Friday, May 14, 2010

Optus results shows its strength in mobile

Nathan Burley, Senior Analyst, Ovum

AUSTRALIA: The key driver of Optus results is generally its mobile division. Today’s result is no different with mobile now representing 63% of revenue and over 68% of EBITDA. In Ovum’s view the results show the strength of the mobile industry in Australia, but also potentially point to weakness at Telstra.

Optus added 254,000 new mobile customers in the quarter its strongest quarterly performance in nearly five year. Ovum notes that well over half of mobile connections added in the year were mobile broadband connections rather than handset subscribers.

Ovum believes that the traditional voice handset subscriber market is essentially saturated, and it is non-handset devices which will drive most growth in the mobile industry going forward.

Much revenue growth will be driven by handset subscribers spending on data, often as they upgrade to smartphones. This was evident in Optus results but the mobile handset and voice market is essentially a churn game – and Optus looks to be performing well.

Reversing a recent trend, Optus also managed to increase mobile EBITDA margins. This is impressive and Optus’ strategy of spending big to acquire high-value iPhone, amongst other smartphone users, is beginning to deliver to the bottom line.

Unlike it is mobile division, fixed consumer and SMB was largely flat as its on-net migration strategy continued. In this market, we do not believe it is Optus that is giving Telstra headaches but rather the smaller more nibble ISPs, although in the current quarter Optus has announced further price cuts which should aid acquisition.

There is however potential upside for Optus as the NBN rolls out. This will potentially enable it to increase fixed broadband coverage, support continued mobile growth, and remove some competitive advantage from the incumbent Telstra.

Challenges for telcos in cloud computing

MELBOURNE, INDIA: Cloud Computing provides a new enterprise service opportunity for telcos who are well positioned to combine cloud computing platforms with secure managed networking to meet enterprise requirements for high performance and secure cloud computing services. However, telcos will meet challenges in terms of credibility with IT decision-makers as providers of cloud computing.

Over the last two years, cloud computing has grabbed the attention of the IT industry because of its potential to offer a new model for the provision of computing and applications to enterprises. More recently, leading global and regional telcos have developed and launched their own cloud computing services, including infrastructure-as-a-service (IaaS), as they plan to compete head-on with solutions from leading players in the IT industry.

For example, over the last year we have seen IaaS service launches from Verizon Business with Computing as a Service and BT with Virtual Data Center.

In spite of the industry buzz around cloud computing, Ovum research indicates that it is not currently high on the CIO/IT manager agenda. “However, we believe that early market entry by leading telcos will give them the opportunity to establish awareness and credibility before the cloud computing market steps up a gear to a higher adoption phase”, said Peter Hall, Principal Analyst based in London.

The cloud computing market is still evolving, and while we have seen wide deployment of some SaaS solutions (e.g. salesforce.com and WebEx), the market is still at an early adopter stage for IaaS services.

Ovum research indicates that cloud computing is currently low on the agenda of most CIOs/IT managers, although many are open-minded about the longer-term potential benefits. “This means that sales uptake for IaaS is likely to be slow for at least the next two or three years”, adds Peter Hall.

“At the same time, it may take two or three years for telcos to establish credibility in this market, so early market entry will have its benefits in the longer term”. The cost to a telco of launching IaaS is significant, although it may be possible to offset some of this against internal use of the infrastructure. This will also help to demonstrate to external customers that the business is prepared to commit to its new services for important internal applications.

The credibility issue is not to be underestimated. Let's look at the results of an Ovum Enterprise Architecture survey where CIOs/IT managers were asked about their preferred suppliers of cloud computing. More than half of CIOs/IT managers in this study would not currently consider a major telco for supply of cloud computing services, whereas more than half expressed a preference for a major ISV, and more than a quarter for a major SI.

“The result is not surprising, given that only a very small number of telcos have so far shown commitment in this market so telco visibility in the market is very low”, comments Peter Hall. Telcos will need to show that they are not just competitors in this market but that they have the best solutions, particularly in areas such as security, performance, and SLAs. This includes leveraging their core network assets in providing secure and high-availability access to cloud computing services.

