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 LTE’s rise in Asia • Cellcos & social media • Battleground for app stores • ‘White space’ for sale

A s i a n Te l e c o m s B u s i n e s s a n d Te c h n o l o g y l w w w. t e l e c o m a s i a . n e t l August 2011

At Home
in the Cloud
Cloud-based services add new dimension
of complexity to the connected home
Published By

Inside:

LTE fuels interest in IPX DoCoMo’s early-bird gambit

Two-thirds of global carriers to Incumbent is first with LTE, but premium
deploy within three years offering limits its reach
 Contents
Subscribe to Asia’s best daily telecom news service:
Volume 22 Number 6 August 2011
www.telecomasia.net

Coverstory

12 At home in the cloud

As home networking gains relevance in age of fiber and
ubiquitous mobility, it also is becoming more compli-
cated. And cloud-based services add a new dimension of
complexity

Viewpoint

21 Marketing the connected home

Ovum says getting the pricing and marketing right has
been the biggest obstacle

feature

IPX Survey

16 LTE fuels interest in IP exchange

Almost two-thirds of global carriers believe IPX will be
essential within three years

App Stores

18 The new battleground for app

12
stores
APAC operators have opportunity to leverage their local
market knowledge to drive adoption

Country Focus: Japan

22 DoMoCo targets end-high users

The 4G battle in Japan is set to grow more interesting
when KDDI, SoftBank and eAccess launch LTE next year

column

Tanner

6 ‘White space’ for sale

16 18
What is the real cost of selling unlicensed spectrum?

6 22
2 August 2011 Telecom Asia www.telecomasia.net
 Managing Director Jonathan Bigelow jbigelow@questexasia.com

Group Editor Joseph Waring jwaring@telecomasia.net

Global Technology Editor John C. Tanner tanner@telecomasia.net
Research Note
Senior Reporter Melissa Chua mchua@questexasia.com
24 Celcos get a boost from social networking Online Editor Fiona Chau fchau@telecomasia.net

Mobile social networking is now a key ARPU driver for many APAC operators Art Director Dick Wong dwong@telecomasia.net
Production & Web Manager Pauline Wong pwong@telecomasia.net

Group Publisher Gigi Chan gchan@telecomasia.net

Account Director, Asia Pacific Jessie Cheung jcheung@questexasia.com
INDUSTRY ANALYSIS Asst. Sales & Marketing Manager Candace Ho cho@questexasia.com

8 LTE takes hold in Asia Pacific HR & Admin Manager Janis Lam jlam@questexasia.comww
HR & Admin Executive Yan Lai ylai@questexasia.com

Accounting Manager Nancy Chung nchung@questexasia.com

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10 Asian telecoms this month
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regulars
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9 Insight
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Building Business Around Mobile
Applications and Data Services
20 October 2011, Singapore

3rd Annual AppsXchange Asia Supporting Media

With mobile apps having evolved into serious business applications, alongside
gaming and rich media, they are increasingly being seen as a revenue generation
opportunity. Now in its third year, AppsXchange Asia focuses on all aspects of
the mobile applications business.

This year’s conference will attract operators, content owners, system enablers
and developers to network and share ideas on the future of the app environment.

This comprehensive event covers key business and technology issues that every
executive needs to understand, including:

n Moving from Growth to Monetization

n HTML5 - A Paradigm Shift for Operators? Organizer
n The Impact of Tablets and Smartphones on the App Economy 
n Implications of WAC (Wholesale Application Community) on the App Ecosystem
n And more…

See full details at www.appsxchangeasia.com Seats are limited

Reserve your
place now!

Registration inquiries Speaking opportunities Sponsor this event

JP Chirayath Claire Tranah Gigi Chan
+65 6395 4597 ctranah@questexasia.com +852 2589 1338
jchirayath@questexasia.com gchan@questexasia.com
 tANNER l John C. Tanner
The cost of selling
unlicensed spectrum
I
t seems like I can’t go a month without
some story breaking about some gov-
ernment or regulator coming up with
some proposed regulation, treaty or law
that gives legal protections to one industry at
the expense of another.
This time, it’s a new bill being proposed in
the US Congress that could potentially trans-
form swathes of unlicensed “white space”
spectrum into paid-for, licensed spectrum.
The Public Safety Spectrum and Wire-
less Innovation Act, proposed by Republican
Party lawmakers in July, ostensibly addresses
the way in which the FCC handles realloca-
tion of around 120 MHz of digital dividend
spectrum currently owned by broadcasters.
Broadcasters support the bill because it gives
them certain protections, such as the ability
to move their facilities (with compensation)
without losing coverage in the process, and
stricter limitations on channel reassignments.
Auctioning everything
However, the bill also contains several
controversial provisions, such as allowing
broadcasters to waive certain FCC regulations
as an incentive to sell, and allowing spectrum
buyers to be exempt from net neutrality rules.
One of the bigger controversies – and the one
arguably the most relevant outside the US –
is a section of the bill covering allocation of
unlicensed spectrum.
Some background: in September last year,
the FCC approved the use of “white spaces”
(i.e. the spectrum left over from both digital
TV signals and the “digital dividend” spec-
trum for wireless broadband services like LTE
and Wimax) for unlicensed use. That means
companies like Google, Microsoft and Yahoo
can use them to offer so-called “Super Wi-Fi”
service, which is similar to Wi-Fi, but with
much wider coverage because of the lower
radio frequency.
The controversy lies in Paragraph 17 of the
bill, which requires the FCC to put unlicensed
spectrum up for auction. The idea is essen-
tially to pit companies that want it for exclu-
sive, licensed use (such as AT&T or Verizon)
6 August 2011 Telecom Asia www.telecomasia.net
against companies that want it to stay open
and unlicensed. The latter group must pony
up an aggregate bid that exceeds the highest
licensed bid. In other words, if companies
who want to keep white space spectrum open
can outbid, say, Verizon (which paid $9.4
billion for 700-MHz spectrum in the FCC’s
2008 auction, incidentally), the white-spaces
spectrum gets to stay unlicensed.
Aside from the slim odds for unlicensed-
spectrum proponents to outbid telcos with
deep pockets – and the puzzling concept of John C. Tanner is global
paying the FCC to not sell spectrum to the technology editor –
highest bidder – critics argue that the real jtanner@questex.com
value of open unlicensed spectrum is the in-
herent innovation opportunities that we’ve
already seen with open-spectrum technolo-
gies like Wi-Fi.
“The innovation and experimentation
we have seen through the use of unlicensed
Industry players
spectrum would screech to a grinding halt,”
Harold Feld, legal director of Public Knowl-
and regulators
edge, said in a statement. “Given that unli- should stop
censed uses like Wi-Fi come from small and
new companies, the future of new uses would
be very bleak.”
simply treating
Obviously, it remains to be seen what final
form the bill takes, and whether it gets passed.
all spectrum as a
But it raises some interesting questions for
markets in Asia and elsewhere that will also
cash cow waiting
be going through their own digital-dividend
transitions in the next few years. The ITU is
to be milked
already looking at the aspects of white-space
spectrum as part of its overall work on the
digital dividend.
Whether analog-to-digital TV shifts re-
sult in usable white-space spectrum in a given
market depends on a lot of local factors. But
where white-space spectrum is available, both
industry players and regulators should take a
close look at the question of unlicensed spec-
trum and the potential benefits of innovation
and competition, rather than simply giving in
to the traditional temptation of treating all
spectrum as a cash cow waiting to be milked.
The success of Wi-Fi alone should be a clue to
the potential possibilities of preserving open
spectrum. TA
 Telco Cloud Forum
Expanding capabilities and driving new services through cloud technology

2011
3 November 2011 Singapore

Telco operators are uniquely positioned to benefit from a rise in cloud applications, especially
on the business customer side. While many operators have focused on VAS services for end
users, others have already started the transformation from a telephony service provider to a
full host of data center and application delivery.

