Barometer reading

This year’s Mobile World Congress had a special resonance given the state of the global economy. Many punters were present to hear the prognosis for the industry in the coming 12-18 months, and while the show didn’t paint the cheeriest of pictures, neither did it paint the foulest

The barometer of the general state of the telecoms industry can best be gauged by what suppliers are saying; be they handset, infrastructure or software providers. Comm. considers the areas identified by the world’s largest equipment manufacturer Ericsson as driving the industry forward, and compares those with arguably the world’s fastest growing telecoms manufacturer, Huawei.

Ericsson
Ericsson’s primary focus at the Mobile World Congress in 2009 was in two main areas. The first dealt with creating new revenue opportunities for operators, and increasing efficiency in their operations by taking cost out of certain areas. The second area of focus was on sustainable solutions and alternatives, which Ericsson has made a long-term pledge to support.

The world’s largest telecoms equipment manufacturer believes it remains relevant for service operators to ask whether it is possible to generate more and new revenue streams in the current economic climate, given that the underlying fundamentals of the telecoms sector remain solid. Research conducted by the technology provider found that 75 per cent of people surveyed are still willing to pay for telephony services, while between 30-40 per cent of them would be willing to pay more for value added services that were relevant to them.

By 2012 analysts predict there will be six billion mobile subscribers on earth, one billion of whom will be based in emerging markets. Thus Ericsson forecasts that a growing trend presently and into the future shall be the question of operators being able to maximise their own channels in order to sweat their assets to as large a degree as possible. Dynamic discounting is such an example, whereby by an operator offers tariff discounts at times when the network is available.

In a recent case study on an African mobile operator, Ericsson found that a year after the operator implemented dynamic discounting, 60 per cent of its installed subscriber base had utilised the technology, which had reduced churn by 65 per cent, and had increase usage of the network by 70 per cent.

Ericsson also predicts that mobile TV is an application that will only grow in popularity, with more than 20 million users already connected. The scope to allow end-users the ability to continue receiving television content irrespective of whether they are in a fixed location or on the move is a concept the technology provider believes is quite powerful, and as such has been heavily involved with.

The idea of tailored television relates to an even larger phenomenon that Ericsson believes has significant market potential, which is the harnessing of social networking in the mobile environment. There are already 300 million people linked to social networks around the world today, and the ability to allow these users to access multiple accounts on the move offers significant potential.

At the Mobile World Congress this year, Ericsson launched a social networking portfolio for mobile network operators called the Pixl8tr initiative and the Social Media Portal. The technologies together offer simplified sharing of user generated content between contacts across diverse networks.

The Pixl8tr initiative is an open-standard solution that allows photo-sharing sites to interact in real time. Mobile subscribers are able to share social media across different operator portals and receive SMS notification of friends’ activities regardless of network.

Carl-Henric Svanberg is a big believer in economic benefits helping to push the cause of sustainability

With Ericsson’s Social Media Portal, operators are able to deliver Pixl8tr-compatible social networking services quickly. Consumers can connect to the social web using any mobile phone, and the solution does not require client downloads. Content is automatically backed up on a community portal that offers personal storage, synchronisation, unified messaging and services for sharing content.

Ericsson believes the development of such solutions ensures network operators are able to remain relevant to the social networking opportunity by being able to help create subscriber stickiness, while also securing a place in the social networking ecosystem. Such solutions also help network operators attract new customers, while potentially increasing brand awareness and driving network traffic.

Mobile advertising is another area identified by Ericsson as possessing tremendous potential for developing opportunities and adding new revenue streams. A growing number of advertising agencies have identified this very same opportunity, and Ericsson believes revenue leakage and assurance in this area is an issue that should be addressed early on in this area. Approximately 2-4 per cent of annual gross revenue at network operators is estimated to be lost through revenue leakages.

In terms of sustainability, Ericsson CEO Carl-Henric Svanberg re-committed the company to the reduction of carbon dioxide emissions of base stations by 10 per cent year-on-year for the next four years. For the global economy, the challenge is to reduce carbon dioxide emissions by around 50 per cent in 2050, at a time when global GDP is expected to triple.