Telcos that are considering entering the market for IaaS will need to assess whether they can develop these services internally or whether a partnership or alliance with an existing player is the preferred option. They will need to gauge local market interest and competition and determine which vendors, including global telco partners, can help them expedite their cloud computing offer.

Competing in the market for SaaS and Caas/UCaaS will be lower-risk than that of IaaS, particularly as these require less infrastructure and some can be offered through a simple resale model with no telco hosting. However, they will also offer lower reward in the long run and, if offered alone, will not begin to demonstrate to customers that the telco is a serious or credible player in the potentially much bigger opportunity of IaaS.

Thursday, May 13, 2010

BWA spectrum will be a strategic complement for 3G auction winners

INDIA: India’s 3G auction is underway and witnessing aggressive bidding activity. 26 days into the 3G auction, the bid price for a pan-India 3G license has risen to over $3 billion. If the auction had concluded at this level, the Indian government would have raised over $12 billion from this auction.

The winners will emerge as front-runners in an intensely competitive market that represents some of the best prospects for continued growth. However, Indian mobile operators should also look to bid for the availableBroadband Wireless Access (BWA) as part of a long-term strategy for data. This will not only provide capacity relief but also ensure sustained revenues from mobile broadband services.

“The prevailing view is that 3G will offset the rapid erosion of voice revenues with increased data revenues. However, we believe that the primary benefit to Indian operators from the paltry 5MHz FDD of 2.1GHz 3G spectrum available via auction will be to offload traffic from high-end subscribers for capacity relief. Any incremental data revenues will represent an upside,” says Shiv Putcha, principal analyst with Ovum’s Emerging Markets practice.

Indeed, the Indian market is the most competitive in the world, with 14 MNOs operating on sub-$5 ARPU and wafer-thin margins in a voice-dominated revenue environment.

The bigger issue is whether Indian operators can execute on a data-driven approach. Indeed, Indian MNOs should think twice before introducing the latest 3G devices such as the iPhone, NexusOne, and newer form factors such as the iPad. Evidence from the US and Europe points to the astonishing – even crippling – impact on mobile networks of network overloads due to the surge in data traffic from 3G smartphone users.

Indian MNOs already do a lot with very limited spectral resources, and now face an unenviable dilemma. To hold back from launching the newest gadgets will hand over the initiative to rivals in an unforgiving and ultra-competitive environment. Launching these devices aggressively will have the opposite effect of bringing their fragile networks to a standstill, as Indian MNOs have not architected their networks to carry data traffic. The only short-term option would be to introduce tiered data plans and also adopt usage caps to protect the network.

Indian MNOs should invest in BWA spectrum
Uncertainty around future allocations of 3G spectrum means that MNOs must adopt forward-looking strategies and look to invest in BWA spectrum as well. Subsequent to the 3G auction, there will be a BWA auction for two slots of 20MHz TDD spectrum in the 2.3GHz band.

MNOs must adopt a long-term strategy which will allow subscribers to access high-speed mobile broadband services over multi-mode, multi-band devices that are backward-compatible with existing 2G/3G networks and incorporate Wi-Fi.

As an option, multi-mode 3G-WiMAX devices do exist today in limited volumes, and will likely enjoy a cost advantage for some time. However, given the strong industry momentum behind LTE, it would not be a stretch to say that device ASPs in the long term will favour a 3G-LTE combination device over a 3G-WIMAX device. The ability of a 3G device to offload data traffic to LTE and Wi-Fi will preserve network integrity.

“The growing maturity of LTE as a viable air interface standard that is backward-compatible and also supports both TDD and FDD modes means that the 20MHz TDD blocks of BWA spectrum are no longer an exclusive zone for WiMAX, but are also available as 3G expansion bands.” said Shiv Putcha.

“In short, we expect and encourage aggressive bidding for the available BWA spectrum, which could present a scenario of an incumbent 2G operator winning 5MHz of 3G spectrum and also 20MHz of BWA spectrum. Regardless of the technology chosen for deployment, this is a worthwhile investment as the alternative is a race to the bottom and eventual exit from the market.”

Wednesday, May 12, 2010

Mobile operators must embrace VoIP

MELBOURNE, AUSTRALIA: Mobile operators must embrace VoIP in order to neutralise the threat posed by Skype and other internet call providers, according to Ovum.

