APAC cellcos admit need to change

Nicole McCormick/Ovum
29/11/2011
News
Commentary

There was a more somber mood at this year’s Mobile Asia Congress (MAC) in Hong Kong as major mobile operators admitted that their business models need overhauling. At last year’s MAC, the leaders of Asia’s largest mobile operators painted a more positive outlook for the industry by attempting to convince attendees that there were still plenty of revenue making opportunities, ranging from mobile cloud to smart cars.

However, this year operators presented more realistic scenarios, including partnering with over-the-top (OTT) players and other operators for the provision of services. OTT players were not seen as competitors, but rather as “frenemies” as Bharti Airtel’s CEO (India and South Asia) Sanjay Kapoor put it. A sign of the times was Facebook’s attendance at MAC as a “partner” company. Facebook’s presence at MAC was indicative of the company’s expectations that the majority of its next 1 billion customers will come from mobile users.

At MAC, the GSMA identified near-field communications, embedded devices, and “rich communications” (services that work on “any device, on any network”) as part of the next wave of “connected life” services. While it is always useful to know the GSMA’s key growth areas, operators’ foresights at this year’s MAC were more pertinent to the challenges facing the mobile industry. NTT DoCoMo president Ryuji Yamada told delegates that LTE and the “launch of new billing plans” – which we read as the end of “all you can eat” pricing for LTE – were the keys to improving network efficiency.

Axiata president Jamal Ibrahim stated that operators need a “complete change of almost every aspect of the business model”. He said that the launch of new services required partnering, even if this is with competitors, and that network sharing and outsourcing were vital cost-saving opportunities in emerging markets. Ovum shares this view, and sees network sharing and outsourcing as key parts of the cost optimization initiatives that operators will be forced to undertake.

MAC confirms Ovum’s LEAN long-term vision for most operators

For most mobile operators, successfully partnering with OTT players such as Apple and Google will be a major determinant of their future prosperity. However, Ovum still believes that the majority of operators will become LEAN (low-cost enablers of agnostic networks) network operators with a business model focused on data traffic. One likely exception could be China Mobile, which unveiled its “Wireless City” apps project at MAC. Under the initiative, China Mobile works with provincial government departments to create apps – such as one for paying utility bills using a mobile phone – for its Wireless City portal, which is available from its Mobile Market apps store. Currently, the Wireless City portal has launched in 22 provinces, and consists of 10,000 apps with 6 million users.

Related content