GSM Asia Pacific

Today I’d like to hear from our panelists about challenges in service delivery. Especially in the context of an IP world and connecting the IP world.

Hans: The success of mobile needs to be replicated in the Broadband space. The penetration curves look impressive. The hockey curve as they call it. In South Asia and the Far East as well. Can we replicate the same success in terms of Broadband? It’s a bit more complicated because Broadband means Internet, and that means Internet. When it comes to broadband penetration, the applicability of broadband to our population is a challenge.

We need to act not only as providers but also as content providers. Our Asian consumer is very literate, but the challenge is much greater because we’re straying away from what we’re good at. Perhaps we need to start creating content ourselves.

The second challenge is economic pressures. On one hand it affects the spending power, and on the operator side we have our own challenges of providing services and driving affordability. Low cost energy and operating models need to be brought in on the operator side. On the consumer side, governments need to step in. As consumer prices rise, we’ve also seen higher levels of taxation. Perhaps because of the success, but few people talk about the investment.

These are two challenges, broadband and economic pressures.

Suren: It gives me immense pleasure to be seated alongside Dr. Hans and Dumi. I think GSM has done a lot of things, including bring us together. In this country we have a great dialog among the operators. The way we see it at Mobitel, is we see challenges as opportunities. If you look at Sri Lanka, we have penetration reaching almost the 50th percentile. If you look at Broadband it’s far below 1%. We saw that as a huge opportunity, as a company that once got left behind on technology. Therefore, in December of last year we were the first in South Asia to deploy HSPA or 3.5G. With that we believe we are in a position to transform our country’s literacy into becoming a more e-literate. Gone are the days that you recruit people for qualifications and experience. Today we like to recruit people for passion and attitude. A benefit we look for is their ability to surf the net and do self-research. At the backdrop of GSMA we are proud to be demonstrating super 3.5G with uplink speeds of upto 5.7 Megabits per second. With that I believe Dr Toure was right when he said it is to equalize the knowledge process.

On the second point [economic], we also see that as an opportunity. In Sri Lanka we pay one of the lowest cost in South Asia. The consumer,however, pays over and above in tax. At Mobitel we try to increase the productivity. Our future generation employee would be one who would stay at home with very fast broadband laptop. We believe that Sir Arthur C. Clarke when he said ‘don’t commute, communicate’ understood what we’re dealing with.

Dumindra: If you look at broadband, I think content is important. Speed is very key. Another influencing factor is the device. If you even look at 2.5G, the penetration of even GPRS devices is very low. The GSMA effort to bring in low cost handsets fueled growth, so the next step is to provide handsets that can support 3 and 3.5G. The penetration of computers is very low, and the handset device will help in getting internet to the consumer. If that challenge is met, the other challenges are easier to meet.

Claire: I will speak from a different perspective. The view of a different mobile convergent group. We’re in a very mature market, but also emerging markets in Africa and the Middle East. In addition to this, I would like to now hae  share with you two key elements. As an industry, we have face the issue of transformation to full IP. We are also working a lot exploring new territories. This is the way we work, business models and new services. Now we are selling less of more.

Rohan: We are in a period of uncertainty. We have penetrated markets and developed technology to a degree we though possible. We have to get out of the mentality that anyone entity has answers. In many countries we’re falling back on the way of thinking that there is one solution. Instead the government should say that we have these objectives, and how do we meet them together. From my old hat and new hat I’d say this is the fundamental challenge we have to address. Otherwise the gains we’re making can be whittled away by unchallenged government intervention.

We have done surveys on how people use technology at the bottom of the pyramid. One of the disturbing things we found, is that we all think we know we cannot live without our technology, this improves our lives. There is a full 1/3 of the people at the bottom of the pyramid who said their ability to make money and save money was harmed by having a phone. The real challenge of the industry is to come up with ways where people can really see that this technology can improve the working of their everyday lives and can help them earn money and save money. Once we solve that problem I think we will be made for life.

Question From Floor: Mr. Suren mentioned telecommuting. Is there any legislation for working from home.

Rohan: When we were bringing the BPO industry we had very archaic labor laws, we had to have matrons for women and they couldn’t stay late. How we could do this is we have people working from home for say two days and at a desk the rest. There have been some studies that if you divide employees into those who come and don’t you have some problems with intrinsic networking. If you do it this way you probably won’t have problems with the labor department.

Jey: Suren, you mentioned this high speed Huawei network. Do you think this will make an impact on the broader market, and do you see a point where microcredit will enable consumers to get enough information for that amount.

Suren: We believe that the adoption of Internet in Sri Lanka will not be traditional. People may not have seen a PC or a laptop, but as Dumi mentioned, with the right device many more people can get access. Generally what we believe is that Internet is all about speed, speed to access, speed to create, speed to share. With that, I think the technologies are enabling that to happen. Obviously the device providers have to create a handset where a country like ours can leapfrog and be Internet enabled as a population.

Question From Floor: Affordability is quite subjective. I think the prices which are prevailing are so exorbitant that the digital divide is increasing instead of decreasing.

The comment was about the different degrees of prices.

Suren: There are elements which make the cost higher in Internet [international bandwidth] but a recent Nokia study indicated that Sri Lanka has one of the lowest cost of ownership for telephony.

Hans: Applicability is in terms of utility at the bottom of the pyramid. They need to get information, substitute for transportation, which are spot transactions. If we are available to produce that information at a price which is less, then we’re adding value. We need to be able to sell broadband in very small pieces, in terms of the utility it delivers. For example, if we can sell an exam paper cheaper than it is to photocopy it, then we’re adding value. Some of this content is local, we don’t really need the international leg. That is in country, fully within our control.