The warning, contained in a new report* by the telecoms industry analyst, comes just days after Skype announced plans for an ambitious expansion with a range of new subscription services and promises of cheaper calls.

Ovum’s report states that attempting to block mobile VoIP is not a viable long-term strategy for mobile operators. Implemented well, VoIP can attract new users, reduce churn, or even encourage data plan uptake.

Steven Hartley, principal analyst at Ovum and report co-author, said: “Blocking VoIP is like trying to control the tides. Most mobile operators today have attempted different means of hindering the use of VoIP, or are cautiously monitoring usage.

“At best, they offer special VoIP tariffs to avoid regulator attention, but these are not viable for end users. However, these approaches merely garner negative publicity from vocal early adopters demanding access.”

Many mobile operators are still clinging desperately to high-margin traditional voice service revenues that are gradually being eroded. However, Verizon Wireless’ recent announcement that it will offer Skype access to its mobile customers heralds a more positive approach to mobile VoIP that Ovum believes all players will ultimately have to adopt.

“Without outside pressure, operators would not concern themselves with VoIP until they had LTE networks,” added Hartley.

“By this time, operators would be able to offer their own VoIP services at a cost far below today’s circuit-switched networks. However, in the real world, user demand, competitor strategies, and increasing regulator interest in the net neutrality debate are dictating the timeline.”

Ovum believes that ultimately, the competitive environment will shape when, where, and how mobile VoIP is adopted – and whether operators are able to dictate their own destiny.

Tuesday, May 11, 2010

TTI Telecom and Huawei join hands to fast tracks LTE deployments

NEW DELHI, INDIA: TTI Team Telecom International Ltd, a global supplier of Operations Support Systems ‎‎(OSS) to communications service providers has successfully completed an LTE integration test between Huawei iManager M2000 ‎and TTI Telecom's Service Assurance solution.

As active partners, TTI Telecom and Huawei were able to successfully complete the LTE ‎interoperability activity between Huawei iManager M2000 and TTI Telecom's Netrac ‎Service Assurance Solution in Huawei LTE OSS Joint Lab in Shenzhen, China. This on-‎going joint work follows up on previous successful interoperability tests held in Huawei ‎LTE lab. ‎

In the current activity, the two companies discussed and tested an integrated solution that ‎enables customers to realize fast integration when choosing Huawei LTE network and ‎TTI Telecom's Netrac Service Assurance Solutions. ‎

TTI Telecom Service Assurance and Huawei iManager M2000 interface, based on TTI ‎Telecom's strong bi-directional mediation engine and TTI's performance management ‎solution, applies centralized service assurance capabilities on Huawei M2000 in order to ‎collect and process LTE and GSM/UMTS data. ‎

During the interoperability activity TTI Telecom used its generic toolset to easily define ‎M2000 based adaptors (TTI Libraries) that adhere to the 3GPP standard for LTE ‎networks, collected counters, calculated KPIs and produced service assurance reports ‎based on SAP Business Objects engine.

Tommy Quitt, General Manager Asia, at TTI ‎Telecom, said, "TTI dearly values the cooperation with Huawei, assuring both companies ‎customers' the advantages of this synergetic relationship between the two companies' ‎leading solutions, especially towards the LTE massive deployment in the years to come."

‎"Huawei is committed to the creation of long-term and potential value growth for our ‎customers," said Ocean Sun, wireless OSS product manager of Huawei. "We are happy to ‎partner with TTI Telecom to provide operators with an advanced OSS solution. The joint ‎work of Huawei and TTI Telecom enables customers to improve their network equipment ‎utilization and reduce their operation costs." ‎

The Huawei iManager M2000 is a centralized management platform of Huawei mobile ‎network. It provides an opened northbound interface to NMS as well.

As the world's leading LTE/SAE provider, Huawei has deployed 60 LTE networks ‎including commercial networks, lab trials and field trials in Europe, North America, Asia ‎Pacific and the Middle East. Huawei has made over 3,300 LTE/SAE contributions ‎to 3GPP as of December 2009.

Monday, May 10, 2010

Latest wave of communications and high-tech corporate investments in customer service falls short during downturn

NEW YORK, USA: New Accenture research has found that communications and high-tech companies—many of which are falling short in their customer service delivery--need to direct their investments at new levers that enhance the customer experience. These levers include social customer relationship management tools.

