Airtel and Vodafone Idea’s Q3 financial results, released last week, provided a stark reminder of the bleak operating environment in India at the moment, with structural consolidation providing only partial mitigation. The Indian mobile market is currently in the throes of a multi-year period of turbulence that can be traced to the entrance of Reliance Jio in 2016.

For a country with the world’s second largest population, a high growth economy and professed destination for foreign tech investment, the gulf between government rhetoric of a digital economy and the challenging regulatory environment it has presided over is in need of urgent redress.

From a consumer perspective though, things are rosy.

Jio’s entry in September 2016 triggered a rapid acceleration of 4G adoption, driven by free/zero-premium 4G tariff plans, cheap 4G feature phones (under $30) and increased handset availability from regional vendors. Today, 4G penetration has reached around 55 per cent of total connections from less than 10 per cent in 2016 – in the same timeframe, 4G adoption in Pakistan and Bangladesh has grown to 23 per cent (from 3 per cent) and 9 per cent (from 0.1 per cent), respectively. Meanwhile smartphones currently account for nearly two-thirds of total connections in India (up from a third in 2016), compared to 49 per cent in Pakistan and 40 per cent in Bangladesh.

[1]The price war that followed Jio’s entry means that India now has some of the cheapest mobile data pricing in the world, with the average price per GB (based on tariff plans) standing at around $0.26 (compared to the global average of $8.53). This in turn is driving high levels of data consumption: Indian smartphone owners, on average, listen to music online and stream video more than the global average (see image, left, click to enlarge), while the government’s flagship biometric passport (Aadhaar) has helped drive public service access from smartphones. In general, an average user in India now spends more than 17 hours per week on social media, more than in the US and China.
All of this is undeniably accelerating India’s digital transition: India will soon be the world’s second largest smartphone market (with an installed base of over 1 billion devices by 2025), 4G will continue to grow (80 per cent of total connections expected by 2025) and, amidst this massive digital transformation, the government is targeting 5G launches next year.
On the other side of the fence however, the operators are struggling.
[2]The aforementioned price war has had a significant impact on operator financials (see image, left, click to enlarge): annual revenues have declined by 30 per cent since September 2016, while annual EBIT has dropped from $2.7 billion to -$1 billion in the same time frame (a swing of almost $4 billion).
At the same time, the operators are facing a tough regulatory environment. In October, it was ruled that the operators will be required to pay the regulator a total of INR920 billion ($12.9 billion) in overdue levies and interest, made up of 3-5 per cent of their adjusted gross revenue (AGR) as spectrum usage charges, plus 8 per cent of AGR as licence fees. Airtel and Vodafone Idea are appealing the decision (specifically around how the AGR is calculated), but the outlook is bleak. Airtel and Vodafone Idea reported net losses of INR509.2 billion ($7.08 billion) and INR230.4 billion ($3.2 billion) respectively in their quarterly results last week, and rumours abound of Vodafone exiting the market (although it has denied this). Jio meanwhile, in a change to its wildly successful free calls proposition, has started to charge its customers for off-net calls in order to recoup the Interconnect Usage Charge (IUC) imposed by the Indian regulator.
These regulatory rulings come at a time when the Indian mobile sector is in a precarious financial position, and could potentially weaken the viability of the sector as a whole. Future network expansion and 5G plans could be put at risk, and there could be a domino effect on the entire digital value chain. Further, despite the obvious demand for data and digital services as outlined above, India’s visions of a world leading digital economy and ambitions to be seen as a poster child for a developing market becoming a fully-fledged digital economy in a short space of time (as outlined in its Digital India campaign) could hit some major road blocks.
This is particularly important as India looks to enter the 5G era, as a thriving mobile sector needs to be in place to help drive the creation and delivery of 5G products and services. The government should therefore seek to create an enabling environment for this to happen, encouraging operators to invest in the market and develop innovative services for the 5G future, rather than stifling them with punitive regulation that puts India’s entire digital future in jeopardy.
If all stakeholders work together in a supportive and forward-looking manner, the mobile market can get back in the fast lane and help drive the Indian, Asian and even global mobile economy forward.
Jan Stryjak, Senior Manager – Core Mobility Research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/ss2.jpg
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/11/ss4.jpg

With India electing a new government to power, the vision of a Digital India has been given a renewed focus, but with more vigour. All stakeholders are now forging ahead to turn the dream of 5G by 2020 into a reality. Fibre backhaul, in particular, is expected to be one of the key enablers for 5G in India. Its deployment will remain critical to successful 5G rollout, but this journey will not be a smooth one.

As mentioned in an earlier blog  – Will India get 5G in 2020? [1] – the lack of required infrastructure is a major challenge to 5G rollout in India. To that end, it’s worth understanding the Indian fibre story to date.