Telco Cloud 2011 will bring together operators, industry experts and solution providers to
discuss the current market situation, business benefits and success strategies for cloud
services. This executive-level event will cover topics including:

n Change management and transition strategies for telcos

n Cloud services for different target groups (SME, Global, Public Sector, etc)
n Service delivery models (SaaS)
n Extending existing services beyond traditional telco offerings
n And more…
Seats rare ited
limited
e lim
Seats a
Reserve our
eserve yyour
Rplace w!
See full details at telcocloud.questexevents.net
now!
place no
Registration inquiries Speaking opportunities Sponsor this event
JP Chirayath Sutha O’Connell Gigi Chan
+65 6395 4597 +65 6395 4588 +852 2589 1338
jchirayath@questexasia.com soconnell@questexasia.com gchan@questexasia.com

Supporting Media Organizer

 industry analysis
LTE taking hold in APAC
A
number of recent develop-
ments show that Asia Pacific
is getting serious about LTE.
South Korean operators
KT and LG U+ both launched LTE ser-
vices at the beginning of July, starting
in Seoul. The operators are pursuing
an aggressive rollout schedule, with SK
Telecom aiming for nationwide cover-
age by 2013. By this stage, the operator
plans to start upgrading its network
to LTE-Advanced, according to plans
disclosed in April.
LG U+, Korea’s smallest opera-
tor, meanwhile, hopes to become the
market leader by LTE subscribers, and
is targeting 10 million customers within
three years.
The launches brought the number
of commercial deployments in APAC
up to six, with the Korean operators
joining Hong Kong’s CSL and Japan’s
NTT DoCoMo – which launched late
last year – Singapore’s M1 – which
went live in June – and the Philippines’
Smart – which commenced services and
demonstrations at the popular holiday
destination of Borocay in April.
Ovum analyst Nicole McCormick
said that these early launches show that
8 August 2011 Telecom Asia www.telecomasia.net
some operators are avoiding the traps
they fell into with initial 3G rollouts
in terms of data pricing. DoCoMo and
both Korean operators have moved
away from flat-rate pricing to capped
data usage models.
By contrast, “big bucket and un-
limited pricing dominate LTE offerings
across the globe,” she said, including
in Hong Kong. This demonstrates that
operators are missing the “opportunity
to offer new premium pricing schemes.”
While some APAC operators are
avoiding the bucket pricing trap, Mc-
Cormick estimates that LTE premiums
average just 20% in the region, com-
pared to over 100% in markets such as
Sweden, Finland and Austria.
But this could be beneficial in the
long run, because LTE providers with
high premiums can’t rapidly reduce
tariffs to lure more customers without
risking alienating the current crop of
high-paying early adopters, she said.
TD-LTE growing up
July also brought indications
of the maturation of Asia’s home-
grown LTE variant. ZTE revealed
it had completed the first
demonstration of a TD-LTE to 2G/3G
handover, in what it said was an indica-
tion that TD-LTE devices will soon hit
the market.
The vendor said that as of April, it
had deployed 25 TD-LTE trial networks
in 15 countries throughout Asia and
Europe.
The standard’s biggest operator
backer, China Mobile, arranged a deal
with Sony Ericsson to develop TD-LTE
handsets, and also announced that its
R&D division will work with network
testing firm Rhode & Schwarz to devel-
op testing equipment for the standard.
The operator has been trialing TD-
LTE networks in six cities since May
and has indicated it hopes to be able to
launch services in 2012.
A month earlier, Malaysia’s P1 had
signed an MoU with Qualcomm to
develop multi-mode TDD and FDD
chipsets. P1 plans to roll out TD-LTE
in 2013 but wants to ensure its devices
can roam to other operators’ LTE
networks.
Also in July, the
GSMA took advantage of
the momentum behind both
forms of LTE to press Taiwan to
abandon its emphasis on Wimax
manufacturing. The association in
July published a report that argues that
given the difference in size between
the markets for Wimax and LTE, “it is
 More coverage of
LTE
in Taiwan’s best interest to focus on the manufac-
turing of HSPA and LTE equipment rather than
Wimax equipment.”
The government should offer the incentives it
currently offers Wimax equipment producers to
LTE vendors, the body said.
Despite the GSMA’s call, yet more recent devel-
opments show that there is life in Wimax yet.
Wimax still kicking
Japan’s UQ Communications staged its first
public trials of Wimax 2 in early July, achieving
downlink speeds of up to 150 Mbps. The operator
intends to upgrade to Wimax 2 in 2013.
Informa analyst Tony Brown said the upgrade,
in combination with a growing Wi-Fi network,
could allow the operator to poach customers from
the fixed-broadband market. If UQ succeeds in
securing a sizable number of converts, he said,
“that really would give the Wimax guys something
to finally smile about.”
Despite LTE’s early foothold in South Korea,
local small-business association Kbiz also an-
nounced an ambitious plan to apply for Korea’s
fourth mobile license, and if successful roll out a
network using the Wimax-based WiBro standard.
Kbiz has proposed to partner with around 900
small and medium-sized businesses in a consor-
tium, and also seek substantial outside investment
to fund the rollout. But questions remain as to
whether Kbiz will be able to secure the significant
funds needed for nationwide rollout, which some
analysts project could cost up to 2 trillion won
($1.9 billion).
This is also not the first time a consortium has
tried to secure a mobile license in Korea. Korea
Mobile Internet has already applied and been
rejected, with regulator KCC determining that the
group had an unrealistic business plan.
Korea Telecom also announced it will lean on
its own WiBro network, as well as Wi-Fi and W-
CDMA, to stay competitive while it waits to roll
out LTE in November. The operator recently an-
nounced it had expanded this network to achieve
coast-to-coast coverage. TA
– Dylan Bushell-Embling
www.telecomasia.net Telecom Asia August 2011 9
INSIGHT ONE MONTH’S TELECOM RESEARCH
>> APAC broadband, IPTV market booming
The APAC broadband and IPTV market is on track to grow to $79.5 billion in
2016, from $52.5 billion last year. Telcos should see revenue growth of 51%,
ABI Research predicts, and are set to take a bite out of cable companies’
revenues with IPTV and operator-provided satellite services. Pay-TV
companies’ foray into cable broadband will offset some of this loss, so cable
company revenues will decline by around 3%. While operators’ IPTV and fiber
revenues will increase significantly, declines in broadband DSL will dampen
growth slightly. Foreign companies looking to capitalize on the booming region
need to be aware that country-to-country variations and business norms can
make success difficult to achieve.
Pay TV and broadband markets in China, India,
Japan and Asia-Pacific
www.abiresearch.com
>> Fiber to beat out DSL in Asia by 2014
Fiber broadband should overtake DSL as the dominant wireline broadband
standard in Asia Pacific by 2014. Ovum estimates that there will be 129
million FTTH and FTTB subscribers in the region by that year, out of a total
285 million wireline broadband customers. What’s more, fiber will grow at
a CAGR of 26% over the next four years, while DSL’s growth has stalled and
cable broadband’s growth rate will be a mere 5%. China will top the subscriber
numbers table with over 74 million customers by 2014, but household
penetration will be just 4%. Australian fiber users will meanwhile grow at a
CAGR of 180% due to the NBN rollouts.
FTTx market review: China’s dominance
www.ovum.com
>> Mobile apps to grab more gaming software dollars
Worldwide spending on the gaming ecosystem, including hardware and
software, has been forecast to exceed $74 billion this year. This will be a 10.4%
increase from 2010, according to Gartner, which believes the market will reach
$112 billion by 2015. Software will continue to dominate spending, with sales
worth $44.7 billion in 2011, representing almost two-thirds of consumers’
gaming budgets. The growing popularity of smartphones and tablets means
mobile gaming’s share will likely grow to 20% of gaming software spending in
2015, from 15% in 2010. Mobile games are already the most popular category
in most app stores. Gaming hardware and online gaming will be worth $17.8
billion and $11.9 billion respectively this year.
Market trends: gaming ecosystem, 2011
www.gartner.com
>> Telcos leading IPTV innovation
IPTV service providers are starting to personalize and differentiate their
offerings, which could explain the segment’s healthy growth. Over six in ten
IPTV providers surveyed by Infonetics support or plan to support multi-screen
viewing by 2012. Half intend to use targeted or interactive advertising by
that year, and 41% plan to offer social networking over IPTV – up from 26%
today. While telcos have been leading innovation in IP video, satellite and cable
operators are jumping on the bandwagon, using broadband infrastructure to
offer similar services. IPTV operators will thus need to keep a close eye on the
competition to ensure they don’t get left behind in any shift in market trends.
IPTV services deployment strategies
www.infonetics.com
 asian telecoms this month

Beijing
Former China Mobile party
chief Zhang Chunjiang is
sentenced to death after being
found guilty of taking $1.6m in
bribes.
A government thinktank esti-
mates the number of Chinese
websites fell 41% in 2010, but
denies that political censorship is
to blame.
China Telecom’s president and
COO, Shang Bin, becomes the
latest in a line of executives to
leave the company and take up a
political post.

