|Issue:||Asia-Pacific III 2012|
|Topic:||4G technology is not an evolution, it’s a disruption!|
|Organisation:||Packet One Networks (Malaysia)|
Michael Lai is the CEO of Packet One Networks (Malaysia) Sdn Bhd (“P1”). He passionately believes in enriching lives through the power of high-quality, high-performance 4G broadband connectivity. He is a pioneering member of Global TD-LTE Initiative (“GTI”) and a WiMAX Forum Board Member, with over 20 years of ICT industry experience. The Peak Magazine dubbed him the Wizard of Wireless and Mobile World calls him ‘Malaysia’s Mr. Broadband’ for his efforts is pushing the boundaries of 4G broadband penetration.
Michael leads one of the world’s leading 4G telecommunications companies – P1, with the challenge to develop the startup right from ground zero. Today, with Michael at helm, P1 has grown from zero to RM1.3 billion (US$371 million) in market capitalisation, with close to 400, 000 subscribers and over 50% population coverage in less than four years. P1 is now the global Malaysian Brand, the world’s largest 802.16e 2.3GHz 4G WiMAX network, outside Korea.
Prior to joining P1, Michael was the CEO of TMNet, the region’s largest Internet service provider during his tenure. Under his dynamic leadership, TMNet was transformed into a billion-dollar enterprise with over 1 million subscribers within only 18 months. Michael was also previously Senior Vice President of Branding and Market Development for Celcom, and Marketing Director for Oracle Malaysia. He is an Electrical Engineer by training with a Master’s degree in Business Administration.
Conventional telco charging used to be by Time and Distance – now charging is quite different. In fact we all changed our behaviour – more reading/typing than speaking. In Japan, Data ARPU has now exceeded Voice ARPU, despite the many free services. Operators who opted for 4G technology early with WiMAX, can support explosive data consumption which would crash a 3G network in no time. Now they are progressing to upgrade WiMAX to TD-LTE, ahead of the region, which is gearing up for 4G, with TD-LTE rolling out in Japan and in China. Unlike Voice networks that can be dimensioned reliably, the ability of Data network to withstand huge volumes is anybody’s guess, so no one knows the effect of migrating to 4G.
If the seven billion people on planet earth start calling each other concurrently using the mobile phone, traditional telcos will know how exactly to dimension the network. However, if the seven billion people go online at the same time, no one will have a clue on how to go about it. How does a conventional telco make money? It is based on two fundamental aspects – Time and Distance. Still, remember how we used to get charged when calling our relatives next door or to other states? For a domestic call, the further the distance, the more expensive it is. For international calls, apart from distance, charges differ according to the duration of your call, plus during peak or non-peak hours. That is how conventional telcos profit from the voice business.
Research firm Ovum indicates that consumers’ increasing use of IP-based social messaging services on their smartphones cost telecom operator US$8.7 billion losses in SMS revenue in 2010 and US$13.9 billion in 2011. Change is in the air. Technology advancement brings us amazing benefits such as free online communication tools. Applications like Whatsapp, Viber, Skype, Google Talk and many more, offer us cheap or even free instant messaging and voice calls. These free applications are threatening telecom operators’ bread and butter.
After the launch of 3G in 2005, I noted the phenomenon that we spend more time reading than talking on our phone. I am a typical example of this change – heavy instant messaging and data user. About 90% of my mobile phone usage is on reading and typing. Only a fraction of the time is used for talking on the phone.
US research house, Senzafili Consulting pointed out that Softbank, the third largest mobile operator in Japan by number of subscribers, became the first operator worldwide to have Data ARPU (average revenue per user) higher than its Voice ARPU in 2010 . Conventional telcos are well aware of the necessary changes that must take place. However, decision makers are sceptic between when and which strategy to reinvent the business model.
Take an example of a local green-field operator who started up directly from an all-IP (Internet Protocol) technology, using WiMAX. Its business case differs from the 3G incumbent’s, which still uses circuit-based technology. This telco’s 4G WiMAX network is designed to provide high-speed and high-capacity broadband from the start. On average, every one of its users consumes 17GB of data per month. This would crash a 3G network at any point in time because it is not designed to withstand such massive loads of data transmission – unlike 4G network architecture.
This local telco’s existing business model is being tested and modified since its inception to cope with the explosive data consumption by customers. In other words, rolling out WiMAX gives the Company lead time in All-IP data management. In a media showcase in April 2011, the Company has successfully demonstrated the ability to transition a WiMAX network to a TD-LTE network in just 30 minutes via a mere software upgrade.
On the devices front, the telco’s parent company is developing TD-LTE devices. Globally, the momentum for TD-LTE devices proliferation is quickly taking shape. GTI (Global TD-LTE Initiative) has over thirty devices developed and tested. They range from USB dongles, mobile routers, tablets, MIFIs and even smart robots. TD-LTE will be the springboard for the local telco company to tap into true mobile broadband, as well as the Machine to Machine communications market, a new, virtually limitless, level playing field for everyone. It is now just a matter of time for the whole ecosystem to ramp up and that is happening very soon. This is a fact – Softbank has already commercially launched its TD-LTE network in Japan, China Mobile having trial in six major cities in China, Reliance in India just firmed up its technology partner and many more deployments are expected in the pipeline.
LTE will bring true super high-speed 4G broadband. The technology is ready to show off its capability and operators must be ready to take up the challenge. Regulators are playing a crucial role where the policies will have a direct effect on the operators’ business model. As I always say, if the 7 billion people on this planet start calling each other concurrently, traditional telcos will know how to handle the network. However, if the 7 billion people go online at the same time, no one will know how exactly to dimension the network. This is simply because the users may access to multitudes of applications and content sources from the Internet on multi-devices.
One classic example is the new iPad which supports LTE in the US. Operators in America such as AT&T and Verizon are now facing a challenge of the surge of data that will potentially crash their LTE network . Therefore, is 3G to 4G an evolution? More likely it’s a Disruption! So, are we ready for the future? As Ronald Reagan once said, “You ain’t seen nothing yet”. “Broadband is not a privilege, it’s a right for all” – Michael Lai.