TelecomAsia January2010

Google vs China Sharing data SKT CTO Grasping the cloud Mini-cable boom
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Asian Telecoms Business and Technology
January/February 2010
Reality
Hits!
Mobile broadband comes down to earth as
operators struggle with margins and flat-rates
Inside:
Published By
Packet-optical convergence
Telcos weigh their options on when

and where to flatten the layers
The path to all-IP mobile
Networks should evolve to

flat-IP architectures only when
the economics are justified
GOLD MEDIA PARTNER
Contents
Subscribe to Asias best daily telecom news service:
Volume 21 Number 1 Jan/Feb 2010
www.telecomasia.net
COVERSTORY
18 Reality sinks in
Mobile broadband subs and traffic may be rising, but the
wide-eyed optimism of a year ago fades as operators deal
with flat revenue growth and risky flat-rate plans
feature
TECHNOLOGY
26 Joining the layers to save

Despite strong interest in packet-optical convergence,
telcos are weighing their options on when and where to
flatten the layers
INSIGHT ROUNDTABLE
30 New ways to partner

To move seriously into applications and revenue sharing
operators need to be able to target attractive customer
segments. This requires partnering in new ways and
sharing data
18
ONE-TO-ONE
33 Delivering the promise of mobile

SK Telecom CTO Lee Myung Sung talks about applying
mobile to boost productivity of a wide variety of businesses
TELEPRESENCE PANEL
34 The path to all-IP mobile

Networks should evolve to flat-IP architectures only when
the economics are justified
CLOUD COMPUTING
36 Start small and tread lightly

The key is to match cloud computings capabilities with a
non-core project that will improve the bottom line
columns
26
30
33
Tanner
6 Goodbye flat-rate
Operators need to reign heavy users, but any move away
from flat rates requires meaningful metrics, like a meter
widget showing data usage in real time
FORUM
32 From data-centric to mass market

The value of 3G licenses will rise as the focus shifts from
data-centric multimedia in developed markets to low-end
subscribers
Insideline
38 Time to grasp the cloud

Its time for telcos to offload their engineering operations
and focus creatively on the customer
www.telecomasia.net
38
36
Telecom Asia Jan/Feb 2010 1
Contents
Volume 21 Number 1 Jan/Feb 2010

Managing Director Jonathan Bigelow jbigelow@questexasia.com
FIRST MILE
Group Editor Joseph Waring jwaring@telecomasia.net

Global Technology Editor John C. Tanner tanner@telecomasia.net
Senior Reporter Fiona Chau fchau@telecomasia.net
Art Director Dick Wong dwong@telecomasia.net

Production & Design Manager Pauline Wong pwong@telecomasia.net
8 Wi-Fi on trains
Kazakhstans national railway uses a Wi-Fi mesh network, linked to a
single auto-pointing VSAT on the roof, to offer free service on 1,300-km
route
INDUSTRY ANALYSIS
10 Foreign smartphones invade Korea

12 More 3G delays due to spectrum shortage
12 Bharti buys into Bangladesh
13 Google faces off with Chinas implacable
censorship system
14 Series of new intra-Asian cables planned
NEWS MAP
16 Asian telecoms this month

Asia news round-up
REGULARS
10 Insight
Group Publisher Gigi Chan gchan@telecomasia.net

Senior Sales & Marketing Executive Candace Ho cho@questexasia.com
HR & Admin Manager Janis Lam jlam@questexasia.comww
HR & Admin Executive Angela Cheng acheng@questexasia.com
Business Manager Eunice Chan echan@questexasia.com
Accountant Ivy Chu ichu@questexasia.com
Accounting Assistant Cannis Wong cwong@questexasia.com
Circulation & Distribution Director John Lam jlam@questexasia.com
Assistant Circulation Manager Allie Mok amok@questexasia.com
Circulation Executive Karena Wong kwong@questexasia.com
Senior Circulation Assistant Shipman Kwok skwok@questexasia.com
News Editor Robert Clark rclark@electricspeech.com
Contributors Brisbane: Nicole McCormick

Canberra: Dylan Bushell-Embling

London: Michael Carroll

New Delhi: Ruth David

Tokyo: Mike Galbraith

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tANNER
l John C. Tanner
The flat-rate mobile

broadband backlash
he iPhone gets a lot of credit

for kick starting the mobile
broadband era, but the real
enabler has arguably been
the introduction of flat-rate data
plans. But while users loved it, cellcos
gave in reluctantly, fearing the risk
of being relegated to bit-pipe status.
Now, with mobile data traffic drastically outpacing revenue growth from
mobile data services, the inevitable
flat-rate backlash has begun.
Well, its mainly begun in the US,
where executives at 3.5G rivals AT&T
and Verizon have declared flat-rate unsustainable and its days numbered as
they lumber on to LTE. In December,
AT&T wireless chief Ralph de la Vega
said the cellco is looking at providing
incentives to heavy users to cut back,
but in the longer term, they were going to have to get back to usage-based
pricing.
Verizon CTO Dick Lynch made a
similar statement a month later, saying that LTE pricing will have to be
different from 3G pricing, likely in
the form of a basic monthly fee and
usage-based pricing for bandwidth
consumed. These arent just US sentiments, either I have heard some
cellco execs in Asia voice similar concerns.
The problem with the above strategies is that they rely on one of the
most unreliable metrics in the industry: the consumer. De la Vega was
vague on details on how to incentivize
heavy users, but it apparently involves
requiring them to understand how
mobile data networks and apps work
so that AT&T can ask them not to use
the service for what theyre paying to
use it for.
Good luck with that. Usage-based
pricing relied on similar knowledge,
and look how that worked out. De la
Vega can talk all he wants about educating the customer on what a megabyte is. I, for one, know perfectly well
what a megabyte is that doesnt mean
I want to access my Facebook page on
my handset or my dongled laptop
with one eye on the meter. (That said,

a meter widget that actually shows
you your per-MB data bill in real time
would be helpful although it will
likely convince users to use the service
less if theres no flat-rate option.)
Another possibility and one that
US cellcos are already pursuing, as
well as some 3G operators in Asia is
tiered pricing that creates value related to either the speed of the service,
the amount of data you can download
or the types of devices you can use. So,
for example, you can pay less for 3.2
Mbps and more for 21 Mbps, and the
monthly fee could also be determined
by whether you intend to use feature
phones, smartphones and/or dongles.
Whether consumers go for the
higher prices (or churn to cheaper
competitors) remains to be seen, but
the good thing about this approach is
that its a simple sell (and upsell). It
also paves the way for cellcos to launch
device-based packages that combine
the usual phones and dongles with
newer wireless devices like e-book
readers, cameras and even telematics
in cars.
Packages based on speed could be
problematic, depending on how its
done. There has been talk of positioning connection speed as a QoS valueadd for priority users, but that invites
more customer-perception issues. If a
website is taking forever to download,
the user is still going to blame the cellcos access network. You could explain
that the problem is a congested server
or router, of course. You might as well
explain to them what a megabyte is,
while youre at it.
To be fair, usage-based data pricing is certainly going to be a key element of 4G once service providers
have the ability and the flexibility to
gauge just how much bandwidth users
need for a given app and device. But
thats many years away, and it wont
be worth much if its presented to users in the form of confusing plans and
baffling metrics that encourages them
to use the service less. TA
I know perfectly well

what a megabyte is
that doesnt mean I want
to access my Facebook
page on my handset or
my dongled laptop with
one eye on the meter
John C. Tanner is global technology editor

jtanner@questex.com
www.telecomasia.net
first mile
l edited by John C. Tanner
Wi-Fi on the rails in Kazakhstan
owned incumbent telco Transtelecom, service provider Astel and satellite equipment
and services vendor Gilat Network Systems
(the turnkey supplier for the project).
The network consists of a Wi-Fi mesh
network in the train cars (which allows cars
to be coupled and decoupled without having
to worry about reconnecting physical network cables) linked to a single auto-pointing
VSAT on the roof that tracks the satellites
location while the train is in motion to
provide a backhaul connection of 2 Mbps
downlink and 256 kbps upstream.
The use of satellite as the backhaul for
a train may sound like an obvious solution,
but few train operators have actually used it
to enable Wi-Fi. NTT Com, for example, is
relying on a leaky coax solution a cable
running along the train route providing a
High-speed VSAT
To find a fully commercial Wi-Fi service wireless 2-Mbps connection.
Most players in the UK and Europe,
onboard a moving train anywhere near Asia,
however, are using either dedicated Wimax
youll need to go to Kazakhstan.
networks or 3G connectivity. But such soluKazakhstan Temir Zholy, the countrys
national railway company, last August intro- tions have their own challenges, from supduced Wi-Fi on the Tulpar train serving the porting high-speed handoffs to the familiar
1,300-km route between Almaty and Astana. issue of providing consistent coverage in
the rural zones where cross-country trains
The VSAT-based system the first in the
typically run and where cellular coverage is
region was put together by government-
he idea of installing Wi-Fi on

passenger trains has been around
as long as the idea of installing
wireless broadband on airplanes.
But despite a number of trials and a handful
of service launches most of them in the
UK and Europe Wi-Fi on trains has been
slow to catch on, especially in Asia.
There have already been trials in India,
Australia, Japan and China, the latter of
which showcased Wi-Fi connectivity on its
high-speed train during the 2008 Beijing
Olympics. But so far, only NTT Communications in Japan has announced any
concrete plans. It will extend its HotSpot
Wi-Fi service to N700 bullet trains in March
this year a full year behind schedule.
typically weak or even non-existent.

This is especially an issue in countries
like Kazakhstan, where there is no cellular
coverage at all outside the cities, says Gilat
marketing VP Doron Elinav.
That said, VSAT-based IP backhaul for
trains has its own challenges, from VSAT
form factors and physical clearance to
line-of-sight problems (i.e. tunnels) and the
actual cost of the bandwidth link.
One thing thats not an issue, says Elinav,
is the latency typically associated with running IP links via geostationary satellites,
thanks to optimization software integrated
in the VSAT that, among other things, prioritizes VoIP traffic.
Elinav said Gilat plans to add a GSM
pico cell to the mix to support cellular voice.
One other issue is, of course, the business model should passengers pay to surf,
or should it be complementary?
The Kazakhstan service is opting for the
latter, says Elinav. Its more about getting
more people onto trains who might otherwise fly. If you can convince more businessmen to take the train, theres more value in
that to them than charging an extra $10 or
$20 for internet. TA
STATSNAP
Continued decline for fixed

As Asia entered 2009 it had
close to 2.3 billion telephone connections 575 million fixed and 1.7
billion mobile. By end-2009, according to a report from Budde.com, the
total number of connections was on
track to hit 2.7 billion; but the total
fixed numbers again fell to about 560
million.
Indonesia was actually one of
only two markets in the top ten to
expand its fixed network jumping
71% between 2007 and 2008 (from
million 17.8 million to 40.4 million)
and continuing in 2009 on the back
of widespread deployment of WLL
technology. Vietnam added almost a
million subs in 2008, and its penetration (34%) is now at the same level
as Japan.
Both China and Japan lost 7% of
their fixed-line subs in 2008, while

Pakistan lost 10%, and India and South
Korea each fell 4%.
Despite declining from 365 million
subscribers at the end 2007 to an estimated 325 million at the end of last
year, China still represents almost 60%
of the regions total subscriber base.
Of the 35 or so countries in Asia,
the top 10 accounted for about 90%
of the regions fixed-line services by
2009.
In developing countries where
governments have tried to force
the pace of fixed-line roll-outs, the
reported noted that the success rate
has been mixed. In the Philippines and
Indonesia these programs have been
conspicuously ineffective, with 5% and
15% penetration respectively. TA
Top ten fixed-line markets

(ranks by subs)
Country

Subscribers Penetration
(million)
Year on year
growth, 2007-2008
China
325.0
25%
-7%
Japan
42.0
33%
-7%
India
37.0
3%
-4%
Vietnam
30.0
34%
4%
Indonesia
35.0
15%
-4%
South Korea
22.0
45%
71%
Taiwan
13.0
57%
0%
Pakistan
4.4
2.5%
-10%
Malaysia
4.3
15%
-2%
Hong Kong
3.7
53%
0%
Source: BuddeComm based on ITU and industry data
www.telecomasia.net
industry ANALYSIS
Foreign brands set to

invade Korean mobile
ooming sales of
iPhones and the
launch of the first
Android-based
handset seem certain to shake
up the Koreas mobile market
this year.
Smartphone sales are set
to soar, driving a surge in
mobile data, while handset
subsidies are back on the
agenda.
The basic business models
of operators are being revised
with the creation of open
rather than closed app stores
and portals, and the aggressive rollout of Wi-Fi networks
by SKT and KT.
Before the launch of the
iPhone on November 28,
market leader SK Telecom
dominated the local smartphone market with around
420,000 smartphone subs for
its ten-model line up as of
December 31 (up from 90,000
a year before thanks in part
to the launch of Samsungs
Omnia2 at the end of August).
Data from last year also
show foreign models given the
cold shoulder; SKT has only
around 20,000 Blackberry
subs.
Until the arrival of the
iPhone, rival KT hadnt
even managed to double its
smartphone subs over the
year, which began the year at
50,000 subs. But that changed
rapidly and 250,000 iPhones
were sold in the first six
weeks, many at the expense of
rival operators.
SK Telecom was also
talking with Apple, and it
appeared that Koreas two
biggest cellcos might both
become iPhone distributors.