Where does India stand today?
According to the National Digital Communication Policy 2018, India enjoyed 22 per cent of fibre coverage between the towers as of March 2018. In order to extend world class high-speed internet connectivity, around 75–80 per cent of mobile towers will have to fiberised; this is the case in markets like the US, China, and Japan. Even getting to a 60 per cent milestone by 2022 (which some consider the bare minimum for the satisfactory delivery of 5G) means there is clearly a long way to go.

[2]India’s leading telecom operators are committed to invest in fibre; Jio leads the pack followed by Vodafone-idea and Airtel. The government, in turn, has already taken initiatives (most notably BharatNet) to connect the deep rural pockets with fibre. Earlier known as National Optic Fibre Network (or NOFN), BharatNet was conceived with a specific aim to connect nearly 600,000 villages and eventually enable them with commercial internet access.

Evidently, efforts are being made, BUT…

Indian problems
While the necessity of fibre deployment for 5G is obvious, there is no shortage of challenges which will conspire to keep the pace of rollout slow: terrain hurdles, differing right-of-way norms across states, quality & maintenance issues. All of this is compounded by limited clarity on active network equipment sharing between the operators.

Of course, there’s also the issue of cost. Fibre deployment is expensive and comes on top of spectrum costs – which could be high given a mega 5G spectrum sale (275 MHz) coming up. And this is when Indian telcos are already saddled with a staggering debt of USD62 billion[1] [3] as of March 2019.

Clearly, the hurdles are there but as a worthy mind once said, “where there’s a will there’s a way.” And to find its way through these roadblocks, it’s time for India to look into a few nation-wide fiberisation models pursued across the globe and learn what can help India convert this digital dream into a reality.

Predominant models of fiberisation:
Based on research, predominantly five broad models of nation-wide fiberisation emerged across the globe. The models on the top of the chart below (click to enlarge) are considered more successful by some, as they mobilise public-private partnerships in such a fashion that they tend to be more conducive to faster and sustainable expansion of the fibre network to even the deepest pockets of the nation, yet remaining viable for operators to survive financially.

[4]

Unregulated Private investment: In this model, service providers are free to invest in fibre where they deem it profitable. There is little to no regulatory pressure to unbundle to competitors, and regulated prices are not enforced.
Incumbent-led, graded government support: In this model, the incumbent operator, usually still with a tangible government investment stake or a high level of influence, is mandated to roll out an extensive national fibre network. Public money is involved directly or indirectly, and some regulation is applied to create a competitive environment.
Private-led, graded government support: While similar to the above model, the government in this model distances itself from the incumbents. Importantly, the government drives and partially funds a national fibre agenda through all the players in the market.
Government-controlled fibre: In this model, the government takes a full hands-on approach to creating and, in some cases, operating a national fibre network. The agenda behind this is open digital economy, and the objective of policy and regulation is to openly offer and possibly transfer the infrastructure to the communication service providers in the country for commercial service operation.
Private investment with heavy regulation: With its focus on private investment, this model assumes strong competition and easy access to financing. Further, this model then applies open access and regulated price controls so that other, usually smaller, operators can offer services without the burden of heavy infrastructure investment. The intent is to induce considerable infrastructure competition that drives low prices for highly specialised services.

What makes sense for India?
For efficient asset management, Indian operators are already taking noteworthy steps to rationalise the capex required to lay fibre:

Bharti Airtel and Vodafone-idea have spun off their fibre assets to separate entities respectively, to monetise the fibre. They have also been discussing the potential to share their respective fibre networks by creating a joint venture.
Jio is in the process of demerging the fibre assets into a separate company which could then be monetised through an investment trust (InvIT) structure. As of now, they plan to keep the 15 per cent share while potentially selling the remaining 85 per cent to five global investors, including Qatar Investment Authority and Canada Pension Plan Investment Board.

While a case can be made for all the models in India, a “Private-led, graded government support” model suits the most. This resonates with the recent recommendation by TRAI (Telecom Regulatory Authority of India), especially for extension of internet and fibre networks to rural India. Subsequently, DoT has recently proposed to tie-up with the country’s three private operators to ensure connectivity to every India village. DoT plans to work with the private operators by providing 100 subsidies on Capex incurred on extending the connectivity to 43,000 disconnected villages, and have also agreed to subsidise the operating costs for the next five years.

Finally, to tackle the biggest bottleneck – RoW (Rights of Way) – the right policies for permits is a must. There should be cooperation between central and local authorities, where the centre could help in resolving issues like enforcing advance notification of civil works for infrastructure deployment (e.g. road, sanitation, energy, telecoms) and creating a single point of information for granting permits. The state government on the other hand should change its approach to take a proactive stance on dealing with the RoW issues and treat the RoW approvals as social-economic enablers instead of a direct revenue source.

