Bottom of pyramid stirs excitement for Telenor

• Data demand being driven by unlikely segments such as migrant workers
• Need for access across bands, transparency in Malaysian spectrum roadmap

“SEVEN months ago, I would not have been able to tell you this,” says an excited Sigve Brekke (pic), executive vice president and head of Telenor Asia.
 
What he is referring to is the recent data phenomenon that Norwegian state-owned mobile operator Telenor has seen in its Asian operations. Brekke is excited not about the amount of data but its unlikely source – “from the lowest part of the pyramid which is now demanding data too.”
 
From the villages of India and even Bangladesh with its US$800 per capita GDP (gross domestic product), to the migrant communities in Malaysia, Telenor is witnessing mass market customers beginning to demand data too.
 
In Malaysia, migrant workers are starting to use data, downloading content and experiencing their first emails.
 
“There is demand where no one had thought possible nor affordable, and it is picking up,” says Brekke, describing demand in India as “really exploding” and pointing out that Bangladesh is now the fastest growing Facebook market in the world.
 
As an operator which has a strong presence in India, Pakistan, Bangladesh, Thailand and Malaysia, with Myanmar on the verge of joining its ranks, Telenor is understandably excited at the prospects this emerging demand for data offers.
 
More so when it has embraced the phrase ‘Internet for All’ as its underlying mission. Incidentally, the phrase was first used in a marketing campaign in Telenor’s Malaysia subsidiary DiGi Telecommunications in late 2009.
 
Myanmar challenges, opportunities
 
In Myanmar however, delivering the ‘Internet for All’ may have to take a backseat to other pressing challenges Telenor will face, the first of which is just getting the actual licence, after which it have just nine months to roll out its services. The licence condition stipulates that voice and data must be offered simultaneously.
 
While Telenor is competing against two other telcos for the licence in Myanmar, its ambition is to be the top operator in the country by offering quality services and going out to the rural areas to cover as many people as possible.
 
Brekke is confident that Telenor can be the market leader, based on the strength of its experience operating in other Asian markets with populations that have very little earning power, as in Myanmar.
 
“We are recruiting from all Telenor Asia companies to take the learnings and quickly deploy them,” he says, pointing to the distribution models from India and Bangladesh and its brand strategy in Thailand, which incidentally has strong cultural similarities with Myanmar.
 
Pressure on spectrum resources
 
This thirst for data that has now crossed economic strata and social tiers is however placing more pressure on telcos to ensure they have sufficient spectrum across the various bands.
 
Which is why Brekke stresses the importance of regulators providing operators with the entire spectrum roadmap, “where we would like a bit of spectrum across all the bands as that is the most efficient way of using data to serve our customers.”
 
While he would love for Telenor to get more spectrum across the various bands, he acknowledges that if it gets a bit of spectrum across the various bands, “then 10MHz per band is enough. We need sufficient spectrum to deliver data in volume.”
 
In Scandinavia, Telenor also has fixed line assets to deliver broadband to its customers, but Brekke affirms that the strategy in Asia, including Malaysia, will be purely mobile. “We assume [in Malaysia] we will get access to sufficient spectrum. There are no fixed broadband plans.”
 
Yet he also makes special mention of the lower bands or ‘coverage bands’ as the 700 MHz and 800 MHz spectra are known as. He describes them as “extremely important for us to get a hold of.”
 
This is generally because the cost of covering an area using the lower bands can be up to 70% less than if the same area was covered using a higher band spectrum, which requires a much heavier investment in infrastructure as the signals travel shorter distances, and thus carrying such signals require more network equipment.
 
Because of the heavy data focus moving forward, Brekke shares that Telenor feels 4G (Fourth Generation) and LTE (Long Term Evolution) in the 2.3MHz and 2.6MHz bands are actually more valuable than 3G (Third Generation) bands.
 
This is down to the simple fact that 4G technology, whether WiMAX or LTE, is much more optimally geared to deliver data than 3G technology.
 
Which brings up the question of Telenor’s interest in Malaysian WiMAX operator Packet One Networks (P1). There have been market murmurs that P1 is looking for suitors.
 
To this, Brekke says, “We are constantly talking to various players and they [P1] is one of them, but there is nothing serious going on now,” however adding that Telenor’s interest in any of the players in Malaysia is also tied to the spectrum roadmap the Government will eventually announce.
 
Malaysia as role model
 
Transparency is the key here, with Brekke expecting all players to have an equal chance to get spectrum.
 
He praises the Malaysian Government in the manner it has awarded spectrum in the past, with the results clear to see.
 
“You [Malaysia] have created a healthy industry with competition between the operators benefiting consumers, while at the same time balanced [this] with the operators enjoying good business too.
 
“You actually don’t see the same balance in other countries where either the governments get greedy and customers suffer as a result of high spectrum fees operators have to pay, or when the process [in awarding the spectrum] is not transparent.”
 
Indeed, within the Telenor group, DiGi is held up as the role model insofar as how to price data offerings which are optimally geared to meeting customer needs and maintaining operator profitability.
 
“Over the long term, you need to find a model that allows you to meet customer demands while ensuring there is a sustainable business for operators too,” he says, warning of the experience of operators in Norway.
 
Operators there got stuck in a corner and destroyed the market by giving away data too quickly and aggressively, to the point they could not charge optimally for it. This may be great for customers in the short term, but is disastrous for them in the long term.
 
“I hope this does not happen here, but I feel Malaysia stands out for having found the balance in pricing and meeting customer needs. I hope the rest of Asia learns from the Malaysian pricing model,” he says.
 
Previous Instalment: Telenor out to avoid the ‘dumb pipe’ nightmare
 
 
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