LTE is good to go, so now what?

By Edwin Yapp December 6, 2012

Much awaited LTE spectrum allocation finally gets released; 8 companies from initial 9 shortlisted get the nod
Operators must get their basics right including 2G & 3G services before singing the LTE marketing praises

NEWS ANALYSIS: THE government, through industry regulator the Malaysian Communications and Multimedia Commission (MCMC), has finally announced the allocation of the much-anticipated 2600 MHz (2.6GHz) spectrum band to eight operators for the deployment of Long Term Evolution (or 4G) wireless technology.

According to a press statement yesterday, the eight companies in alphabetical order are Celcom Axiata Bhd, DiGi Telecommunications Sdn Bhd, Maxis Broadband Sdn Bhd, Packet One Networks (M) Sdn Bhd, Puncak Semangat Sdn Bhd, REDtone Marketing Sdn Bhd, U Mobile Sdn Bhd and YTL Communications Sdn Bhd.

Of the nine companies that were awarded licenses under certain conditions in December last year, one company seemed to have missed out on the assignment – Asiaspace. The other eight are what the industry has called 'the usual suspects', which were primed to get the nod to go ahead with an LTE rollout.

LTE is good to go, so now what? At the time when these licenses were first awarded a year ago, tongues were wagging, notably questioning three main issues.

The first was whether or not Malaysia, having only 28 million people, would need nine LTE providers to serve such a small market; the second was why some companies were assigned the precious spectrum even though their existing business was not doing well.

The third was why was a new operator, Puncak Semangat – ostensibly with ties to a powerful local billionaire, Tan Sri Syed Mokhtar Al-Bukhary – was allocated 40MHz of spectrum despite its lack of proven expertise in running a complex wireless business.

In its press statement yesterday (Dec 5), MCMC chairman Dato’ Mohamed Sharil Tarmizi said that his agency is always committed to finding the right balance between the needs of consumers, investors and other stakeholders of the industry.

“We believe that the balance struck between ensuring healthy competition in the market and promoting industry development will help spur continued growth for existing service providers and provide opportunity for new market entrants.”

Unfortunately looking at yesterday’s announcements and statements, we’re no closer to answering any of these questions, a year on. Malaysia needing nine, or now eight licenses, goes against the international norm, according to an analyst.

LTE is good to go, so now what? Nicole McCormick, Ovum senior analyst, said this [spectrum assignments] would make it hard for operators to achieve profitability, and past mobile consolidation in Malaysia shows this.

“Heavy discounting by operators will likely emerge as nine mobile broadband players contend for market share,” McCormick had said in ZDNet Asia.

When asked if awarding 30MHz of LTE spectrum to a nascent player such as Puncak Semangat was a good idea, the Ovum analyst said such practices went against global trends. She noted that in several Asian markets such as Vietnam, India, Indonesia and the Philippines, the trend was towards consolidation, rather than the licensing of new players.

McCormick added that she expects consolidation to happen in the next few years as four of the cellular players may become three.

"On the WiMax side, it will be difficult for even two nationwide players -- as Malaysia has the most aggressive WiMax play in Asia -- to compete alongside three to four LTE players," she said.

Besides this, there are also concerns as to what happens should some of these eight players find it too hot to handle the competition.

Quoting from the same article, a senior telco executive had then questioned how many of these players are going to re-sell their spectrum allocation [at a later date] should they not be able to roll out LTE networks, given that some of them haven't been successful [with their WiMax rollout] in the first place.

“And what are the mechanisms by which MCMC will use to monitor their business plans this time?” he said then. “At the end of the day, the allocation of government resources should not be used as a get-quick rich program,” he said, noting that spectrum is a national resource that should only be given to those who have a proven track record and can deliver value to the country.

Get the basics right

As much as the industry and consumers would like to complain about this matter, the situation seems inevitable with the final allocation of these assignments.

LTE is good to go, so now what? While the industry can’t make more headway as to the aforementioned questions, consumers however can pressure service providers to buck up and ensure that these new LTE services are rolled out properly.

MCMC in its statement said that existing service providers may use the 2600 MHz allocation to meet consumer demand, while new players are expected to bring fresh ideas and innovation to the market.

The industry regulator added that it expects service providers to enter into smart partnerships and sharing agreements between them, which include spectrum and radio access network sharing in order to utilize larger bandwidths, lower the cost of roll out and offer better 4G-experience and affordability to consumers.

It also expects 4G wholesale MVNO (Mobile Virtual Network Operator), which will also be offered to other service providers that do not get access to the allocation.

While these are laudable goals for the eight players to work towards and achieve together in what is known in today’s industry parlance as “co-opetition,” there are still some hard realities we need to face.

The first is to ensure that before these players sing the hype of LTE and its wonderful promises – which are often couched in glitzy marketing promotions and advertisements – basic services from legacy systems such as 2G to 3G are up to par.

Many have experienced, and are still experiencing, poor service now with their existing systems and so this time around, consumers should demand more from their respective service providers.

Hype always trumps reality in marketing, but this time around, it’s incumbent on service providers to go back to the drawing board and ensure that the fundamentals are right before sounding the LTE trumpet.

What this means in practice is for them to ensure that in everything they do, they have the customer at the top of their minds.

From the design of the network, rollout plans, customer provision and activation, customer service enquiries and complaints, right down to billing disputes, and even to the termination of service -- everything should be about customers and their experience.

This implies that they have to provide top-class service to their customers. No more must the customer experience inept call center officers who are just parroting a checklist when helping customers troubleshoot their problems; no more advertisements that claim high speeds and high quality that are not actual; no more promises of deadlines are not met.

What customers want today is a reliable service that is affordable, easy to use, and which meets their needs.

And with LTE, this should be non-negotiable.