Emerging Markets Communications Strategies

Analyzes the issues facing existing and new players who are looking for a share of growing mobile markets in over 30 developing countries, including the developing regions of Asia and Africa.

July 28, 2010 02:07 telliott

For some time now, a dominant cultural meme – a word I use experimentally and won’t repeat, since it evoked a fierce gag reflex as I typed it – holds that there will be more of everything in the future, especially people, and that stuff will cost more, unless it’s digital hardware in which case it will cost less and there will be way more of it.

Real estate crashes and the more serious specter of deflation suggest that in fact stuff may not always cost more. And according to UN demographers, while global population will continue to rise for some time, there are places where population is shrinking.

This sounds like good news, considering global warming etc., but it may not be, if your business depends on selling more stuff next year than you did this year. Fewer customers just makes your job harder. And if that shrinking customer base already has a lot of your stuff, it’s harder still.

Consider the situation in the developing world, as shown in the chart below, which plots mobile subscription penetration against projected population growth for 135 countries. (I ran out of label space in the middle; email me if you’re curious and I’ll send you the whole list.) pop-vs-pen.jpg

Rapidly growing population and low mobile penetration (lower right of the chart) does not necessarily mean a country is a terrific opportunity. Afghanistan, for example, has some issues as a business environment. But the scenario of high mobile penetration and shrinking population (upper left) raises a unique set of challenges to growth.

Clearly, penetration on a user basis in these countries is lower than 100%; subscription penetration is particularly high in Russia and elsewhere because of multiple SIM and multiple device ownership. So it is not the case that everybody who wants a mobile phone already has one. But an awful lot of them do. And a shrinking population means fewer first time buyers are entering the market.

Clearly, the focus for an operator in a developing country with high penetration and low or negative population growth needs to be different than in the more usual case of emerging markets with rapid population growth and low penetration. Loyalty and churn reduction become critical, as does revenue enhancement through incremental service offerings, and in particular, cold-eyed and ruthless cost justification of network expansion. If you build it, they won’t come if they’re just not there.

July 7, 2010 11:07 rgupta

Qualcomm stunned many by participating in India’s recent wireless broadband auctions. It bagged licenses in 4 circles including metros Delhi and Mumbai. (The other operator which got licenses in these two circles is Reliance Industries (RIL). Reliance got the broadband license for all the circles in India). Qualcomm has decided to tie-up with some other operator for TD-LTE based broadband services in India.  It is a very strategic move by Qualcomm to push TD-LTE in India. The only competition for TD-LTE in India is WiMAX and the main competitor for Qualcomm would be RIL, if the latter opts for WiMAX, which looks very unlikely.   Broadband penetration in India is less than 1% so there is a huge untapped population that can be targeted. But operators will initially target metro and ‘A’ category circles as these are the circles where demand for broadband is high. Metro circles in particular will be the target as most high ARPU customers live there. Since only Qualcomm and RIL have licenses to operate in Delhi and Mumbai, they have an advantage.  It makes sense for RIL as well to opt for TD-LTE as the operators, which have got 3G licenses would like to tie-up with the TD-LTE operator rather than going for WiMAX due to compatibility issues. And if RIL goes for TD-LTE then WiMAX will take a backseat in India as other operators too are likely to follow RIL. Tikona, another operator, which got licenses in five circles has already said that it would go the RIL way on technology.     So it looks like that initially Qualcomm has an edge over others in BWA play in India. It will not operate directly but will be benefitted hugely by the royalty on technology and chipsets (TD-LTE). The only player that can be the threat to Qualcomm on chipset side could be Samsung. If Samsung comes out, which is very likely with TD-LTE chipsets, the competition will become stiffer. 

The loser here will be WiMAX and Intel in particular. Operators are not quite upbeat about WiMAX. If Qualcomm manages to successfully roll-out TD-LTE devices and gets major BWA operators on its side, then it could be an end game for WiMAX in India

Rahul Gupta