Bottom line – A lot is being done to make 5G a reality, but adequate infrastructure remains the most essential piece of the puzzle in order to become truly ready. Hence, it is important for the operators to continue to invest in additional fibre deployments as building blocks for 5G.

– Aryan Jain – Research Manager, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] [5] Source: Crisil

[1] https://www.mobileworldlive.com/blog/intelligence-brief-will-india-get-5g-in-2020/
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/08/breakup.png
[3] https://www.mobileworldlive.com#_ftn1
[4] https://www.mobileworldlive.com/wp-content/uploads/2019/08/india.png
[5] https://www.mobileworldlive.com#_ftnref1

At the GSMA’s China Week this year, stakeholders from the technology, media and telecommunications industry met in Beijing to engage and debate, and to reflect on key takeaways from MWC19 Barcelona.

Though I was unable to attend in person, the event also marked the culmination of a recent project of mine, with the launch of GSMA Intelligence’s (GSMAi) Mobile Economy China 2019 report. Here, we discuss major issues for the country’s broad mobile ecosystem, including operator financials; 5G; e-commerce; blockchain; and AI.

Mobile consumers have helped create a huge online marketplace
Chinese mobile users are enthusiastic social networkers and many are active on IP-based messaging apps. Tencent’s WeChat is now used by more than 1 billion people every day. China is also home to some of the most avid participants in e-commerce globally: the latest GSMAi Consumer Survey shows 69 per cent of smartphone owners use their devices to purchase goods or services online every month, with an additional 16 per cent doing so less frequently.

More significant, however, is how the intrinsic link between consumerism and the smartphone has established China as a contactless superpower. The main mobile apps are typically multipurpose platforms, offering travel booking and gaming, and incorporating digital wallet services (for example Alipay and WeChat Pay), which are now accepted in most bricks-and-mortar retailers. Some 81 per cent of smartphone owners use their devices for contactless mobile payment technology at least once per month, a substantially higher proportion than in some digitally advanced markets (see chart, below, click to enlarge).

[1]

Consequently, China has become the world’s largest market for B2C e-commerce, with a turnover of RMB1.7 trillion ($253 billion) in 2017, a 30 per cent annual growth rate. For Chinese consumers, Singles’ Day on 11 November is the year’s largest online shopping day, with sales valued at more than Black Friday and Cyber Monday combined.

It was adopted first by Alibaba in 2009, which racked up RMB213.5 billion on its e-commerce platform on the day in 2018.

Looking ahead, mobile data traffic growth will support greater use of online payment platforms and further development of the Chinese digital commerce market. In particular, growing smartphone adoption in rural areas and the extension of 4G services to the most remote communities will see more transactions conducted here, while also delivering benefits for social, economic and financial inclusion.

Wireless broadband connectivity enables the digitalisation of sectors, which can lead to increased efficiency and productivity, and positive knock-on effects for the wider economy.

Targeting AI dominance by 2030
With IP-based communication, social networking and e-commerce prominent features of consumers’ mobile experience, the government’s focus is elsewhere. It is aiming to weave AI into the fabric of Chinese society, which it views as a strategically important technology for reinvigorating traditional industries and for future national prosperity. In 2017, China published its three-stage Next Generation Artificial Intelligence Development Plan, which recognises the need to first achieve parity with the US. The second phase focuses on formulating legislation and making breakthrough applications of AI in various sectors by 2025, after which China is aiming to achieve global AI leadership during the third five-year period.

In light of this initiative, China’s tech companies are recruiting and investing heavily in AI. Consider just a few high-profile examples:
– Baidu is looking to develop and commercialise AI across several verticals, for example, the Apollo project for autonomous vehicles.
– Through the Damo Academy, its R&D arm, Alibaba is also working to produce its first in-house AI chips and quantum processors.
– One of Tencent’s major AI priorities is healthcare, where it is using data to help train AI algorithms for the development of virtual healthcare assistants.

Chinese mobile operators are also recognising AI’s strategic importance for future business and digital transformation, as well as driving autonomous and intelligent networks. China Mobile and Nokia are researching the use of AI and machine learning for 5G network security and reliability. China Telecom is working with Nokia and Intel to develop an AI-supported cloud network for the delivery of mass-market services with extremely low latency, while China Unicom is serving as deputy directing unit of the AI Industry Development Alliance of China.

The government hopes these investments and partnerships will combine to create a domestic industry worth RMB1 trillion by 2030. However, as applications of AI multiply and the technology matures, potential pitfalls have emerged. Facial recognition is raising questions around privacy and surveillance, while there are challenges to determining the liability and responsibilities of people and algorithms in self-driving cars.

These concerns are not unique to China and will require all countries to engage with AI’s ethical dimension, an area where the European Union is already making progress. Given that the impact of AI will be felt around the world, it is incumbent on all members of the global mobile ecosystem to coordinate and collaborate to embed the right values and governance framework at the centre of the AI debate.

