Mobile internet the main real growth area in Latin America for 2016

February 5th, 2016, by

Latin America provides significant geographic and practical opportunities as well as difficulties for telcos, governments and telecom regulators. The diversity of the markets poses its own challenges in terms of maturity, the physical development of networks, economic prosperity and the disposable income available to consumers. In addition there are considerations related to the business environment in the region, particularly in relation to the ease of going business, investment opportunities and the level of sympathy provided by local regulatory regimes. Investment opportunities abound in the Latin American region, though conditions vary significantly between countries. Some governments retain a protective stance towards the incumbent players, which limits the opportunities for competitors in practice.

Mexico a showcase for regulatory progress

Mexico has been at the forefront in this regard in recent years, having passed legislation in late 2013 aimed at reforming its over-concentrated market and encouraging the ability of smaller players to compete against the incumbents Telmex and Telcel. This process is showing dividends into 2016, particularly with the greater involvement of the other key market players Telefonica and AT&T.

Pay TV gaining strength

Across the region, though, the key developments into 2016 will focus on pay TV, where developments have been rapid in recent years, as also in mobile broadband.

These two segments are feeding on the success of satellite and cable TV as well as the proliferation of videostreaming services. These have been able to expand as a result of upgraded fixed-line infrastructure. Mobile broadband has similarly benefitted from operator investments in mobile networks and technologies, particularly with LTE which in early 2016 is commonly providing population coverage of up to 70%. Within the next few years LTE coverage will be far more extensive, and some operators will begin to close down their 2G infrastructure to concentrate on LTE and on upcoming 5G technologies.

FttP networks on the rise

Fibre broadband is also a strong area for growth in coming years. Much of the stimulus for investment is provided by competitive pressure, as well as encouragement from governments which, like their European and North American counterparts, have instituted plans to built national broadband networks. These are aimed at closing the digital divide between urban and rural areas, and at enabling all citizens to make greater use of the socio-economic benefits provided by access to fast broadband infrastructure.

Investments supporting bundled services

Examples of government and telco investment schemes in the region abound. América Móvil, to cite one case, has in train a $50 billion five-year investment program to deploy a 500,000km FttP network across its Latin American markets. The move was in part prompted by the arrival of AT&T into its home Mexican market. For its part, AT&T, which recently acquired two Mexican mobile network operators as well as the regional pay TV operator DirecTV, has ambitions to build up a North American Mobile Service area covering more than 400 million people in Mexico and the US.

For detailed information, table of contents and pricing see: Latin America – Telecoms, Mobile and Broadband Forecasts

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Potential value of smart cities to the economy

February 3rd, 2016, by

Based on a global estimate by Cisco – that the value of having an IoT infrastructure is worth some $5 trillion dollars to the public sector (smart countries/cities) – we have made a rough estimate for Australia. This public sector value gain is based on increased efficiency and productivity, as well as reduced costs through the deployment of new technologies.

Table 1 – Public Sector Value Gain (A$)

Public Sector Value Gain (A$)
Smart buildings $2 billion
Gas monitoring $1 billion
Smart parking $800 million
Water management $800 million
Road tolls/congestion charges $350 million
Better employment productivity $36 billion
A connected militarised defense $30 billion
General cost reduction $15 billion
Better citizen experience $8 billion
Increase revenues $2.5 billion

(Source: BuddeComm based on Cisco data)

The actual numbers are perhaps less important than the sheer size of these gains. In order for our societies to maintain their standard of living; and in order to lift that standard for those who haven’t reached it yet, it is critical that we take significant chunks of costs out of the public sector structures that we have built over the last 50-70 years, without diminishing the value we obtain from them.

We are already seeing the effect of such ‘digital’ savings in the consumer retail sector through the deployment of the internet. This gives us a glimpse of the future; but at the same time is only the tip of the iceberg, as with IoT we can go much further into such cost savings.

It is important to realise that from an economic perspective ‘smart cities’ is all about efficiency, productivity and cost savings. There are some new revenue opportunities, but in general they are only a fraction of the overall gains that can be made.

As a result of these gains cities will be more attractive to people, businesses and investors. These cities will be more transparent and responsive to the needs of these groups. Only smart cities will allow for the creation of new value-added jobs and businesses in the emerging connected, sharing, digital economy.  There is a massive move from people towards cities; and cities will increasingly have to compete with each other for people, businesses and investments. There is no doubt that the truly smart cities will be the winners in this development.