Rohan: I agree completely with what Hans just said. I think you have to have a new model to make broadband accessible. I would say that there is a subset of a population which is interested in always-on connectivity, high speeds. When you look at that it’s important that we do systematic benchmarking. You look at in terms of purchasing power parity. We have done that for some countries in South Asia. You cannot simply talk about prices. You have to also think about how much quality of experience you are getting. You are paying for 2MB, but if you’re getting 20%, 30% of that… Some of the research we’ve looked at, within the domain the speeds are close to the advertised. However, the question is international bandwidth, which is a significant cost.

Dumi: It’s a question of perceived value. I saw a few days ago an ad from Dialog for unlimited bandwidth for about $30. That’s about a dollar a day. That’s where it’s heading.

Suren: One thing which we have to collectively do. The problem with unlimited access is you’re depriving someone from getting a good experience. That’s why at Mobitel we have a fair-use policy. Otherwise everyone starts downloading and supporting piracy. We’re trying to give as many Internet users quality access as possible.

Hans: I must add that we too have a fair use policy.

Jey: We’ve seen how mobile has enabled m-government, hospitals, learning, etc. In your opinion, how important is it for legislation to have a technology aspect or a mobile component in their thinking? Do you think it’s necessary in order to improve connectivity? Do you think it’s up to the market?

Rohan: The problem in most countries is not legislation, its implementation. I’d say lets talk implementation. When we talk about delivery of government services, we can look at it in two different ways. We will continue to spend money to provide services in the old way, for e-government we’ll have to find new money. That’s one way. The other way is how, if we take some of that money and allocate it to e-gov.

In these cases you need to really put your focus on getting the job done. I’m a fan of the government service Lalith mentioned, but it could have done more.

Jey: How do we change peoples thinking?

The propaganda of the deed. The government information center is an example, people can get their work done and the people in the government office are able to do their job better as well. Once we get that kind of thinking into government then we’ll get innovation happening. Then try to consolidate it, frame it through legislation. Legislation doesn’t solve problems, legislation does.

One example is M-Banking, we don’t have committees and frameworks

Alternative Energy:

Hans: From a cost point of view there’s no doubt that energy efficient and green power based will be featured very high going forward. As an industry we need to realize that we’re playing a larger and larger role in a country’s economy. Ten years from today the people in this room might be contributing up to 10% of their countries GDP. We need to be aware well in advance in terms of our infrastructure footprint and impact. I’m digressing, but child abuse is an eye opener. It’s time that we realize that we’re going to be key players and taking cognizance of the greater positive impact we can have on the environment and people.

How much would you invest?

The good part is that solutions around green power are intrinsically cheap. The good news is that a lot of the innovation is not necessarily expensive innovation.

Is there enough awareness in government? Are they prioritizing it?

I don’t think the government is on the ball. In these areas there is no grid electricity in areas, and the electricity is bad quality. If we had the reforms of the telecom sector here, we’d see the emergence of alternative providers. One area the government has helped is by their mismanagement. There is no alternative, the thing has gotten so expensive. The government is telling you get off the grid and produce your own electricity. That’s what their implicitly telling you.

Dumindra: You can run a diesel or an LPG generator, but that’s not the idea of alternative energy we’re telling you.

Question From Floor: We talk about mobile broadband on the bottom of the pyramid. But mobile internet is still a challenge, SMS and voice are the killer applications. One this is low-cost device, and the other is poor implementation of standards across device vendors. Why don’t you have a uniform initiative (not LG or Motorola, etc)? This is a huge challenge if we really want to drive mobile internet.

Jey: Why did we select one vendor? The idea here behind our low cost handset initiative was to have a minimum set of standards a handset should aspire to. The reason we ran a competition was because we wanted the vendors to compete to reduce the cost. In that competition you had one winner.

One of the biggest problems we have today is how the internet is displayed on screen. To that end we started something called .mobi to establish a standard to ensure that mobile pages could be configured in the optimal pattern for most screens. Another area is the creation of content. Mobile providers thought they could make different deals with different content providers. What we’ve done is introduce APIs for content so everyone can use open standards.

Question from floor, Anoja: Do you think mobile is recession proof? Is it one of the last things people would give up, like cigarettes?

Claire: I would answer with an example from Madagascar. My friend was talking to his colleague from a beer company. He said we are direct competitors now because our consumer has to choose between one top-up and one beer. We now have a population where the mobile is as basic as these needs.

Dumi: I think in some aspects we have become the cigarettes because the governments look at the mobile operators as a good revenue source. Then we see that the usage still continues. In Sri Lanka we have about 30% taxes on calls, which is extremely called. There is a risk thanks to prepaid, which has a certain elasticity. What happens is that the operators net revenue reduces, but people continue to use. But we are seeing that the amount of money in the wallet for mobile is reduced. There is a delicate balance, especially at the bottom of the pyramid.

Suren: I think it’s important to draw the differences. I think cigarettes and mobiles are competely separate. If you look at the cigarette industry, to just draw a parallel, there is a lot of variable cost. In our industry, once you make an investment, the fixed cost has been incurred. If you squeeze the cost to serve and drive up the usage you can actually arrest the inflation.

Hans: I think we’re in a race now. How soon can we get the school on the phone and the bank on the phone and extract wallet share that would otherwise go to transportation or other needs. We have been the golden goose, but it’s not a comfortable feeling when you’re about to get your neck chopped off from time to time. Governments need to realize that this industry has a tremendous capacity to turn economies around.