Facebook, Google have to go through telcos to reach Asian mass markets
Clarity on Malaysian spectrum policy critical, with data being key driver
WHEN you spend an hour with an executive who know his industry deeply and can articulate his thoughts well, you can’t possibly cram all the insights from the chat into one long article.
So following the first article last week on Telenor’s executive vice president for Asia, Sigve Brekke (pic above), in this second part, I will focus on Brekke’s thoughts on the over-the-top challenge; Facebook CEO Mark Zuckerberg’s new passion to make the Internet available to all; and on his hope that the Malaysian Government will provide a clear roadmap on spectrum for operators.
I actually asked Brekke about how telcos can differentiate themselves by focusing on protecting the data privacy of their customers, but my interest perked when he linked his response to Zuckerberg’s new passion.
“The Facebook CEO says that the Internet should be a human right and free for all. That is easy to say, but how do you achieve that?” he said.
In the United States, the proliferation of WiFi networks means that Internet companies such as Facebook and Google can go direct to the consumer, but Brekke feels that in Asia, that those players need to go through the telcos which are the only ones with the distribution system and billing connections with the customers, especially those in the mass markets and lower-income bands.
“There is no way they can reach out to mass market customers, and in this case we are in a much better position than telcos in the Western world mainly because we control the interface with the consumer,” he said.
“It is now up to us how we monetise that and yet ensure the privacy of our customers. We set the rules here and it is quite interesting,” he observed.
Interesting indeed because just three years ago in Barcelona at GSM World, the mobile industry’s main yearly event, the telcos were wringing their hands in despair after being caught wrong-footed by the deluge of data on their networks where most of the revenue was being captured by Internet companies which could reach customers on their mobiles by riding on the billion-dollar networks built by the telcos.
This became known as the over-the-top (OTT) trend.
Telcos were caught because they had sold consumers data plans with unlimited usage. This was the hook to get consumers to take up one- to two-year plans where the telcos figured they could earn their money from voice.
However, voice usage started dropping as consumer behaviour in developed markets on mobile started changing toward being more data-centric.
With the benefit of what happened to operators in the West, Telenor believes it is much better prepared to deal with the OTT challenge in Asia, especially when it comes to reaching the mass market.
And of course, Telenor itself has adopted as its new mission making the Internet available to all. This puts it on a collision course with the Internet giants like Facebook.
Its network coverage is the huge advantage that it has in this game, however. As Brekke shared, Telenor’s network coverage in the Asian countries it is in covers a population of one billion people. Around 130 million of those are its customers.
This is why Brekke can say, “There is no way he [Zuckerberg] can do that [reach customers] in markets like Bangladesh and India without working through us. So, this is a big opportunity for us.”
Recent data from Informa, a telco-focused market research firm, revealed that Indian smartphone penetration will hit 6% this year, a 52% jump over 2012. The strong growth will only serve to accelerate market entry by established Internet companies and provide competition to the telcos.
Brekke says that Telenor is already engaged with US-based Internet players. This will be an interesting development to watch.
Spectrum clarity sought
Another interesting development, much closer to home, is on spectrum policy. When it comes to the lifeblood of what allows telcos to tick, spectrum is the all-critical resource.
Brekke (pictured here with the writer on the right) says Telenor would like the Malaysian Government, via regulator the Malaysian Communications and Multimedia Commission (MCMC), to provide them “with a clear spectrum roadmap' including on how they plan to allocate spectrum specifically in the lower bands of 700MHz, 800MHz and 900MHz, collectively known as the coverage bands, as they allow for longer distances to be covered and are ideal for rural rollouts.
He is also looking forward to some guidelines on the re-farming of spectrum, with some spectrum usage coming to the end of their licence periods.
The continued operator urgency to have visibility on the Government’s spectrum policy is partly driven by the fact that data has become such a big driver of growth for them, and everyone wants to get the best slices of the spectrum for their data usage.
“Now with the increasing use of data by consumers, having a clear spectrum policy is much more important – for instance, what the higher and lower bands can be used for,” said Brekke.
He also ties the need for a clear spectrum policy to the Government’s aspirations to provide broadband for all citizens. Pointing out that this can only be done via wireless means, he said, “The only way for us [operators] to do that is for the Government to look at the entire spectrum band and license it efficiently.”
Acknowledging that this is a difficult task, especially in an increasingly data-driven telco world, nonetheless he said he hopes for a “clear spectrum roadmap for the future.”
When asked about the talk of DiGi Telecommunications Sdn Bhd – of which Telenor owns 49% -- acquiring WiMax players for spectrum, Brekke noted that the spectrum is currently locked for data but that the main challenge has been over the lack of devices.
“But they are coming,” he added.
All pictures courtesy of The Malay Mail Online
Previous Instalment: Telenor – tomorrow’s Internet company
DiGi’s Internet for All: From ad campaign to corporate mission
Facebook’s ‘Internet for all’ – Asean challenges
It’s spectrum rebalancing: MCMC on 2.6Ghz allocation
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