Telcos: Our Love-Hate relationships with them Pt.2

By Cat Yong

If there was one thing that could contribute to the highs and lows of an average person’s day on a regular basis, that would be the humble mobile phone… or rather the telco service that powers it. Besides being the conveyor of  good, bad news, information etc. etc,  service delivery lately, have been cause for quite a lot of frustration. Recent developments in the local industry have been encouraging, but… will they be enough? Part 2 continues from where Part 1 left off.

Candy-wrapped broadband
You can be sure there are those who would take advantage of the ‘dumb pipe’ medium, to offer colourfully-wrapped, eye-catching services over them.  Dubbed over-the-top (OTT) players, some popular ones that immediately come to mind, are Facebook, Google, WhatsApp, Viber, Skype, Spotify and more.

Other more recent examples that have hit our local shores are LINE and WeChat, both originating from Japan and China respectively. More significantly, they are not just mobile messengers but moving towards being full-fledged platforms with games, tools, and content with enough social and entertainment elements to keep the masses engaged.

On the one hand, these OTTs ensure that dumb pipes are being utilised. On the other, why should telcos continue being dumb pipes and let OTTs steal precious customer-facing time away from them?

Every time we use applications by OTT players, these OTT brands stick in our minds, and not the telco whose platform had enabled those services.  It becomes a thankless job, but worse yet is that OTT services like WhatsApp and Viber, even eat into telco messaging revenues, for example.  This overall impacts average revenue per user (ARPU) for telcos.

Celcom’s Shazalli already does admit, “Digital services are still a new but massively promising arena. We recognise the revenue opportunities from content, applications and value-added services (VAS) are still in early stages, but providers who ride the right wave stand to benefit greatly.”

As early as 2005, local telcos have already begun a series of forays into the Web or digital services arena with products like mobile portals, or one-stop mobile Web pages which aggregate content, apps and VAS from a third-party or the telco’s own ‘ecosystem’ of developers and content providers.

Somehow or rather, even with the massive headstart they have had, OTTs like Facebook, Google, WhatsApp and many more, have overtaken telcos without so much as a backward glance, to become darlings of the consumer space.

The enterprise communications space is definitely impacted as well. But we will cover more of that in our Feature about Business Model Innovation on page xx.

All roads lead to this 
At end of the day, it’s all about the customer, and keeping them happy so that service providers can keep them as customers. And technology vendors wield a breadth of solutions for telcos to do so.

Brocade Malaysia Country Manager, Sean Ong said, “Service providers in Malaysia need to differentiate themselves with service features other than price as competition gets increasingly fiercer.”

Ong opined that investments in data centre infrastructures and other resources are necessary to configure customer bandwidth needs dynamically, according to their changing needs.

Analytics solutions like the ones deployed by Celcom are supposed to also help target relevant mobile campaigns at relevant customer segments, while IT solution providers like Oracle, HP, Compuware, IBM and many more see there is real value to be had from big data in terms of optimising network ie. analytics to detect when network is down, under-utilised or reaching capacity.

Oracle’s VP of Technology Business Unit in ASEAN Praveen Thakur observed, “Today, service providers manage network bandwidth with either data caps or tiered pricing models. Using big data, it is possible to create personalised network usage policies by combining network data with unstructured data and analysing them to detect customer behaviour patterns.”

Solutions for telco from the world of IT and from the telco world itself, are many and varied. They address very real problems that the communications services industry has had to deal with for decades.

But, at most they would only be cosmetic or band-aid solutions that does not address low broadband coverage in the country.

The unseen variables
Some years ago in 2010, Malaysia took the bold step of embarking upon a national broadband project, called High Speed Broadband (HSBB).  This is a pretty landmark decision, seeing as how there are only a handful of NBNs in the APAC region.

The local incumbent, Telekom Malaysia (TM) won the bid to build out HSBB, and the rest as they say is history.

But, the emphasis of the HSBB (now TM Unifi) at that time, at least to telco journalists following the beat, was that it was meant to increase broadband coverage.