However, SK Telecom decided to fight the iPhone invasion head on with Android,
rushing Motorolas Motoroi
into shops early this month.
Both sides are preparing for
a bloody marketing battle focusing initially on the
iPhone, Omnia and probably
the Motorori.
SK Telecom has already
announced 15 new Androidbased models for this year
and says that 50% of its
two-million handset sales this
year will be Android phones.
Both KT and SK Telecom have
announced huge investments
to support smartphones by
building out Wi-Fi networks
and setting up open application stores.
Not surprisingly, 2010
forecasts for smartphone sales
have been revised rapidly
from one million just weeks
ago to four million.
Korean handset makers
must be horrified to see the
two main carriers in bed with
Apple and Motorola, and local
consumers scrambling to get
their hands on foreign-made
handsets. It appears Korea,
long an isolated smartphone
backwater dominated by local
brands, is being transformed
into an open market full of
foreign models.
Samsung reportedly
lobbied strongly against the
changes in legislation that
made it possible for the
iPhone to be sold in Korea.
KT in January admitted that
relations with Samsung had
been damaged. TA
Mike Galbraith
INSIGHT
ONE MONTHS TELECOM RESEARCH
>> Global mobile revenues to hit $1t in 2013
Worldwide mobile service revenue will top $1 trillion in 2013, with

a decline in voice income more than offset by mobile data spending.
According to Informa Telecoms & Medias latest forecast, data
revenue will grow to over $330 billion that year, from $208 billion
in 2008. By the following year, data revenue and ARPU will surpass
voice revenue and ARPU in the advanced Japanese market. While
2G technologies still account for 90% of the worlds subscribers,
this figure will fall to 70% in 2012. By 2014, 50% of the worlds
subscribers will be on 3G and above technologies, with one-third
of the world using 3.5G+. That year, global mobile penetration will
reach 92%.
Global Mobile Forecast
www.informatm.com
>> Prepaid subs to drive mobile broadband boom
The number of prepaid mobile broadband users in the Asia-Pacific

region will increase tenfold to 160 million over the next three years,
with the region leading the world by subscriber additions. A Tariff
Consultancy report shows that in many countries, the majority
of mobile broadband users are prepaid subscribers. The bundles
offered by operators are also becoming more varied and complex
for example, Australias Optus, Indias Reliance and Indonesias
Telkomsel all offer at least eight different bundle options, with data
allowances of up to 8GB. Data allowances are meanwhile increasing,
with some operators offering no-contract monthly allowances of up
to 25GB, at prices comparable to fixed broadband services.
Pre Pay Mobile Broadband Services
www.telecomspricing.com
>> Chinas 3G rollouts spark mobile data boom
Chinas 3G rollouts are spurring a wireless data boom, with revenue

from non-voice services rising to $19.3b in 2009. Researchers iSuppli
said that wireless data revenue rose 18.9% in 2009 and will nearly
double to $31.5 billion from 2008 to 2013. And as mainstream
adoption of 3G increases, non-messaging revenue is poised to
exceed messaging revenue, reaching $20 billion in 2013. Chinese
operators spent a combined $6.3 billion on mobile infrastructure in
2009. Spending in 2010 is set to dip by 2.4% and continue to fall
over the next five years but never below $5.5 billion. China Mobile
will maintain a stable market share of around 60% over the next
few years, despite growing pressure from China Telecom and China
Unicom.
Chinas Mobile Infrastructure Market in 2009
www.isuppli.com
>> IMS market gets boost from LTE migration
The global IMS market is set to more than double in value to $17.3
billion over the next five years. A study from ABI Research revealed
that $8.4 billion was spent on IMS during 2009. But the growing
pace of LTE deployment is expected to help the market flourish.
Until now, LTE adoption and therefore IMS spending has been
constrained by the data-centric nature of LTE. Most operators
still earn 70% of their revenue from voice and SMS services. But
now that a group of operators and OEMs have agreed on a voice
standard for LTE, that stumbling block has been cleared. The
only remaining hurdle for IMS is the cost and complexity of the
technology.
IP Transformation
www.abiresearch.com
www.telecomasia.net
industry analysis
industry analysis
India cuts back 3G plans

due to spectrum shortage
Googles China
show
ndias communications ministry

scaled back its 3G plans due to a
shortage of spectrum as another
auction deadline came and went.
The ministry had planned to conduct
the auctions starting on January 14 but
has set a new tentative starting date of
February 12 or 13. The government
is eager to conclude the auctions by
end-March, so the funds raised will be
reflected in the annual budget.
A draft document prepared by the
government states that only three blocks
of spectrum will be sold per circle instead
of four as previously set down.
But the government is now considering issuing four licenses in five of Indias
22 circles, and three in the rest of the
country.
The lack of spectrum is down to a
tussle between the ministry and defense,
which had been allocated the spectrum as
a dedicated band. The Defense Ministry
had originally intended to keep the spectrum until a dedicated defense network
had been built, and had to be coaxed into
relinquishing it on a rolling basis.
This lack of spectrum could

mean that only one winning bidder receives a license immediately,
with the rest having to wait until
July or September for frequencies to
become available.
Another factor contributing to
the delay is a lack of agreement over
the auction rules. For example, the
government has not decided whether to
demand operators pay the entire winning
bid upfront, or to request payment in
installments.
Meanwhile, Bangladesh took another
step closer to conducting its own 3G
auction, setting June as the target date to
finalize its 3G licensing guidelines.
The Bangladesh Telecommunications
and Regulatory Commission (BTRC)
expects to auction at least four slots of
spectrum by the end of the year.
UK-based mobile firm Vodafone
which does not hold a stake in any of
Bangladeshs six mobile operators is
said to have approached the regulator to
bid for 3G spectrum.
Market leaders Telenor-backed
ts the internet dust-up the world has seemingly

been waiting for.
It began when Google chief legal officer David
Drummond announced on the company blog on
January 14 that the company would no longer censor its
Chinese search results. He said Googles servers had come
under attack from China-based hackers aimed at stealing
the companys intellectual property.
The company later revealed that the Gmail accounts
of some human rights activists within China and elsewhere had been breached. It said it has begun an internal
investigation to see whether any Beijing-based staff had
been involved in the attacks.
Grameenphone, Orascom-owned
Banglalink and NTT DoCoMo-backed
Axiata Bangladesh will also be gunning
for 3G licenses. Bangladesh Telecom, the
second smallest operator 45% held by
Singtel is also expected to bid.
Over in Australian regulator ACMA
is also considering a spectrum auction,
mulling whether to sell off most of the
2.5-GHz band as LTE spectrum. The sale
could reap the government up to A$1
billion ($920.1 million). TA
Dylan Bushell-Embling
Bharti gets Warid for $300m
fter two failed attempts to

acquire South Africas MTN,
Bharti Airtel has gained control of a key target outside
its home market.
Indias biggest operator said in January that it had acquired a 70% stake in
Bangladesh operator Warid Telecom for
$300 million. Warid is wholly-owned
by the Dhabi Group, which will retain a
30% interest after the transaction closes.
Bharti has also pledged to subscribe
to fresh equity in Warid and pump funds
into the company. The overall investment will be in the region of $1 billion,
Bharti said in a statement.
Bangladesh, with a population of

over 160 million and teledensity of 32%,
is a very promising market for telecom
services, Bharti chairman Sunil Mittal
said.
As of November 2009, Warid had
2.92 million subscribers and a market
share of 5.9%, making it Bangladeshs
fourth largest cellco.
Bharti also said it would launch a
dedicated offshore arm on April 1 to
spearhead the groups expansion into the
south Asia region.
The operator has appointed Manoj
Kohli, currently CEO for India and South
Asia, to head the new unit.
Other international targets on

Bhartis radar reportedly include Kuwaits
Zain and Luxembourg-headquartered
Millicom. The company retains plans
to enter the African mobile market, but
has given up on acquiring MTN since its
planned $23 billion merger was blocked
by South African lawmakers.
The operator sees international
expansion as crucial for revenue growth,
because of slowing growth and low margins. Indian market has one of the lowest
ARPUs in the world, with an effective
calling rate of around $0.01 per minute,
according to Wireless Intelligence. TA
Dylan Bushell-Embling
www.telecomasia.net
Unreparted in China
The news of Googles decision was widely-reported in
China. However, early reports of the hacking of activists email accounts were scrubbed, and China has not
acknowledged the breaches.
In its initial measured response, the government
claimed the internet was open in China and that it would
seek talks with Google.
But the rhetoric ratcheted up quickly, with state-controlled media accusing Google of acting in concert with
the US government. Many said the search firm was leaving the market because it trailed Baidu by a long margin.
By coincidence, Googles announcement came a day
after Baidu had gone off air because of an attack on its
US-hosted DNS server by the Iranian Cyber Army.
Baidu sued its US registrar, a move seen by some as political theatre intended to highlight that Chinese companies were also victims of hackers.
US Secretary of State Hilary Clinton called on the
Chinese government to conduct a full and transparent
investigation into the Google attacks.
Googles decision has had a direct impact on its new
Android handset business. Unicom put its Android handset launch on hold, and the future of Googles device
business in the market remains highly uncertain. TA
Robert Clark
www.telecomasia.net
industry analysis
SingTel, Google lead mini-cable

boom with $400m SJC system
Ihe intra-Asian capacity

market looks about to go
through a construction
phase, with a series of new
cables now being planned.
The firmest of these is the Southeast Asia Japan Cable system (SJC),
backed by several of the companies
behind the Unity trans-Pacific cable,
including Google, SingTel and KDDI.
The $400 million system running
from Singapore and Indonesia to Japan
is potentially the worlds biggest ever
cable, the consortium says. It has a
design capacity of 17 Tbps and can be
upgraded to 23 Tbps.
The 8,300-km cable is to be operational by the second quarter of 2012,
said SingTel when it joined the group
in January. At the Japan end it will link
to the Unity cable, whose launch date
has been put back from early 2010 to
the middle of the year.
Other members of the SJC consortium are SingTels Philippines affiliate
Globe Telecom, the SingTel-Bharti JV
Network i2i, Indian carrier Reliance
Globalcom, Singapore-owned Telemedia Pacific and Indonesias Telkom.
One Unity investor not in the SJC
group is Pacnet, which is seeking backers for a planned $150 million system
linking India to Singapore.
Pacnet announced the West Asia
Crossing (WAC) system on December
9, with an initial design capacity of
6-8 Tbps. It would link Chennai to
Malaysia and Singapore and would
interconnect with Pacnets EAC-C2C
cable system, which serves southeast
and northeast Asia.
Pacnet is also aiming to extend
connectivity into Bangladesh and Sri
Lanka, but currently it is still seeking
investors.
The other new cable announcement
is for a new subsea system linking

Singapore to Perth and connecting to
Sydney via Nextgen Networks existing
terrestrial fiber.
Nextgen Networks, a subsidiary
of developer LendLease, last month
joined hands with Singapore telco
Matrix Networks and its Indonesian
affiliate NAP Info to announce the new
system.
Matrix and NAP Info own and
operate the Matrix Cable system that
joins Singapore and Jakarta. Nextgen
operates terrestrial fiber between Perth
- the Australian landing point for the
new cable - and Brisbane.
The proposed network, with an
initial design capacity of 2.56 Tbps and
a service offering from carrier neutral
POPs in Singapore, Jakarta and Sydney,
could be completed as soon as November 2011, the parties said.
There is significant demand to
introduce a new open access cable
system between Singapore and Sydney,
said Jim Schweigert, Matrix Networks
executive vice-president. TA
Robert Clark
www.telecomasia.net
Seoul
SK Telecom announces it will launch more
than 12 Androidpowered smartphones
in South Korea this
year, and launches its
first such device, the
Motorola MotoRoi.
Zhang Chunjiang is stripped of his roles at