While no city in the world can claim to be the leader in this field there are thousands of examples in the leading cities around the globe – and increasingly in Australia also – that have very impressive scores on the board. The fact that most leading cities are now finally developing strategic smart city plans – or at least economically viable smart city projects – indicates that this is not just another blue sky story, but a solid business reality.

Add to this how people are embracing smartphones, the internet, and apps, and it becomes clear that people are more than ready to live in smart cities. The key to success for a smart city is to find the right investment and business models that allow us to reap those public sector gains, in a collaborative way between industry and public sector. These models will increasingly have to be based on city-as-a-service models, whereby cities will have to operate their smart city services based on an opex rather than a capex model.

Paul Budde

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As mobile growth eases, Asia’s top operators keep expanding

February 3rd, 2016, by

Across Asia a total of around 3.8 billion mobile subscribers were being served by a large number of mobile operators heading into 2016. The operators are continuing to drive the market, expanding it by between 5% and 10% annually at the moment. Whilst the overall growth rate in the region has moderated the sheer numbers are impressive. A new BuddeComm market report presents a wide-ranging review, providing details on around almost 200 of the mobile operators to be found in Asia in 2015.

The list of operators ranges from the giant China Mobile with more than 800 million subscribers right through to a number of much smaller operators with only a few thousand subscribers each. And of course there are the mobile virtual network operators (MVNOs). BuddeComm’s overview of mobile operators in the region does not claim to present an exhaustive list of the licensed operators but it is truly indicative of the breadth and variety of operators to be found in the region. It also reflects the highly commercial and competitive nature of the mobile sector in this region.

The focus of this report is on the operators within the individual national markets. Of course, in addition to these individual operators there are those companies such as SingTel, Vodafone, and Axiata (formerly Telekom Malaysia International) that have built a substantial presence around the region beyond their own domestic market through their shareholdings in operators in multiple other markets. While this aspect of the regional operations is not discussed in any detail, it is mentioned in passing in the relevant country reviews.

Asia – total mobile subscribers – 2002 – 2015

Year Subscribers (million) Annual growth
2002 430 32%
2003 548 27%
2004 679 24%
2005 836 23%
2006 1,078 29%
2007 1,398 30%
2008 1,773 27%
2009 2,167 22%
2010 2,643 22%
2011 3,057 16%
2012 3,205 5%
2013 3,457 8%
2014 3,691 7%
2015 (e) 3,865 5%

(Source: BuddeComm based on industry data)

In table below the top 15 operators in Asia are shown ranked by subscribers as of end-2014. The table also shows the available subscriber numbers for 2015. It is noted that of the region’s operators these 15 (as listed in the table) have a combined share of 70% of the total regional mobile subscriber base. In other words, less than 10% of the total number of operators in the regional market control 70% of the total subscriber base. This list of top operators has remained relatively stable over the last year or so, with few changes to the leading group.

Table 2  – Asia – top 15 mobile operators by subscribers – 2014 – 2015

Rank1 Operator Country 2014

Subscribers

(million)

2015

Subscribers

(million)

1 China Mobile China 807 817 (Jun)
2 China Unicom China 299 289 (Sep)
3 Bharti India 221 231 (Jun)
4 China Telecom China 186 191 (Jun)
5 Vodafone Essar India 179 184 (Mar)
6 Idea Cellular India 151 162 (Jun)
7 Telkomsel Indonesia 141 n/a
8 Reliance Communications India 106 111 (Jun)
9 BSNL India 81 77 (Mar)
10 Aircel/Dishnet India 79 81 (Mar)
11 Smart Comms (PLDT) Philippines 70 70 (Mar)
12 Tata Teleservices India 66 66 (Mar)
13 NTT DoCoMo Japan 63 67 (Jul)
14 Indosat Indonesia 63 69 (Sep)
15 Viettel Vietnam 55 55 (Jun)

(Source: BuddeComm based on industry data)

Note: 1ranked by number of subscribers at end-2014

While the overall regional growth rate has eased considerably in the last few years, there are still some countries (and therefore operators) with growth rates well in excess of the regional average. Then of course there are the various growth patterns within the overall subscriber numbers. In this respect, the phenomenal growth of mobile broadband must be mentioned. Operators across the region have been responding to the huge demand for mobile broadband access.