Shenzen
ZTE demonstrates a TD-LTE to 2G/3G handover, claiming this as a sign
TD-LTE smartphones will soon hit the market.

Delhi
Telecom minister Kapil Sibal urges mobile
operators to stop fighting a “war,” warning
that cut-throat competition risks destroying
the sector.

Bharti Airtel, Vodafone Essar and Idea reach a

roaming pact that will allow them to use each
others’ networks to deliver 3G in zones where
they lack spectrum.
Singapore
M1 reports a 6.6% profit growth for the
Bharti reveals plans to restructure its Indian
June quarter, attributing improved service
and South Asian operations into consumer
revenue and handset sales.
and business divisions. It also is considering
a $1b tower unit IPO.
IDA Singapore prepares a consumer-fo-
cused guide to signing up to the NG-NBN,
The government threatens Etisalat DB with
setting an August publication date.
a $1.6b fine for allegedly exceeding direct
foreign ownership limits.

Kuala Lumpur
DiGi books a 15% slump in Q2 profit to
$92m as a result of depreciation and financ-
ing costs.

10 August 2011 Telecom Asia www.telecomasia.net

 movements

Seoul z Cisco swings the ax on some 6,500 jobs, and arranges to sell a manu-
Small business federa- LG U+ and SK Tele- SK Telecom launches facturing plant, in a bid to save $1b in annual costs.
tion Kbiz applies for com both launch LTE tablet-based mobile
South Korea’s fourth services, while KT learning platform z RIM cuts 2,000 jobs, and announces some management changes – but
mobile license, reveal- says it will launch in T Smart Learning not the CEO-level change some investors had been lobbying for.
ing an ambitious plan November when suf- in South Korea, an-
to roll out a national ficient LTE handsets nouncing plans for an z News Corp becomes embroiled in a fresh phone-hacking scandal,
WiBro network. should be available. international rollout scuttling its planned BSkyB takeover and stirring internal turmoil.
next year.
z Apple, Microsoft, RIM, Ericsson, EMC and Sony team up to snatch
Nortel’s patent portfolio away from Google with a $4.5b joint bid.
Taipei
The GSMA calls on Taiwan to abandon its Wimax manufacturing focus z Rumors circulate that Apple and Google could go head to head over
and instead offer incentives to LTE equipment makers. patents again, in a bidding war for wireless technology licenser Inter-
Digital.

Tokyo z Sony Ericsson swings to a $70.6m loss, blaming lingering component

KDDI starts rolling Android is estimated NTT DoCoMo shows shortages from the Japanese quake, as well as a “collapsing” feature phone
out nationwide Wi-Fi to have toppled iOS its green side, an- market.
for its 3G subscribers. as the most popular nouncing a plan to
smartphone platform deploy 10 renewable z ST-Ericsson’s Q2 loss widens to $221m, as the company grapples with
in Japan. energy facilities in what its CEO acknowledges is a “very tough” financial situation.
FY12.
z Nokia and Siemens abandon the search for a private equity buyer for
joint venture NSN, due to a reported lack of interest.

z APAC is said to be driving global IPv6 adoption, motivated by regis-

trar APNIC’s warning that it is running out of v4 addresses.

z Start-up Emerald Atlantis commissions what it says will be the world’s

Auckland
Pacific Fibre contracts TE SubCom to build the planned $400m subsea
cable linking New Zealand, Australia and the US.
first 100 x 100G subsea cable network, linking the US, Canada, the UK
and Iceland.
z Google CEO Eric Schmidt is called in to testify at a US senate antitrust
hearing into the company’s growing internet dominance.

z Despite healthy gains in APAC, Norway’s Telenor records a more than

50% profit slump to $814.4m.

z LG Electronics launches its first 3D smartphone, the Optimus 3D.

z Gartner calculates that mobile payment take-up is growing slower

than expected in emerging nations.

z Akamai cautions that new broadband adopters are the most vulner-
able to cybercrime.

Sydney z Microsoft makes more inroads in its patent challenges against

Australia’s NBN Co wins the required
2.3-GHz licenses to roll out the wireless
portion of the National Broadband
Network.
In response to soaring customer com-
plaints, regulator ACMA proposes telcos
be barred from using terms like “cap” or
“unlimited” misleadingly in advertising.
Telstra implements HD voice across
its Next G 3G network, in what vendor
Ericsson claims is the world’s largest
deployment.
Android-based device vendors, securing two licensing deals in just two
weeks.
z Dell plans a foray into data-center networking with the upcoming
purchase of vendor Force 10 Networks.
z Spain’s Telefonica foreshadows layoffs of around 20% of its Spanish
workforce – some 6,500 staff – in a cost-cutting drive.
z Gartner forecasts that global IT spending will grow 6.6% in 2011,
despite the supply chain issues arising from the Japan quake.
z A Vodafone executive is quoted as saying the company hopes for
dividends of $5.5b from its 45% stake in Verizon Wireless, but the telco
subsequently insists the quote was taken out of context.

www.telecomasia.net Telecom Asia August 2011 11

cover story
At home
in the cloud
Cloud-based services are transforming the home
networking paradigm and creating new challenges,
from integration issues to content sharing
John C. Tanner
A
s fixed and wireless broad-
band proliferate across the
globe and the hunger for
web and video content es-
calates, home networking
is becoming an increasingly vital com-
ponent of the broadband saga. This is
especially true as more and more con-
sumer electronics ship IP-ready and
consumers become increasingly used to
accessing the web by more than just a
desktop PC at home or in the office.
For a sign of the times, one can turn
to Singapore, where the Infocomm De-
velopment Authority (IDA) sees home
networking as the next area of develop-
ment for its NBN project. At this year’s
CommunicAsia event, IDA senior di-
rector for next generation infrastruc-
ture Philip Heah said that the regulator
has been receiving many queries from
consumers asking how to network de-
vices in their homes, and would kick off
a home networking initiative to address
their concerns. This month, the IDA
will release a home networking guide
for homeowners, which will offer a
summary and comparison of common
options to connect devices in different
parts of the house to the NBN’s fiber ac-
cess termination point.
But even as home networking gains
more relevance in the age of fiber ac-
cess and the Internet of Things, it’s also
becoming more complicated. Service
12 August 2011 Telecom Asia www.telecomasia.net
providers have typically shied away
from becoming too involved in home
networks primarily because managing
devices sitting behind the home gate-
way (which service providers would
naturally be expected to do) was a
challenge. Even as industry standards
groups like the Digital Living Network
Alliance (DLNA) have labored to pro-
vide protocols and standards to enable
devices to connect to home network
gateways more easily, a mishmash
of access standards (from Ethernet,
HomePlug and MoCa to Wi-Fi and
WiGig) has complicated device inter-
operability.
Meanwhile, there’s a new complica-
tion arising – the cloud. If “traditional”
home networking was concerned main-
ly with enabling devices within a home
to share resources and content within
that network (such as your iTunes play-
list, for example), the cloud adds a new
dimension by allowing some of that
content to be hosted outside the home
network in a way that’s still accessible
by all the devices connected to that
gateway.
With industry hype growing around
streaming content services like Netflix,
YouTube and Rhapsody, and content-
hosting services like Apple’s iCloud and
Amazon’s Cloud Player – all of which
tout the ability of users to easily access
content via multiple devices – the tra-
 More coverage of
IPV6

What about IPv6?

