never really a serious threat to the incumbent, more established big three – Maxis, Celcom Axiata and DiGi.
 
Simply put, WiMax players were only ever going to be Tier-2 players as they never had a vibrant handset ecosystem that gave consumers enough choice to mount a real challenge against traditional cellular players.
 
Will TD-LTE make a difference for YTL Comms?What people wanted at that time was an always-on, always-connected, easy to use, sexy-looking handset that could meet their every Internet need. But all WiMax players could muster up were stodgy-looking mobile dongles, and in the case of YTL Comms, the poorly conceived WiMax-GSM hybrid Eclipse phone (pic), which just couldn’t provide the same kind of experience smartphones could.
 
This situation was exacerbated by the likes of Apple Inc, which brought in the highly desirable iPhone, and to a lesser extent Samsung, with mobile handsets for every market segment, all powered by Google’s Android operating system.
 
These handsets effectively put an insurmountable gap between WiMax and cellular players, with the latter extending their incumbent advantages.
 
That said, Hong Leong’s Tan did argue that this landscape could change should YTL Comms, with its vast financial muscle, gobble up Asiaspace’s WiMax spectrum and run TD-LTE over a combined 60MHz of spectrum on 2,300MHz, offering a “theoretical download speed of up to 220Mbps.”
 
With this capability, he said, YTL Comms could mount a competent challenge against the incumbents by offering rich and high-definition voice and text services over a pure advanced data network, without the worry of a legacy voice network.
 
In theory this sounds plausible, but in practice, it is anything but.
 
Running an efficient and effective wireless network requires much more than merely equipping a network with more spectrum and faster surfing speeds. It requires careful network design, finding suitable base station sites, acquiring site locations, and linking fibre backhaul back to the data centre.
 
It would require competence in the running of the softer side of business – customer provisioning and activation, customer service enquiries and complaints, billing disputes, and even termination of service. It would require a skilled workforce to maintain and run a complicated wireless network and planning for the future.
 
Granted, YTL Comms might have some of these processes and plans in place, but ramping up its efficiency to match that of Tier-1 operators would still require a formidable effort.
 
While it has built a credible WiMax network with reasonably fast speeds over a short period, as a telco, YTL Comms hasn’t had a full-on track record of challenging the big boys yet, I would argue.
 
The company claims to have 500,000 active, paying subscribers to date, but lacks transparency in how it’s faring on the revenue and profit front because it does not make such figures public.
 
It also claims to have covered 85% of the nation with its WiMax network, and alludes to website SpeedTest to best judge its surfing speeds -- but running a modern telco isn’t as easy as just getting coverage and speeds right.
 
Will TD-LTE make a difference for YTL Comms?Of course, its chief executive officer Wing K. Lee (pic) claims to not be worried about this, noting that it doesn’t want to be known as a telco but rather an Internet company
 
Also, transitioning to TD-LTE may allow it to use handsets in Band 40 or the 2,300MHz range, which is certainly a plus point for the operator as there are no legacy issues to deal with, as pointed out by Hong Leong’s Tan. But the company would still have to contend with building a convincing apps and services portfolio if it were to tackle the incumbents successfully.
 
In fact, I would argue that much of what YTL Comms has accomplished to date has only been tied to its highly publicised but somewhat controversial 1BestariNet project.
 
Notwithstanding how savvy Wing and his crew present themselves as being, YTL Comms will need to prove itself to be more than just a marketing company and actually go beyond rhetoric and offer apps and services on top of its network that people want, not just more bandwidth and coverage.
 
When YTL Comms first started in November of 2010, its head honcho and owner Francis Yeoh said, “Smartphones should be run on smart networks and not run on dumb networks,” implying that the YES network was a smart one as opposed to dumb networks run by competing cellular providers based on older, legacy systems.
 
The thing is, this vision hasn’t exactly come true yet, and YTL Comms’ YES network isn’t any ‘smarter’ than when it first began – certainly not any more profitable than those of its rivals, which have grown from strength to strength in the last three years.
 
Perhaps this is what YTL Comms needs to do: To let revenue, profits, subscriber growth and the introduction of broader apps and services do the talking, instead of alleging that its network – WiMax or TD-LTE – is better than those of its competitors
 
That would be the smarter thing to do.

(YES Eclipse phone image above courtesy of vernonchan.com)
  
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