Should the economic recession still be affecting the Eurasian Telecommunications market?

The Economic Recession: Implanting a Global Mindset of Panic

Following the events of 2007, the phrase ‘economic downturn’ resonates strongly in the hearts of individuals all over the globe. With the macroeconomic environment having falling into significant decline and being shadowed in great uncertainty following the global economic recession, it is no wonder that its impacts echo considerably into daily life years into its aftermath. My view however is that the impacts of the recession have escalated far beyond the extent of its reality. It is the ‘global mindset of panic’ embodied almost universally which has triggered the escalation of the recession from an epidemic into a global pandemic. I believe that to recover, one must look forward. To grow, one must spend. And this thinking is of paramount importance to the business world. Positivity not only in thinking, but in spending, is crucial if we are to grow out of this ghost of recession which continues to haunt the public mind.

Is the recession still truly affecting the Eurasian Telecommunications market?

The telecommunications market has no less been threatened by the deepest post-war recession to date. With reduced consumer spending and volatility in the markets of operations, there has been a negative impact on financial and operational performance. In Eurasia, many of the leading operators of the region have stated that ‘global difficulties within the financial sector make it difficult to attract additional financing’ (MTS) whilst ‘inflationary pressures on daily necessities are hitting peoples wallets leading to cautiousness when it comes to consumption’ (Telenor).

But what have been the actualities of the market through this recessive period? Subscription growth for telecommunications has in fact steadily grown from prior to 2007. Penetration of mobile broadband is currently at 74% and is forecast to reach an impressive 97% by the end of 2012 (Informa Telecoms & Media). Thus evidence shows consumers are consuming and growth will continue. And with the increasing opportunities given by evolving telecommunication technology, epitomised by mobile tv and videos, gaming, multiple applications and healthcare, this is set to grow further. Additionally, with the release of new spectrum at 2.5Ghz in accordance with the digital dividend, mobile broadband services are set to become truly pervasive. The necessity for communication is constant, which alongside the multidimensionality of the telecoms markets, leaves a picture which is predominantly positive.

So what should Eurasian Telcos be concentrating on to maximise their ROI?

A seemingly relatively easy question becomes much more difficult in the aftermath of a destabilising economic recession. Is it right to increase expenditure now to prepare for forecasted growth or to limit expenditures considering the instability of a recovering market?

Personally, I feel that now is the time to get ready for the next stage of growth. In order for telco businesses to stay at the cutting edge of the market, now is the time to start investing in the technologies of the future and shed this mindset that has been so detrimental to the economy of the present day. So what way can telecos do that, you may ask? Let’s take LTE. Having now been tested, trialled and commercially announced by over 100 manufacturers, surely the migration to LTE from 3G is the future of the networks, addressing market needs for the foreseeable future. The idea of investing in new LTE architecture, rather than building upon existing infrastructure, although expensive now, seems like the right thing to do.

Other big earners for the market in my opinion must be value-added content, crucial in keeping the ever-demanding customer happy. Loyalty schemes, similarly, will surely benefit operators in retaining their highest-value customers. The opportunities for growth are endless in such a multi-dimensional arena, as long as thinking and spending remain positive.

Discussion and Debate: Determining the Direction of Development

I am sure my view is one that will not be unopposed. Even the world’s leading economists disagree on what are the optimal business models for moving out of a recession. This unsettling fact leaves the industry in a predicament on the best way forward. So what to do?

We need to talk through these issues in depth and detail, with advice from the regions’ key leaders. Platforms are needed to resolve queries of the future of the Eurasian telecoms market: how can we capitalise on new revenue streams and constant broadband developments? How can businesses be revolutionised to boost their development? Do the answers lie in LTE, IPTV and seamless fixed-mobile convergence? The answers are far from clear-cut but dedicated discussion and debate holds the key for finding the right path.

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Where can the right level of discussion and debate be found? Where is there dedication to a focus on the Eurasian teleco market specifically? Where can you proactively join in these discussions? To find out more about such a forum that initiates truly topical discussion, click here...

http://eurasia.comworldseries.com/conference/download_brochure

Do you have any comments?

Please contact Jane.Schofield@informa.com

Informa bullish on mobile data during the economic downturn

During my time with Informa Telecoms & Media I have not had the opportunity to consult with Mark Newman, our Chief Research Officer, anything like a regularly as I would have liked. The last time I had cause to do so was in the lead-in to December's GSM>3G Middle East conference in Dubai, at which Mark was in the Chair, sharing the stage with heavy-hitters from the likes of Etisalat, Zain, Turkcell and Nawras. At that event, all of these companies made very positive noises about mobile data services in the context of the markets which they serve.