 – James Robinson – Senior Analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/03/Mar27_GSMAiBlog_chart.png

The opening weeks of 2019 have already delivered big announcements from the likes of Daimler, BMW, Seat and Uber. All of them seem to be betting big on smart urban mobility [1] and all aim to create the ‘platform of platforms’ in the city transport space through newly announced ventures.

A decade after Uber brought taxi booking to our mobiles, fresh traction in the space suggests a new wave of innovation might be round the corner for smart urban mobility. Just look at a handful of the announcements made in the last two months:

Daimler and BMW
The automotive behemoths, after concentrating on an ecosystem of services adjacent to mobility (parking; car rental; electric vehicle charging, taxi booking), announced at MWC19 Barcelona that they are going after the integration of all into one mobile app.
This is expected to merge 14 different services into one later in 2019.

SEAT and IBM
Unveiled the Mobility Adviser app at MWC19, which will use IBM Watson AI to help commuters make decisions about their daily transportation options, from scooters and bikes (the so-called micro mobility) to cars and public transport. The initiative is currently at a proof-of-concept stage.

Uber integrates public transit into its app in Denver
It’s no secret that Uber has been trying to integrate public transport routes and ticket purchases as well as the option to rent electric scooters into its app, while also trying to find its way more into our lives through food delivery with Uber Eats.

Here Technologies’ SoMO app
Announced in January, SoMo is an app connecting various on-demand mobility services, offering the option of sharing taxis with selected people, all on top of Here’s core mapping service. It plans to integrate more mobility service providers with SoMo and expand to new cities in the near future.

The common denominator of all these ventures? The creation of a ‘platform of platforms’ for urban mobility that allows commuters to plan their journey end-to-end and through one single app.

Can these companies really live up to their promises? Probably not. Consider the following:
Taxi sharing companies won’t make friends with cities any time soon
The Ubers of the world have been finding it really hard to operate even basic services in many cities due to protests from established competitors and conflict with local regulation over licensing of drivers. One can imagine the challenges of integrating local public transport data, especially when few cities’ transport authorities offer open APIs.
Uber’s Denver deal, to name one example, happened after seven years of Uber’s operation across cities of the world and is still at early stages. There is really no particular reason to be optimistic about the prospects of other players attempting to do the same thing across cities.
Micro mobility vendors’ future in question
Early endeavours in the micro mobility space are disheartening. Emblematic companies Bird and Lime both found it difficult to protect their assets from vandalism, so wide availability of scooters and dockless bikes in cities remain an open issue. In addition, the viability of the business model has been questioned due to small margins, hence talk about Uber buying one or the other. Therefore, even in the buyout scenario, an Uber, Lyft or Grab would have to subsidise their micro mobility business unit due to different margins.
Adjacent tasks provided over third-party apps add complexity
Bringing all urban mobility service providers under one application is not enough. The commuter is still required to perform a number of related tasks separately (mapping; navigating; planning; paying for ticket fares) which are tricky to integrate altogether in one app.
The reasons for this are that few cities offer mobile ticketing services for public transport: mobility apps are not necessarily good at mapping and rely on other apps, such as Google Maps; and payments over existing mobility apps often redirect users to PayPal or mobile banking apps.
All of these add complexity in the end-user experience and there is no development in sight that suggests their seamless integration will be achieved at scale.

Mobility through a single pane of glass is still a far away dream
Of course, integrating multiple means of transport (private, shared and public) and related services into one vendor’s app is a step in the right direction. However, the real value for commuters lies in offering this capability while integrating with all other mobility apps, even competing ones, through a single pane of glass type of platform that can operate independently of the geographic location.

If an app works in London but not in Paris or even in Bristol, is it really valuable and can it scale?

In reality, integrating all these services in one single pane of glass type of application is a far away dream due to inherent limitations in the respective companies’ partnership strategies and business models. For example, a typical European city has around five taxi booking apps and another five bike sharing services, which might not actually operate in the adjacent city or country. In other words, this is a highly fragmented market and further integration is needed.

But without any significant breakthrough, further market concentration such as the move by Daimler and BMW, can only lead to merging just parts of the mobility experience, without any visible way out of the location and multi-apps constraints.

Such a compromise which delivers an inferior user experience should not be accepted.

There is a market gap to fill: what would a breakthrough look like?
Clearly, there is a market need that aspiring entrants are so-far failing to address. Potential propositions might include a “connector” app which will interface with all competing mobility services providers and the adjacent ones, such as payments and mapping.

Of course, this “connector” app would have to be offered for free in order to incentivise companies to on-board. So the question is how to make money from that.

Interesting elements in that direction arise from Iomob, a Spanish start-up; Citymapper; and the Here Technologies’ Open Mobility Marketplace. However, more time is needed to assess their real potential in the market.

