Home Asia-Pacific I 2009 ICT convergence and implications

ICT convergence and implications

by david.nunes
Author's Picture Issue: Asia-Pacific I 2009
Article no.: 13
Topic: ICT convergence and implications
Author: Naeem Zamindar
Title: VP & Head, Broadband Business Division
Organisation: Mobilink, Pakistan
PDF size: 279KB

About author

Naeem Zamindar is the VP & Head of the Broadband Business Division at Mobilink, Pakistan. Mr Zamindar was part of the start-up team responsible for setting up Mobilink. Mr Zamindar previously led 23 venture capital investments for Intel Capital in of Santa Clara, CA, in sectors enabling the broadband economy. To give every Pakistani an opportunity to connect to interactive TV via high-speed Internet, Mr Zamindar is currently transforming Mobilink into a total communication services provider utilizing its extensive fibre optic and WiMAX network under the brand of Mobilink Infinity (www.mobilinkinfinity.com). Naeem Zamindar holds a MBA from INSEAD and a CPA from the State of Washington, USA.

Article abstract

Broadband Internet service in Pakistan is quite limited; only 200 thousand of its 165 million inhabitants have high-speed Internet access. The cost of providing access was, until recently, prohibitive. Pakistan has over 90 million mobile subscribers today, so the convergence of mobile voice and data promises to bring affordable Internet access – and a socio-economic revolution to the country. This will follow the example of mobile WiMAX, which leverages existing fibre, microwave and cell backbones for its distribution network.

Full Article

Convergence offers a great opportunity to enable our customers’ lives in ways that were not possible in the past – creating great value for society and profits for the communications industry at large. Convergence is the only way forward; players that leverage this opportunity will lead the future. It is not only about converging different technologies, but more importantly, converging different services and applications using this connectivity to enable completely new uses of that connectivity. I will share with you the perspective from a GSM mobile telephony provider that has worked to leverage this opportunity for convergence in a developing market like Pakistan. Pakistan has seen a massive growth in its teledensity – driven entirely by the GSM mobile telephony – from less than two million subscribers to over 90 million subscribers over the last five years. This growth has heralded an era where a vast majority of the population has basic telephony connectivity for the very first time – revolutionizing their social and economic lives. This happened primarily because of intense competition, the increasing affordability of handsets, easy availability and usability due to ‘plug and play’ devices, off-the-shelf products, and scalability of the technology associated with wireless and prepaid business model. Now, the game is to leverage this platform and to create new value for customers through converged offerings. The tremendous growth fuelled by intense competition has forced down the ARPU to less than US$4 per subscriber and increased churn rates to more than 20 per cent per annum. In anticipation of this trend, the key cellular operators pursued a path of expanding the mobile telephony relationship with the customer to deliver new services, making the relationship ‘stickier’ and generating new revenue streams. Over the years, these new revenue streams will mature and make these customer relationships more valuable and long lasting. Only a few years ago it seemed that the digital divide could not be resolved in the near future because of the prohibitive cost of deploying conventional wired infrastructure in developing countries. Wireless Internet connectivity, however, can resolve this bottleneck. The convergence of mobile telephony and data will ensure that data will achieve the success of voice, but data has far greater potential than voice alone could ever have. In Pakistan, we fortunately have the example of wireless broadband and telephony service for residential and enterprise consumers based on the mobile WiMAX standard, 802.16e-2005 (Rev-e). This service leverages existing fibre optic and microwave backbone infrastructure, cell sites, customer base and distribution network to rapidly realize this opportunity in a powerful and synergistic way to create a massive market opportunity. In a country with over 165 million people, 17 million already access the Internet using low speed dial-up connections; only less than 200 thousand have access to high-speed broadband service. Additionally, there are currently around six million households in the middle class, five million in the urban centres and one million in rural areas along with one million businesses that can benefit immensely from this service. From an operator’s perspective, convergence gives the freedom to provide any service with convenient technology under a single authorization and billing infrastructure. Convergence enhances economies of scale and greater efficiency by optimising infrastructure and resource sharing; this inevitably leads to lower costs and, obviously, greater profits. In Pakistan, a model for convergence is gradually being established with the support of the country’s regulatory body – the Pakistan Telecommunications Authority, or PTA. For the PTA, convergence means quicker rollouts and faster growth of both wireless telephony and Internet access; it ensures flexibility and efficient utilization of resources and encourages efficient small operators to cover niche areas, in particular, underserved rural markets. Finally, it facilitates easy entry and ensures a level playing field for all operators. The greatest beneficiary of this has to be the consumer. Firstly, the financial benefits of convergence will translate into ubiquitous availability of telephony and Internet services even in under-developed regions of the world. Secondly, consumers will get one-stop service and the lower operating costs will directly benefit them in the form of lower tariffs. Increased access will create an enabling environment for the growth of other businesses; it will create employment opportunities and raise the standards of living of the people. Most importantly, broadband becomes a delivery platform for services that are currently difficult to obtain. In a country where the educational infrastructure is weak, broadband has the potential to bridge the gap with powerful, interactive and engaging content personalized to meet individual needs and learning modalities. In a country with millions of educated women wanting to work from home, broadband provides an excellent medium to connect with employers and execute work. In a country where two-thirds of the population resides in villages, it allows producers of goods to engage directly with consumers without the middlemen that would otherwise earn most of the profit. There is a need to develop a platform around which an ecosystem of local content and services can develop and thrive with the help of telecommunications service providers that provide the billing and charging infrastructure to monetize this eco-system. In a mobile telephony market that is 98 per cent prepaid, the existing prepaid card infrastructure provides a way to pay for the new services accessed via mobile broadband. With millions of prepaid subscribers, mobile operators are, de facto, Pakistan’s largest issuers of debit cards. In a country where less than ten per cent of the population has bank accounts, and only one per cent has credit cards, mobile payments will evolve and bring banking facilities to the masses. This sort of convergence, bringing financial services to the population, will revolutionize commerce in Pakistan. In the larger picture, convergence is an enabler of development, both local and regional. It also has the potential to boost entrepreneurial activity and most importantly, enhance educational opportunities and access to healthcare and training for those sections of society that were otherwise outside the scope or on the periphery and hence, marginalized. If adequately employed and tapped, convergence could aid in filling the crucial gaps in Pakistan’s socio-economic indictors and truly create a difference. The challenges faced by developing countries, including Pakistan, are largely determined by its local political and economic conditions; nevertheless, the potential of this technology is so immense that it will break otherwise impenetrable barriers and provide the impetus for many developing countries to finally live up to their potential. Migrating current infrastructures to a single technology is a great challenge in itself, but the real puzzle has been developing single platforms that can use the same infrastructure to provide multiple communications and service environments. The convergence of infrastructures, technologies and services is a solution that offers immense savings for both the user and the service provider. By improving economic efficiency and productivity, convergence opens the window for innovation, new business opportunities, increased choice and lower prices that benefit all users. The convergence of the communications, media, education, commerce, banking and entertainment industries will create the new business models that will generate the next wave of successful companies. In developed markets, convergence changes consumer behaviour, but often offers little other than more cost-effective, improved, versions of existing services. In developing economies, however, the convergence revolution will cost-effectively satisfy currently unmet needs. This will fuel a socio-economic revolution by catering to the staggering mass of people at the bottom of the socio-economic pyramid.

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