Mobile Asia Congress 2011
Exclusive analysis on the key themes from last week’s GSMA Mobile Asia Congress in Hong Kong
This year's GSMA Mobile Asia Congress was held against a backdrop of booming regional growth. Spurred by development in the world's two largest mobile markets (China and India), GSMA Intelligence forecasts that mobile connections in Asia Pacific will reach a landmark three billion in Q1 2012 (representing over half of the world's total connections base) and will hit 4.1 billion by 2015.
The diverse nature of the Asia Pacific mobile market – spanning countries with highly advanced networks and huge demand for data services, through to low-ARPU markets where feature phones are being used as the first connection to the Internet – brings with it a multitude of challenges. In this special edition, writers at our sister publication Mobile Business Briefing identify the major trends discussed at last week's Congress. You can also read all the news from the show.
TD-LTE gains ground outside China
This time last year the TDD flavour of LTE (TD-LTE) was expected to be confined to China Mobile's next-generation network ambitions, with the technology having limited appeal beyond the world's largest mobile operator. Fast forward 12 months though and this year's Mobile Asia Congress demonstrated growing regional demand for deployment of LTE services running in unpaired spectrum. The prolific nature of TD-LTE was demonstrated by the fact the Global TD-LTE Initiative (GTI) – the group promoting development of the technology and boasting 32 operator members – packed out an auditorium last week for its three-hour morning session. Touting itself as the commercially viable alternative to WiMAX technology, TD-LTE's backers are keen to echo the rollout and success of GSM technology, while focusing on the need for interoperability between devices running over TD-LTE and the more commonly used FDD-LTE flavour.
The opening address by the GSMA's new director general Anne Bouverot reiterated past concerns about interoperability. Indeed, her call for dual-mode chipsets was similar to that of China Mobile's opening event keynote appearance in 2009. However, the very fact that the appeal this year was given by a global operator association, rather than a single player, demonstrates how far the technology has come in a short space of time.
Elsewhere, Japan's SoftBank unveiled plans to launch TD-LTE services in Japan next March, while China Mobile announced its intention to move to the second phase of its pilot, prior to fullscale commercial deployment. And in an apparent response to the GSMA's call for action, Chinese vendor Huawei launched what it claims is the industry's first multimode TDD/FDD LTE chipset based on the 3GPP's Release 9 specification. Finally, throw in talk last week from Bharti Airtel (operating in India, the world's second-largest mobile market) and it's clear to see that the TD-LTE bandwagon is now rolling across Asia.
Smart cities coming to Asia
One area where the convergence between the mobile Internet, M2M communications and the cloud is really driving innovation is in smart city initiatives – and China Mobile was in Hong Kong to demonstrate strong progress in this field. In his keynote, Li Yue (pictured), President and CEO of the world's largest mobile operator, said that the firm has now signed 'Wireless City' MoU's with 26 provinces and over 160 cities in China and launched Wireless City portals in 22 provinces. Some 10,000 apps have been launched to date, with close to 6 million cumulative users so far (10 million are expected by year end). Li Yue highlighted a number of impressive examples of consumer services that were already live, including a hospital registration app and a bill payment service. On the M2M side, there were remote street lamp monitoring, noise monitoring and real-time traffic information services, among others.
While such use-cases are nothing we haven't heard before, what's significant is that China Mobile is now seeing such services adopted by subscribers, governments and businesses in serious numbers. For example, in the Shandong Province (where the utility payment app is live), the firm boasted 1.4 million Wireless City users by mid-October with apps such as social security, health insurance, driver notification, agriculture and utility services boasting over 100,000 users each. Those numbers represent just a fraction of China Mobile's 600 million+ total connections base but are an indicator of where the operator is heading and what will drive its urban connections growth moving forward.
The smart cities theme was subsequently picked up in a vendor discussion involving NSN, Alcatel Lucent and Ericsson. It was noted that 30 percent of the world's population will reside in cities by 2016 - occupying just 1 percent of the world's landmass – and that there could be as many as ten “mega-cities” in Asia by 2025, classified as cities with over 25 million people. China Mobile's Wireless City initiative looks like a glimpse into the future.
'Spectrum crunch' concerns driving innovative thinking
The surge in use of connected devices means mobile networks will be under increasing pressure in the next few years. And with Asia predicted by the GSMA to be the biggest market for connected devices by 2020 - with 11 billion devices - the region will feel the strain more than most.