W
ith IPv6 now standard issue from the world’s RIRs, the ques-
tion of implementation has taken center-stage in a number
of areas. Home networking is now one of them, as little
work has been done in the IPv6 space in regards to home
networking devices. An IPv6 implementation standard for broadband CPE
was only just released by the Broadband Forum in April this year. And at
the end of June members of the Internet Engineering Task Force proposed
the creation of a working group specifically to address the issues of de-
ploying IPv6 within home networks.
According to an IETF announcement proposing the working group,
the increasing diversity and scale of the number of internet-ready devices
sitting behind a home gateway that can connect directly to the internet,
as opposed to connecting indirectly via NAT (Network Address Transla-
tion) is creating new requirements for IETF protocols for IPv6 implemen-
tation.
One issue cited by the IETF is the introduction of multiple subnets
to home networks, which will become increasingly crucial not only to
support private and public (guest) networks, but also to accommodate
networks that use Layer 3 (i.e. Ethernet) as well as link layers designed for
low-powered sensor networks (i.e. home energy management systems).
That level of segmentation may also be necessary in situations where
building control has to be separated from the internet access network.
Another issue is the trade-off of home networking devices with di-
rect internet connectivity: exposure to unwanted traffic. “Firewalls that
restrict incoming connections may be used to prevent exposure, however,
this reduces the efficacy of end-to-end connectivity that IPv6 has the po-
tential to restore,” the IETF proposal says.
“Home networks need to provide the tools to handle these situations
in a manner accessible to all users of home networks. Manual configura-
tion is rarely, if at all, possible, as the necessary skills and in some cases
even suitable management interfaces are missing,” the document says.
The Internet Engineering Steering Group (IESG), which oversees the
IETF, had not yet approved the working group proposal as we went to
press. TA
– John C. Tanner

www.telecomasia.net Telecom Asia August 2011 13

cover story
Cloud-based services concentrate complexity
in the cloud. Home networks concentrate
complexity in the home”
ditional paradigm of home networks
is arguably changing, says Jim Wil-
liams
, president of consultancy Media
Strategies and
 Solutions.
“The continuing expansion of
cloud-based services will definitely im-
pact how home networking deploys and
evolves,” he tells Telecom Asia. “Each in-
stance of a cloud-based service chips
away at the complexity that would oth-
erwise be required of a home network
for that application. Cloud-based ser-
vices concentrate complexity in the
cloud. Home networks concentrate
complexity in the home.”
Integration
disincentives
One of the issues presented by
cloud-based content services, particu-
larly on the mobile side, is that it poten-
tially lowers the incentive for consum-
ers to integrate wireless devices with
their home networks.
Kevin Burden, mobile device prac-
tice manager at ABI Research, points
out that new cloud services offered by
Amazon, Google and Apple allow con-
sumers direct access to both user-gen-
erated and licensed media.
“If they are easier and more conven-
ient for consumers, mobile cloud ser-
vices could completely bypass the need
for integration with home networks or
entertainment equipment,” he said in a
research note.
The irony is that certification pro-
grams for DLNA and Wi-Fi Direct now
make it easier than ever for consumers
to integrate smartphones and tablets
into their home networks, adds ABI
senior analyst Victoria Fodale.
14 August 2011 Telecom Asia www.telecomasia.net
“Wi-Fi Direct enables a device
to connect directly to another de-
vice without a wireless network. DL-
NA‑certified devices discover other
certified devices, eliminating the need
for a consumer to configure the con-
nection,” says Fodale. “Both programs
help mitigate the difficulties that con-
sumers often face when connecting
devices at home, and both bring wire-
less technology further into the main-
stream market.”
But figures from ABI indicate that
while Wi-Fi Direct- and DLNA-ena-
bled smartphones will grow strongly, at
CAGRs of 63% and 23%, respectively,
through 2016, home networks will
grow at only 4% in that time frame – il-
lustrating “a clear disconnect” between
smartphone capability and home net-
work usage, Fodale says.
“Although Wi-Fi connectivity is
ubiquitous in smartphones, and the
number of wireless home networks is
growing steadily in developed markets,
network configuration remains chal-
lenging for the average consumer,” adds
Fodale.
DRM issues
That’s not to suggest that the home
network will be an either/or proposi-
tion of home vs cloud. Williams of Me-
dia Strategies says there’s already a con-
tinuum of possible solutions between
the two models in play.
“An example of a hybrid approach
is a whole home PVR that serves mov-
ies and television to lightweight STBs
throughout the home,” he explains.
“Now imagine connecting the whole
home PVR over the internet to a cloud-
based service like [digital rights authen-
tication and cloud-based distribution
system] Ultraviolet. Additionally, imag-
ine that one of the devices in the home
is a portable device with its own storage
that could load a movie from the PVR
to watch while traveling in a plane. This
architecture is an amalgam of the cloud
and home network approaches where
devices take on different roles at differ-
ent times for different purposes.”
Shawn Ambwani, VP of Intertrust,
notes that the extent of a hybrid ap-
proach will depend on the network, the
business models and how people con-
sume content.
“For something like Netflix, for ex-
ample, it’s in the cloud, but you have
to be connected to watch it, and it has
to be a good connection, otherwise it’s
useless and has no value,” he said. “If
you want to watch a movie from iTunes,
you have to download it first and that
takes awhile – you have to wait an hour
to watch it. There’s all these different
combinations that make it complex.”
That’s becoming especially true in
the case of content from multiple devic-
es inside and outside the home network
because of multiple DRM standards,
Ambwani adds.
“Service providers want to be able
to offer different types of services –
streaming video, downloads, or a hy-
brid of the two. Users want to be able to
access that content on different devices,
or they want to access iTunes or other
services,” Ambwani says. “All that con-
tent needs DRM, but if they all have a
different DRM standard, it limits your
ability to get content on all of your de-
vices.”
 Proprietary DRM is already a prob-
lem within home networks themselves,
he adds. “You can’t have an Xbox, an
Apple TV box and a TV set in your liv-
ing room with different DRM stand-
ards.”
Williams observes that the differ-
ence for cloud-based systems and home
networking systems is where the rights
management function is located: in the
cloud or in the home. Either way, he
says, “the same essential problem must
be solved. And since the eventual sys-
tems that are successful in the market-
place will likely be an amalgam of the
two approaches, both the cloud and the
home networking content protection
problems need to be solved.”
Ambwani’s company Intertrust is
one of a community of developers ad-
vocating Marlin, an open-standards
DRM platform that promises to not
only lower costs for service providers,
but also enable a practical solution for
protecting content across different de-
vices and services. To date, Marlin has
been adopted in a handful of markets,
including Japan (for its national IPTV
standard), the UK, France and Italy. It’s
also supported by the Open IPTV Fo-
rum and Ultraviolet.
Beyond content sharing
However the DRM issue plays out,
broadband service providers are still
looking at other ways to leverage the
cloud for home networking services.
The Home Gateway Initiative – an in-
dustry group of broadband service
providers and vendors that publishes
requirements for “digital home build-
ing blocks” (hardware and software) to
www.telecomasia.net Telecom Asia August 2011 15
connect with each other – has recently
begun work on protocols to help broad-
band players develop services that can
take advantage of both cloud technolo-
gies and home network resources.
HGI president Duncan Bees offers
home energy management as an exam-
ple. “We’re already developing the home
gateway to serve as a platform for that,
but another approach is to put some of
that application awareness and intelli-
gence in the network,” he says.
From there, Bees adds, “We can
build that to home automation, moni-
toring and security, and those types of
things.”
Bees says HGI is also looking at
home network resources that might
need to be managed from the cloud and
“manage that in a more active way than
the typical TR-69 management. For ex-
ample: firewall management on your
home gateway, statistics, user profiles,
file resources, phone books – all kinds
of things in the home you might need
access to in the cloud, and how to en-
able communication between the home
network and these cloud based services.
There’s all kinds of things like this once
you start getting in to it.”
HGI is also looking at things like
media sharing (to include user-gener-
ated photos and video), although he
notes that they “haven’t really looked
at the DRM issues for sharing content
across the cloud yet, but we probably
will.”
Bees says that while bringing cloud-
based services into the home network-
ing mix does add new complexity, “the
counterpoint is that the home gateway
or the set top box is a good application
platform. So a lot of these things can be
done in the home or reside in the cloud
and so it becomes a question of the
tradeoffs.”
Williams agrees, noting that while
cloud-based services can shift complex-
ity from the home to the cloud, “The
trade-off is the need to have always-on,
high-speed broadband and coming to
grips with the associated privacy and
control issues. These issues alone will
likely ensure a continuing role for home
networking as the cloud-based model
continues to grow.”
Meanwhile, the IEEE is working on
a technology standard that can help
ease the complexity somewhat, at least
in terms of transport. IEEE P1905 aims
to enable connection of fixed-line home
networking devices and mobile devices
by creating an abstraction layer that
provides a common interface for apps
and upper layer protocols. Those apps
and protocols would then be agnos-
tic to whatever underlying home net-
work transport technologies they come
across in the home network, be it pow-
erline (IEEE P1901 and HomePlug AV),
Wi-Fi, MoCA or Ethernet. 


