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.

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 26, 2010 04:05 telliott
We recently did some interesting interviews with low-income mobile phone users in Manila. (See “Voices of the Next Billion: Initial Input from First Time Mobile Phone Owners in the Philippines.”) They were not the poorest of Manila’s poor, but they were poor enough, some with stories that were difficult to hear, like Edward, who took some architecture courses but has a part time job on a cleaning crew at a McDonald’s. He missed a call from a better job because nobody was home to answer the landline. He got a mobile phone after that, but the job won’t be calling him back – there’s too many others in line. Or Jennalyn, who makes $65 a month as a nanny, and whose husband had to go back to the family farm because he couldn’t get work in Manila. Obviously, we didn’t do the research to learn if being poor in Manila is a hard life – we pretty much knew that going in. (Although having names and faces and stories does take it out of the abstract a little.) A research goal we did have was to find out what people in constrained economic circumstances want in a mobile phone. There we did encounter unexpected things – not “rethink-your-entire-worldview” unexpected, but thought-provoking nonetheless. For example, not everybody wants a cameraphone, but for those who do, VGA resolution is not enough. Several people said a camera was a key factor in their next phone decision – but at least a megapixel. (This included non-cameraphone owners as well as those whose current phone has a VGA camera. Few respondents had digital cameras, so the cameraphone is their sole image recording device.)
  •  Edward, for example, wants to be able to take printable pictures of his 5 month old baby.
  • ­ Alvin, an unemployed 27 year old, has a used Nokia 3200 but would like to upgrade to a used E71, primarily for the camera. He wants to be able to upload pictures onto the Facebook account he maintains at Internet cafes.
I’m not arguing on the basis of a small sample that megapixel-plus cameras are the key to the low-income market. But I am suggesting that bare minimum functionality may be where planning offerings for the bottom of the pyramid should start – but it should definitely not be where it stops. 3G phones, while currently a bit of a stretch for this segment, ought to be within a reasonable planning horizon.

March 30, 2010 00:03 David Kerr

sa photo dk Returning from CTIA in Las Vegas last week and with only 2 days before going off on vacation to Florida, I found myself reflecting that two of the most interesting meetings I had at the show were with mobile operators.

During CTIA I spent some time with AT&T emerging devices and T-Mobile M2M teams and was impressed with how both these units had managed to cut (or at least untie) the cord to the mother ship and avoid having innovation stifled by the Borg up at Corporate.

    • AT&T’s efforts to encourage a broad range of new applications and devices has definitely paid dividends with Mr. Lurie and his team adding an impressive 1M users in Q409 as a result of new device categories (mostly PND and EBR).
    • T-Mobile revealed a somewhat unheralded pedigree in M2M.

Partnership is the order of the day.

AT&T highlighted partner applications ranging from location enabled pet collars (Apisphere) to glow cap bottles to aid compliance with medication schedules (Vitality) to a very cool new tablet from Openpeak which is very different to the announced but apparently supply side challenged iPad.  Verizon Wireless and Sprint are of course also praying at the alter of open development but perhaps with less public presence.

When I think of enterprise mobility, AT&T and Verizon Wireless are top of mind but T-Mobile has in fact quietly been developing strong competency in the M2M space over the last 7-8 years.

T-Mobile offers four different SIM form factors to suit specific applications and have enjoyed triple digit growth for the last four years. T-Mobile US has quietly activated “hundreds” of different device types on its network with only a handful of devices being rejected or pulled due to network unfriendly characteristics. These devices span Telematics, Connected Energy, Telemedicine and several other applications.

So what is the common DNA of two very different operators that has allowed them to innovate and focus on new opportunities? Separation and operational autonomy to facilitate and open funnel approach to partners and speed of execution not normally associated with US carriers.

In the case of AT&T, the Emerging Devices group was chartered with developing a new space and freed from the legacy of voice & data consumer tariffs and prepaid/postpaid categories which just don’t cut it in the new connected reality where users will have multiple devices connected but used in very different ways. Mr. Lurie and his team have been able to streamline device certification and experiment across the spectrum of business models for new connected applications.

For T-Mobile, speed of certification (days not months) and the independence of being a self-contained unit (own engineers, own sales although linked to broader enterprise group) reporting to Finance & Strategy have allowed them to pursue their “easiest to do business with” approach to the M2M markets.

So, the takeaway? Innovation is alive and well at US operators but separation from the collective corporate mind is essential.