China Mobile - including vice-chairman, party
secretary and vice president - after state prosecutors launch a probe into his professional
conduct during a previous appointment.
Hong Kong
Hutchison Whampoa makes a $4.23b offer to take loss-making subsidiary Hutchison
Telecom International (HTIL) private. The company, which already owns 60% of
HTIL, does not intend to increase its HK$2.20 ($0.28) per share offer.
Lee Sang-chul takes the

helm of the newly-converged LG Telecom and
announces plans to
expand the companys
services beyond the
traditional telcom sector, transforming the
firm into a personal
value provider.
Subscribe to Asias best daily telecom news service: www.telecomasia.net
Vendors LG and
Samsung sign separate deals to embed
Skypes VoIP software
into their 2010 internet TV models, taking
advantage of Skypes
new HD video chat
functionality.
Taipei
Handset vendor HTC reports a 31% decline in Q4 profit to $175.4m. But
by December the company was back to growth, with its first year-on-year
earnings increase since July.
Local operators i-Cable and City Telecom separately announce plans to

offer free-to-air TV services in Hong Kong. PCCW reveals it plans to
submit a bid for its own free-to-air license.
z Google ceases filtering search results in China, after alleging

China-based hackers have been conducting illegal cyber-surveillance on the search firms services. This may leave Google
unable to offer services in China.
z Cisco restructures its APEJ business, splitting the unit into a
China group covering China, Hong Kong and Taiwan and
an Asia-Pacific group, including Australia, Korea and ASEAN.
z Google launches its hotly anticipated own-branded smartphone, the Nexus One, in Hong Kong, Singapore, the US and
the UK to disappointing initial sales. Google is selling the
device unlocked through its own website, as well as through
carrier partnerships.
z Teliasonera names Ericsson and Nokia Siemens its main LTE
equipment vendors, snubbing Huawei which had installed
the Nordic operators first commercial LTE network in Oslo.
movements
Beijing
Search engine Baidu comes under fire from
Iranian hackers, who took the site offline for
several hours. The hackers are protesting US
intervention in Iranian affairs, with China
targeted due to its US ties.
newsmap
Asian telecoms this month
z HP and Microsoft partner to develop new cloud services

platforms, and jointly allocate $250m toward the development
of applications and virtualization solutions over the next three
years.
Bangkok
The House of Representatives drafts a
bill that would create a unified national
broadcasting and telecom regulator, with complete
control over the allocation of telecom, TV and radio
spectrum.
Sydney
Telstra slashes the
prices of its mobile
broadband data plans,
in the response to the
narrowing of its lead in
subscriber figures compared to competitors
Optus and Vodafone.
But the prices are still
not as attractive as the
rival offerings.
Communications minister Ranongruk Suwunchwee pledges

that 3G services will be available nationwide by 2011, declaring the network rollout by state-owned operator TOT to be the
ministrys top priority.
Colombo
The government invites Malaysian operators Maxis and Telekom Malaysia
to invest in its maiden $150m satellite project. Both operators express an
interest if the venture is commercially viable.
Delhi
Huaweis Indian subsidiary allocates $500m toward
research and manufacturing
in Bangalore for the next five
years, as part of an effort to
dispel negative perceptions
of the Chinese vendor in the
country.
India mulls lowering the

number of 3G slots offered
in the upcoming auction
to three, due to an ongoing
spectrum shortage. Winners may also have to wait
until September to launch
services.
Dhaka
Indias Bharti Airtel agrees to pay $300m
for a 70% stake in Warid Telecom from sole
current owner the Dhabi Group. Warid had
2.92m subscribers and a market share of
5.9% as of November.
Nextgen Networks
and Singapore operators Matrix and NAP
make plans to build
a 2.56-Tbps subsea
cable linking Singapore and Perth. The
proposed could be
completed as soon as
November 2011.
SingTel mulls floating a

25% stake in Australian subsidiary Optus,
in a move which could
raise up to $3.7b. SingTel reportedly values
the unit at over $12b.
Auckland
Trade regulator NZCC warns Telecom NZ to stop breaching New Zealand
competition law, after convicting or warning the incumbent operator eight
times over its behavior since 2003.
z Huawei and Samsung separately announce plans to enter the

booming e-reader market, with Huawei announcing a local
partnership with Tianjin Jinke to jointly develop e-publishing
solutions.
z Apple acquires mobile advertising firm Quattro wireless for
a reported $275m, effectively confirming plans to enter the
mobile advertising market in competition with Google.
z Motorola shelves plans to auction its home and networks
mobility division the vendors largest single unit after reportedly receiving unsatisfactory bids up to $2b below its $4b-$5b
asking price.
z Gartner predicts that mobile users will spend $6.2 billion this
year in mobile app stores, downloading 4.5b apps. By comparison,
the global mobile ad market is expected to be worth just $600m.
The government approves

plans to sell a 10% stake in
state-owned operator BSNL,
while holding a meeting to
discuss ways to improve the
companys deteriorating
profitability.
Telecom regulator BTRC announces it is

close to completing Bangladeshs 3G regulations and aims to issue at least four licenses
via open auction by June.
z Alcatel-Lucent launches a green telecom initiative, with

the ambitious goal of making the worlds communications
networks 1,000 times more energy efficient. Carriers such as
China Mobile and AT&T are already on board.
z Nokia wins a long-running UK legal battle with German patent licensing firm IPCom, which had been attempting to wring
$17.1b worth of GSM patent licensing fees from the handset
vendor.
Manila
Globe Telecom petitions the Philippine
court of appeals to block regulator NTC
from implementing its order forcing operators to adopt per-pulse billing.
Singapore
SingTel, Google and five other companies sign an agreement to build
what could become the worlds
largest ever cable, the Southeast
Asia Japan Cable System (SJC), with
a design capacity of 17 Tbps and
upgradable to 23 Tbps.
M1 prepares for the February

launch of a two-month LTE trial,
using network gear supplied by
Nokia Siemens Networks. The trial
could pave the way for M1 to begin
commercial LTE services as early
as late-2010.
z Opera appoints a new CEO, after the departure of co-founder

Jon von Tetzchner from the role. He is replaced by chief commercial officer Lars Boilesen.
z An Egyptian court blocks France Telecoms attempted $2.2b
takeover of Egyptian mobile operator ECMS, after ruling that the
bid was too low. France Telecom considers appealing the ruling.
z SingTel takes control of Irelands largest carrier, Eircom, after
purchasing a majority stake in the company from Eircom Holdings for $202m. It is Eircoms fifth change of ownership in a
decade.
www.telecomasia.net
www.telecomasia.net
coverstory
coverstory
Respondent profile
The Telecom Asia-Ovum online
survey was conduced in December
and early January and had
responses from more than 320
telecom executives in 19 countries
across Asia Pacific. Almost a quarter
of those surveyed were mobile
operators, and another 18% were
integrated players. Management
accounted for 28% of respondents,
sales/marketing 28% and
engineering/operations 23%. This
was the second year the survey was
conducted.
Mobile broadband:
still growing but
realism sinks in
obile broadband has

been a telecom growth
story for the past two
years. Connections
and traffic have continued to expand, as has associated revenues, although not at the same rate.
Just look at the growth in prepaid
mobile broadband users in Asia Pacific. The segment defined as PC-based
internet connectivity using a USB modem supporting download speeds at
least 384 KB is expected to increase
tenfold to 160 million over the next
three years, with the APAC region
leading the world by subscriber additions.
A report from Tariff Consultancy
found that in many countries the majority of mobile broadband users are
prepaid subscribers.
The results of a joint Telecom AsiaOvum Asia-Pacific mobile broadband
survey show that although respondents
still believe mobile broadband is good
news for the industry, they are now
more realistic about its benefits compared to the wide-eyed enthusiasm of
last year.
The survey found a more mature
mobile broadband market, where expectations on margins are more realistic
(although still overly optimistic), new
charging methods are being explored

(with unlimited flat-rates unsustainable) and the real threat to fixed broadband is better understood (as more of a
direct competitor).
Better margins?
The majority of the telecom executives surveyed continue to see mobile
broadband adoption as a significant
boon to the industry, with 44% expecting mobile broadband to be a highermargin business than mobile voice.
Thats down from 52% a year ago, but
still widely optimistic based on the revenue generated compared with the required spending on capacity.
The number pf respondents thinking margins will be lower increased
from 24% last year to 32%. (See chart
1 below). Nathan Burley, an analyst
in Ovums Asia-Pacific research team,
says more realism has set in, yet this
is still a very optimistic view of the
industrys future. Another 13% said
they dont know they will increase or
fall.
Responses to this question also varied more than any other between different markets. Industry participants
doing business mostly in emerging
markets were more likely to see mobile
broadband as a higher margin service
A higher- or lower-margin business

than mobile voice?
The mobile broadband industry has grown

up a lot over the past year. A survey shows
expectations on margins are more realistic, new
charging methods beyond flat-rates are being
explored and the real threat to fixed broadband
is better understood
13.6%
Higher
44.2%
The same
Lower
31.5%
Dont know
By Joseph Waring
10.7%
Source: Ovum/Telecom Asia

www.telecomasia.net
www.telecomasia.net
Chart 1
coverstory
We are getting to a point where operators

need to manage data usage or their business
models will become unsustainable
(52% vs only 36% in developed markets). Those in developed markets, further along in the adoption of mobile
broadband, think that the same or
lower margins are more likely (42%
of respondents answered lower vs only
22% in emerging markets).
Burley noted that: When utilizing
un-used capacity or signing on highvalue early adopters, mobile broadband
obviously will deliver good margins.
However, as the service matures, limited
ability to differentiate hence strong,
mostly price-based competition and
the ongoing capital investment required
to support growth will put pressure on
margins.
The vendor segment, unsurprisingly, was the most adamant that
mobile broadband would be a higher-margin service (55%) while mobile operators were more negative on
margins, with only 34% forecasting
higher margins.
Over half of respondents think that
unlimited/flat-rate-based
charging
models are the most effective way to
charge for mobile broadband services.
(See chart 2 below.)
The question is what respondents

mean by most effective. Consumers undoubtedly prefer unlimited/
flat-rate-based charging, however, it is
unlikely the most effective method for
operator margins. As a result, Burley
noted that true unlimited/flat-ratebased charging is increasingly uncommon as fair-usage policies are implemented in Asia.
Not sustainable
In the US a strong backlash has
flared up, with both AT&T and Verizon
declaring flat-rate unsustainable and its
days numbered as the operators move
to LTE. AT&T said in December that
it will have to get back to usage-based
pricing. Verizon said in Janauary that
LTE pricing will have to be different
from 3G pricing, likely in the form of
a basic monthly fee and usage-based
pricing for bandwidth consumed. Were
starting to hear similar concerns from
cellco execs in Asia. (See column on
The flat-rate mobile broadband backlash on page 6.)
Many operators are seeing significant network congestion in urban cent-
What is the most effective way to charge?