Yesterday, in Informa's telecoms.com blog, Mark reported a general feeling of optimism around mobile data worldwide. Mark began by noting the "widely held view that the mobile content sector is failing to live up to expectations, 3G has disappointed and mobile operators have thrown away an opportunity to develop a revenue stream that could ultimately surpass the voice business."

Mark feels that "if 2008 is remembered for one thing, it should be for being the year that this notion was dispelled. Until last year, the non-voice business was dominated by SMS. For a typical European operator, SMS accounted for up to 80% of non-voice revenues in previous years. But this figure has started to fall sharply. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues. Investment in 3G - or 3.5G - is now generating payback."

While pointing out the erroneous nature of the idea that North America is a laggard in terms of mobile data adoption, Mark notes that Japan and South Korea continue to be the real hotbeds of enthusiasm for data services. This has been a well-worn truism for as long as I've been attending conferences and workshops themed around boosting the acceptance and profitability of mobile content, data and value-added services. I recall being asked to take over the running of a London conference about five years ago and hearing all kinds of actors in the mobile VAS value chain complaining about revenue sharing arrangements with operators and MNOs' 'walled garden' approaches. The participants were at least 90% European and content providers and aggregators were much better represented than network operators. Everyone seemed to be casting envious glances at their Japanese and Korean counterparts, speaking warmly about how the likes of NTT DoCoMo were enabling the growth of a healthy mobile content ecosystem.

Only last week, when I was asked to make a presentation on mobile social networking at the most recent Mobile Monday Istanbul meeting, I found myself referring constantly to the greater success of some of these services in the Far East. Quoting from an Informa Telecoms & Media report, I told the Turkish audience that according to a Sydney Morning Herald article published in December 2007, half of Japan’s top 10 works of fiction are now written on mobile handsets. These works, called keitai shousetsu’, each sells an average of 400,000 copies and are written entirely on cell phones complete with emoticons and common SMS abbreviations.

Today, according to Mark Newman, the ratio of prepaid subscribers to postpaid goes a long way toward accounting for the differences among markets in mobile content adoption and usage. Postpaid subscriptions account for 99% of all subs in South Korea, 94% in Japan and 90% in the US. Mark points out that these are the countries with the highest mobile data ARPUs.

Overall, Mark feels that even if the most pessimistic scenarios for the economic downturn come to pass, it seems unlikely that the mobile content sector will stop growing. Mark points out that 2008 saw a switch to flat-rate and mobile Internet models and believes that 2009 will see this trend continue and will see the arrival of more-affordable mobile Internet devices. For Mark "the bigger uncertainty is whether mobile operators will accept a role as dumb pipes rather than continuing to invest in their own services and smart-pipe strategies. "

Today I should complete handing over my notes to colleagues who will be developing our annual Russia & CIS Com conference, set to take place in Moscow in early June. With the Russian MNOs having now deployed 3G networks in most major cities, our research respondents have expressed the desire to use the event to debate how best to accelerate the process of getting a return on these investments by encouraging customers to accept mobile data and content services.

More on (mobile social) networking in Istanbul

Last week I had the great pleasure of visiting the shiny new Microsoft MEA office in Istanbul, which was the venue for this month's local Mobile Monday meeting. Part of the pleasure was being reminded of the warm hospitality I always experience when meeting telecoms people from Turkey. The pre-meeting drinks, nibbles and chatter session yielded lots of interesting new contacts. Among these were representatives of the country's three mobile operators and owners/directors of a number of value-added services companies. Mobile banking solutions seemed to be quite a well represented area so perhaps this is something set to gain traction in Turkey.

Ostensibly, I was there to speak on behalf of Informa Telecoms & Media, making a presentation on the theme of mobile social networking. This was drawn from a comprehensive report on that subject, an updated second edition of which is currently being prepared. With a 25-minute time slot, I was only able to offer a few of the ideas covered in the report. A number of those present were kind enough to indicate that they had found the presentation helpful. Judge for yourself. Natali Yeşilbahar, the Mobile Monday Istanbul organiser, has made the slides available here. If you want the notes which I used to provide examples and expanded comments, please let me know any time.

Mine was one of two speeches made that evening, the other being offered by Mehmet Arslantunalı, General Manager of Mobilife magazine, a telco sector publication in the local vernacular. Mehmet's presentation was also made in Turkish so I was not able to gain from it. Those of you who do understand that language are invited to have a look at the slides and fill me in on what I missed!

