Telco Deep Dive: Q&A with the Big 3 (Part 2)

On May 26, Digital News Asia (DNA) released its first Deep Dive report, which looked at the telecommunications space in Malaysia. To download the Telco Deep Dive, click here. In this final article, DNA founder Karamjit Singh puts the senior executives of the Big 3 telcos in the hot seat. This reprint includes responses from Celcom Axiata CEO Shazalli Ramly, which came too late to be included in the initial report. This is the second of a two-part finale.

  • Celcom, DiGi and Maxis working to adapt to the OTT reality
  • Despite the challenge, believe it can enrich customer experience
Telco Deep Dive: Q&A with the Big 3 (Part 2)

THE telecommunications space is undergoing one of its more challenging phases, with smartphone adoption changing customer behaviour, new technologies like Long-Term Evolution (LTE) making it a new ball game, and competition coming from a variety of new sources.
 
Here, we speak to senior executives of the ‘Big Three’ telecommunications companies: Celcom Axiata Bhd chief executive officer Shazalli Ramly, DiGi.com Bhd chief operating officer Albern Murty and Maxis Bhd chief executive officer Morten Lundal.
 
For the previous instalment, click here.
 
DNA: As OTT becomes a bigger part of the user's mobile experience, what is your fundamental approach towards this reality?
 
Albern: All indications are that over-the-top services will continue to strongly gain adoption. This presents a clear opportunity for operators to adapt to the new data game by finding pragmatic ways of benefiting each other.
 
Today, we offer customers relevant, affordable, bite-sized plans that are catered to their specific needs and use of a range of mobile applications, and we will likely see bundles (voice minutes, SMS, and data) gaining popularity in the coming years.
 
Moving forward we will continue to drive innovations in new services related to OTT.
 
We should note though that OTT players will never be able to provide guarantees on the quality of service, which underscores the importance of operators.
 
Telco Deep Dive: Q&A with the Big 3 (Part 2)Lundal (pic): OTT enriches our customers’ data experience, and such services have garnered massive popularity as a result of the rapid adoption of smartphones and tablets, simultaneously occurring with the social media boom.
 
We are not fighting this phenomenon but instead making sure that our customers have the best possible Internet experience when they enjoy their favourite apps.
 
Shazalli: We are looking at exploring Inter-industry partnerships and collaborations with OTT players in order to stay relevant in the mobile messaging space.
 
While OTT is a big part of the user’s mobile experience on smartphones, we must not forget customers who are not yet on smartphones. Hence, we consider providing traditional content and services for these customers as still crucial.
 
Therefore, there is still a strong emphasis within Celcom to get content and value added services to our users no matter if they are on basic or smart phones.  In the long run it is important for us to create a convergence of these services for all users.
 
DNA: It is also inevitable that OTT players are coming after your voice market. Will this just hasten the day when you offer voice for free (as has happened in Norway) or do you have other mitigation strategies?
 
Lundal: Voice over Internet has been available for more than a decade but the adoption is marginal for several reasons.
 
One is that the user experience on VoIP is not necessarily the best. There is no dominant VoIP OTT (unlike in messaging, where there are giants like WhatsApp). As a result, users on different platforms will find it a challenge to communicate with each other.
 
Using VoIP is not completely ‘free’ – it uses up part of your data quota (unless you only use it on WiFi, which may not be widely available).
 
Also, a large portion of our user base is still on 2G (second-generation mobile technology) and feature phones, and will not have access to VoIP. These customers are still very important to us, which is why we are modernising our network to improve quality of calls and give them the best possible voice experience.
 
Enterprise customers, on the other hand, require reliability in their voice calls and connections, so we create value through a seamless experience across fixed and mobile voice.

That said, voice and SMS will over time likely also be sold as inclusive in larger data packages.
 
Telco Deep Dive: Q&A with the Big 3 (Part 2)Shazalli (pic): While we expect many customers on smartphones to adopt VoIP technologies, we believe there are still many segments that will continue to seek high quality voice services.
 
Therefore, while we strengthen our efforts to extend our reach in data services, we are also enhancing the quality of voice and SMS as these services remains fundamental for our customers.
 
DNA: What is your view on the trend of consumers surfing the Internet via a USB dongle? Is it a declining segment (as in consumers migrating from dongles to small screens and mid screens – smartphones and tablets)? If yes, why is it declining? Is there still upside in this segment?
 
Telco Deep Dive: Q&A with the Big 3 (Part 2)Albern (pic): Where it is available, households will tend to opt for fixed or fibre-enable broadband. This however requires high monthly commitments (> RM100), and not all households will do this – which is why we see mobile broadband continuing to be relevant.
 
Our observation is that Internet access via USB dongles is increasingly being substituted by tablets and smartphones. This is due to growing availability of innovative devices across a wide range of price points, increasing adoption of such devices by consumers, and also consumers increasingly using the devices as personal hotspots. Hence, we do expect usage of USB dongles to gradually decline.
 
Lundal: The USB dongle trend is declining industry-wide, due to increasing demand for tablets and more sophisticated smartphones as the device of choice to access the Internet. This is also coupled with the widespread WiFi availability at public areas in Malaysia.
 
Therefore we expect this decline in dongle broadband subscriptions to be compensated by the increase in data SIMs, which we also believe is easier to monetise.
 
Shazalli: While there is a slowdown in dongle uptake, there is a huge uptake of data through smart devices. This is not really a big surprise to us, as more and smarter devices are now available in the market and at price points that meet most consumer segments.
 
These new devices are very powerful and have many capabilities including data tethering which can function as the dongle. As there is more personalisation of the services directly on the smart devices to each individual, we see more consumer behaviours evolving to this, resulting in fewer customers needing a traditional broadband dongle.
 
However, a new need of sharing data is more and apparent too. Hence, we introduced the PortaWiFi that enables customers to share their data connection with up to five people.
 
This is part of our plan to maintain the dongle business, by evolving and creating new products that address new behaviours and needs.
 
Previous Instalment: Telco Deep Dive: Q&A with the Big 3 (Part 1)

 
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