Panel discussion chaired by Mr. Paul Hodges - Director of International Services, CSL Ltd., Hong Kong, China.

Featuring: Mr. Gordon Chang (Director Chunghwa Telecom), Mr. Janaka Jayalath (GM International Business, Mobitel), Ms. Asma Khan (GM International Business, Warid Telecom), Mr. John Murray (Marketing Director, Dhiraagu), Ms. Sylvia Chou (Deputy Director IR, Taiwan Mobile Group), Mr. Amit Mehta (Senior Product Manager, Signalling and Roaming Services, Tata Communications).

Asma: I think the changeover on the operator level is a good thing. Europe is initiating more IOT discounts. After the EU regulation, we have noticed that as the European operators have to maintain a ceiling, they have increased their tariffs for the Asian operators. Lots of Middle Eastern operators are also taking a free ride. In the last 3 months they’ve increased SMS and data charges at least 4 times.

Late last year, usually all the alliances join together and deal only on the group level. Now the good part that I’ve seen in the Middle East is that they are also initiating requests for the non-group operators.

How are the Asian operators cooperating in non-voice services?

Gordon: In these two days we learned something from mobile broadband, etc. All are services focused on data. Are the data services only used in local environment or roaming? Reminds me of a customer who spent $20,000 on roaming services in a week. It was really a bill shock. In our company we have to set a mechanism to set a threshold to notify the customer if their data services are over 10 MB. We can learn something from Eurotariffs. We should have maximum prices for GPRS IOT. The prices in the whole Asia Pacific area should be unified. If we set one price for all GPRS we’re happier and our customers are happy.

Sri Lanka has excellent 3G coverage. How have inbound data revenues been increasing?

Janaka: We’ve seen an exponential growth on data revenues o inbound roaming. How I see it is that basically it is true that the GPRS user and the 3G user, there’s a huge difference between consumption of data. If you apply GPRS rates to 3G the bills will skyrocket. Moving forward, I would suggest that the operator should get into a tier based tariffing. If the high user tends to use more and more 3G they could actually get into a different tier of tariffing.

Do you see any cannibalization of data revenue in voice over IP?

When you really look at VOIP it’s an arbitrage opportunity. You’re actually bypassing the IP based interconnect. What I feel is that it’s always good to have innovation. From an operators perspective can we cannibalize it or oppose it? I think basically we can’t. What operators have done is join and you have a certain part of that revenue coming in. These segments are very different. If you’re a broadband user you wouldn’t necessarily use Skype because you’re paying for data.

Slyvia, there’s still quite a disparity in domestic tariff, roaming tariffs and retail tariffs. How do you see the disparity between domestic and retail progressing?

Sylvia: There’s a big gap… We see the IOT has actually evolved to a stage where the gap has shortened. The rest of the world, however, the gap has gotten bigger. The EU said the tariff charge was too high. At the end of the day, however, they increased the IOT to non-European operators. For our customers roaming into EU, our pricing gets more expensive. I just want to point out one thing. Just put a hypothesis. If all Asian operators say we all increase our IOT, then those EU operators say how can you increase your IOT? Because you increase your IOT. At this point we could negotiate. We spend a lot of effort and time negotiating IOT and by the end of the day we actually return to the same point.

The beauty of telecommunication is to fulfill customer needs. In roaming, however, we actually kill customer need because the price is too high. That’s voice however, but for data almost everyone charges the same IOT.

John, you’re from quite a different market. Is roaming perceived as being a luxury product? How can roaming be made more affordable?

John: Roaming is perceived as a luxury product, historically targeted at the business market. On the back of that, operators have enjoyed enormous profit on it. I find for example in the Maldives, they benefit from inbound traffic from tourists. The bigger challenge for us in SAARC is how do we make roaming affordable for the average customer. Local calls both here and Maldives are very cheap, but roaming is not. Roaming suffers the higher IOT from other operators. For some reason in SAARC we choose to disadvantage each other. The whole ethos behind roaming, making it easier to travel and call, is lost entirely for most of our population. I’d like to see SAARC work together towards the objective of lower IOTs.

What’s been your experience with things like CAMEL roaming in emerging markets?

Amit: In the emerging markets, we’ve seen a high demand for prepaid roaming and CAMEL based services. With it come issues of interoperability and CAMEL testing. The service offering that we’re happy to offer today is CAMEL Exchange which enables operators to overcome issues and fast-track the testing processes. The key challenges are many-fold.