I understand that Microsoft is a new member of the roster of companies that have hosted Mobile Mobile Monday Istanbul meetings. I believe that the privilege usually falls to one or other of the MNOs - Turkcell, Avea or Vodafone. I am pleased that Informa Telecoms & Media will be joining this exalted company in April, at which time we will be providing the meeting facilities and laying on the catering. The venue will be the city's Mövenpick Hotel, which will also be the home of this year's Eurasia Com conference and exhibition - our annual gathering of senior telecoms people not only from Turkey but also from the CIS markets of the Caspian and Central Asian regions (Azerbaijan, Georgia, Kazakhstan, Uzbekistan etc.). Natali was kind enough to allow me drum up further local support for the event.

A number of the meetings which I arranged during the rest of my short stay should have a positive impact on the conference element of the Eurasia Com event. One which is very straightforward is the addition of a further speaker from Turkcell. Given the extensive coverage given to the issue of MVNOs possibly hitting the Turkish market in the near future, I am delighted to welcome Dr. Deniz Tunçalp to the panel of speaker. Deniz is in charge of the market-leading cellco's discussions with prospective MVNOs and as well as outlining his thoughts on barriers and opportunities for potential virtual operators in Turkey, he has offered his assistance with encouraging these companies to attend. It is my understanding that these players will come from an interesting mix of non-telecoms brands.

All in all, another useful and enjoyable trip to Istanbul - but I still haven't found time to do more than scratch the surface in terms of really enjoying the city's countless tourist sights, historical treasures and entertainment. Next time, I hope...

(Mobile social) networking in Istanbul

Greetings from Istanbul. This evening I will be speaking at the January meeting of the local Mobile Monday chapter, sharing just a few of the ideas detailed in our (soon-to-be-updated) report on Mobile Social Networking. The organiser, Natali Yesilbahar (who works with B2B social software platform XING) tells me that services of this kind are not yet a commercial reality here in Turkey and that there is therefore likely to be a good level of interest in my short presentation. I only hope I am able to answer questions and contribute to discussions to the satisfaction of the group attending tonight. I understand this will include managers from this country's three mobile operators (Turkcell, Avea and Vodafone) as well as companies actives in the mobile VAS space, of which there seem to be a good number headquartered hereabouts.

Wearing my marketing hat, I hope that a consequence of attending this evening's meeting will be a locally raised awareness of our Eurasia Com conference and exhibition, which will take place here in Istanbul 31 March & 1 April. Opening with a Keynote Address from Turk Telekom CEO Dr Paul Doany, the event will gather telecoms execs from its host country and many more from the CIS markets of the Caspian and Central Asian regions.

A timely take on mobile social networking

At Informa Telecoms & Media, my task of producing telecoms sector discussion/networking events is made much easier by being able to seek the input of our own industry analysts and by my having a wealth of ITM report products and subscription research services at my fingertips. Prior to joining Informa, I worked for companies who created useful and profitable conferences without the benefit of having such resources in-house. Frankly, this meant I had to beg and borrow information and insights in order to get my job done (I won't admit to stealing). During that time, I found some analysts to be particularly insightful.

One such was Dean Bubley, whose blog is linked from this one. The motto of Dean's mobile sector advisory business is "don't assume" and he asserts that "the technology industry - and its customers and investors - have accepted too readily nebulous, unsubstantiated and unchallenged predictions of self-appointed 'experts' and pundits." Dean's blog entries are written in just this spirit. Most recently, he has turned his attention to mobile social networking.

This was very timely for me, given that I spent a large chunk of yesterday working on a presentation on exactly this subject. This will be delivered on January 15th at the next Mobile Monday Istanbul meeting, at which I was invited to speak by the local organiser, Natali Yeşilbahar. While I am considering quoting Dean's comments to spice things up a little, most of my slides are drawn from the Informa Telecoms & Media 'Mobile Social Networking: Communities and Content on the Move'.

While I am delighted to be sharing some of our thoughts on this area, I was also motivated to travel to Turkey for the meeting by the prospect of being able to drum up local support for our Eurasia Com event, which will take place in the same city 31 March & 1 April. The Eurasia Com speaker panel is drawn from all over the Caspian region and Central Asia, with most of the former Soviet republics well represented. I have a great team in place to ensure that good numbers of delegates from these markets also attend, but I am keen to make sure we do not neglect the matter of marketing the event very actively to telcos in its host country. Hence my keenness to spend some time in Istanbul this month. I am looking forward to this first overseas trip of 2009. I'd better finish my presentation this weekend...