Another type of breakthrough would possibly be a solution that enables secure personal data and personal mobility preferences portability across applications. Blockchain presents some interesting attributes on digital identity, but nothing has emerged so far that would be applicable in the short-term.

Until there is a substantial shift in the market, some incremental improvement in our mobility experience is not bad at all, but it’s far from ideal.

– Christina Patsioura – senior analyst, Emerging Technologies, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsmaintelligence.com/research/?file=d2e2f4b417a6a0f60d32b3dec01e7274&download

With 5G continuing to dominate industry headlines, it may come as a surprise to learn that the world’s ninth largest mobile market, Bangladesh, only recently launched 4G services [1]. With over 85 million mobile users, however, it would be imprudent to understate the impressive development of the mobile industry and the critical role it plays in Bangladesh.

For one, the nascent but burgeoning digital ecosystem in the country has been underpinned by large-scale and rapid adoption of mobile services since the turn of the century: mobile subscriber penetration levels in Bangladesh have risen from just over 1 per cent in 2003 to half the population at the end of 2017, GSMA Intelligence data shows.

Further, the much anticipated launch of 4G services in February 2018 heralded an important step in the evolution of Bangladesh’s mobile industry, enabling faster and more reliable internet connectivity, and offering numerous consumer, economic and social benefits. When combined with the young and dynamic population in Bangladesh, the upgrade to mobile broadband networks also creates sizeable opportunities for start-ups and investors.

Take the case of Pathao, a Dhaka-based motorbike taxi-hailing service founded in 2015: last month it raised in the region of $10 million, in an investment round led by Indonesian taxi-hailing service Go-Jek, at a valuation in excess of $100 million. From on-demand motorbike taxi services to food delivery, as Pathao expands into new cities it has continued to diversify its services and is now developing a mobile wallet app aimed at reducing customers’ reliance on cash payments, which remains the main payment method in the country.

But not only does mobile connectivity continue to transform the ways in which the Bangladeshi society functions and interacts, it is fundamental to socio-economic development and the achievement of Bangladesh’s national development plan (Vision 2021 [2]), as well as the UN’s Sustainable Development Goals (SDGs). Mobile services are helping to address major challenges facing Bangladesh, from population growth and rapid urbanisation to poverty, inequality, natural disasters and climate change. Just last week, an app being launched by children’s charity Plan International and the Bangladesh government was cited as a game-changer in the ongoing fight against child marriage, an area where Bangladesh has amongst the highest rates in the world.

So, after almost three months since services were launched, how come the initial customer response to 4G has been dubbed tepid?

A 2G market: Bangladesh is a predominantly 2G, prepaid mobile market, with some of the lowest ARPU levels in the world. Only one-in-five Bangladeshis subscribed to mobile internet services in 2017, despite 3G networks covering more than 90 per cent of the population. Therefore, while part of the 4G adoption issues relate to customer reluctance to upgrade their 3G SIM cards, the fact remains there is a significant digital divide in Bangladesh.

Affordability: In this context, affordability is a major barrier to the uptake of mobile services in the country, with a higher cost of mobile access having a greater impact on the poorest consumers. From a 4G perspective, the affordability issue is compounded by the fact that, up to now, there has been limited availability of cheap 4G-enabled handsets in the market. Part of this is due to high levels of taxes and fees applied to the mobile sector in Bangladesh, which have an impact on the affordability of devices and mobile services.

Usability, skills and content: From a consumer perspective, other factors aside from costs, such as basic and digital literacy, usability, skills (for example digital skills and confidence in learning to use basic mobile phone functions), as well as the availability of locally-available relevant content, are important barriers too.

Infrastructure: More broadly, as the 4G rollout continues, tax and spectrum barriers in Bangladesh constrain mobile operators’ ability to invest in network coverage and expansion, which can have adverse effects on consumers. As mobile broadband adoption scales over time, the increased data demand will further strain network capacity, inevitably requiring even greater access to affordable spectrum. Without this, quality of service for users will suffer, impeding the adoption of, and engagement with, digital services.

So given this, what’s the outlook for 4G, and can Bangladesh continue to achieve its goals?

[3]First, it’s important to note the 3G lifecycle still has a long way to go before reaching maturity. As we can see in the accompanying chart (click to enlarge), 3G connections are only expected to overtake 2G connections in 2020, with 4G adoption gradually accelerating out to 2025, at which point 4G is expected to represent half of total connections thanks to a combination of gradually improving affordability (driven by falling smartphone prices) and greater 4G network coverage.

While the slow transition to mobile broadband technology in Bangladesh is, in part, a matter of timing, ultimately, the pace at which the digital divide will be reduced will depend on enabling a regulatory environment which is conducive to investment and helping to alleviate affordability barriers on the part of consumers. Nevertheless, by helping to promote digital inclusion and support the delivery of essential services, there is no question the mobile industry will continue to make a vital contribution to the economy of Bangladesh and achievement of its Vision 2021 as well as the SDGs.