Yogesh Malik - COO of Indian start-up operator Uninor - said that demand for spectrum will continue to increase even when more spectrum is opened up, saying "sufficient in itself can never be enough." And despite the benefits LTE is likely to bring, it's not going to be the silver bullet to solve the spectrum issue. In his keynote in Hong Kong, KDDI president Takashi Tanaka (pictured) said the Japanese operator expects its LTE and 3G/CDMA networks to be at capacity by 2014. KDDI has plans to offload demand for data onto other networks, including FTTH broadband, WiMAX and even cable TV via Wi-Fi enabled set-top boxes.
The US is one of the foremost LTE markets with Verizon Wireless, and to a lesser extent AT&T, having made greater strides with LTE rollout than other countries and so it's no surprise that the regulator is addressing the spectrum issue already. Speaking at Congress, the US Federal Communications Commission (FCC) chairman, Julius Genachowski, outlined ways in which the US regulator is planning to tackle what he called the ‘spectrum crunch'. In its efforts to free up 500 MHz of spectrum, the FCC is looking at two-sided spectrum auctions in which licence holders contribute unused spectrum in exchange for revenue created by its reallocation, as well as dynamic spectrum sharing, a second-hand spectrum market and – much like KDDI plans to do - offloading data onto other networks. We expect that operators, infrastructure providers and regulators in Asia will follow the FCC and KDDI's lead when the spectrum crunch begins to bite.
Chinese giants add scale to NFC
Momentum behind NFC as the mobile payments standard of choice strengthened last week with news that China Mobile and China Unicom – the country's two largest operators – had pledged their support for the GSMA's NFC programme. The two players together account for some 800 million Chinese connections, so – in terms of sheer scale, at least – they can claim to be among the most significant of the 45 global operator names signed up to the scheme to date. It is not known, however, when the first Chinese NFC-based payment schemes will appear.
NFC also appears to be gaining traction in Japan, a market that has had its own proprietary contactless platform (FeliCa) in place for over a decade. While there are an estimated 70 million contactless-enabled handsets in circulation in the country, FeliCa services do not work outside of Japan, leading operators and financial services firms to plump for NFC as an international alternative. Leading the charge is SoftBank, which has just launched a payments scheme which is thought to be the first in Asia to enable NFC payments from a choice of different credit card accounts (in this case, Orico and Credit Saison, both via MasterCard's PayPass). There was also much talk of the recently announced NFC scheme being rolled out by the Infocomm Development Authority of Singapore (IDA) in collaboration with the country's three operators (SingTel, StarHub and M1) and several local banks, that is thought to be the first interoperable nationwide deployment of NFC in Asia.
The main stumbling block to widespread adoption of NFC services continues to be handset availability, but with over 25 NFC models available today from various vendors (a figure which is expected to almost triple by next year) there was plenty of optimism in Hong Kong last week that 2012 could finally be the year when NFC payments go mass market.
Asia's connected devices revolution will encompass non-mobile players
The increasing use of connected devices using embedded mobile technology - as well as mobile phones themselves - will be a key theme in Asia over the next decade. At last week's Congress, the GSMA forecast there will be 11 billion connected devices in the Asia Pacific region by 2020, 47 percent of the world's total. Consumers in Japan and South Korea will have an average of 11 connected devices each and the GSMA puts the revenue opportunity in Asia Pacific at around US$447 billion by 2020.
Asia Pacific will clearly be a significant source of revenue for mobile operators who provide related services to support connected devices - but other types of businesses such as energy companies (smart meters) and car manufacturers (telematics/connected cars) are also set to benefit. BMW is one of the leading connected car players and BMW ConnectedDrive business lead for China, Fran Dance, said in Hong Kong that the company is pursuing embedded mobile as customers with increasingly sophisticated smartphones are starting to demand similar connectivity and functionality in their cars.
Dance feels operators and non-mobile players will need to work more closely to get the most out of the connected device opportunity. For one thing, the evolution of mobile networks needs to support the slower evolution of other industries. Companies new to the sector will need support from the mobile industry while the creation of standards will also be key, something that chimes with the GSMA view. “We need this whole ecosystem to unite behind a consistent standards-based approach to deliver on this opportunity,” GSMA CMO Michael O'Hara said last week.
So, the connected device revolution won't just be about mobile players - it will encompass an array of organisations with operators providing vital support in the development and rising usage of connected devices in Asia.