One thing I mentioned was traffic steering, and particularily anti-traffic steering.

Asma: The problem is anti-steering. Steering means you have control over your outbound customer, but you don’t have control over the inbound customer. Operators are not stopping it. The GSMA should either regulate it or take measures against. As a group we have to be very stringent on this.

Some of the photos from day one are online at the Flickr account. Highlights include the arrival of the special guests, and leader’s forum panel.

Today, I’m thankful to the vendor community that we have backward compatibility. The risk to the operator is much less. On the same note, I’d like to say that this transition is not without pains. There’s a lot of pain points, especially for an operator who’s invested already in GSM 2.5. If you have a 10 year depreciation and you’re 5 years in, if you want a new investment you have a lot of explaining to do to your shareholder community.

In my own experience, the experience is not that easy. From an operator point of view, the success of broadband, the key is the reach. You have to have the required reach. Anywhere, anytime, anyhow. I was reading an article about Vodafone. 60% of their revenue was coming from 10% of the cell sites. In WiMax you talk about hotspots. In mobile broadband as well, bulk of your traffic is coming from hotspots.

I can draw from an example. Ours is a company due to a wrong technology choice, found ourselves in a bad position. However, we are now in a challenger’s position. The rule is in telecoms, you can’t get stuck with obsolete technology.

Supun: In terms of a more mature operator coming into 3G space, we see 3G as a big opportunity. We don’t see a difference with investing in 3G to the first GSM network. We saw GSM as a good opportunity to capture a good share of the voice market. Today we have the voice penetration levelling off. Increasingly we see that there’ll be huge competition on voice, but there’s great opportunity on the broadband segment. This is not particular to Sri Lanka, it’s available in all the other markets. Another key philosophy we use in investment decisions is to break the chicken and egg cycle. We have invested first and then got the results. We come from the point of creating the markets, investing ahead of demand, and maximizing on opportunity.

With broadband unlike voice we have the problem of having the correct content. This region, consumers are less English literate. We need to ensure that a rural user can benefit.

Kavan: You’re crossing into a new market segment where they’re not willing to pay for anything. How do you get them to pay?

We need to facilitate through applications. One key application being a mobile operator is the access to location information. That’s one area a mobile operator can differentiate.

Kavan: Does the answer lie in portals?

Vinay: What has been seen on the portal is that 70% of traffic goes out of the wall garden. What is the business potential? The key is identifying the asset that drives that 70% and use that asset to generate advertising.

Kavan: Do you see Mobitel driving your customers through a portal?

Rasantha: The operators role is becoming a platform. Through that platform, we make it very convenient for consumers to access that. We need to strike a business case where we keep our revenue, and I think volumes are key to the game. We become the conduit and the platform and we add value for the consumer. Whatever situation they’re placed in, they have access to this content.

Kavan: What do you think of sachet broadband:

Yeow: Affordability towards the bottom of the pyramid is important. There are many ways for us to manuver. At the bottom, they need the connectivity when they really need it as a necessity. Not a monthly, you can break it down in a much more understandable one. One hour or two hours, to give them the opportunity to get connected. This involves much more than a single party.

Vinay: India is going through this journey of allocating 3G spectrum. Early studies indicate that voice in isolation is not the answer for the business case for 3G. The way 3G spectrum works is for data. Ericcson did run a trial called Gram Joti in Tamil Nadu where we did depict typical and relevant applications for a 3G environment. Tele-medicine, tele-education. Would there be a business case to have those applications? The point is that it’s the relevance of that service or application to the end user.

Supun: Unlike the mobile sachet, the broadband operator has to create. Shared access to broadband is important. Consumer on a lower end cannot invest in a PC. Shared access centers are very essential. Different charging models also need to be looked at.

Question from crowd: Is there any planned model to open up the HSPA network to the developer and content community.

Rasantha: This is something we are contemplating, and we are very close to the reality. Through a server, innovators can connect to our platform. That will be done through a registration process. A certain panel will approve such products and we will allow the inventor community to have access to our platforms. We will be launching this together with universities very soon.

Supun: For 3G applications we have a process where we allow people to register, and be screened.

Why? That process takes so long.

Supun: Vendor panel identification is a one-off thing. It’s mostly due to security and stability reasons. It has to be a win-win for both sides.