– Mike Rogers, Senior Analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

…

For further information, GSMA Intelligence recently published the second part of a deep dive report into the mobile industry of Bangladesh which can be found by following this link here [4].

[1] https://www.mobileworldlive.com/asia/asia-news/major-bangladesh-operators-launch-4g-services/
[2] https://www.mobileworldlive.com/asia/asia-news/mobile-offers-potential-to-drive-progress-in-bangladesh/
[3] https://www.mobileworldlive.com/wp-content/uploads/2018/05/bangladesh2.jpg
[4] https://www.gsmaintelligence.com/research/2018/04/country-overview-bangladesh/664/

With 5G continuing to dominate industry headlines, it may come as a surprise to learn that the world’s ninth largest mobile market, Bangladesh, only recently launched 4G services [1]. With over 85 million mobile users, however, it would be imprudent to understate the impressive development of the mobile industry and the critical role it plays in Bangladesh.

For one, the nascent but burgeoning digital ecosystem in the country has been underpinned by large-scale and rapid adoption of mobile services since the turn of the century: mobile subscriber penetration levels in Bangladesh have risen from just over 1 per cent in 2003 to half the population at the end of 2017, GSMA Intelligence data shows.

Further, the much anticipated launch of 4G services in February 2018 heralded an important step in the evolution of Bangladesh’s mobile industry, enabling faster and more reliable internet connectivity, and offering numerous consumer, economic and social benefits. When combined with the young and dynamic population in Bangladesh, the upgrade to mobile broadband networks also creates sizeable opportunities for start-ups and investors.

Take the case of Pathao, a Dhaka-based motorbike taxi-hailing service founded in 2015: last month it raised in the region of $10 million, in an investment round led by Indonesian taxi-hailing service Go-Jek, at a valuation in excess of $100 million. From on-demand motorbike taxi services to food delivery, as Pathao expands into new cities it has continued to diversify its services and is now developing a mobile wallet app aimed at reducing customers’ reliance on cash payments, which remains the main payment method in the country.

But not only does mobile connectivity continue to transform the ways in which the Bangladeshi society functions and interacts, it is fundamental to socio-economic development and the achievement of Bangladesh’s national development plan (Vision 2021 [2]), as well as the UN’s Sustainable Development Goals (SDGs). Mobile services are helping to address major challenges facing Bangladesh, from population growth and rapid urbanisation to poverty, inequality, natural disasters and climate change. Just last week, an app being launched by children’s charity Plan International and the Bangladesh government was cited as a game-changer in the ongoing fight against child marriage, an area where Bangladesh has amongst the highest rates in the world.

So, after almost three months since services were launched, how come the initial customer response to 4G has been dubbed tepid?

A 2G market: Bangladesh is a predominantly 2G, prepaid mobile market, with some of the lowest ARPU levels in the world. Only one-in-five Bangladeshis subscribed to mobile internet services in 2017, despite 3G networks covering more than 90 per cent of the population. Therefore, while part of the 4G adoption issues relate to customer reluctance to upgrade their 3G SIM cards, the fact remains there is a significant digital divide in Bangladesh.

Affordability: In this context, affordability is a major barrier to the uptake of mobile services in the country, with a higher cost of mobile access having a greater impact on the poorest consumers. From a 4G perspective, the affordability issue is compounded by the fact that, up to now, there has been limited availability of cheap 4G-enabled handsets in the market. Part of this is due to high levels of taxes and fees applied to the mobile sector in Bangladesh, which have an impact on the affordability of devices and mobile services.

Usability, skills and content: From a consumer perspective, other factors aside from costs, such as basic and digital literacy, usability, skills (for example digital skills and confidence in learning to use basic mobile phone functions), as well as the availability of locally-available relevant content, are important barriers too.

Infrastructure: More broadly, as the 4G rollout continues, tax and spectrum barriers in Bangladesh constrain mobile operators’ ability to invest in network coverage and expansion, which can have adverse effects on consumers. As mobile broadband adoption scales over time, the increased data demand will further strain network capacity, inevitably requiring even greater access to affordable spectrum. Without this, quality of service for users will suffer, impeding the adoption of, and engagement with, digital services.

So given this, what’s the outlook for 4G, and can Bangladesh continue to achieve its goals?

[3]First, it’s important to note the 3G lifecycle still has a long way to go before reaching maturity. As we can see in the accompanying chart (click to enlarge), 3G connections are only expected to overtake 2G connections in 2020, with 4G adoption gradually accelerating out to 2025, at which point 4G is expected to represent half of total connections thanks to a combination of gradually improving affordability (driven by falling smartphone prices) and greater 4G network coverage.