Unlimited/
Flat-rate-based
51.4%
Data volume-based
Quality of services/
SLA-based
18.6%
9.5%
Speed-based
7.6%
Application-based
6.6%
Time-based
6.3%

Chart 2
ers, and one operator reported late last

year that 40% of its traffic was being
generated by 3% of its users.
We are getting to a point where
operators need to manage data usage
or their business models will become
unsustainable as the costs of managing
exponential mobile data traffic escalate
much faster than the revenues they can
generate from all-you-can-eat plans,
Bridgewater Systems SVP David Sharpley told Telecom Asia.
The competitive nature of the market, however, makes flat-rates a necessary evil, says Ranga Thittai, product
manager at InfoVista, so theyll be
around for a while. He says capex on
network capacity can be kept in check
through the use of systems that enable
operators to optimally size their network.
Operators need capabilities that allow them to continually baseline traffic
trends, predict traffic growth and establish smart engineering limits (like 95th
percentile load). The same offerings also
monitor end-user quality to ensure that
reduced network sizing does not compromise end-user QoS, he noted.
Some 19% of those surveyed think
data volume-based pricing would be
most effective while 9.5% are looking
to a QoS/SLA-based model. Another
8% said speed-based charging would be
best.
Burley says operators are beginning
to explore many other charging methods to provide tiered services and differentiate in the market.
Celcom in Malaysia started off
charging per kilobyte, but customer
bills went through the roof, so it moved
to unlimited plans. It has tiered plans
for different speeds while Maxis offers
tiered plans based on volume. Were
seeing if its the right pricing model,
said Harcharan Singh, GM of Celcoms
broadband division.
No clear key differentiator emerged
for marketing mobile broadband services. However, 31% of respondents see
coverage as the leading differentiator,
followed by quality of service (23%),
www.telecomasia.net
coverstory
coverstory
What is the most important

differentiator?
31.2%
Coverage
23.2%
Quality of Service
Speed
Other
1.9%
4.4%
10.4%
19.0%
15.5%
31.9%
What device types will drive

the most traffic growth?
1.9%
4.1%
4.1%
What impact will mobile broadband have

on the fixed broadband market?
10.1%
15.9%
PCs
48.3%
41.3%
Other
consumer
electronics
devices
8.3%
34.6%
Machine-toMachine
Audio
Other
Chart 3
price (21%) and speed (19%). (See

chart 3 above.)
There was a notable shift in the order of these criteria from the previous
years survey. Last year price topped the
list with 29% seeing it as a key differentiator, coverage was second (28%) and
speed third (26%).
We can only assume that that lowcost mobile broadband service alone
will not secure customers acquisition,
loyalty or differentiation.
All-you-can-eat pricing strategies
can lead to pricing wars that curb subscriber loyalty, says Amir Ofek from
Amdocs. These strategies also miss the
opportunity to collect revenue from
high-bandwidth subscribers who are
willing to pay a premium for better
service.
He says that without distinguishing between mobile data traffic type or
priority, network capacity is being deployed on the basis that every data bit
costs (and is priced) at the same level.
There is no discrimination when rolling out new capacity as to its value.
Burley points out that coverage for
a long time was important to differentiation in the mobile voice market. It
will also be, if not more so, for mobile
data.
While price dropped to third
Chart 4
from first last year (falling 8 percentage
points), that was a just a dip compared
to the freefall for value-added services,
which plunged from 16.5% thinking it
was a key differentiator a year ago to
only 3.7% this year.
Obviously, users are not attaching
much value to operator VAS services,
especially for big-screen devices. The
main selling point is connectivity.
Burley says niche services will be of
value in certain segments and potentially reduce churn yet they wont be key
a differentiator. He suggests that operators choose VAS investments and focus
on areas very strategically.
He says potential applications for
both big- and small-screen mobile
broadband VAS are integrated solutions
across access networks and bundled offerings, security or device management
with GPS location. In the enterprise
space, the ability for IT departments to
control mobile assets, VPNs, and roaming may add value.
Browsing remained the leading traffic generator, but its dominance dropped
from 42% of respondents seeing it as the
main traffic driver last year to 36% this
year. The big winner was video, with expectations video will be the main driver
of traffic growth increasing from 22%
last year to 32%. (See chart 4 above.)
Chart 5
Those in emerging markets were

even more likely to see browsing as the
key traffic driver while those in developed markets where more likely to see
video as the main driver.
Both peer-to-peer and LBS were a
distant third and fourth, little changed
from a year ago when 16% saw P2P as a
major growth catalyst and 12% expected LBS to drive growth.
Access is the killer app

Similar to last year, but only more
emphatically in the clearest result of the
survey, 83% of respondents believed
non-operator content would drive more
traffic than operator content. Thats up
from 76% in 2009.
Internet-based third-party content
is both driving user demand for mobile
data and traffic across devices.
Revenues will mostly be generated
by data access with content and premium services remaining niche services.
Most value and revenues generated by
content and new services will not be
captured by operators. Efficient data
provisioning is, therefore, essential to
operator strategies, Burley insists.
Almost a quarter of operator respondents stated operator content will
drive more traffic. One reason for this
may have been the traffic intensive nawww.telecomasia.net
ture of some operator services such as

mobile video.
With little change from a year ago,
laptops/netbooks and handsets were
expected to fuel growth. Almost 90%
of respondents said these two broad
categories of devices would account for
most traffic growth. Looking at specific
segments, mobile operators and those
in developed markets were more likely
to select laptops/netbooks.
The PC category was the big looser
from last year (slipping to just 4% from
10%), presumably as respondents see
a shift to mobile PC form factors. (See
chart 5 above.)
Mobile broadband is clearly both a
complement and competitor to fixed
broadband, creating new broadband
usage cases while also directly competing against fixed broadband in some
segments.
Last year 63% of respondents saw
mobile broadband as more a complement than competitor to fixed broadband. This year, with more a detailed
look at the impact, we found 35% of
those surveyed expecting a significant
impact and substitution. Another 40%
said was would have some or limited impact and substitution. Just 16% though
it would have no impact and was only
complementary. (See chart 6 above.)
www.telecomasia.net
None. Mobile
broadband will only
complement fixed
broadband
1.2%
Laptops/
netbooks
Handsets
P2P
Other
2.4%
Video
Location
based services
3.7%
Browsing
36.0%
20.5%
Price
VAS
What application will be main driver

of traffic growth?
We agree with the consensus, mobile broadband revenue streams will not
entirely be generated by new product
categories, but will steal revenue from
the fixed broadband market as operators compete directly, Burley said. For
many consumers, especially in emerging markets, fixed broadband will be
irrelevant.
Investment required
Due to the business models adopted, especially the common unlimited/
flat-rate plans offered by so many mobile operators, traffic has been growing
exponentially. This growth has created
a major strain on operators backhaul
and access networks.
Representing similar results to last
year, 66% of respondents believe backhaul capacity is, or will be in the next
12 months, an issue in the provisioning
of mobile services. The same number as
last year (17% reckon backhaul wont
be a restraint on mobile services. (See
chart 7 on page 24.)
The responses to this question did
differ by market. Interestingly, those in
developed markets where more likely to
see backhaul as a constraint compared
to those in emerging markets, despite
more options generally available in
those markets.
30.0%
Limited impact
Some impact with
substitution occuring
Significant impact
and substitution
Large impact in all but
small segments
Fixed broadband
is dead
Chart 6
In Malaysia, more than half of respondents stated backhaul as currently
a restraint on mobile services.
Over 59% of industry respondents
believe wireless backhaul technologies
will achieve greater growth than wired
backhaul in 2010. This result is the same
as last year.
Operators were more likely to suggest wired technologies would be deployed, with 41% selecting that option.
Capacity constraints in backhaul
are a more pressing concern than in the
access network. Burley says this differs
by market. For example, in dense areas
radio network capacity is more likely to
be an issue while in rural areas backhaul
may be the bottleneck.
Regardless, respondents still believe
access capacity is still under pressure. A
total of 65% believe radio access capacity is, or will be in the next 12 months, a
constraint on mobile services. However,
21% do not forecast radio capacity being a constraint in the foreseeable future. (See chart 8 on page 24.)
Just under half of vendor respondents saw radio access as a constraint
on network capacity in the next 12
months, significantly above the overall average. Malaysian respondents
again were also above average in seeTelecom Asia Jan/Feb 2010 23
coverstory
Do you think backhaul capacity is:
Do you think radio access network

capacity is:
Currently a restraint on
mobile services
51.4%
Currently a restraint on
mobile services
Will be a restraint on
mobile services in the
next 12 months
18.6%
Will be a restraint
on mobile services
in the next 12 months
Wont be a restraint on
mobile services for the
foreseeable future
7.6%
Wont be a restraint
on mobile services
for the foreseable future
Dont know
9.5%
Dont know
Chart 7
ing radio access capacity as restraint

mobile services.
Burley says significant investment
is required to support traffic growth in
capacity upgrades through technology
upgrades, network expansion and infill,
and use of additional spectrum via refarming and auctions.
There has been a lack of investment
in capacity across some operators leading to network issues, although shortterm capacity demands should be able
to be met with sufficient investment.
Inevitably operators will also turn
to other cost cutting initiatives such as

site or network infrastructure sharing
and even operator consolidation as they
seek to support growth and be as efficient as possible.
Solving the capacity crunch

To keep up with traffic growth, excluding adding capacity, 41% of operators said theyd look at offloading traffic
to ease constraints, especially through
Wi-Fi. Another 13% would consider
offloading to femto cells. (See chart 9
below.)
Excluding installing more capacity, what is the most

effective solution to deal with traffic growth?
5.7%
Wi-Fi and offloading traffic of

the macro network
12.6%
41.0%
18.9%
Other traffic management

techniques such as throttling
and use of policy control
New charging schemes
(QoS, SLA, etc)
Femto cells
21.8%

Other
Chart 9
19.0%
20.5%
3.7%
31.2%
Chart 8
Other traffic management techniques, such as throttling and use of
policy control, as well as new charging
schemes also received strong support
from respondents as solutions to traffic
growth.
Burley says there is no silver bullet
to dealing with traffic growth and numerous solutions to manage capacity
need to be used.
Bridgewaters Sharpley agrees. Its
not an either-or situation. Operators
will need to deploy a toolkit of strategies to manage explosive mobile data
traffic growth, including policy control,
data traffic offload, and migration to 3G
and 4G.
Research from Chetan Sharma Consulting (sponsored by Bridgewater Systems) shows that by deploying a combination of these strategies, operators can
reduce costs by more than 60% over the
next three years with savings of 20-25%
from data offload to Wi-Fi or femtocells, and over 10% from policy control
alone.
Sharpley also sees opportunities to
combine data offload and policy control. For example, operators can use
policy control to surgically offload
certain applications to another access
network or apply policies that offload
traffic based on network conditions or
a subscribers location. TA
www.telecomasia.net
technology
technology
By John C Tanner
Bringing packets
into the light
Telcos want to flatten their packet and optical network layers,
but the right solution depends on how optical-centric or
packet-centric your vendor is
he term convergence may

be one of the most overused and overhyped words
in telecoms, but theres no
better way to describe the
current interest in flattening the IP and
optical layers of the network.
The idea of packet-optical convergence which in broad terms means
taking packet networks (namely Carrier
Ethernet), Sonet/SDH and DWDM and
flattening them down into one network
that does everything those layers do
separately has been around for some
time.
However, in early 2009, US operator Verizon threw the gauntlet down
to vendors when Stuart Elby, VP of
network architecture at Verizon Net26 Jan/Feb 2010 Telecom Asia
work & Technology, said at an OFC

conference that it intended to transform its global network into a packetoptical transport system (P-OTS) that
would combine Layer 1 and Layer 2
functionality and into a much more
efficient and cost-effective network
with an integrated control plane. And
Verizon wanted suppliers to come
up with boxes that would help them
achieve it.
The basis for Verizons demand was
an internal analysis that found IP transit
traffic patterns and demand for flexible
routes were so dynamic that IP traffic
at the optical layer often didnt have to
touch the network routers.
That adage of switch where you
can, route where you must has never
gone away, and Verizon wanted its IP

transit traffic that didnt need routing
to stay in the optical layer, explains
Anup Changaroth, product marketing
director for Asia for Nortel Networks
MEN business recently purchased by
Ciena. Its a very costly affair to put
routers in place and take your IP traffic up to that layer if you dont need
to.
Verizon concluded that to support
those dynamic traffic patterns and bypass routers, it made more sense to
have the optical layer using MPLS-TP
as the key switching mechanism. And
theyve been driving vendors to look at
that, says Changaroth, adding that carriers in Japan and elsewhere have done
their own internal studies and reached
www.telecomasia.net
the same conclusions in the last six

months.
Infonetics, meanwhile, found in a
survey last year that two-thirds of service providers plan to combine their data
and transport operations sometime next
year. And vendors are now jockeying for
position to help them do just that.
We have the technology