“The aim is for consumers or opera-
tors to be able to combine these differ-
ent connections to maximize a home
system’s overall performance and ro-
bustness,” explained Rethink Research
analyst Caroline Gabriel in a research
note. “Packets can arrive and be trans-
mitted over any of the network types
according to quality of service (QoS)
priorities. P1905 also supports com-
mon set-up procedures for adding de-
vices, ensuring security, implementing
QoS and managing the network.” TA
Survey: IPX
IP exchange poised
to soar
Two-thirds of global carriers plan to deploy within three years
Michael Carroll and John C. Tanner
O
perators are starting to prick
up their ears at mention of
IP exchange (IPX), as IP
core networks become the
norm and looming mass
market LTE services make adoption of the
GSM Association-defined traffic exchange
mechanism a more urgent concern. How-
ever, carriers say more clarity over what
constitutes an IPX network and the ser-
vice-level-agreements that underpin them
is needed before the market can truly take
off.
Almost two-thirds of global operators
plan to deploy IPX services in the next one
to three years, with the shift to LTE a ma-
jor driver of interest in the exchange net-
works, research by Telecom Asia reveals.
The study – conducted for IPX pro-
vider Sybase 365 – found that 63% of
global carriers plan to launch the net-
works within three years, with the major-
ity believing the networks will become an
essential component to offering LTE ser-
vices during that period. Factors turning
Best describes an IPX platform
Source: Telecom Asia
16 August 2011 Telecom Asia www.telecomasia.net
operators on to IPX include the security,
ease of deploying end-to-end IP services,
promises of lower costs, and the potential
to ease the migration to next-generation
networks.
More than 50% of the operators sur-
veyed rated all the elements as key ben-
efits of IPX currently, however, a break-
down of the numbers shows that many
operators see the ease of IP deployment
element as the chief purpose of IPX (see
Figure 1 below).
While IP deployment and service qual-
ity top the list, carriers are also attracted
by the potential to lower costs using IPX.
Justin Middleton, intercarrier commercial
manager at Vodafone Hutchison Australia
(VHA), explains one of the main cost sav-
ing measures is reducing the number of IP
exchange hubbing partners from the 10-
12 VHA has currently, to potentially just
one. “I’m curious to see what results we’ll
derive from that,” he notes.
Despite the current benefits, it is for
LTE networks that IPX holds the greatest
Figure 1
appeal. There is a clear correlation be-
tween the number of operators planning
to deploy IPX in the next three years and
those that consider the networks essen-
tial for LTE services. And many opera-
tors also see the exchange networks as a
means to shore up relationships with
fixed-line carriers and over-the-top ser-
vice providers.
Relationship building aside, operators
rank roaming, IP signaling and streaming
as the principal services IPX will bring to
next-generation networks. In the longer
term, they will also expect their IPX to
handle fraud detection.
Paul Hodges, executive VP of corpo-
rate, wholesale and international at Hong
Kong-based CSL, believes it will be up to
IPX carriers to implement the new ser-
vices offered by the networks. His view is
echoed by Bernd Hoogkamp, mobile data
sales manager at TeliaSonera’s interna-
tional carrier division, who says his firm
will expect the IPX to offer new services
rather than build services to suit the new
networks.
IPX today
All the talk about the future potential
of IPX overshadows the fact that 34% of
carriers surveyed have already deployed
IP exchange networks. The networks are
currently most popular among integrated
operators, followed by wireless providers
and wholesalers (see Figure 2).
However, these early deployments
have flagged some problems in terms of
implementing IPX – not least of which is
whether current networks truly live up to
the GSM Association’s definition of an IP
exchange.
At its simplest level, IPX is the modern
version of the GSMA’s GPRS Roaming Ex-
change (GRX) specifications. The associa-
tion has laid out common specifications
for the end-to-end delivery of IP traffic
and the quality of service operators can
expect, but it has left the market to decide
how to implement those specifications.
CSL’s Hodges notes the specifications
are necessary, particularly for the data
roaming traffic that is expected to domi-
nate early IPX deals. “When you are talk-
www.telecomasia.net Telecom Asia August 2011 17
Operator deployments by carrier type
Source: Telecom Asia
ing about data speeds up to 100 Mbps,
without guaranteed quality of service in
the underlying MPLS network, the con-
nectivity we are used to such as the con-
ventional GRX simply would not be able
to support this kind of data speed.”
The problem, though, is a lack of clar-
ity on how to achieve the service level
agreements (SLAs) that underpin IPX,
Hodges notes. He says defining SLAs cov-
ering Diameter and SIP proxy, and voice
hubbing have “yet to be clearly defined in
the IPX ecosystem.”
Despite that lack of clarity, Hodges says
the main hindrance to IPX deployment
currently is a lack of compatible networks
to hook up with. “For basic IPX data con-
nectivity, we’re ready now. The schedule
for implementation of other services such
as voice and signaling largely depends on
the readiness of other mobile operators.”
Assessing that readiness is one of the
major stumbling blocks to IPX currently,
says Telia Sonera’s Hoogkamp. He notes
the phrase has become another industry
buzzword, which makes it hard to assess
which carriers are ready to roll. “A lot [of
carriers] have an IPX, but how do you as-
sure end-to-end quality of service?”
The uncertainty makes Hoogkamp
wary of Asia-Pacific operator’s claims to
have launched high-level IPX networks
covering end-to-end service delivery, and
he says more specific regulations are need-
ed to clarify the situation.
Hoogkamp’s views are not shared by
Figure 2
the GSMA. Dan Warren senior director
of technology at the association, stands by
the view that it is for the market to decide
how interconnection works, noting that
IPX is similar to the GRX agreements al-
ready in place for GPRS traffic. As such, no
new standards should be needed to cover
the in-depth details of commercial agree-
ments, he says.
Mitigating the potential spat is Mark
Dioguardi, executive VP and head of net-
work and technology at Maxis. He told Tel-
ecom Asia the solution is for operators to
agree a clear implementation strategy for
IPX. “The challenge is in working closely
with different vendors to establish the
full range of possible benefits which stem
from IPX’s current applications, while as-
sessing the need for a certain amount of
investment in things such as session bor-
der control equipment.”
While LTE interconnect may currently
be hindered by small number of 4G net-
works, Deutsche Telekom spokesman Ralf
Sauerzapf says that doesn’t stop IPX being
a commercial reality. “IPX transport is a
reality today and will increase with RCS-
e and Diameter signaling over the next 12
months.”
Warren concedes “some technical
work” is necessary for future and emerg-
ing services, including RCS-e and VoLTE,
to ensure “operators are working in the
same way.” He says the association has the
task in hand, and expects to finalize the
work in the next six months. TA
App Stores

