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By SYED NAZAKAT in Hong Kong

Asia is creating a unique catalyst in the world of telecommunications: a nexus of markets where the demands of basic services is pushing a next-generation telecoms revolution. The region is the source of most of the world’s growth in the consumption of telecoms services, home to half of the world’s mobile phones and broadband users, and the headquarters for the IT-enabled services that are helping create e-readiness around the globe.

Duncan Clark is the chairman of BDA Research, a leading advisory firm serving investors and participants in the Telecom, Media and Technology (TMT) sectors in China, India and other Asian markets. Some eight years ago, when he moved to Beijing to start his own telecoms company, he already had an idea about the potential of what he termed ‘Chindia’ (China and India) telecoms market. But today, he says, the growth has even surprised his own market assessment.

“There has been an amazing growth in the telecoms sector in Asia,” Clark told the Asia News Network on the sidelines of Netevents Asia-Pacific press summit in Hong Kong. “There a is huge untapped market and there is big money to be made in the region,” he said.

‘Chindia’ Factor

In India, where over six million people now sign up for a mobile phone every month, the rapid growth of telecoms industry is visible not just terms of subscriber numbers but in other ways, too. Last week, BSNL, India’s third largest mobile operator, decided to share towers with other operators to cut costs involved in expanding its wireless network.

“The Asian telecoms market is creating e-readiness around the globe but there are many problems that remain unresolved” 

This is a marked departure from a state owned company trying to retain profitability in the fiercely competitive Indian mobile segment where operators are doing everything to add profit in a low tariff regime. The message is quite clear. The government is trying to catch up with the private sector by following the industry trend of sharing infrastructure. The telecoms market in India is opening up as private telecoms companies are full of enthusiasm to introduce new wireless technologies.

In neighbouring China, the largest market for mobile telephones in the world, the telecoms industry is still very much driven by the state. China Mobile, China Unicom and the fixed line companies, Netcom and Telecoms, are all state owned enterprises.

“So this is one arm of the state competing with another arm of the state. It’s a unique construct that China has achieved,” says Duncan Clark.

Mobile operators are investing billions of dollars in building new networks across Asia that provide fast Internet access. The 3G systems are being upgraded and an upstart technology called WiMax is being explored in the region. Many telecoms executives hope that this will connect not just people and their phones but also gadgets, machines, cars and homes.

“The next wave of broadband upgrades may be up to 10 times bigger than the original internal build-out 10 years ago,” says Alan Lippman, director of Technology and Planning of Redback Networks Inc, an Ericsson company that makes video-centric routers for 75 per cent of the world’s largest triple-play networks.

“Much faster cell phone network (14 to 144 mbps) will be in the market to mobilise business productivity and service portability to consumer data, voice and video service. In 10 years, more video programmes will be delivered over broadband network than cable satellite and TV broadcasters,” he says.

Challenges Ahead

But there are many problems which remain to be resolved. There is no telling whether there will be any demand for such services because the technology is not yet in place. Both China and India are struggling to have third-generation (3G) mobile telephones which offer exciting features such as Internet-browsing and video.

When operators bought licenses to run 3G networks, paying far too much (over $100 billion) for them, a single global standard still seemed a possibility. But now there are two rival technologies: W-CDMA, championed by European firms, which is expected to become the dominant 3G standard, but has been delayed by technical problems; and CDMA2000, championed by American firm Qualcomm, whose technology is already used in South Korea, the most heavily penetrated broadband market in the world, and Japan which has already incorporated wireless technology into national policies.

Now, the big question is: which standard will India and China choose? Backers of both 3G standards, each with strong political support, have been furiously lobbying the Chinese government to bless their particular technology. To complicate matters further, however, a third contender has entered the field: China’s home-grown 3G standard, called TD-SCDMA. In India the debate is still revolving around how to balance the interest of existing operators, consumers and new entrants.

Security Still A Headache

The telecoms sector is also facing other challenges. Cyber-security is a huge headache. The internal security budget of BT, a leading provider of communications solutions, alone is over $200 million a year. Richard Moss, who heads BT’s Security wing in Asia Pacific region, said the telecoms fraud has resulted in losses of $176 billion for operators in the last year. He said operators are now trying to reduce revenue leakage at the product planning stage in an effort to fully recoup future revenues.

Some mobile operators are trying to change their business models. Mobile operators are looking to data services to provide future growth. In the domestic fixed-line market, the incumbents are betting on broadband-Internet services. In the corporate telecoms market, operators are betting on the provision of new kinds of data services to large companies as a promising source of future growth. Such services range from the relatively simple business of securely interconnecting a company’s regional offices through a virtual private network to running entire networks, data centres or call centres.

Some operators may even design and implement new computer systems, write custom software and manage a company’s computers, from mighty mainframes to humble desktops. This sort of systems-integration work is traditionally done by large information-technology firms. But as the overlap between telecoms and IT grows, some telecoms operators are getting in on the act too, trying to increase their margins and strengthen customer loyalty.

Redback Network Inc’s chief technology officer, Alan Lippman, imagines a world in which your cell phone becomes your WiFi box and cable TV tuner.

Alan Lippman will be able to provide what he calls ‘service portability’ across fixed and mobile networks and will set the table for the three-screen world of full of service broadband.

“When networks aren’t intelligent enough to provide user friendly connections then there are service gaps and carrier companies can lose customers,” Alan told Asia News Network. “Our mission is to make technology simple and smart”.

(Asia News Network, Nov 12, 2007)

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