The technological advances enabling
the push to packet-optical convergence
are already here: Ethernet-over-SDH,
ROADM (for wavelength-switching),
ASON (Automatically Switched Optical
Network), GMPLS (which allows MPLS
to run on the control plane) and OTN
(Optical Transport Network) switching.
www.telecomasia.net
OTN is one of the key technologies

mentioned in Verizons P-OTS strategy. Verizon intends to implement a
wavelength-centric OTN-compliant
network supporting multi-vendor interoperable OTN-compliant (G.709)
interfaces.
OTN is key because it brings a lot
of the good manageability stuff from
Sonet/SDH to optical, so you can see
the traffic, detect faults, all the operational management stuff and granularity from SDH, Changaroth says.
It also supports legacy TDM traffic, which is crucial to packet-optical
convergence, he adds. TDM may not
be growing by leaps and bounds as
much as IP traffic, but it still generates
a huge amount of revenue for telcos, so
anyone who says they can just get rid of

that TDM Sonet/SDH layer is kidding
themselves.
Bandwidth and cost

efficiencies
Of all the benefits of flattening the
IP and optical layers, there are two recurring themes: more efficient bandwidth usage and lower costs.
By bringing several layers of their
network together, service providers
can reduce the number of devices in
the network, the space and power consumption, says Luc Ceuppens, marketing VP of high-end systems for Juniper
Networks. That will help them not
only get capex down but prepare for the
future services they want to run over
technology
Optical-centric vendors will develop

optical transport with some packet
capabilities, and packet-centric vendors
will develop packet-oriented gear with
some optics integrated into it
these networks.
Ronen Mikdashi, AVP and head of
the product marketing department at
ECI Telecom, agrees that packet-optical
convergence will help reduce capex and
opex, but adds that the savings dont
just come from the hardware.
In this type of convergence, software should support all the layers in
a single management system to support end-to-end provisioning, which
reduces time to market, response time
to customer needs for expansion, and
other things that can also help to reduce
costs, he says.
Meanwhile, bandwidth efficiency
gains are a matter of having the flexibility and sufficient granularity to fill
lightwaves to capacity, Mikdashi says.
If you have a 40G WDM channel
and youre only using 10 Gbps of it because your Ethernet service only runs at
10G, you can multiplex several other lowbit subservices onto it, running as low as
2 Mbps, he says. You can fill it with 4 x
2.5G or 10 x 1G or 100 x 100 Mbps and
so on any combination you like, so all
your channels are fully utilized.
Alcatel-Lucent which fired the first
shot in the packet-optical convergence
wars with its converged backbone transformation (CBT) strategy launched in
September touted its ability to groom
traffic not only at the wave level, but
also the sub-port level using ODUflex
technology, an emerging ITU standard
due for completion next year, which
provides higher granularity by enabling
VLANs or pseudowires within a port to
be logically or virtually mapped to the
same wave.
Result: carriers can maximize capacity without spending more money
on extra core routers, and yield capex
savings of at least 30%, in addition to

savings in power, space and operational
complexity.
Optical-centric or packetcentric
A minor war is already brewing
over just how much money telcos can
save depending on whose solution they
choose or rather, how focused their
convergence strategy is on bringing the
packet layer to DWDM or the other way
around.
There is a difference, says Ceuppens of Juniper and one that tends to
be defined by the core expertise of the
vendor.
You have players in the optical
world and the packet world and theyll
each approach this new product in their
own way, he says. Optical-centric vendors will develop optical transport with
some packet capabilities, and packetcentric vendors will develop packet-oriented gear with some optics integrated
into it.
Perhaps unsurprisingly, Juniper says
the latter approach will ultimately save
telcos more money in the long run.
A cost analysis from Juniper reckons
that that a packet-centric integration
solution (i.e. MPLS-based with OTN
switching) would cost 65% less than a
traditional optical network, while an
optical-centric solution (i.e. hybrid
router and MPLS/OTN switching)
would save just under 50%.
That said, Ceuppens admits the cost
model makes specific assumptions that
wont apply uniformly to different networks.
Which is as well, since operator decisions on a packet-optical convergence
strategy will be determined by the ar-
chitecture already in place, says Mikdashi of ECI.

Some operators want a very intelligent Ethernet network with some basic WDM capabilities, but others that
already have a complicated optical layer
want an intelligent optical network with
mesh capabilities, ROADM, etc, and a
basic Ethernet layer, he says.
It also depends on what TDM and
Ethernet services they have at the time,
Mikdashi adds. If their network is
dominated by Ethernet and IP services,
they can deploy a packet-optical network thats more oriented on Ethernet
and is stronger on Ethernet capabilities
than optical. So theres no one rule of
thumb.
Ceuppens agrees, and adds that
despite the fact that operator interest
in packet-optical convergence is high,
actual implementation is going to take
time as telcos weigh their options on
when and where to flatten the packet
and optical layers with minimal disruption to existing services.
It will be slow because of the
amount of legacy equipment and architecture carrying live traffic, he says.
As a service provider you dont want
to mess with your customer. So very
often they work with overlays create
that NGN and then migrate customers
over to that. Its only when its proven
that the new network is cost-effective
that theyll make the effort to migrate
customers over to it.
There will also be one other convergence issue that telcos will have to resolve, adds Mikdashi interdepartmental convergence.
For many Tier 1 operators, the
packet divisions and optics divisions
are usually separate, he says. So telcos
do have to look at how this is going to
affect those two divisions.
Changaroth of Nortel agrees. Organizationally SDH/optical and IP operate as separate business units. So operators will be more challenged to drive
them to work more closely together.
Some are already doing it, but it will still
be an issue for many. TA
www.telecomasia.net
INSIGHT ROundtable
INSIGHT Roundtable
Preparing for the content

A move into applications and revenue sharing means
managing partners in new ways and sharing data with those
that drive traffic and help you build customer relationships
ew government licenses
for spectrum have created a flood of new players
in the mobile broadband
space. In a short time, the
cost of devices and services has come
down tremendously, fueling uptake,
traffic and a search for new pricing and
business models.
Competition has never been fiercer,
making economies of scale more critical than ever at every point in the value
chain. With network and device costs
tumbling, attention is shifting to applications that will drive usage and profitability.
For operators to move seriously
into applications and sharing revenue
they need to be able to target attractive customer segments and partner in
new ways. This means sharing customer
data with partners that bring more traffic and help you build customer relationships.
These were he key messages at Telecom Asias Insight Roundtable, held
in Kuala Lumpur last month, which
pulled together a handful of operators
and analysts to discuss Capitalizing on
the growth of mobile broadband. Participating in the event, hosted by Intec,
were P1 CEO Michael Lai, GM for Celcoms broadband division Harcharan
Singh, Frost & Sullivans director of
ICT practice for Malaysia Delesh Kumar, MD of Value Partners Hong Kong
Jenny Ng and Damian Harte, Intecs
senior strategist for content innovation and initiatives, group editor Jospeh
Waring was the moderator.
The mobile broadband market is in
hyper drive across much of Southeast
Asia. The industry had been playing out
Operators need to embrace non-telco ways to

work with partners
Focus on coverage
Michael Lai, P1
Harcharan Singh, Celcom
in similar fashion to the traditional mobile ecosystem, with two to three operators in most countries serving 20 to 30
million subscribers.
But that changed when governments
started offering spectrum to new players to boost competition in an attempt
to expand broadband penetration. The
industry has seen new technologies like
Wimax as well as a flood of new players.
There are 12 players in Malaysia and a
staggering 18 in Indonesia.
Weve never seen this level of competition, said Kumar from Frost & Sullivan. The issue moving forward is many
dont have the scale to optimize ebitda
margins, bargain with CPE and equipment vendors, and leverage backhaul assets. He noted that at every point in the
value chain economies of scale matters.
Celcoms Singh doesnt see scale as
the overriding issue. Of course we all
Jenny Ng, Value Partners Hong Kong
wish there were fewer players [laughter]. But the cost of dongles and base
stations have dropped sharply and IP
transit is more affordable.
He said that while ebitda margins
are much lower than voice, they are still
positive. Were now looking at what
other services we can sell on this pipe to
boost revenue.
He said penetration in Malaysia isnt
increasing at a significant rate new
adds are customers of other operators,
so theres a lot of cannibalization.
There are some issues with backhaul, since the cost of putting in fiber is
huge, but our bigger challenge is radio
access, especially transmission, Singh
said.
He said Celcom has learned a
number of lessons since 2007. When
we started, there was a lot of congestion
in the core. We fixed that, then there
www.telecomasia.net
was congestion in the IP transit, which

is expensive with few players in Malaysia. Weve starting local peering with
Google. We fixed the transit. Now we
face huge issues in the RAN.
He has seen scenarios where a base
station is using about 60% of its capacity and in a week is at 100%. Its a major
issue because Celcom offers a seven-day
money-back guarantee and customers
tolerance level is low.
P1s Lai agreed that economies of
scale is critical. You can talk about 12
local players, but Malaysia really only
has five active players. In a short time
device prices have come down tremendously, which will boost adoption and
help push toward mass-market.
With network and device costs tumbling, he said the next big factor is the
application part, which is what is gong
to drive usage and profitability.
www.telecomasia.net
Intecs Harte asked if value-added

services are a big part of P1s revenue
projections?
Not now. For a greenfield operator
like us the No 1 job is to build coverage as fast as possible, Lai said. Once
we get the network connecteds well
provide other valued-added services to
get consumers attention and increase
margins.
Singh said Celcom is still looking at
providing quality of services. Broadband is new and adoption is picking up,
so we want to assure customers there is
a certain level of QoS. Theres no point
doing lots of apps if the basics arent
there.
Ill be frank, were struggling with
the basics to a certain degree. We dont
think there will be one super app that
will drive usage.
Ng from Value Partners said that before operators can move seriously into
applications and sharing revenue, they
have to encourage companies to work
with them to target attractive customer
segments.
She noted that the youth market is
an easy target, which is more entertainment driven. But it may not be the highest margin segment, because they are
not the ones willing to pay for content.
Ng suggests that rather than provide only access, operators need to offer
more integrated services with communications solutions. She noted that 3040% of those in the 25- to 40-year-old
group with mobile broadband use it as

a complementary service to their fixed
service.
Taking a page from AT&Ts announcement last December, she said
operators need to education consumers that if they use more, than need to
pay more so they have differentiation of
services.
So customers willing pay a premium will have a better quality of services;
this is how you maintain the brand.
Harte said a major issue at this stage
is that a bad experience will keep users
from upgrading their services.
Lai said that has to be a given. As
we continue to grow so fast, quality of
services is essential.
Singh said that once the experience
is good, users tend to move to highervalue packages. At the start about 85%
new users went for the low-end packages, now that is down to 66%. In response
to low-volume users, Celcom launched
unlimited daily and then weekly packages.
He said the daily plan has had no
impact on the monthly subs, and weekly didnt affect the daily plan, which
increased threefold over a couple of
months.
The jump to VAS

Looking at the road to value-added
services in markets that are building
out the networks, Ng gave the example
of China where data usage accounts for
some 27% of ARPU. And thats on Edge
INSIGHT Roundtable
Delesh Kumar,
Frost & Sullivan Malaysia
Damian Harte, Intec
before 3G network rollouts and high

even compared to developed markets.
She said China Mobile used to work
with as many partners as possible to
drive daily usage. Then it started to try
to understand customers better, and
differentiated those that could provide
sticky content and those that could
bring customers back. For those that
drive content consumption, the operator would have a different working relationship and share customer data and
even help them offer more customized
solutions for the customer.
These are the things to think about
when you expand your subscriber base
and have to start managing your partners that bring more traffic and help
you build customer relationships, instead of just being an access provider,
she said.
She emphasized that segmentation
is very important, because it impacts
where you put your infrastructure investment and how you manage your
content partners.
Harte said its about making it easy
to work with partners. Perhaps some
operators have been guilty of being a
bit too arrogant in the way they worked
with partners. He said that relationship
needs to evolve to one where there is
true partnering.
In dealing with the new breed of

partners, Ng said operators need to
embrace non-telco ways to work with
partners and acknowledge the new environments. It doesnt immediately
drive business but is a way help bring
more customers.
Harte said a recent survey found
whats most important for operators is
not ARPU but maintaining the existing
customer base and market share.
Kumar points out that with partnering it all boils down monetization.
When there is money being made, it
doesnt matter if youre a big or small
player, everyone gets along and theres
no issue over who owns the subscriber.
The problem now with partnerships, he said, is that the monetization
part is not clear.
Kumar noted that its becoming
more apparent that there is no killer
app that will differentiate a company,
actually it will be a killer process that
can measure changes in the subscriber
base and work with unlimited partners.
Lai said telcos are staring to realize
that its not the application that matters
but the benefits that application can
bring to customers that can be monetized. This change of thinking is critical moving forward.
Looking at barriers in Malaysia to

mobile broadband adoption, Kumar
said internet penetration is fairly high
(50%), with most people connected at
work and many at school.
Fixed-line replacement
It comes down to perception of
value. He said Frost & Sullivan did a focus group and found that among people who use the internet but dont have
a broadband subscription, the main
reason was they dont use it enough to
justify a subscription. There is a large
segment of consumers who arent heavy
users.
He said the entry of new players
has encouraged people to evaluate
their options and to consider mobile
broadband as a replacement for fixed
service.
But right now they are willing to
wait. In the next one to two years, when
the overall value improves pricing and
quality of service become more compelling youll start to see low-volume users move to mobile broadband, because
it offers flexibility. Youll see pay as you
use packages.
He said operators need to go to the
15-20% users who are happy to use the
internet only at work and give them a
reason to sign up at home. TA
www.telecomasia.net
Telepresence panel
telepresence panel
Paving the path to all-IP mobile

