Telcos should look beyond data consumption 

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KUALA LUMPUR: Telecommunication companies (telcos) need to be more innovative to provide independent services beyond increasing their basic data consumption component, said Frost and Sullivan vice-president for ICT Practice in the Asia-Pacific, Ajay Sunder (pic).

For higher data consumption does not necessarily translate into higher revenue, he said yesterday at a media briefing on the consultancy firm’s Information and Communications Outlook for 2015.

As a case in point, Ajay said the Japanese market has seen its data consumption increasing from 2865.6 petabyte to 3597.1 petabyte, but revenue per gigabyte (GB) of data has declined from 660.9 US cents (RM2.20) to 525.6 cents. 

He noted that the Asia-Pacific market’s revenue per GB of data has been declining since 2013.

“The traditional portfolios (for telcos) are not the way forward,” Ajay said, noting that traditional portfolios will still rake in revenue as they are expected to grow from US$567 billion in 2014 to US$627 billion in 2019. 

Even as average revenue per user (ARPU) rises, he said, the increment revenue per GB of data is declining. Hence, telcos should think about innovative services which will give them the edge in the future.  

This is true even for the Malaysian market. The local market is currently at a growth stage, with a subscriber growth rate at 2.2% and a mobile penetration rate of 140.7% in 2014. 

Mobile market revenue for Malaysia in 2014 was at US$7.448 billion, with mobile subscribers rising to 42.9 million. However, the ARPU has fallen to US$14.64. By next year, the market is expected to grow to US$7.45 billion, driven by data and value-added services. 

There is still room for improvement for the local 4G market as usage is only at 3%, said Ajay. This, he said, is mostly because the population coverage is less than 20%, hence consumers are reluctant to take up the service now. 

Voice services in the Asia-Pacific region are projected to grow about 1%, while non-voice services will see a more rapid growth of 5.2%. 

Ajay is cognisant of the fact that the Malaysian market’s 2014 voice revenue fell to US$4.44 billion and non-voice revenue rose to US$3.01 billion, but urged telcos not to abandon their voice services in the coming years.  

He said telcos should instead find new initiatives to grow those services.

Ajay cited the voice translation service by NTT Docomo, which automatically translates voice calls in Japanese and the receiver’s language, as an example.

He also advised telcos to find innovative ways to further develop their non-voice services and not lean too much on “bundled offerings” of over-the-top content such as WhatsApp and Line. They should consider developing independent and innovative applications, Ajay said. 

 

This article first appeared in The Edge Financial Daily, on November 14, 2014.