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.

February 21, 2012 18:54 telliott

In the past year a number of infrastructure sharing deals and outsourcing of network management from firms like Ericsson, Nokia Siemens Networks and Huawei have been announced across a wide spectrum of developing countries. For operators seeking to reduce expenditures as ARPUs relentlessly decline, these various techniques for cost sharing and organizational optimization can be very attractive. But is it also possible that such practices lower the barriers to entry or to expansion to the extent that competition in a given market is effectively enhanced?

 

See "Can Outsourcing, Infrastructure Sharing and Managed Services Lead to More Competition?"


September 21, 2010 02:09 telliott

The mobile market potential of the “bottom of the pyramid” has rightly aroused a lot of interest – including some from Strategy Analytics. The ability to profitably service the huge untapped market of the poor and rural will have a major effect on the long term emerging market prospects of operators like Orange, Vodafone, and Telenor, device manufacturers like Huawei and LG, and infrastructure vendors like NSN, Alcatel Lucent, and Ericsson.

But let’s not forget about the developing world’s middle class, which may number as many as 2.6 billion people. It is middle class consumers who, having some measure of economic security, are in a position to stretch just a little on their handset purchases, or sign up for that slightly frivolous entertainment service. The revenue from each of those stretches, times 2.6 billion, will help fund rural roll-outs and maybe, just maybe, add to the bottom line.

The 2.6 billion comes from Martin Revallion, an economist at the World Bank, who estimated the number of people in developing countries in 2005 whose daily consumption was between $2 and $13 a day, measured on a Purchasing Power Parity basis.

Now, if you are reading this in an industrialized Western nation you might be saying “$13 a day is my idea of poor, not middle class! And $2 a day is very poor.” And in your context you would be right, because that range does not describe the middle class where you live. (In fact, $13 a day was the US poverty line in 2005, which Revallion somewhat arbitrarily chose as his upper bound. $2 was the average officially reported poverty line in 70 developing countries he looked at.)  

The question is whether daily per capita consumption of $2-$13 supports a middle class life in the developing world. This in turn raises the question of what is “a middle class life,” which even those of us who live them find difficult to define. A Middle Class (Perhaps) Shopkeeper in Liberia A Middle Class (Perhaps) Shopkeeper in Liberia

Fortunately, sociological precision is not always required to gauge mobile demand. The key element for our purposes is whether in the local context there is enough of a middle class sense of security at $2 a day – or $3 or $7 or some other number – to free up discretionary spending for non-basic communications services. This is a course of research that we will be pursuing in the next year, and we would welcome comments and suggestions.


June 4, 2010 20:06 David Kerr
sa photo dk

 

 

 

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week.  So, what next?

    • Will we see significant priced based competition for mobile data among the top US operators?
    • Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?
    • What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?
    • How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

  • Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

  • with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

  • as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

  • but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.


May 20, 2010 21:05 David Kerr

sa photo dk

 

May you live in interesting times as the old Chinese proverb goes. Well in the information, communication and entertainment industry we certainly do. Some very interesting questions face our industry whether we look at:

  • the outcome of much delayed Indian 3G auction or
  • the battlegrounds around HSPA+ and LTE or
  • the surging Android ecosystem vs. weakening Symbian or
  • the upside potential for WebOS under it new owners
  • the potential disruption caused by mobile cloud phones and device

Every major technology advancement has lead to a massive disruption in the handset and infrastructure vendor community.

  • In 3G, Motorola’s slim myopia led to its near ruin and has provided huge growth for Samsung and a foothold in international markets for LG and SEMC.
  • On the infrastructure side 3G was expertly grasped by Huawei and ZTE leading to a new wave of M & A and a new world order which counts Nortel as a victim and seriously challenges ALU.

So how will the migration to 4G change the playing field?

  • Who will benefit most on the operator/service provider side?
  • Will Cloud Phones be disruptive in LTE?
  • Will operators find a path to realign the traffic/revenue mix with mobile broadband devices?

I would welcome your thoughts on these key questions. Also don’t forget to join our client webinar on Thursday May 27.

 

David


April 28, 2010 03:04 telliott

"I have been over into the future and it works” said Lincoln Steffens after a 1921 visit to Russia. Well, I have been over into one version of the present –Internet access in Manila via 3G dongle – and I’m not quite as optimistic as Steffens. True, Globe Tattoo is way better than my hotel’s lame Wi-Fi, but I don’t think it’s a long term solution for connectivity, whether for the First, Second, or Third World. Good news first. Setup was easy. The instructions showed clearly how the SIM card slips into the Huawei-built dongle, which my computer recognized with no issues.  tattoo-dongle2.jpg

After a couple of minutes of software loading, I was online, at respectable if not blazing speeds. Keeping half an eye on a speed meter, I recorded one instantaneous burst of 539.4 kbps, and several in the 200’s and 300’s, although the average was a lot lower.

  • Considering the slow dial-up speeds the hotel’s Wi-Fi was delivering, I wasn’t unhappy. And as a bonus, Globe is cheaper. Globe bills at PHP 5 (US$ 0.11) per 15 minute increment. This would be PHP 480 (US$ 10.90) for 24 hours, versus the hotel’s PHP 600 (US$ 13.65).

So what’s not to like? Inconsistency, for one thing. Those average speeds contained a lot of slow periods mixed with some high speed bursts. Even when stationary it kept slipping from HSDPA to what it calls 3G to EDGE speeds. This presumably reflects the shifting burden of traffic on capacity-limited cell sites even in (I blush to admit) one of Manila’s more upscale districts. speed-meter.jpg

This is a problem for applications like Strategy Analytics’ VPN, which requires regular communication from the client. Something – possibly the dead spells or the switching from HSDPA to 3G – interferes with that check-in process, dropping me many times. VoIP is out of the question – I couldn’t even talk with Globe customer service.And what did I want to talk with Customer Service about? Why, how to add more funds to my account, of course. Tattoo may be imperfect, but it beats the alternative.

  • And speaking of alternatives, this experience has made me appreciate that the emerging market opportunity for overlay wireless data networks, whether WiMAX or LTE, is not just a rural and secondary city play. There might be a few takers right here in Makati.