Inter-city backhaul fibre provision is more or less already covered by Telekom Malaysia, and to lesser extent, Fibrecomm, Fiberail, TIME and Maxis have that too. But for nationwide coverage backhaul, Telekom Malaysia is the guy to go to.

Inter-city backhaul aside, what about the all-important last mile coverage from the telco exchange or central office to customer premises? Wireless broadband technologies like LTE and 3G have picked up as more Malaysians jump on the broadband bandwagon, but wireless technologies are not meant to do the work of fixed broadband.

Chew Choo Soon

Managed Internet provider, MyKRIS’s CEO, Chew Choo Soon observed, “What is really lacking here, is the last mile.”

This worsens the wireless bandwidth issue, because 3G is trying to do fibre’s job and provision fixed broadband service to homes and business premises.

No wonder 3G user experience overall, sucks.

Even Skali’s Tengku Farith picked up on the lack of good fibre last mile services. He stated, “My issue (about broadband) is the quality of bandwidth. It’s congested.

He said, “Fibre is great, and it’s great there are alternatives, but the players need to have last mile coverage – can people subscribe to it easily and so on?” He added that the quality of bandwidth could be better.

The cost of laying last mile fibre is very high, especially for new areas that have not had any infrastructure there before. Chew shared, “Fibre is a high capital investment.” In fact, it isn’t cost of fibre material that is expensive but the mechanical and civil engineering or construction work involved in laying fibre, that is costly.

Many ISPs have had to ensure that there is demand in a certain area, before ruling it economically viable to pull fibre from the exchange to serve demand. On one hand it’s exasperating for pent-up demand, on the other, should ISPs be expected to invest at a loss?

Former Energy, Water and Communications Minister, the late Dato’ Lim Keng Yaik used to say, “Build it and they will come.”

Five years later after he first said it, the reasons to make that statement true this time around, are overwhelming – trends like bring-your-own-device (BYOD), cloud computing, pent-up demand from a steadily growing outsourcing industry… yes, there are even more applications that are still realistic for usage with our very, very congested networks.

Malaysia might be getting it backwards – wireless broadband is promoting demand for fixed broadband, instead of the other way around. But, it will just be another thing about Malaysians that makes us so darned quirky.


SIDEBARS
Community-powered service
This MVNO uses the O2 network to run its service and was launched in 2009.  Its core product is a SIM card which supports standard 2G and 3G services. After such a catchy brandname like Giffgaff, they outdid themselves when they introduced bundled services with names like Goodybags, Gigabags and even Hokey Cokey.

Blackberry services were launched in early 2012, and since October 2012, there has been an iPhone app to help users manage their account from their phone.

Giffgaff is 100% online with no retail distribution or big budget advertising.
Relying on crowdsourced information and ideas, with minimal support from an internal giffgaff team, community members have asked over 130,000 since 2010, with responses to them numbering over a million.

Over 40% of their customer base got involved in the first six months and received Payback cash in return.


The LTE superiority
Based upon IMT-Advanced requirements, LTE has around 100 Mbps (megabits per second) peak download data speed for mobile users and around 1Gbps (gigabit per second) download speed for stationary fixed or nomadic users, supports scalable channel bandwidths for 5 to 20Mbps, with an option for 40Mbps.

It also supports more users per cell than 3G, includes support for machine-to-machine (M2M) communications, offers high quality of service for next generation multimedia support, prioritisation of certain applications over others, superior user experience and more other technical advantages over 3G.

LKY Gems
Many people remember different things about the late Dato’ Lim Keng Yaik. For the media industry, he was the one of the few ministers whose press conferences they really looked forward to.
Besides taking on a hot ministry seat for an industry that was seeing very rapid changes, just as rapid were the memorable quotes Dato’ Lim churned out, that reflected his expectations of it.
•On awarded 3G licenses – “I will not tolerate companies that sit on their licenses and don’t roll out services. As I have said before, I won’t hesitate to take back licenses.”

•“Don’t compete on infrastructure, compete on services!”

•“Don’t give me words like ‘best effort.’ I told the service providers if you charge people for 1 Mbps speeds, then make sure you give them what you promise. No more excuses!”

•On rolling out broadband to the whole nation-   “Come… come dream with me!”