What's next for Asia's mobile operators

Telecom Asia staff writers and industry analysts
21 Dec 2010
00:00

Bank on smartphones to drive growth

LTE is largely seen as a silver bullet for many of the growth challenges facing mobile operators in the region, and in the long term it certainly will be the next gateway for mobile operators to offer a variety of new services. However, there are still many operational challenges that operators will have to address before this becomes a reality.

The recent announcement from NTT DoCoMo concerning its LTE pricing underscores one of these key issues. DoCoMo's Xi LTE brand is offering a 37.5-Mbps connection over a wireless dongle for only $80 per month - but that starts with just 5 GB of data, underscoring the fact that radio technology is evolving faster than capacity is being added. Therefore, issues like migration to packet transport networks and new backhaul technologies are needed now to ensure future capacity for 4G wireless networks.

There are actions that mobile operators can take, however, most notably on the device front. It has been demonstrated time and again that smartphone adoption does in fact increase ARPU, and smartphone adoption is still by and large low with only 4.5% of the region's devices sold in 2009 classified as smartphones. This will grow exponentially going forward, but operators must do all that they can to encourage adoption.

Indosat in Indonesia recently unveiled its own smartphone using Android to present a low-cost alternative to their local market while several vendors in India such as LAVA and MicroMax are pushing the envelop in the sub-$50 smartphone space. 

Many operators in the region, particularly in Southeast Asia, have also found success in the prepaid mobile broadband space and these business models should be expanded.

Our estimates show that Asia's mobile penetration rate will pass 100% by 2013, foreshadowing an end to the organic subscriber growth still enjoyed by emerging markets and the developed market operators that have invested in them. Mobile broadband can and will be the solution to this slowdown, but investments will have to be made now to profitably capture the opportunity.

- Marc Einstein, industry manager for Asia Pacific at Frost & Sullivan

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