David Kerr

February 24, 2010 14:02 telliott
My late husband, the President of Nigeria, left me a large telecommunications company. I need someone of your skills and reputation to help privatize it. Please send me your bank information …  Well, it probably didn’t happen like that, but the flap about China Unicom’s alleged participation in a bid for Nigerian Telecommunications Ltd. (Nitel), Nigeria’s national telecoms carrier, does make you wonder if they should tune their spam filters a bit. The story, in brief: On Tuesday, 16 February a consortium called New Generation Ltd., which allegedly included China Unicom, was reported to have won an auction for Nitel, with a bid of US$ 2.5 billion. This was $1.5 billion more than the next highest bid. Bloggers muttered darkly about inside deals. Wait, it gets better.
  • On Wednesday, China Unicom denied being part of the consortium. It had only offered to serve as technical advisor, although it might eventually be interested in an equity stake. (Original reports cited a figure of at least 20% ownership, though China Unicom’s subsequent official statement confirming their interest did not quantify it.)
  • Interested parties then started trying to contact another consortium partner, referred to in the first press releases as “Dubai-based Minerva Group.”
    • I emailed the Dubai office of Minerva Financial Services, based in the Channel Islands. They were not the Minerva in question, did not know who was, and – reading between the lines – rather wished people would stop asking.
    • The Lagos Daily Champion got similar denials from two other Minervas in Dubai, including Minerva FZ, a wireless VAD, which is at least halfway plausible.
    • Reuters reports that calls to Minerva General Trading were not returned.
  • In case New Generation disappears, the second bidder, at $956 million, is scarcely a household word in telecommunications, either: Omen International, registered in the British Virgin Islands. Go ahead, Google them and see if you find more than I did.
Entertainment value aside, what can we get from this mess? It would be tempting, but unwise, to decide that Nigeria should be avoided until it starts acting more like Switzerland. That could be a long time, and meanwhile Africa’s largest mobile market presents some real opportunities – along with equally real challenges. The fact that China Unicom – generally speaking, no dummies – would consider an equity position ought to suggest that serious players are weighing the risks and rewards. But don’t bring your checkbook to the first meeting. - Tom Elliott Update, 10 March 2010. In a development that should surprise no one, it has been reported today that the head of the Bureau of Public Enterprises, the agency supervising the sale, has been sacked. Well, technically "suspended," but I suspect it amounts to the same thing.

October 28, 2009 17:10 rgupta


China has upped its ante to promote its home grown TD-SCDMA technology. The Ministry of Housing and Urban-Rural Development has signed a cooperation agreement with China Mobile to give priority in the use of TD-SCDMA technology for housing and rural/urban development. China Mobile plans to support the ministry with e-governance, information infrastructure, housing programs, public funds and environment protection.  

By June-09, China Mobile had around one million TD-SCDMA subscribers but it has an aggressive plan to cover 70% of the geography by end of 2011which essentially means providing coverage in 238 cities. The deal with the Ministry will help, since the primary task of this Ministry is to provide subsidized housing in the cities. Around 2.5 million households had moved into this subsidized housing by the end of 2008. In May this year, the Ministry released a three-year plan to provide affordable housing for 7.5 million low-income urban households. It’s a huge subscriber base to tap for any operator and since China Mobile has already tied-up with the Ministry, it should be able to grab a major chunk of these subscribers.

Undoubtedly China Mobile is getting strong government support to make TD-SCDMA a mainstream 3G technology in competition with mature 3G CDMA technologies - WCDMA and CDMA 2000. This will definitely help China Mobile to grow rapidly. China Unicom and China Telecom will have to pull up their socks to compete with an over aggressive China Mobile.

China Mobile’s major problem at the moment is to manage and make TD-SCDMA handset available to the subscribers. Vendors too will have to come out with an expanded range of TD-SCDMA handsets at different price points to compete with the more mature and more broadly supported 3G technologies.. At present Samsung, ZTE and Coolpad are the top selling TD-SCDMA handset vendor brands in the country but they still have to go a long way to come closer to WCDMA,CDMA 2000 feature loaded handsets. According to our Wireless Device Strategies Service, the total TD-SCDMA handset shipment in 2008 was 0.1%, which is expected to rise between 3.4% by end of this year and around 8% by 2010. Though China Mobile has been able to rope-in almost all major handset to come out with TD-SCDMA device but due to limited models in this category and poor products quality, these devices are yet to gain grounds in the highly competitive Chinese 3G market. Nokia has recently launched its first TD-SCDMA model 6788 and it will definitely make competition more intense among TD-SCDMA device vendors.

If China Mobile manages to develop a competitive portfolio of handsets that provide a compelling experience on optimized applications, TD-SCDMA can flourish in the country.

  -Rahul Gupta