18 August 2011 Telecom Asia www.telecomasia.net

APAC emerges as
new battleground
Success revolves around quickly establishing a large developer community and engaged
subscriber base by taking advantage of their deep understanding of the local market
Luc Grimond and Guillaume Sachet, Accenture
A
pp stores have been around
since the turn of the cen-
tury. Yet, they have only
started to garner broader
interest since June 2008
and the launch of the most successful
app store to date. Since then, operators,
operating system (OS) vendors, and de-
vice manufacturers have launched their
own application stores.
An app store offers operators an
alternative distribution channel for
mobile content and an opportunity to
boost data revenues. Yet, the success of
operators’ app stores has been mixed
and operators are now re-thinking their
approach to building and launching
app stores, with an increased focus on
the eco-system.
Operators in Asia Pacific (most no-
tably in Southeast Asia) have a unique
opportunity to engage and grow their
subscriber base by leveraging their
knowledge of local market specificities
given the lack of established OS or de-
vice manufacturer app stores with a lo-
cal footprint. This is further supported
by the emergence of cross-platform
and multi-device standards as defined
by Wholesale Application Community.
Asia Pacific is therefore becoming a new
battleground for app stores.
Why have so many
failed?
Only a handful of operators have
seen their app stores generate signifi-
cant growth since their launch, with
some of the largest and most well es-
www.telecomasia.net Telecom Asia August 2011 19
tablished operators failing to capture
sufficient interest from both the devel-
oper community and consumers, de-
spite multiple launch attempts. Five key
factors have contributed to this lack of
success:
1. The dominant market share of the
largest device manufacturers and
OS vendors in the mature North
American and European markets
have made these app stores the
channel of choice for consumers to
download mobile content.
2. Burdened by the capital expendi-
tures required to upgrade existing
network infrastructure, operators
cannot afford to invest as much in
app store technology as OS ven-
dors or device manufacturers that
are able to source funds from their
healthy and sustainable OS or de-
vice sales revenue streams.
3. Telco’s organizational structure is
not aligned to a dynamic internet
business that requires a much leaner
operating model to respond to con-
stantly changing customer and part-
ner needs.
4. The “walled garden” approach
maintained by some operators can
Operators cannot afford to invest as
much in app store technology as OS
vendors or device manufacturers”
hinder app store success unless an
operator has attained sufficient scale
or dominance in its market.
5. The lack of innovative pricing strat-
egies and attractive business models
for partners.
Despite these challenges, operators
continue to launch app stores, hoping
to build attractive eco-systems for the
developer community, advertisers and
content providers, as well as for their
own subscribers.
Avoiding dumb-pipe
scenario
Over the last decade operators have
seen their ARPU shrink as voice became
more commoditized. ARPU continues
to decline as subscribers move from tra-
ditional VAS toward more freely avail-
able content supplied through web or
native apps. Amidst this shift, app stores
present a opportunity for operators
looking to stem the drop in ARPU and
declining traditional revenues.
Telcos aim to increase ARPU
through higher data revenues under-
pinned by a low-cost smartphone strat-
egy adopted by many Southeast Asian
operators to increase mobile data usage.
App Stores
2011 WAC partner operator addressable subscriber base
WAC Operator Partner
Subscriber Base
3.3 Billion Subscribers
Non-WAC WAC Closed OS
Latin America Middle East & Africa
App stores have the potential to
reduce churn by offering a compel-
ling portfolio of applications that will
make switching to a competitor much
more costly given the subscriber’s in-
vestments of time and money into the
existing operator’s applications. They
can create additional indirect revenue
streams from advertising, billing or
provisioning services. They also can
generate revenue associated with the
purchase of applications using multiple
innovative pricing mechanisms (in-app
purchase, subscriptions, pay per down-
load, etc.)
In addition, telcos can derive sig-
nificant intangible benefits such as in-
creased brand exposure through having
an operator’s app store readily acces-
sible from the subscriber’s handset. An
app store may also improve the percep-
tion by major OS vendors and device
manufacturers of operators located in
small geographical markets.
The success of Asia-Pacific opera-
tors revolves around quickly establish-
ing a large developer community and
engaged subscriber base by taking ad-
vantage of their deep understanding of
local market specificities (e.g. language,
culture) to ensure applications are rel-
evant to subscriber needs and localized.
Incumbents of course can leverage their
20 August 2011 Telecom Asia www.telecomasia.net
WAC Closed OS Subscribers
2.9 Billion Subscribers
WAC Open OS Subscribers
425 Million Subscribers
Asia/Pacific Eastern Europe
North America Western Europe
historically strong brand presence.
Operators can also use their ex-
panding 3G/4G infrastructure that is
fueling the adoption of smartphones
to create significant opportunities to
create mass-market applications. The
limited exposure to large global OS ven-
dors and device manufacturers in some
countries can give the operators a first
mover advantage in creating a sizeable
app store ecosystem.
The capacity to provide integrated
billing, as many Asia-Pacific markets
remain largely unbanked, provides op-
erators with a unique competitive ad-
vantage and positions them to become
preferred partners for OS vendors and
device manufacturers looking to access
these markets.
WAC momentum
Formed in 2010 as a collaborative
effort between a handful of network op-
erators, OEMs and other industry play-
ers, WAC aims to create a standard for
the development of mobile apps that
will allow seamless development across
different platforms and different device
hardware. Collectively, they represent a
subscriber base of more than 3.3 billion,
of which 425 million use devices with
an open operating system.
Although many skeptics question
the speed at which WAC will be able to
approve standards internally given the
composition of its membership, WAC
offers operators the opportunity to tap
into a much larger developer communi-
ty by enabling cross-platform applica-
tion development and several operators
have recently launched WAC enabled
app stores. WAC’s standard for mobile
apps allows developers to write code for
their applications once only, before de-
ployment across multiple operating sys-
tems and devices. WAC could generate
a richer portfolio of innovative applica-
tions, ultimately enabling operators to
attract a sizeable user community.
While the Asia-Pacific market diver-
sity and WAC provide operators with
the opportunity to attract develop-
ers to build applications for their own
branded app stores, several challenges
still face operators.
First, operators need to define an ap-
propriate business model, determining
what monetization methods to adopt and
what portfolio of applications to offer. It
also should include any strategic partner-
ships that may be required from content,
device and operations perspectives.
They also need to build a support-
ive operating model, either as a spin-off
organization or an integrated division
within the existing organization to al-
low for flexibility and speed. They then
need to adopt the right enabling tech-
nologies, sourced either in-house or
outsourced to a third party.
Despite multiple challenges and
competition from OS vendors and de-
vice manufacturers, app stores should
remain at the core of operators’ mobile
data strategy moving forward. As smart-
phone penetration continues to grow in
emerging markets, and WAC standards
become more widely adopted, a grow-
ing community of developers will be
attracted to create innovative applica-
tions that will drive the consumption of
mobile content by subscribers through
operator app stores in APAC. TA
Luc Gremond is a senior manager
for strategy and Guillaume Sachet is a
partner for strategy at Accenture

Time to get the marketing right
Michael Philpott, Ovum
T
he connected home concept
is not new. It has been around
ever since fixed broadband
was first launched, and over
the years numerous service
providers have tried, largely without
success, to launch connected home ser-
vices into the mass market. And yet here
we still are in 2011 still talking about the
same services, same opportunities, and
to a certain extent the same problems,
as we were ten years ago.
So are connected home opportuni-
ties real, and is now the time to realize
them, or will we be simply repeating
this conversation in another ten years’
time?
The connected home promise is not
a myth, the opportunities are real and
demand is growing. There are numer-
ous reasons why connected home ser-
vices failed in the past, but they largely
come down to: unrealistic pricing, bad
marketing and services aimed at the
niche rather than the mass market.
The latter is the most important. It
is difficult to sell a product or service
when the customer doesn’t see the need
for it – the connected fridge is perhaps
the best and most well-known example.
But even when real mass-market op-
portunities such as content backup have
sprung up, connected-home solutions
have then been badly marketed and
priced too high for customers to see or
understand their real benefit over sim-
pler and cheaper consumer electronic
solutions.
There is currently a shift in the mar-
ket, however – one that will prise open
the mass market for cloud-based, con-
nected home solutions. This shift is
caused by the rapid adoption of port-
able, more personal connected devices,
which is loosening our dependence on
the desktop PC as our internet por-
www.telecomasia.net Telecom Asia August 2011 21
tal. As this shift takes place, connected
home services increasingly start to
make sense, as they suddenly start to
meet a real need.
The need for media sharing and re-
mote content access for example, only
starts to become important when we
own and regularly use a number of con-
nected devices on which we would like
to access the same content. According to
Ovum’s Consumer Insights data, the av-
erage number of connected devices we
use on a regular basis in the developed
world is 3.2.
As the mass market continues to be-
come more “connected”, a greater range
of connected home services will start to
also appeal. It is then down to service
providers to get the pricing and market-
ing right.
Choosing a strategy
According to our Consumer Insights
data, the biggest opportunities today are
focused around advanced home moni-
toring and security, device security,
advanced parental controls, and media
sharing with automatic content back
up. However, creating the right go-to-
market strategy will be critical to maxi-
mize these, and other, connected home
opportunities.
Trying to charge for each individu-
al application separately, which is often
what has been attempted in the past, is
certainly unlikely to work. Consumers
have become too used to value-added
services coming for free or as part of
a bundle to suddenly start paying for
individual applications. However, giv-
ing everything away for free does lit-
tle for ARPU growth, which must be
a priority for service providers going
forward.
Service providers will need to be
canny enough to know which services
view point
to incorporate as a value-add to cre-
ate stickiness with their customers
and to identify those it can charge a
premium in order to increase ARPU.
Ovum warns service providers to look
at their own market when developing
this strategy though, as our data clearly
shows that different markets are pre-
pared to pay for different things, so
simply copying thy neighbor will not
work in all cases.
It is broadband service providers
that have eyed the connected home
market for the past ten years. How-
ever, as the connected world converges,
broadband service providers are far
from being the only consumer brand
with presence in the connected home.
Although coming from completely dif-
ferent backgrounds, going forward it
will become increasingly hard for the
consumer to distinguish between a
pay-TV operator, a broadband service
provider, an online company, or even,
in some cases, a consumer electronics
vendor.
As some connected home services
are related to a core product (just as
media sharing may be linked to an on-
line music offering, for example), it will
seem natural for consumers to take such
services from the suppliers of those core
products. The more powerful brands in
these core areas will have the advantage
of either increasing their stickiness and/
or ARPU. As offerings start to look sim-
ilar, however, players will have to work
harder to make sure they retain their
position as one of these key brands. TA
Michael Philpott is
practice leader the
consumer segment at
Ovum
Country Focus: japan

