Telcos can learn from the music biz

Joseph Waring
17 May 2011

After years of faltering, many feel that the music industry is in a long-term decline. Yet according to Universal Music International (SEA) president Sandy Monteiro, its Southeast Asia unit reported its most profitable year ever in 2010.

Monteiro, in a keynote presentation at the Telco Strategies conference with an audience of 180 telecom executives, suggested that instead of looking at itself as an industry in decline, what would the music industry do differently if it was actually at the starting point of a massive boom?

He asked telcos to consider the same question for their business. "We have been here before. Back in 1989 when sales of cassettes were in decline and CDs were just 30% of sales, we were at the beginning of a boom. That is where we are now - just replace 1989 with 2010 - we could be on the same growth path as in 1989."

He pointed to the company's best results ever since it opened in Southeast Asia in 1995 as proof that it's at the beginning of a boom. "The industry is suppose to be at the worst place [with all the illegal downloads] and we had our best year."

Universal Music has exclusive partnerships with 23 telcos to combine the power of its brand and music library with a telco's marketing muscle to expand its music sales and the operator's revenue.

During a panel discussion on business models and partnerships, XL Axiata president director Hasnul Suhaimi said three years go it started to lease towers and give access to rivals, which have become customers like its subscribers. "When we started, the marketing guys said we're 'giving a weapon to our competitors.'" But now tower leasing and active network sharing accounts for 6% of total revenue. The marketing guys are no longer skeptical.

Softbank Mobile senior EVP Tetsuzo Matsumoto agreed for the need to share networks, saying "it's ridiculous for competitors to compete against each other by investing in network capacity, which just pushes up the price."

Taking a different approach, HKBN CEO William Yeung said it won't partner with the players in the same market. "We want to control the network and control the quality. We won't sell backhaul to mobile operators or lease capacity from the incumbent. We'll partner with the international carriers and CDNs."

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