The move to a flat-IP architecture is less of a technology issue
than an economic one
obile data traffic

growth has put the
spotlight on the need
for cellcos to adopt
efficient and flexible
all-IP architectures. But cellcos and IP
experts at a online discussion in January say that IP networks should evolve
only if the economics are justified. The
event, moderated by Telecom Asia global technology editor John C Tanner
and sponsored by Cisco, was held via
telepresence at sites in Hong Kong, Singapore, Sydney and Mumbai.
John Tanner: What types of devices are
customers using and what impact is
that having on your IP resources and
your network?
Christian Daigneault: Dongles are
generating about 80% of all our traffic
at this point. The other 20% is mostly
smartphones, and traffic for both has
grown by about the same factor 18 to
20 times since we launched HSPA+
nine months ago. And this is not stopping. When we talk about the iPhone,
and those type of phones, we see new devices like this coming out on a monthly
basis, so this is not going to stop.
Stephen Chau: In our network, more
than 80% of our traffic is generates by
the dongles. Also, we are offering a residential fixed-broadband-type service
[using HSPA as the last-mile link]. So
from that perspective, if you include
that with the dongles, that actually represents more than 90% of the total data
traffic volumes.
Anthony Goonan: I can relate completely to that 90% figure. And within
that, about half of our data is just
straight http-type traffic. Around 10%
of it is YouTube and other streamingtype services. High-end smartphones,
for Telstra at least, are contributing

seven to ten times as much data as a
standard-feature phone. And our data
traffic in Telstra is roughly doubling
every eight months.
Lam Hong Kit: One thing to add on
the point of http traffic, from what we
see, thats not only just for http web,
but also progressive downloads. I dont
know the exact split, but a big portion
of http comes from the video via the
progressive download, and YouTube is
one part of that.
Tim Mark: Our colleagues in the
US, and even some of them outside the
US, are seeing traffic doubling every six
months because of video and telepresence all the traffic has been doubling.
Were really seeing that from the infrastructure side.
Jayesh Easwaramony: Basically what
is happening is youre creating a much
bigger addressable market for service providers. So if you look at mobile broadband, instead of having one
household broadband connection, you
are actually selling four connections
each laptop will have a connection.
Also, we talk about smartphones and
netbooks, but theres also going to be
another entire set of devices which
could be tablet PCs or e-book readers
which are going to further the gap between netbooks and smartphones.
Hong Kit, how much is this driving
internet traffic on the international
links?
HK: Before 12 months ago, a lot
of mobile operators were under their
mother company, which also owned a
fixed-broadband service, for example,
and they were bound together because
the traffic was relatively small. After
2008-2009, they began to have high
THE CAST
Stephen Chau,
SmarTone Vodafone CTO
Christian Daigneault,
CSL CTO
Jayesh Easwaramony,
Frost & Sullivans director of ICT
consulting and head of telecom
research
Anthony Goonan,
Telstras director of
wireless fundamental planning
Lam Hon Kit,
Tata Communications senior
director of IP product management
and development, global IP and
VPN services
Tim Mark,
Cisco Systems senior manager of
strategy planning and business
operation, Asia Pacific service
provider operations
enough growth demand that they were

able to spin off, and they could come directly to us to buy IP transit. And in the
past 12 months, some of the customers
have doubled their bandwidth. Traffic
growth for our mobile customers has
been 100% to 120%.
What kind of impact is all this having
on the mobile IP architecture?
www.telecomasia.net
CD: Well, we have HSPA+ and allIP to the cell sites, and if you have fiber
or high-capacity microwave, theres
no bottleneck with the radio access or
backhaul. For the core, at this stage it
has been a bit easier to grow the capacity. There will come a point where you
want to simplify your core, but I dont
think the complexity is at this level today.
SC: I agree. In Hong Kong, theres
not as much concern about network
loading because weve already been
building up the network to accommodate the traffic to meet the broadband
need, not just the mobile usage.
AG: One thing that we found in
Telstra, because weve got a common
core for our 3G network and HSPA+
network, as we went through the speed
evolution, we would find parts of our IP
network that were in fact causing bottlenecks, and they werent exposed until the air interface speeds went up. So
there are bottlenecks within your core
that you just dont know are there, and
we need to look at how we can identify
those and remove those in a cost-effective manner.
Given all that, just how urgent is it for
mobile operators to migrate to a flatIP architecture with LTE?
CD: I think its a question of volume and throughput. And right now at
21-Mbps, I dont see it as a bottleneck.
There is the claim that with flat IP or
LTE, well get better 10-20 millisecond
latency vs the over-100-millisecond latency we have now. That would make
a big difference, but I think a lot of it
is due also to the LTE radio access and
NodeB.
AG: No ones going to pay the engineers to make it flat for the sake of bewww.telecomasia.net
My job [CTO] is to make sure when we build

anything, we understand the business rationale
ing flat. Were not loading things onto
our existing network, were unloading
things off. So were doing incremental things at the moment and itll take
a technology change to really move to
true flat architecture.
SC: It has to be something thats
justified. When LTE is ready, should we
then jump on it? My question is still:
why? By all means, if theres a good reason to get a much more efficient network architecture, you can always do
that. Its not a question of technology;
its a question of business evaluation.
JE: I think this flat-IP decision is
more like when you buy a car, you want
to first look at its looks, and then look
at the fuel efficiency. So I think its that
kind of a decision its not necessary
as of now. I guess it is a desirable state,
but is it an essential state? Maybe not
at this point of time. In terms of really understanding cost efficiencies, I
dont think operators have completely
grasped the cost economics of their
network. I mean, they can do it technically, but if you present a business case
to the CFO, I think that modeling goes a
bit haywire, so I think thats something
which operators need to work on.
AG: I think you make a really good
point there. The engineering group
want to have the latest and greatest devices in customers hands, the device
distribution people want to give the
cheapest ones out there, and the pricing folk want to drop the prices to be
cheaper than what you can move a bit
around the network. So youve got these
three parties with diverse models and
you have to make sure those three different needs get aligned, and its a real
challenge.
Christian, does your CFO get the
economics?
CD: Yeah. [laughter] We have a CFO
and a CEO who is also a previous CFO,
so hes very focused on the dollars and
the business case. Our challenge on the
technology side is that we need to reduce
the costs, because thats the only thing
in our control. We increased our traffic
by 18 times in the last year, maintaining
the same backhaul. So we have reduced
our cost by 18 times for the backhaul. It
also means very strong negotiation with
our vendors. Vendors are coming with
all those claims of reducing costs by doing it this way. Very often you dont see
the cost savings. So you really need to
understand the economics of your network costs to be able to drive the costs
down.
SC: This is why, as a CTO now, I always call myself the most non-technical
guy in the company [laughter]. The reason is that I want to be even more upfront on the overall cost structure rather
than just focus on the technology, because theres a lot of factors that affect
the whole cost structure, not just the
stuff were buying. Its the whole value
chain and how we work together with
the international bandwidth provider,
the domestic leased-line provider they
have their own costs they need to adjust
as well. But my job is to make sure when
we build anything, we understand the
business rationale. TA
one-to-one
Beyond mobile
SK Telecom CTO Lee Myung Sung articulates his companys vision
for innovation and its pursuit to change the game
by Chee Sing Chan
Telecom Asia: Regarding SK Telecoms
commitment to what it refers to as
Blue Ocean strategies how is this
being developed and what specific
goals does SK Telecom have in this
regard?
Lee Myung Sung: SK Telecom was
one of the earliest players to introduce
music and financial payment services
and LBS. However, while these services
have not achieved the target financial
accomplishments that we had targeted,
we strongly believe that this is an industry that it is very promising with much
more potential.
What our CEO refers to as Blue
Ocean strategy is not only the convergence theme that we have always pursued but other areas as well. We believe
that telecommunications, especially
mobile, can contribute to enhance the
productivity of other industries as well.
SKT believe that by applying and utilizing its ICT infrastructure in Korea we
can enhance the productivity of businesses in various sectors.
Our new focus is not only to use our
mobile industry infrastructure but also
to seek areas that can enhanced the productivity of the businesses of a wide variety of areas and to use it actively, when
we go global.
How exactly does SK Telecom leverage
its ICT to drive further developments,
and within SKT what characteristics
are required to continually drive the
ability to innovate?
What really drives us is firstly to
maintain our leadership in our core
business which is the mobile business.
On top of that we must fully understand
our customer base as they demand difwww.telecomasia.net
ferent resources and capabilities. And

that includes culture and organization
changes, we have not yet decided how
we are going to change but we are looking in a new direction and we are looking at what we need to best cater to our
customers. The first step is to redefine
our customers and then look at the
needs of each customer group.
In terms of our technology we obviously leverage our world-class network
and infrastructure to deliver a new
breed of service plus look to technology
to better capture customer information.
So can you indicate what these changes
or new directions might be?
Were just starting on this change
process its a very big change and you
must understand that we are a large organization so things will take some time
to change. We have decided the general
direction for this change to follow and it
will take us into new areas very likely
beyond the mobile space, but I cant disclose what they are now.
A lot of people talk about the consumerization of technology. Now how do
you harness that trend and how do you
make use of the potential knowledge
that you can get from consumers?
We already have a very advanced
infrastructure and platform in place.
Therefore, when we develop new services we can just simply use our existing
platform and complete the developing
process in a very rapid way.
In terms of meeting consumer
needs and reaching out to them we have
many measures in place to do this, via
the web, and other channels which all
Lee Myung Sung
increase our interaction with consumers. We are keen to use consumer interests and insight to incorporate into our
product development process.
I think were a very consumer-oriented company and to have succeeded
in this industry for this many years we
have definitely had to be effective in
listening to customers and have them
participate in the operations and development of the products.
If you look ahead to the next two
three years within your industry, what
do you predict to be the best game
changing shift? Is it going to be at
device or operating system level?
I honestly think in the immediate
future, concepts like Facebook we call
this direct e-commerce will have huge
influence on consumers especially in
the way we consume media and content.
Facebook users produce and consume
the way they want so that e-companies
like Verizon may have less impact and
less influence on the direction of services they must provide increasingly it is
the consumer that will decide and have
most impact on profits. TA
Cloud Computing
cloud computing
Match capabilities with

biz opportunities
Understand cloud computings capabilities and match those
to non-core projects that can improve the bottom line
By Stefan Hammond
009 was the Year of the Cloud

for most tech vendors. But if
you ask 27 different vendors
to define cloud computing,
youre likely to end up with 27
different answers.
By its strictest definition, anything in
the cloud uses computer resources not
physically present at the point of origin.
A mainframe accessed by dumb-terminals (a typical setup in past decades)
might qualify using that definition.
But that doesnt help us understand
whats going on in the early years of our
new century. Cloud computing in 2009
is the greatest shift in the computing paradigm since individual firms started aggregating computing power in the form
of mainframes and servers and allocating it to their employees. The cloud
analogy works because much computing
nowadays is conducted wirelessly, and
the main avenue is the formless internet.
When college students made up something called Hotmail in the 1990s, it
was so you could communicate by email
outside of an educational or corporate network. Maybe this wasnt strictly
cloud computing, but it reflected the
concept.
Cloud evolution
Nowadays, many of us use our email
archives as a primary record-keeping
mechanism, and our historical email
files are an important resource.
But what happens if the email files
are not backed up regularly? Whether
your primary email is a part of a corporate network or simply your personal
copy, odds are good that you have your
email set to delete the messages from the
server as soon as they are downloaded to

the PC. And even if a copy of the emails
may still exist somewhere in the bowels
of the IT department, recovering these
emails can be a major issue.
But if youre using a network-based
service, such as Gmail, then all of the
email would be safe. This has the advantage of potentially recovering not
only the correspondence itself, but also
the vast majority of important files.
Even though accounts from providers like Gmail dont have licensing fees,
theyre a way of storing emails and attached files in the cloud.
On the enterprise-level, cloud computing can be used for far greater things.
The next year or two may see radical
shifts as firms like Google and salesforce.
com gear up their cloud-centric products, as netbooks continue to proliferate.
Its an interesting time for technology, and some of Asias tech experts are
intrigued.
At the beginning of 2009, I thought
cloud computing was just hype or at best
that it was simply another name for outsourcing, said Linda Hui from F5 Networks. There were not many companies
in the market actually providing cloud

computing services. The name we heard
frequently was salesforce.com which I
feel and many others feel is softwareas-a-service, a fraction of what cloud
computing is about.
However, as 2009 progressed and
more and more companies such as
IBM, AT&T, Amazon and SingTel began to provide cloud computing services,
the situation changed. There was the realization that a temporary infrastructure
could be set up and that potential customers could pay for what they use, and
that virtualizing resources was becoming
a reality. So now I see cloud computing
as a more concrete proposition and I believe that it will really take off in 2010.
From servers to service