For detailed information, table of contents and pricing see: Asia Mobile Operators and MVNOs

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Asia home to over 50% of world’s mobile broadband services

February 2nd, 2016, by

With some 3.7 billion people across Asia using mobile phones – over 50% of the mobile subscribers in the world – spread across a diverse range of markets, the region is already rapidly advancing in the adoption of mobile data/wireless broadband services.

Asia – mobile services and mobile broadband – subscribers/penetration – 2012 – 2015

Category 2012 2013 2014 2015 (e)
Mobile subcriptions
Subscribers 3,205 million 3,457 million 3,663 million 3,737 million
Penetration 80.9% 86.4% 90.6% 92.0%
Mobile broadband subcriptions
Subscribers 605 million 741 million 1,201 million 1,726 million
Penetration 15.3% 18.5% 29.8% 41.0%
Proportion of mobile subscriber market 18.9% 21.4% 32.8% 46.2%

(Source: BuddeComm based on ITU data)

As the penetration of mobile services in Asia moved from 80% to 92% in the four years up to 2015, the share of mobile broadband services as a proportion of the still growing mobile subscriber base moved rapidly from 18% to almost 50%. Growth across the region in high speed access to the internet by means of mobile broadband services has been largely driven by highly competitive markets combined with the preparedness of the customer to embrace new generation mobile technologies. With 3G and 3G+ platforms extensively covering the region, mobile broadband services have already become well established.

The rapid take up has been underpinned by increasingly cheaper smartphone prices and lower airtime tariffs combining to support even wider adoption. And now, of course, we have 4G/LTE providing a fresh impetus, not only in the region’s pace-setting markets, but right across Asia.

In the context of mobile broadband services, we should not ignore the WiMAX platform. Whilst there has been some activity in the providing of fixed WiMAX networks, the real test has been the advent of mobile WiMAX. The roll-out of WiMAX-based mobile services in Asia has begun; however, significant rollouts have been limited to just a few markets. The technology is looking more and more like a platform suited for niche markets. Pakistan, Bangladesh and Malaysia have notable WiMAX roll outs.

By end-2015 mobile broadband subcriptions in Asia totalled just over 1.7 billion – about 50% of all the mobile broadband subscribers in the world. The number of mobile broadband subscribers in Asia was growing at around 45% annually heading into 2016.

For detailed information, table of contents and pricing see: Asia – Mobile Broadband – Statistics and Analyses

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UAE introduces fixed network sharing agreement

February 1st, 2016, by

The United Arab Emirates is one of the most advanced telecoms sector in the Middle East and with a government actively supporting Smart City and Digital Transformation initiatives – the future for the sector continues to look bright. This is assisted by the high rate of fibre penetration in the Emirates, where around 85% of all fixed broadband subscribes utilise FttH/FttP.

A milestone was reached in October 2015 when the TRA announced it had implemented fixed network sharing across the UAE. Both Etisalat and Du are now able to utilise fixed infrastructure and market services across all locations. This signalled the end of six years of negotiations between the TRA and the operators. While the arrangement does not currently include Pay TV it is expected this will become included by the end of 2016.

The UAE possesses a strong mobile market which includes high smart phone penetration. The focus of the operators in recent times has been revenue growth through offering increased service options such as bundling aimed at increasing mobile data usage. Their efforts are succeeding with mobile data now making up over 30% of both Etisalat’s and du’s mobile services revenue in the UAE.

Further opportunities for telecoms in the UAE exist around the growing enterprise sector, underpinned by a high number of SME’s operating in the country. In particular there is a growing need for data centre and managed services, along with M2M solutions and increased mobile broadband offerings.

The UAE government at both federal and emirate level has been proactive in the digital economy and digital media sectors, with programs to encourage computer and internet use. Like other countries in the Middle East, the UAE aims to transition into a ‘knowledge based and highly productive economy’ by 2021.

Generally speaking, e-commerce is growing in the stabilised markets of the Middle East and the UAE’s growing wealth and internet usage have spurred the development of e-commerce, with more and more shoppers being attracted by the value of online purchases, secure payment facilities, the reputation of the website, and the speed of transactions. The United Arab Emirates is also a prime location for the rise of streaming video and video-on-demand services due to its strong mobile and fixed infrastructure and a population which traditionally enjoys TV and entertainment.

For detailed information, table of contents and pricing see: United Arab Emirates – Telecoms, Mobile and Broadband

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