|Issue:||Latin America 2007|
|Topic:||Innovation for growth|
|Author:||Adenor Martins de Araujo Junior|
Adenor Martins de Araujo Junior is the Vice President of AGM Telecom and is responsible for AGMís Marketing and Sales operations. Mr Araujo Jr. has over 11 years of telecom market sales, marketing and management experience. Prior to AGM Telecom he worked at Banco do Brasil. Mr Araujo Jr. graduated in Electrical Production Engineering from Federal University of Santa Catarina, UFSC, Brazil.
As in the rest of the world, wired telephony has been under pressure in Brazil for some time. Although the number of lines has grown marginally, the number of lines in service has fallen and the operators are losing ground to mobile services. Broadband, digital subscriber lines, DSL, is the one area where the fixed operators control the market and are growing. Operators look to unified service applications, content delivery and next-generation, IP-based networks to build future ARPU growth.
The Brazilian telecommunication market, especially the mobile segment, has grown significantly in recent years and has seen great evolution in applied technologies. Due to its smaller legacy access network infrastructure compared to North America and Europe, the results of growth in Latin America are easier to perceive. Mobile and convergent technologies, such as VoIP, Voice over IP, have made possible great advances in a short time. Brazil is growing significantly, if not consistently, throughout its entire population. The market wants applications that are only possible with the new networks IP/NGN, Next Generation Network, but modifying or replacing existing legacy POTS/TDM, plain old telephony/ time division multiplex, network infrastructure is challenging. To be cost-effective, extreme care is needed selecting the technology, applications and content. Although the new technologies have great potential, there is a perceptible lack of suitable content and applications. Brazil is a country of widely varied regional characteristics, inhabited by a rich variety of cultural and ethnic groups; consequently, the cultural and socio-economic context plays an important role in the introduction of new services and content. Due to this complexity, the Brazilian market will be continually attractive, if enriched by innovative services and contents. The market needs innovative service providers and creative content that can manage, that can take advantage of technological evolution, and move ahead despite the intervention of the regulating and consumer protection agencies. Development of the sector will depend upon Unified Communications applications, content and the ability of the operators and service providers to package the services and applications attractively. Applications The need to be competitive is forcing business users to adopt Unified Communications as a way to improve their operational efficiency. Unified Communications applications and services include: ï Virtualization – services are available wherever and whenever they are needed, not only in the office during business hours. Virtualization makes it possible to work any place and have the same access to content, information and applications available in the office; ï Mobility – wired and wireless – o Wired – Workers can move freely between different sites in the enterprise and, by logging on to whatever fixed terminal is available, have access to their own extension number to receive and make calls; o Wireless – A softphone is software for making telephone calls over the Internet using a PC. It can be used at WiFi hot spots at airports, home-offices, hotels, etc. When the local service providers offer fixed-mobile integration FMC, fixed-mobile convergence, multi-mode mobile phones will work as a mobile when in the street, or as an extension in areas covered by WiFi or Bluetooth. These multi-mode devices combine GSM or CDMA cell phone service with other wireless technologies such as WiFi, WiMAX, Bluetooth and the like. In principle they work with whatever network has the best performance and or price advantage; ï Rich Media, voice, video and web collaboration – Unified Communications integrate voice, video and web communications within a single device or interface; ï Presence, intelligence in the network – ëPresenceí lets you know if your contacts are available and on which type of device they can be reached. It is a tool that tracks availability on all the devices where a person might be available – business phone, mobile, home phone, instant messaging, IM, email, etc. It shows which devices the person is available on at any given moment. By eliminating wasted calls to devices that are not in use, it increases the agility of communications. ëPresenceí can be used with notebooks, desktops or even mobile smartphones; ï Policy & Preference, find me, follow me, and hide me – Policy and preference tools let users define and manage the way they can be contacted in accordance with the place, technology and personal availability at any given moment. A user can define contact only by IM during a meeting, instead of mobile, for example; ï Speech, simple access to services – Speech recognition applications can simplify access to services. These applications, initially implemented in the enterprise, will soon be available to other users, by service providers with new sales models looking for new markets. Content Content is the biggest challenge for operators and service providers. Understanding the consumer is essential for any content provider. It is a challenging task to create and offer content that appeals to a wide range of consumer segments in a large country like Brazil, where you find a variety of strong regional characteristics and cultures. The content must constantly innovate, all driven by the local and cultural interests of its consumers. Fixed-line networks are losing traffic and clients to mobile networks. Appealing content is essential to build and maintain network traffic. Broad-context content is losing space to regional and personalized content. For low-income consumers, originality and regionalism are decisive. Interactive content is an efficient traffic builder in this type of environment, since the bilateral, interactive, communication involves the user and produces traffic within communities and regions with similar social characteristics, knowledge, culture and interests. The great innovative trend in content production, nowadays, is content produced by the user. User produced content, distributed and broadcast using viral (friends telling friends to watch) techniques have drawn an enormous number of viewers to sites such as YouTube, for example. As users gain more and more access to the Internet and to mobility, and communication devices add more features, virally propagated content will gain strength and new users will appear creating content and inventing new ways to propagate it. Service provider New models will appear and new applications will arise for use in both business and the consumer markets. In Brazil, where investments in infrastructure are limited, and businesses and consumers are price sensitive, services and content offered by providers are still dominant in the market, however the distribution of this content is still somewhat limited. Part of this results in the desire of telecom operators to provide, themselves, all types of services and content to the consumers and users. Many of these operators do not believe in dividing their income with partners better prepared than they are to provide top-notch content and more focused on the userís needs. New content and Unified Communications applications are vital parts of the coming service model. Although these applications are still limited to the enterprise, service providers will see to their spreading to the general public. Telecom operators According to ANATEL, Brazilís telecommunications regulatory agency, the Brazilian mobile market reached the mark of 106.7 million mobile accesses in June 2007, of which more than 80 per cent are pre-paid. At the same time, though, the number of fixed-line terminals increased, the number of active terminals fell. Most mobile phone users have pre-paid accounts. They have low-incomes, own low-end phones with few features and make very limited use of new IP-based applications. On the other hand, we have the high-end technology consumers, many of then business users, who want the technology to support the latest, most powerful IP-based applications and content; they demand networks with great coverage and increasingly faster Internet access. Based on fixed-line market statistics, the migration of users to a mobile network – based on its anywhere availability, pre-paid plans and attractive sales bundles – is obvious. The great challenge for the fixed-line telecom operators is, ëHow to increase income given the drop in active line-usage?í One way is to reinforce and expand relations with service and content providers focused on the voice segment. Another way is to accelerate broadband Internet access coverage and migrate to Internet Protocol next-generation networks, IP/NGNs, that support the sort of compelling new applications that will compensate for the drop in voice traffic. The challenge is not simple, especially since cable TV operators with cable modem broadband access can provide access to the same convergent applications. Some telecom operators have been trying the fixed-mobile convergence model; however, the services and applications offered are limited to the regions they cover. As a result, many operators and service providers are investigating mergers and acquisitions to increase their coverage. Telecom operators are investing in services and content to attract and keep users in todayís highly competitive market. Nowadays, they would rather share the revenue than lose the clients – and the profits – to the competition.The Brazilian telecommunications market is still developing; there are many exciting new business opportunities, even now, to increase ARPU, average revenue per user, and profits. Innovation and investment will be needed to take advantage of these opportunities as they appear.