Even Microsoft has gotten on the
bandwagon. Cloud computing is about
taking the complexity out of IT without
sacrificing the capabilities, said CEO Steve Ballmer in an interview. At Microsoft,
this means that anything that has been a
server needs to be a service so that customers can choose whether to run onpremise, in the cloud or take a hybrid
approach.
Ballmer added that around 70% of
customers using Microsoft Online Services have moved from legacy platforms:
for example, Proctor & Gamble, Glaxo
Smith Kline, Coca-Cola Enterprises and
Blockbuster Video have all made the
move.
According to a recent IDC research
sponsored by Microsoft, looking into the
adoption of SaaS, 26% of Hong Kong
companies with 25-500 employees are
already deploying or considering deploywww.telecomasia.net
ing SaaS. Thats three times the regional

average, said David Hooper, information worker group lead, Microsoft Hong
Kong. The vast majority of the cloud
applications are communication and
collaboration based such as email, calendaring, web conferencing and instant
messaging.
Which projects are right for the
cloud? Some IT functions are perfect for
the cloud, while others need to stay in
your data center.
Budget-minded CEOs are telling IT
managers to look into cloud computing
to reduce the amount of expensive hardware running their data centers, CFOs
are interested because theyve heard the
model can slash costs associated with
new IT projects, tech-savvy employees
are asking for it because they think it
sounds cool. IT departments large and
small feel obligated to at least look into
cloud computings potential to save
money, reduce overhead and increase efficiency and flexibility.
Whats more, those IT shops that
drag their feet might find overeager users are beating them to the cloud, warns
James Staten, an analyst at US-based
Forrester Research. For example, application developers are using the cloud
and not telling IT, he said. To avoid being caught unaware, IT should take the
lead in deciding what goes into the cloud
and determining how to get it there, said
Staten.
Emerging best practices

In a report published in September,
Forrester Research outlined the following best practices for cloud computing:
Conduct functional and scalability
testing and development work.
Deploy short-lived and highly volatile Web applications.
Run quick, grid-type high-performance computing analysis.
But where to start? Whats the best
way for an IT manager to determine
whether his companys corporate culture is suited for shipping computing
tasks to web-based third parties? What
expectations should service providers be
www.telecomasia.net
required to meet? How should the success or failure of a cloud computing

project be measured?
These are not questions to be taken
lightly, since the success or failure of a
companys foray into the cloud will influence corporate perceptions of the
model going forward.
The Corporate Executive Board, a
research and membership organization
designed to support the functions surrounding CEOs, has studied corporate
adoption of cloud computing through
its Infrastructure Executive Council and
its Data Center Operations Council, both
of which are headed by practice manager
Mark Tonsetic.
Tonsetics advice to IT managers: find
a project that supports a business opportunity and could be easily moved into the
cloud to cut costs and resources something that doesnt involve core competencies and moving it offsite shouldnt
create a security risk. In other words, find
a project where moving some or all functions to the cloud would improve the
bottom line but the company wouldnt
face disaster if security or availability was
compromised.
Tonsetic isnt alone in advising companies to tread lightly into the cloud security risks are created when companies
move sensitive information beyond the
limits of their own data centers. And, as
proven by a number of recent high-profile outages of cloud services provided by
Google, Microsoft and others, availability is a real concern.
Look at your portfolio of applications and services and decide which are
commodities, not core competencies,
Forresters Staten advises. Those are
your candidates for cloud.
Worth doing right

Embarking on a cloud computing
project may take extensive research and
preparation, but the payoff can be significant when everything is done correctly.
In order to realize the promised reductions in cost, companies need to make
sure they pick the right projects to send
to the cloud.
From a business point of view, said
Tonsetic, its important to understand
cloud computings capabilities and match
those to opportunities, then evaluate different technologies and vendors. TA
Chinas SaaS Market pegged at

$170 million in 2010
hinas SaaS market is expected to grow at 56% next year to reach $171 million in revenues by the end of 2010.
A report from Springboard Research showed that demand for SaaS will
increase in the next two to three years and the growth rate will far exceed
that of the traditional IT industry, including the on-premise software market.
Springboards survey of Chinese enterprises indicated that three out of four respondents interviewed are already subscribing to SaaS solutions, while out of the
remaining, more than half are likely to subscribe to SaaS in the next 12 months. Also,
almost 100% of respondents in China reported being aware of the SaaS concept,
compared to only 52% last year. In terms of vertical industries, SMBs in retail, logistics, manufacturing, services and circulation report higher SaaS adoption.
The appeal and growth of SaaS in China are based on the advantages of SaaS
applications compared to traditional software such as lower upfront costs, easier
maintenance and quick roll-outs, said Devin Wang, business analyst for emerging
software at Springboard Research. We see aggressive demand for SaaS in China in
the coming months, as corporate IT budgets continue to be under tighter scrutiny and
enterprises look to hire fewer technical staff, he added. TA
Forum
l Charles Moon
3G repositioned for low-end
Key drivers
For governments and regulators, issuing 3G licenses provides an opportunity to increase competition. The combination of providing greater broadband
coverage along with standard voice and
messaging services is enticing given that
it addresses two issues prevalent in most
emerging markets: low fixed-line broadband penetration and inefficient mobile
market competition.
In addition, allowing mobile operators to provide internet access services
through 3G networks immediately boosts
competitive pressure on incumbents,
since the trend toward fixed-mobile substitution can be leveraged with wireless
mobile broadband packages to provide
attractive bundles.
Furthermore, spectrum is used by governments to create new revenue sources
another major driver behind 3G licensing.
As 3G technology is repositioned from being suitable mainly for data-centric multimedia in developed markets to also being
appropriate for low-end subscribers and
mass-market business models, the value
of licenses in emerging markets will rise.
From an economic point of view, two
things are working in unison to lower operating expenses for carriers rolling out
3G networks. First, greater demand for
3G infrastructure is driving down prices,
particularly as global vendors work to
keep up with the price erosion caused by
Chinese vendors ZTE and Huawei. The
outcome is that depreciation costs decrease for operators, positively affecting
bottom lines.
Asia-Pacific 3G subscriber penetration

3G as percentage of total mobile subscriptions
ast year marked a turning point

for 3G in the Asia-Pacific region, with adoption set to ramp
up significantly over the next
five years (see chart). The balance of
3G subscribers will be shifting to emerging markets as the timely combination
of government initiatives, opex benefits
and steadily declining device ASPs work
together to help drive the 3G penetration
rate to nearly 40% in the Asia-Pacific region by 2014. The adoption and application of 3G will help emerging markets in
the region meet their demands at a governmental, economic and societal level.
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2006A 2007A 2008A 2009E 2010E
2011E 2012E 2013E 2014E
Source: Pyramid Research
Second, improvements in design are

resulting in more power-efficient and
smaller base stations, lowering power and
site procurement costs. Power savings can
equate to the equivalent of 12-15% of 2G
consumption levels, and some 3G base
stations are small enough to be carried,
allowing co-location within current 2G
base station sites.
The long-term goals for any operator
should be to leverage the benefits associated with 3G rollouts into greater market share at both ends of the economic
spectrum. A large and loyal customer
base provides a strong foundation for a
platform from which many different customer segments can be engaged and, ultimately, monetized. The declining cost of
3G related devices will enable operators to
achieve more creativity and be more flexible in their offerings to consumers.
Until now, attention has been focused
on 3G as an expensive technology enabling
wireless broadband access as well as media
and smartphone functionality. However,
the ongoing shift in 3G positioning to appeal to low-end subscribers has far greater
implications for operators than securing a
small, albeit lucrative, customer segment.
The combination of high bandwidth and
an operators billing and payment systems provides a platform that any industry vertical can tap to provide services or
sell goods. Operators need only focus on

their core strengths marketing and billing/operational support systems integration and market dynamics will exploit
new efficiencies created by faster networks
and smarter devices.
On the demand side, pricing is arguably the most important factor in determining take-up of a particular device in
emerging markets. Sub-$50 devices have
historically been classified as the very-low
end, suitable for those subscribers who
make up the dominant prepaid segment
in emerging markets. What is interesting
to note is that this sub-$50 category originally consisted of handsets from smaller
device makers, or were stripped-down 2G
devices, but we are now seeing ODM 3G
devices from Chinese vendors approaching the $50 mark.
As the price of 3G devices decreases,
more people will be able to afford devices
with 3G capabilities and thus gain access
to new sources of information. On a societal level, this can serve to narrow both
the knowledge gap as well as the digital divide, empowering people with knowledge
that is applicable in their daily lives.TA
Charles Moon is a manager on

Pyramid Researchs Asia Pacific team
www.telecomasia.net
telecomcareer
Ericsson names Mandersson

global services head
Ericsson has appointed its CDMA chief
Magnus Mandersson as
head of global services
business unit. He will
lead 40,000 professionals
in areas such as managed
Magnus
services, systems integraMandersson
tion and consulting.
Replacing Mandersson as CDMA head is
Rima Qureshi, who
is currently heading a
strategic program for a
major North American
operator and Ericsson
Response. She will head Rima Qureshi
the CMDA operation with its 2,500 employees in North America and China.
BT appoints global services chief

Jeff Kelly has joined
BT as CEO of its Global
Services division. The
US-born Kelly worked
at global IT services firm
EDS for 25 years, most
recently running its $10
Jeff Kelly
billion business in the
Americas. He will take over from Hanif
Lalani, who is leaving BT after 26 years
to pursue personal business interests.
Lalani has also resigned from the BT
board.
HTIL forms independent board

committee
Hutchison Telecommunications International Limited (HTIL) has established an independent board committee
comprising Kwan Kai Cheong and Kevin
Westley, both independent non-executive directors of Hutchison Telecom.
Cisco revamps Asian ops

Cisco has announced an executive
reshuffle to accompany the restructuring of its Asia-Pacific operations. A new
China group comprising China, Hong
Kong and Taiwan will be split off from
the companys existing APEJ unit. The
group will be led by current Asia-Pacific

chief Owen Chan.
The remaining unit will be responsible for Ciscos Asian operations outside
of China and Japan including Australia, Korea and ASEAN. It will b run by
Cisco Japan head Ezard Overbeek.
Chan will relocate from Hong Kong
to Beijing to take on his new position,
reporting directly to Robert Lloyd, EVP
of worldwide operations.
Jim Sherriff, the chairman of the
new China group, will continue developing and leading Ciscos China strategy, Cisco said. Vice-chairman Thomas
Lam will be responsible for CSR, corporate affairs and university relations.
Tata Communications taps

managed services head
Tata Communications has appointed David Wirt as its global head
of managed services.
Wirt will take charge
of managed services
commercial
business
and data center engi- David Wirt
neering and operations, as well as the
outsourcing business. Prior to joining
Tata Communications, he was VP and
MD of Greater China & Korea at EDS.
Orga Systems appoints CEO

Orga Systems has appointed Ramez
Younan as CEO, effective immediately.
Younan has replaced Rainer Neumann, who left the company earlier this
month. He has announced plans to focus on driving internationalization and
growth.
Avaya APAC taps president

Avaya Asia-Pacific has appointed
Francois Lancon as its new president.
He replaces John DiLullo, who will take
control of the companys operations
in Canada and Latin America. Lancon
previously served as president of EMEA
and Asia-Pacific for Nortel Enterprise
Solutions, which was acquired by Avaya
in December.
New secretary-general for ABU

Asia-Pacific Broadcasting Union (BAU)
has appointed Javad
Mottaghi as its next secretary-general. Mottaghi
is currently director of
the Asia-Pacific Institute
for Broadcasting De- Javad Mottaghi
velopment (AIBD). He succeeds David
Astley, who has been secretary-general
since July 2002, but will leave the ABU
at the end of June. Mottaghis starting
date is yet to be announced.
Acronis names Apac president