The research, entitled “Lessons from the Recession: Where Customer Service and Support Investments Yield Superior Returns for Communications and High-Tech Companies,” revealed that while more than half (60 percent) of the companies surveyed believe their recent actions to extend their offers and reduce costs had positively impacted the customer service experience they delivered, most of their business and residential customers receiving the service reported no visible or tangible improvements.

The research also found that those customers who believe their service experience declined are more likely to stop or reduce the amount of business they do with their current vendors.

“Companies are investing in customer service, but at the same time customer expectations are rising--in many cases faster than the investments,” said Joe Hughes, senior executive with Accenture’s Customer Service and Support business.

“Some of the investment has been to reduce costs, which favorably impacted the way clients perceive customer service, but the path to more profitable, longer lasting customer relationships centers on improving the customer experience. Such improvements are not unique during tough economic periods, but they are even more critical to resolve amid a tough economic climate.”

During such times, the research found, garnering customer loyalty is vital--but elusive. Ninety-two percent of enterprise customers and 81 percent of residential consumers who think the service and support they’ve received has improved said they are more likely to keep doing business with their current vendors.

However, strong loyalty to communications and high-tech providers among all consumers is rare. Only 13 percent of residential consumers and 25 percent of enterprise customers said they were “very loyal” to their vendors.

“The value customers place on better service experiences is consistent, but loyalty to their vendors is fleeting and tenuous,” added Hughes. “As a result, there’s a good chance customers will seek out better service elsewhere if their current vendors don’t improve.”

In the investment arena, 61 percent of companies surveyed indicated they are making investments or acquisitions in the downturn to boost customer service capabilities. And they increased their customer service operating expenses by an average of 68 percent. The research also found that nearly 60 percent of consumers and enterprise customers who believe their service and support experience has declined are more likely to eliminate or reduce the amount of business they do with their current vendors.

Friday, May 7, 2010

Samsung intros stylish Guru 1175 phone with enhanced FM capabilities

BANGALORE, INDIA: Digital technology leader, Samsung Electronics today announced the launch of its entry level Guru 1175 handset which combines style and functionality and is customized meet the needs of Indian consumers.

Ranjit Yadav, Director, Mobile & IT, Samsung Indian Electronics Pvt Ltd said: "The new, stylish Guru 1175 is a valuable addition to the popular Guru series of Samsung phones in the essential phone segment. The Guru series stand differentiated in the market on account of their Longer Battery Life, Bright Torch Light, regional language display and advanced mobile tracker. The feature–packed Guru 1175 introduces style to the series along with all the features the Guru series is known for and more."

The stylish Guru 1175 with a curvy design and patterned battery cover has a ergonomic grip due to its streamlined body. The ergonomic design of the phone and its rounded edges fit comfortably in the palm during calls and during text messaging.

It has enhanced FM music features and offers users FM radio with upto 23 hours playtime, 40 poly and MP3 ringtones featuring bollywood hits and an extended battery life of 1000mAH allowing 12 hours of talk time and 650 hours of standby time. In addition, the FM phone is equipped with advanced mobile tracker, Fake call and SOS messages.

The handset also offers convenient features like a bright torch which can work upto 38 hours and can be operated on a bike mode as well. The bike mode is a useful feature for two-wheeler owners that allows users to receive calls only those calls that are important. In the profile settings, one can set important contacts list whose calls only can be received .Anyone else calling, will get the user busy response.

Further, an automatic call answer can be set for added convenience, as calls can be instantly connected via the handset without any need for a manual press of a button. Further, the ring tone volumes are the loudest possible to hear in the traffic noise.

The Guru 1175 has a an enhanced memory of 1 MB with phonebook memory of 1000 entries and an SMS memory of 500 entries allowing users the ease to store their contacts. A 9 regional language input & display makes it easier for users to use the phone in the language of their choice. The phone is also equipped with a Indian calendar and games like – Carrom, Suduku, Super Jewel Quest and Cricket. The Samsung Guru 1175 is priced at Rs. 1,690.

With the launch of this new handset, the Guru series is now available at a range of Rs. 1,520 to Rs. 3,130.