by Marc Einstein and Eriko Jitsukata, Frost & Sullivan

NTT DoCoMo’s
early-bird gambit

L
ast December NTT DoCoMo being a first mover in the LTE space (per- CoMo has seen its service revenue fall
became the first Asian opera- haps maybe for CDMA players) and many by 13% over the last five years in local
tor to massively deploy LTE other operators in the region have taken currency terms while its mobile market
service under the Xi (pro- a wait-and-see approach to LTE such as share has also fallen below 50%. Profit-
nounced “crossy”) brand. The Korea Telecom and CSL’s competitors in ability has increased largely due to a re-
massive LTE launch is the latest in a se- Hong Kong. Only time will tell if there is structuring of the handset subsidy sys-
ries of firsts for the operator, and repre- really a first-mover advantage. Irrespec- tem and the capex for the LTE network
sents a fundamental shift in the opera- tive, it is clear that DoCoMo needed to rollout remaining below 2007 levels.
tor’s strategy in the market. As operators revitalize its strategy in the midst of trou- DoCoMo has largely banked on LTE to
across the region prepare their own LTE bling times in its home market. While revitalize its domestic market strategy.
networks for commercial launch, look- the operator has found initial success in DoCoMo decided to price its LTE
ing at the DoCoMo case can offer some its Indian tie-up with Tata, the Japanese services at a premium, offering 37.5
tips for operators looking to formulate mobile market is facing a recession along Mbps at 1,000 yen for 2 GB of data and
their product and pricing strategies. with the overall economy. 6,510 yen for 5 GB of data with addi-
Some might question the wisdom of As shown in the table below, Do- tional blocks of data being available
for purchase on both two-year con-
tract plans. In comparison, its largest
NTT DoCoMo selected KPIs competitor in the dongle space eAccess
charges 3,880 yen for unlimited service
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 (Est.)
on its 42 Mbps HSPA+ offering. UQ
Wireless revenue 4,314.1 4,165.2 3,841.1 3,776.9 3,746.9 3,737.0 Communications, a Wimax operator
(JPY bn) partially owned by KDDI has a similar
CAPEX (JPY bn) 934.4 758.7 737.6 686.5 668.5 705.0 offering priced at the same rate and has
recently launched Wimax-2 to increase
CAPEX/revenue 21.7% 18.2% 19.2% 18.2% 17.8% 18.9% its competitiveness.
EBITDA margin 32.9% 34.8% 37.7% 36.6% 37.1% 37.2% DoCoMo is trying to attract the
high-end users with its LTE offering
Mobile market 50.5% 49.1% 48.4% 47.4% 46.9% 46.4% before getting aggressive in the mass
share market. In terms of its overall strategy,
the company has already announced

22 August 2011 Telecom Asia www.telecomasia.net

 More coverage of More coverage of
Japan NTT DoCoMo

An often overlooked fact about the

Japanese market is that smart-
phones are not as prevalent in the
feature-phone dominated market”

its intentions to make its LTE network

available to other telecom companies, as
there are certainly several other ISPs, ca-
ble operators, tablet manufactures and
automotive companies keen to enter the
potentially lucrative data-MVNO busi-
ness. DoCoMo will have a considerable
head start in this market as rivals KDDI,
SoftBank and eAccess aren’t expected to
deploy LTE services until next year.
DoCoMo has been less aggressive
than other LTE operators such as Ve-
rizon in deploying smartphones and
VoIP using LTE, but the company has
demonstrated other LTE-based services
such as a real-time translation service smartphones already on the market. which would lead to higher churn rates
and an augmented reality service. Verizon, however, is looking to promote (currently less than 1%). Another of-
DoCoMo has added 120,000 sub- mobile broadband usage and differenti- ten overlooked fact about the Japanese
scribers to its network in roughly six ate its network from domestic competi- market is that smartphones are not as
months, or about 20,000 new subscrib- tors and charges the same data rates for prevalent in the feature-phone domi-
ers per month. As far as data-only sub- 3G as it does for LTE. nated market (DoCoMo sold fewer
scriptions are concerned, DoCoMo is The 4G battle is set to grow even than 2.5 million smartphones last year)
actually loosing market share as eAc- more interesting in the Japanese mar- and therefore networks have truly not
cess still has clear market-leadership in ket. Frost & Sullivan predicts that the yet been put to the test and all-you-can-
the space, with UQ Communications market for mobile voice and data com- eat plans may face the same fate as such
gaining the most market share. This munication services will fall by an av- plans in the US and Western Europe. TA
compares to Verizon Wireless in the US erage of 2% per year for the next five Marc Einstein is an industry man-
which alone sold 1.2 million LTE-ena- years, causing competition to intensify. ager and Eriko Jitsukata is an associate
bled devices in the second-quarter due This will be compounded by the pos- analyst, both are based at Frost & Sul-
to the wide-range of LTE tablets and sibility of more handset unlocking, livan’s office in Japan