While the slow transition to mobile broadband technology in Bangladesh is, in part, a matter of timing, ultimately, the pace at which the digital divide will be reduced will depend on enabling a regulatory environment which is conducive to investment and helping to alleviate affordability barriers on the part of consumers. Nevertheless, by helping to promote digital inclusion and support the delivery of essential services, there is no question the mobile industry will continue to make a vital contribution to the economy of Bangladesh and achievement of its Vision 2021 as well as the SDGs.

– Mike Rogers, Senior Analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

…

For further information, GSMA Intelligence recently published the second part of a deep dive report into the mobile industry of Bangladesh which can be found by following this link here [4].

[1] https://www.mobileworldlive.com/asia/asia-news/major-bangladesh-operators-launch-4g-services/
[2] https://www.mobileworldlive.com/asia/asia-news/mobile-offers-potential-to-drive-progress-in-bangladesh/
[3] https://www.mobileworldlive.com/wp-content/uploads/2018/05/bangladesh2.jpg
[4] https://www.gsmaintelligence.com/research/2018/04/country-overview-bangladesh/664/

Let’s return to the argument that 5G is a battle between nations – that the first markets (national or regional) to get to 5G will enjoy an insurmountable economic advantage, establishing 5G winners and losers in the near-term as 5G commercialisation takes hold.

Don’t get me wrong; I have no particular affinity for the argument. You might recall from our earlier analysis [1] that I’m somewhat suspect of the logic. Operators in different markets, after all, don’t directly compete and the technology suppliers who will power all of our grand 5G visions aren’t limited to selling their wares in their home country. Regardless, the argument isn’t losing any steam with people in positions of power. Consider recent comments from Wilbur Ross, the US Commerce secretary: “Whoever pursues it, whoever does it, we’re very much in support of 5G. We need it. We need it for defence purposes, we need it for commercial purposes.” It’s no wonder, then, that T-Mobile US and Sprint claimed 5G investment as a key driver behind their planned merger [2]. Seems like a solid way to build support, right?

Now, to be fair, there is a legitimate argument to be made for the risks of lagging too far behind in 5G. To recap our Intelligence Brief from two weeks back, a country which seriously delays on commercialising 5G could theoretically miss out on the innovations 5G networks and capabilities help to incubate. The question we posed, then, was how long of a lag would be too long?

Good news: we have an example to look at.

Similar to aspirations around 5G, 4G has been hailed as responsible for enabling a wide array of digital innovations – everything from video everywhere business models, to pervasive IoT and the sharing economy. And while, circa 2018, we might take solid LTE coverage for granted across most developed markets, it obviously didn’t get rolled out simultaneously across the globe. China, for example, might be today’s leading 4G market by subscribers, but it wasn’t always this way. So, when discussions around a Race to 5G between the US and China are invoked, it seems like looking at the history of 4G rollouts in each is a worthwhile exercise.

We all know China lagged in the race to 4G, but by how much?

[3]

[4]

Let’s look at this along two different dimensions: total LTE connections and share of connections on LTE.

China didn’t start ramping its LTE uptake until about the start of 2014 (see top chart, click to enlarge). It didn’t take long for China to reach about the same base of LTE connections as in the US (Q1 2015), but that was still four years after LTE rollouts and connection uptake began in the US.

And on the share of connections front? You could argue that this is the more important metric.

Where total LTE connections might signal the scale (and scale efficiency) opportunity, share of connections on LTE point to the technology’s reach within the market – the opportunity for LTE-driven innovations to touch people. Here, we could look at a few milestones. China reached the 25 per cent penetration mark in Q3 2015, about two years after the US (see bottom chart, click to enlarge). The 50 per cent penetration mark was hit in Q3 2016, a year after the US. But if we’re talking about a race, then the important milestone is when China caught the US, right? That would be sometime between Q3 and Q4 of 2017, more than six years after US consumers began experiencing LTE.

Clearly there was a massive lag in the Race to 4G between the US and China. And what have been the results?

Today, China maintains two of the top LTE networking infrastructure vendors. It remains a major LTE smartphone market for vendors from around the world, while generating its own top-tier smartphone makers. It’s executed on new LTE technology innovations like NB-IoT and leveraged LTE to power new business models innovations (for example, the on-demand pushbike rental craze). Ultimately, it would be hard to argue that the lag in getting LTE commercialised in China irreparably harmed the country.

That doesn’t mean there isn’t a feeling that 5G will be different, that nobody can afford to be late to the game. Because of how 5G will open up new enterprise business models. Because of how 5G will allow service providers to benefit from two-sided business models like never before – potentially on a global scale. Because of the way in which 5G is so intricately linked to massive technological movements like artificial intelligence, IoT and mass digitalisation. Because of the hope 5G can help establish competitive advantages if regulation can deliver support, not obstacles.

Hope, of course, springs eternal, no matter what past experience suggests. In this case, however, if 5G truly is a race between nations, history suggests it is much more akin to an ultra-marathon than a sprint.