“When there is no financial incentive (to have a green policy), then we’re back to legislation and regulation,” commented Svanberg, in reference to the requirement for organisations to have to identify ways in which to benefit from sustainability programmes. “We want to see a business case for sustainability issues. If on the poorest side there is a business case, then we believe there is scope for further successful expansion of sustainability efforts.”

Huawei
The China-based manufacturer saw a 40 per cent rise in sales in 2008, and according to Ihab Ghattas, the company’s assistant president for the Middle East, the manufacturer forecasts sales growth of 20-25 per cent in 2009. Thus while the economic crisis rages on around the world, Huawei appears to be more insulated than many large organisations given that it remains privately held and has thus not been subject to the stock market collapse of its competitors.

Huawei’s Ghattas would like to see more cooperation amongst vendors, network operators and national regulators in the Middle East

“As we are not publicly-traded it is an advantage in these market conditions,” Ghattas pointed out. “I think we still have a good year ahead of us. People will not stop talking, and what the industry needs to aid it along is just for investment to flow again. The industry itself remains fundamentally sound, and I am really optimistic about telecoms.”

Over the years Huawei has been able to reinvent itself from being perceived as a cost-saving alternative to established equipment manufacturers with a specialisation in emerging markets, to a full-blown global provider with references across all market stages.

“I think one of our main differentiators is our ability to package things,” said Ghattas. “We offer a full portfolio of products and services from handsets to managed services, which is becoming a large component of what we do.” Thus Huawei prides itself in its ability to offer a saving to costs-per integration and as such, forecasts it is in a position to grow over competitors.

According to Huawei, broadband is very much the name of the game, be it fixed or mobile, and given this trend Ghattas believes the evolution of billing modes to incorporate fixed fees is inevitable.

While previously the telecoms industry has developed by means of technology always being ahead of usage, it appears it has reached a stage whereby the current technology offerings are such that for the coming number of years no radical technology developments are expected. An example is LTE, which is set to start shipping in the latter part of this year and rolled out in networks during the course of 2010 and 2011. The technology is only likely to account for significant traffic flows in the 2012 time-frame.

In the Middle East region, Ghattas believes significant scope for growth in both legacy as well as next generation technology exists. “There is a patchwork of technologies that exist in the region, and I believe there needs to be further cooperation between vendors, operators and national regulators in the spreading of knowledge and in further investment in broadband,” Ghattas said.

Congress attracts close to 50,000 visitors

The GSM Association reported that more than 47,000 visitors (includes all attendees for the event, including delegates, exhibitors, contractors and media) from 189 countries attended the GSMA Mobile World Congress 2009. The four -day conference and exhibition attracted executives from the world’s largest and most influential mobile operators, software companies, equipment providers, Internet companies and media and entertainment organisations, as well as government delegations. Fifty per cent of Mobile World Congress attendees held c-level positions, including more than 2,800 CEOs.

Industry leaders from companies including AT&T, China Mobile, China Unicom, Ericsson, Microsoft Corp., MySpace, Nokia, Telefónica, Telenor, Verizon Communications and Vodafone attended the event

During the event, leaders from companies including AT&T , China Mobile, China Unicom, Ericsson, Microsoft Corp., MySpace, Nokia, Telefónica, Telenor, Verizon Communications and Vodafone, among others, gathered to address head-on the challenges presented by the global economic slowdown and outline strategies for sustaining growth. Additionally, the Congress delved into the world of mobile entertainment, with the one-day Mobile Backstage event featuring the MOFILM Mobile Short Film Festival.

The 2009 Congress featured 1,300 exhibiting companies and occupied more than 57,000 square metres of exhibition and hospitality space, a footprint 11 per cent larger than that of the previous year. Nearly 2,400 international print, Web and broadcast media attended the event to analyse and report on the many significant industry announcements made at the Congress.