www.telecomasia.net Telecom Asia August 2011 23

Research Note
Social networking
drives data revenue
Generating prepaid data revenue is daunting, but Asian operators find a sweet spot
M
obile social networking
is becoming a key driver
of mobile data revenue
in several fast-growing
but low-ARPU markets
in Asia Pacific, according to new research
from Wireless Intelligence.
The increasing use of social network-
ing mobile apps in markets like Indo-
nesia, Thailand, Malaysia and China is
enabling local operators to target price-
sensitive, prepaid consumer segments
with mobile data services.
At Indonesia’s XL (Axiata), for exam-
ple, revenue from data and value-added
services grew by 44% year-on-year and
contributed 16% to total revenue in the
opening quarter of the year. This was
mainly driven by the increasing popu-
larity of RSS news feed and applications
such as Facebook, Twitter and instant
messaging. XL launched its prepaid mi-
cro-SIM card for smartphones and tab-
lets to accommodate increasing demand
from prepaid users for these devices.
Similarly, Thailand’s AIS reported
that the growth drivers behind mobile
data usage included the increasing adop-
tion of smartphones and dongles (“air-
cards”), as well as the growing trend of
social networking and the operator’s
device-data bundling package. AIS is of-
fering a wide portfolio of aircards with
speed-based pricing (3.6 Mbps and 7.2
Mbps download speeds) for both Edge
and 3G networks.
Also, AIS launched its Google
Chrome-branded aircard in the first quar-
ter – a dongle preloaded with the Google
Chrome browser and an application to
check remaining airtime and price plan
changes. AIS is developing a number of
applications to encourage consumers to
24 August 2011 Telecom Asia www.telecomasia.net
The consumer craze for social
networking apps is helping
operators to encourage users
to stay online longer”
stay online longer, including location-
based promotional services and deals via a
GPS-enabled aircard that can connect to a
network of 5,000 local partners.
AIS has reportedly 7.5 million ac-
tive data customers, 86% of which are
on feature phones, 10% on smartphones
and 4% on dongles. Its Wi-Fi facility
supports network capacity as it expands
from 15,000 hotspots to 50,000 by year-
end.
Malaysia’s Celcom (Axiata) launched
its home-grown social network Kolony,
which has already attracted 1.8 mil-
lion users less than three months after
launch. This helped Celcom generate a
20% year-on-year rise in data revenue in
the first quarter. Data now contributes
36% of total revenue, up from 30% a
year ago. Data revenue, excluding SMS,
increased by 37% over the same period.
Meanwhile, 3G connections at China
Unicom more than tripled year-on-year,
passing the 22 million mark last May.
China Unicom launched more than 100
customized 3G handsets in 2010 as well
as its application store, WO Store. The
consumption of content such as mobile
newspapers, mobile music and mobile
TV has led to a monthly average data us-
age per subscriber of 178 MB.
China Unicom’s 3G adoption is ex-
pected to gain strong momentum com-
pared to its competitors due mainly to
rapid price erosion in its handset portfo-
lio. According to reports, the operator is
selling 4,500 units a day of its ZTE Blade
V880, a smartphone introduced in June.
Chinese operators are also benefiting
from the country’s home-grown social
networks such as Sina Weibo, Renren,
Kaixin001, QZone and Pengyou. As of
March, ISP Tencent had 504.8 million
active user accounts on Qzone and 101.4
million on Pengyou. Renren is believed
to have 31 million active users per month
while Weibo boasts 140 million.
Tencent reported that revenues from
its mobile value-added services increased
by 6.8% sequentially in the first quarter
to $120 million, and represented 12.3%
of total revenue. This growth was pri-
marily driven by the company’s bundled
SMS packages as well as an increase in
revenues from mobile social networking
sites and mobile games.
“The consumer craze for social net-
working apps is helping operators to
encourage users to stay online longer,”
said Joss Gillet, senior analyst at Wireless
Intelligence.
“Yet, operators taking a ‘home-
grown’ approach should be cautious
to retain engagement with end-users,”
Gillet added. “With the recent arrival of
Google+ onto the global social network
landscape, operators will be able to lever-
age consumer choices for some time.” TA
Telstra CFO to resign at
end of year
Telstra said its CFO
and board member John
Stanhope will retire at
the end of the year after
spending for more than
40 years with the Aus-
tralian incumbent.
Stanhope joined Tel- John Stanhope
stra in 1967 and has held a number of op-
erational roles and senior financial man-
agement positions including director of
finance. He will also retire as a director of
the Telstra board on December 30.
Bridge Alliance appoints
chairman
Asian mobile group Bridge Alliance
has named Hui Weng Cheong as its new
chairman.
Hui is currently CEO International
of SingTel. He succeeds Lim Chuan
Poh, who has been the chairman since
the inception of the Bridge Alliance in
November 2004.
Thaicom hires new CEO
Suphajee Suthumpun
has taken over as CEO at
Thailand-based satellite
operator Thaicom.
Suthumpun replaces
Arak Chonlatanon, who
continues to work with
Thaicom as chief advi- Suphajee
sor from August until Suthumpun
the end of September.
Suthumpun has more than 23 years
of experience in the IT industry, work-
ing for a multinational company. Before
joining Thaicom, Suthumpun held the
positions of MD of IBM Thailand and
GM of global technology services group
at IBM ASEAN.
China Telecom COO steps
down
China Telecom president and COO
Shang Bin resigned in July to become
a vice minister at China’s Ministry of
Industry and Information Technology
(MIIT).
www.telecomasia.net Telecom Asia August 2011 25
He replaces Xi Guohua, who left the
MIIT late June to take up the position
of vice chairman and secretary of the
Communist Party committee at China
Mobile Communications.
Telstra International taps
North Asia head
Andrew Wildblood
has assumed a new role
as head of North Asia at
Telstra International to
lead the company’s sales
strategy and activities in
China, Hong Kong, Ja-
pan and Taiwan. Andrew
Based in Hong Kong, Wildblood
Wildblood was previously the VP of
sales for Telstra International EMEA.
He has over 10 years of experience with-
in Telstra and held a number of senior
leadership and sales positions in Europe
and Australia.
Nokia hires commercial
business head
Nokia has appoint-
ed Michael Halbherr
as EVP to lead a new
business unit, called
Location & Commerce,
which will be created
from the merger of the
vendor’s Navteq map- Michael-
ping business with its Halbherr
social location services operations.
Halbherr, who has been at Nokia
since 2006, will report directly to Nokia
CEO Stephen Elop. Most recently he has
been leading the product unit in Nokia’s
services business unit, based in Berlin.
Huawei Australia selects
first directors
Huawei Australia has appointed
John Brumby, Alexander Downer and
John Lord as independent directors on
the company’s newly-established board.
John Lord will act as chairman of the
board, which comprises the three inde-
pendent Australian directors, along-
side Huawei Australia CEO Guo Fulin,
Huawei South Pacific president Jeff Liu,
and two members from Huawei’s global
board – global director Chen Lifang and
global executive director Li Jie.
TM appoints EVP for SME
segment
Telekom Malaysia has named Azizi
telecomcareer
A Hadi as EVD of its SME segment with
immediate effect.
In his new role, Azizi will oversee all
aspects of the operator’s efforts to cap-
ture more SME business in Malaysia.
HP appoints senior execs
HP has appointed
David Caspari as SVP
of enterprise services
for Asia Pacific and
Japan. Previously Cas-
pari was HP’s VP of
enterprise services for
South Pacific. Colin Png
Colin Png has joined HP as VP of
enterprise marketing for Asia Pacific
and Japan. He will be responsible for
creating awareness for the Instant-On
Enterprise and HP solutions offerings,
while leading key strategic enterprise
marketing initiatives across the region.
Prior to joining HP, Png was VP of mar-
keting for SAP Asia Pacific and Japan.
HTC names president for
global sales
HTC has promoted Jason Macken-
zie to the newly-created position of
president for global sales and market-
ing. Mackenzie joined HTC in 2005 and
has led HTC North America and Latin
America since 2007. He will continue in
his role as president of North America
and Latin America until a replacement
is announced.
Contacting Telecom Career
Advertising: Gigi Chan
Tel: 852 2589 1338 Fax: 852 2559 7002
E-mail: gchan@telecomasia.net
Editorial: Fiona Chau
Tel: 852 2589 1333 Fax: 852 2559 7002
E-mail: fchau@telecomasia.net
eventscalendar

Networking opportunities

across Asia
Date Event Location
August 02, 2011 M2M Asia Pacific Summit Singapore
September 06 – 07, 2011 LTE Asia Summit Singapore
September 06 – 07, 2011 Broadband Traffic Management Asia Singapore
September 07 – 09, 2011 Mobile Financial Services Asia Pacific Summit Singapore
September 20 – 22, 2011 Submarine Networks World 2011 Singapore
September 26 – 29, 2011 Mobile Money Southern Asia Conference & Expo Mumbai, India
September 26 – 30, 2011 P&T/ EXPO COMM China 2011 Beijing, China
September 27 – 29, 2011 Smart Grids Asia Summit Singapore
September 27 – 30, 2011 Asian Carriers’ Conference Cebu, Philippines
October 11 – 12, 2011 IP&TV Forum Eastern Europe & EurAsia Istanbul, Turkey
October 20, 2011 AppsXchange Asia Singapore
October 24 – 27, 2011 ITU Telecom World Geneva, Switzerland
October 25, 2011 Managed Services 2011 Hong Kong, China
October 31 – November 03, 2011 CASBAA Convention Hong Kong, China
November 01 – 02, 2011 Capacity Asia Kuala Lumpur, Malaysia
November 01 – 03, 2011 Connecting The Next Billion Jakarta, Indonesia
November 02, 2011 Asia Cloud (Forum) Conference Singapore
November 03, 2011 Telco Cloud Singapore
November 15, 2011 Indonesia Telecoms International Summit Jakarta, Indonesia
November 16 – 17, 2011 Mobile Asia Congress Hong Kong, China
November 16 – 19, 2011 Vietnam Comm/ Vietnam Internet & IT/ Vietnam Electronics 2011 Hanoi, Vietnam
November 30 – December 01, 2011 Cloud Computing World Forum Hong Kong, China
November 30 – December 01, 2011 CDN World Forum Asia Hong Kong, China
November 30 – December 02, 2011 Carrier Ethernet APAC Singapore
January 15 – 17, 2012 PTC 2012 Honolulu, US
January 26 – 27, 2012 Management World Asia Singapore
February 27 – March 01, 2012 GSMA Mobile World Congress Barcelona, Spain
For full details of the events, visit www.telecomasia.net To list an event, contact Candace Ho at cho@telecomasia.net

26 August 2011 Telecom Asia www.telecomasia.net