 – Peter Jarich, Head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-the-importance-of-handicapping-the-race-to-5g/
[2] https://www.mobileworldlive.com/featured-content/home-banner/t-mobile-to-lead-combined-co-in-sprint-merger/
[3] https://www.mobileworldlive.com/wp-content/uploads/2018/05/gsma1.jpg
[4] https://www.mobileworldlive.com/wp-content/uploads/2018/05/gsma2.jpg

Let’s return to the argument that 5G is a battle between nations – that the first markets (national or regional) to get to 5G will enjoy an insurmountable economic advantage, establishing 5G winners and losers in the near-term as 5G commercialisation takes hold.

Don’t get me wrong; I have no particular affinity for the argument. You might recall from our earlier analysis [1] that I’m somewhat suspect of the logic. Operators in different markets, after all, don’t directly compete and the technology suppliers who will power all of our grand 5G visions aren’t limited to selling their wares in their home country. Regardless, the argument isn’t losing any steam with people in positions of power. Consider recent comments from Wilbur Ross, the US Commerce secretary: “Whoever pursues it, whoever does it, we’re very much in support of 5G. We need it. We need it for defence purposes, we need it for commercial purposes.” It’s no wonder, then, that T-Mobile US and Sprint claimed 5G investment as a key driver behind their planned merger [2]. Seems like a solid way to build support, right?

Now, to be fair, there is a legitimate argument to be made for the risks of lagging too far behind in 5G. To recap our Intelligence Brief from two weeks back, a country which seriously delays on commercialising 5G could theoretically miss out on the innovations 5G networks and capabilities help to incubate. The question we posed, then, was how long of a lag would be too long?

Good news: we have an example to look at.

Similar to aspirations around 5G, 4G has been hailed as responsible for enabling a wide array of digital innovations – everything from video everywhere business models, to pervasive IoT and the sharing economy. And while, circa 2018, we might take solid LTE coverage for granted across most developed markets, it obviously didn’t get rolled out simultaneously across the globe. China, for example, might be today’s leading 4G market by subscribers, but it wasn’t always this way. So, when discussions around a Race to 5G between the US and China are invoked, it seems like looking at the history of 4G rollouts in each is a worthwhile exercise.

We all know China lagged in the race to 4G, but by how much?

[3]

[4]

Let’s look at this along two different dimensions: total LTE connections and share of connections on LTE.

China didn’t start ramping its LTE uptake until about the start of 2014 (see top chart, click to enlarge). It didn’t take long for China to reach about the same base of LTE connections as in the US (Q1 2015), but that was still four years after LTE rollouts and connection uptake began in the US.

And on the share of connections front? You could argue that this is the more important metric.

Where total LTE connections might signal the scale (and scale efficiency) opportunity, share of connections on LTE point to the technology’s reach within the market – the opportunity for LTE-driven innovations to touch people. Here, we could look at a few milestones. China reached the 25 per cent penetration mark in Q3 2015, about two years after the US (see bottom chart, click to enlarge). The 50 per cent penetration mark was hit in Q3 2016, a year after the US. But if we’re talking about a race, then the important milestone is when China caught the US, right? That would be sometime between Q3 and Q4 of 2017, more than six years after US consumers began experiencing LTE.

Clearly there was a massive lag in the Race to 4G between the US and China. And what have been the results?

Today, China maintains two of the top LTE networking infrastructure vendors. It remains a major LTE smartphone market for vendors from around the world, while generating its own top-tier smartphone makers. It’s executed on new LTE technology innovations like NB-IoT and leveraged LTE to power new business models innovations (for example, the on-demand pushbike rental craze). Ultimately, it would be hard to argue that the lag in getting LTE commercialised in China irreparably harmed the country.

That doesn’t mean there isn’t a feeling that 5G will be different, that nobody can afford to be late to the game. Because of how 5G will open up new enterprise business models. Because of how 5G will allow service providers to benefit from two-sided business models like never before – potentially on a global scale. Because of the way in which 5G is so intricately linked to massive technological movements like artificial intelligence, IoT and mass digitalisation. Because of the hope 5G can help establish competitive advantages if regulation can deliver support, not obstacles.

Hope, of course, springs eternal, no matter what past experience suggests. In this case, however, if 5G truly is a race between nations, history suggests it is much more akin to an ultra-marathon than a sprint.

 – Peter Jarich, Head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-the-importance-of-handicapping-the-race-to-5g/
[2] https://www.mobileworldlive.com/featured-content/home-banner/t-mobile-to-lead-combined-co-in-sprint-merger/
[3] https://www.mobileworldlive.com/wp-content/uploads/2018/05/gsma1.jpg
[4] https://www.mobileworldlive.com/wp-content/uploads/2018/05/gsma2.jpg