Vinay: This has been a debate for a long time. It’s all about executing step by step.

Presentation by Mr. Vinay Dhar, Head Sales and Business Development, Business Unit Multimedia, Ericsson India Pvt Ltd.

Presentation by Mr. Shayam Majeed, Senior VP Engineering, Dialog Telekom PLC, Sri Lanka

Presentation by Mr. Yeow Ooh Sheng - Director, Asia Pacific Marketing, Huawei Technologies. This presentation addresses what is next after HSPA.

Licensing licensing renewal lessons from PakistanV3

Universal service funds are criminal in that $6 billion dollars has been collected that’s not being diverse. From a personal perspective, we’ve paid in and nothing has been disbursed. I don’t see why operators should continue to pay. We would be very happy as an operator to withhold funds for investment in rural areas. Are we going to be aggressive enough to do anything about it collectively? I think not, but it would be good.

One thing taxation can do is create fiscal incentives for investment in rural areas. Revenues generated from shared infrastructure should be subject to less of a tax burden, etc. In Afghanistan I think 20% of domestically generated revenue comes from the telecom sector. The problem is that politicians don’t have 10 or a 4 year view. It’s one thing to say in three or four years time you’ll see more revenue, but a politician isn’t going to see or understand that.

Two more broad points, ownership. In Afghanistan we have delegates coming from rural communities telling us to come in and provide networks. You look at the Grameen experience of lending to people, can we give ownership of networks in those communities. We could look at community financing and ownership of networks.

In Afghanistan we introduced mobile banking three or four months ago, and the Central Bank told us to go ahead and keep them informed as they didn’t have the capacity to immediately implement legislation.

Universal Service

My perspectives will be broad. I’ll cover the broad issues here. Primarily on connecting the unconnected for the first two issues and roamin applies to all of us. Today 80% of the world has mobile coverage. One could question whether universal service has already been reached. Interesting when we look at developing countries, about 1/3 have a universal service fund. The trend is for governments to introduce more universal service funds and to stretch the definition. The people that contribute to this fund are you the mobile operators and it is in effect taxation. It becomes a taxation to subsidize monopoly fixed line operators something that they had hundreds of years to do.

Ironically, by taking money away, universal service funds can inhibit mobile service providers ability to reach unconnected. Our question has always been, is it appropriate to have a universal service fund, and if it is necessary can we ensure that the distribution of those funds is fair and equitable.

There’s an estimated 6 billion dollars tied up in universal service funds that can’t be accessed. What we’ve realized is that they’re not going away, so we’ve focused on good governance of those funds.

Taxation

Like cigarettes, we’re a very easy target. The impact is that it takes money and redistributes it into other years. The difference is that it doesn’t go back into telecom. We believe that we are tax neutral if you remove punitive taxation. By punitive we mean above and beyond value added tax. In half of the countries in the world 25% of the cost of handset is punitive taxes. This is a tax above and beyond other taxation. We see this across many markets.

The contribution that mobile makes to markets is absolutely astronomical. Our call to government is don’t tax mobile, let us do our job and we’ll provide the services and the value to your society that you’re looking for.

Roaming Regulation

It’s now very active on the political agenda. Everyone knows about European Roaming Regulation. Within your region in Asia we’ve seen the Austratian Parliament and Indian Parliament be quite active. The genesis started in 2004 with the EU complaining about roaming prices in the UK. The result was a wholesale cap of 30 Euro cents and a retail cap 49 cents for outgoing and 42 cents for incoming. And this retail cap was unheard of. The question really is, is it a regulatory question in Europe or is it something else? My answer is that it has nothing to do with regulation.

Prices were falling at about 20% a year, there was no sign of competitive failure, and surveys in Europe showed that users were happy with their mobile services, including roaming.

The EU is now surprised that innovation has stopped in roaming. It doesn’t make sense to do anything different. The reason the European Commission wanted to implement caps was that you would see an explosion in roaming traffic. The mobile operators have seen 30% of revenue wiped out and nothing near the promised elasticity.

The European Commission is unpopular in member states and they needed a win. They picked a pan-European service and they’ve been very successful politically.

As an industry we managed it badly. Being responsible, being transparent and being clear remail a priority for mobile operators. And make sure you communicate to your politicians what you’re doing.  It cost the operators 150 million euros to implement the regulations.