Acronis has promoted Bill TaylorMountford as president of its AsiaPacific operations. He will be based in
Singapore, overseeing the operations
in the APAC region. Previously TaylorMountford was GM of Acronis ANZ.
Eli Harari joins Telegent board

Telegent Systems has appointed
SanDisk founder Dr. Eli Harari as an
independent board member. Harari
has served as CEO and as a director of
SanDisk since 1988.
Arbinet appoints new SVP

Brian Troesch has
joined Arbinet Corporation as SVP for product and business development, as part of its
renewed emphasis on
voice and mobile products. Troesch has more Brian Troesch
than four years of management experience in international telecom and mobile data services, most recently as VP of
Americas for Belgacom ICS.
Contacting TelecomCareer
Advertising: Gigi Chan
Tel: 852 2589 1338 Fax: 852 2559 7002
E-mail: gigic@telecomasia.net
Editorial: Fiona Chau
Tel: 852 2589 1333 Fax: 852 2559 7002
E-mail: fchau@telecomasia.net
www.telecomasia.net
eventscalendar
Networking opportunities
across Asia
Date
Event
Location
February 15-18, 2010
GSMA Mobile World Congress
Barcelona, Spain
February 16, 2010
Global Mobile Awards
Barcelona, Spain
March 08-09, 2010
Femtocells Asia
Singapore
March 08-10, 2010
Asia Billing & Revenue Assurance
Bangkok, Thailand
March 08-10, 2010
Mobile Backhaul Asia
Bangkok, Thailand
March 17-18, 2010
M-Commerce World Summit
Singapore
March 18-19, 2010
Vietnam Digital Marketing
Ho Chi Minh City, Vietnam
March 22, 2010
Satellite Industry Forum India
New Delhi, India
March 23-24, 2010
Mobile Network Evolution
Singapore
March 23-25, 2010
CTIA Wireless
Las Vegas, USA
March 23-25, 2010
Convergence India
New Delhi, India
March 24-25, 2010
Frost & Sullivan OSS BSS Asia Pacific Summit
Singapore
March 24-25, 2010
Mobile Commerce Summit Asia
Manila, Philippines
April 13-14, 2010
Wimax Forum Congress Asia
Taipei, Taiwan
April 13-16, 2010
International ICT Expo 2009
Hong Kong SAR, China
April 14-15, 2010
Mobile Marketing Forum Asia
Singapore
April 14-15, 2010
China Next Gen Broadband Summit
Beijing, China
April 20, 2010
Telecom Asia Awards
Singapore
April 20-21, 2010
Telco Strategies 2010
Singapore
April 27-28, 2010
Annual Mobile VAS Summit 09
Kuala Lumpur, Malaysia
April 28-29, 2010
Mobile Marketing Forum Asia
Singapore
May 18-20, 2010
Vietnam Telecoms International Summit
Hanoi, Vietnam
May 25-26, 2010
Minimizing Churn & Building Customer Profitability
May 26-28, 2010
Music Matters
June 15-18, 2010
CommunicAsia/ EnterpriseIT
June 16-17, 2010
AppsXchange Asia
Singapore
Hong Kong SAR, China
Singapore
Singapore
For full details of the events, visit www.telecomasia.net To list an event, contact Candace Ho at cho@telecomasia.net
www.telecomasia.net
PREshow
Mobile World Congress l Barcelona l February 15-18
Turning vision
into action
ew technologies and
emerging developments
in the wireless world
are not the only focus of
this years Mobile World
Congress, as the event will also highlight
the benefits that the mobile space lends
to both society and the environment.
Adopting the theme Vision in Action, the 2010 MWC will have some
of the most sought-after experts in the
wireless industry discuss topics as diverse and specific as embedded mobile
broadband, LTE, femtocells and cloud
computing, side by side with more
sweeping issues such as new business
strategies and growth opportunities
driven by mobile.
Other key issues to be discussed in
the four-day conference and exhibition,
which will take place on February 15-18
in Barcelona, include new mobile applications, services and content, associated
business models and channels to market, as well as the benefits of mobile on
society and the environment.
Speaking at the conference are industry stalwarts Ben Verwaayen, CEO of
Alcatel-Lucent; Chang Xiaobing, chair-
www.telecomasia.net
man and CEO of China Unicom; Hans Vestberg, president and CEO of Ericsson;
Eric Schmidt, chairman and
CEO of Google; Guo Ping;
chairman of Huawei Communications; Tadashi Onodera, president and chairman
of KDDI Corporation; Csar
Alierta, executive chairman and
CEO of Telefnica; and Vittorio
Colao, chief executive of Vodafone.
The conference will allow
participants to hear what these
experts have to say about the
new device marketplace, mobile entertainment and lifestyle, mobile security, nextgeneration networks, mobile
advertising, m-health applications for universal healthcare,
and the move toward a sustainable green future.
To ensure that the mobile
industry will have a brighter
future, issues such as segmentation and pricing, compelling
customer service, mergers and
acquisitions, and network management and shared services
will also be discussed.
Event participants will be
treated not only to keynote sessions, but
also to more than two dozen conference
sessions spanning various technology
and business topics and led by industry
experts from all over the globe.
Apart from the conference, the 2010
MWC also features an exhibition of
more than 1,300 companies that will
display the latest products and technologies seen defining the mobile landscape of the future.
An awards ceremony will likewise be
held to recognize the industrys best.
Those interested in application development are also in for a treat. The

2010 MWC will have an event within
an event, dubbed App Planet, which
would focus on the fast growing application developer community.
Last years MWC played host to
around 47,000 mobile industry professionals from 182 countries, more than
half of whom were C-level executives.
Some 9,000 of these guests were representatives of various mobile operators
worldwide. TA
insideline
l Robert Clark
Grounded cellcos need to

grasp the cloud
obile operators must

be the only people in
the business world
not interested in the
cloud.
Its a mystery why. Cloud services
- or network-based services as they
used to be known - are cellcos best bet
for regaining the initiative from the
smartphone guys.
I was thinking this recently as I spent
several hours transferring my address
book from my PC to a well-known
internet brand because it can sync them
with my mobile phone.
A tiresome task but surely my
mobile service provider could have done
that. And maybe it does, in which case
they should be shouting it from the
rooftop. Im not aware of any cellco in
Asia does it.
Take it from me, if youre hosting my
contact book, Im locked in.
Even the smartest mobile devices are
limited in their functionality and screen
real estate, so added network-based
functionality becomes critical.
Phones are also vulnerable to being
lost or stolen. Contacts are just one part;
how about backing up my photos, my
texts, emails and documents?
I keep getting calls from my operator
offering to insure my device for HK$520
($67) a year. No one calls me about
offering something much more useful,
which would be to back up my data.
Apple charges $99 a year for its
MobileMe address book and backup
service. Telcos could charge less than half
that for the same service.
Thats just the beginning. Youd
think telcos would know that the address
book is the launching point for any
communication. Hosting a database of
thousands of contacts is a big win in
itself. You can build an online business
around that, not least in the essential
area of social media sites.
But while the cloud offers cellcos the
chance of an end-run around the handset
firms, customer care is one area where it
can work in partnership with them.
Telcos run some of the most
sophisticated customer service systems

of any business. Long-suffering
customers might scoff, but telecom
operators are certainly way ahead of, say,
software firms, whose idea of customer
care is a disclaimer before a user
download.
Complex
Google learnt this last month
when it decided to sell its new Nexus
One phone directly to customers. The
reason for that is clear enough; Google
doesnt want to share the end-user with
anyone else. After that debacle Google
must decide whether it builds its own
customer care platform or works with a
partner that has one.
Smartphones are complex and
increasingly new customers are going
to need help. Apple has indeed been
fortunate in that cellcos are willing
to share their service revenues while
bearing the brunt of the customer care;
operators should be billing their partners
for providing that service.
Telcos keep missing these
opportunities and the reason they do
is because of the way they think about
their business. Theyre too focused on
networks and technologies. How much
senior management time is taken up
with talking about HSPA, LTE and
network operations?
Over the years theyve ridden fresh
waves of technology from voice to text
to mobile broadband and today theyre
still expecting some big new concept to
turn up that will ward off the dreaded
dumb pipe.
The concept operators really need to
embrace is the customer. That doesnt
mean reading the results of a focus
group. It means a business culture of
spending 24/7 in the customers shoes
and seeing the world that they see.
Telecom operators in the 21st
century are still structured around their
engineering operations just as they were
in the 20th century. Its time to offload
those networks and start focusing
creatively on the customer. TA
Telcos keep missing

opportunities because
of the way they think
about their business.
Theyre too focused
on networks and
technologies
Robert Clark is a technology journalist

rclark@electricspeech.com
www.telecomasia.net
backpage
briefing
SpinVoxs crash to earth
In a rapid fall from grace, UK-based mobile software developer SpinVox was
this month sold for just $102.5 million to rival US firm Nuance, having been
valued at $500 million in 2008.
The brainchild of high-profile executives Christina Domecq and Daniel
Doulton, SpinVoxs claim to fame was that it had developed software for converting
voice mail messages to text or email.
Or had it?
In an embarrassing admission, Domecq was forced to reveal recently that SpinVoxs
system was only 85%-90% automated. Yes, in some instances, SpinVox was using people
in call centers to convert the voice-to-text messages!
Double Ouch. TA
Huawei stirs up Australians

Chinas TD-SCDMA
pipe dream
Chinas Vice Premier Zhang Deijang this
month urged Chinas three mobile operators to
strengthen TD-SCDMAs supply chain.
Yeah right. Like China Unicom and China
Telecom, which are deploying W-CDMA and
1xEV-DO services respectively, are going to start
promoting TD-SCDMA on the world stage.
Fact: the great white elephant TD-SCDMA
was pushed on China Mobile by the government.
Fact: China Mobile lobbied and lost to
pursue W-CDMA.
Fact: China is in the midst of a 3G tariff
battle.
Fact: Unicom and China Telecom are
seriously unlikely going to sing the virtues of
TD-SCDMA. TA
Thais at it again
Thailands Information and Communications Technology Ministry

says it is unsure whether Thaicom
(formerly Shin Satellite) can legally
launch its next bird, Thaicom 6.
So it is seeking the opinion of the
Office of the Attorney General.
But wait: The ICT has investi-
On January 4, Chinese vendor Huawei came out in support of the

Australian governments open-access National Broadband Network.
Bloggers then raised speculation again that Huawei had connections
with the Peoples Liberation Army.
So, will Huawei gain a piece of the Australian governments A$43
billion ($39.9 billion) NBN project?
Firstly, Huawei will very likely make the long short list of
network vendors from which only
two will succeed. Secondly, it
is worth mentioning
that Prime Minister
Kevin Rudd is well
known for pursuing
warm relations with
the Chinese (and he
can tell you so in
Mandarin if you like.)
The latter however may not be enough to get
Huawei over the finish line due to lingering national
security concerns. Some reports have even said that Huawei
in Australia has been investigated by the Australian Security
and Intelligence Organisation (ASIO) over its ownership ties.
Huawei has vehemently denied any ownership links to the PLA or
that it has been investigated by ASIO. TA
gated Thaicoms contractual status.

And it appears from a committee
report that yes indeed, a new contractual obligation needs to be inked for
Thaicom 6. But it will check with the
OAG first.
Enter Thaicom. Thaicom says its
current concession does not permit it
to launch Thaicom 6.
Oh, and while its at it, it says
it will launch Thaicom 6 only if its
current concession is extended by 15
years from 2021.
Such is the bureaucratic red
tape weve come to expect from
Thailand. TA
www.telecomasia.net

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4 Jan/Feb 2010 Telecom Asia

The flat-rate mobile

he iPhone gets a lot of credit

with one eye on the meter. (That said,

I know perfectly well

John C. Tanner is global technology editor

l edited by John C. Tanner

Wi-Fi on the rails in Kazakhstan

he idea of installing Wi-Fi on

typically weak or even non-existent.

Continued decline for fixed

their fixed-line subs in 2008, while

Top ten fixed-line markets

Source: BuddeComm based on ITU and industry data

Foreign brands set to

10 Jan/Feb 2010 Telecom Asia

become iPhone distributors.

ONE MONTHS TELECOM RESEARCH

>> Global mobile revenues to hit $1t in 2013

Worldwide mobile service revenue will top $1 trillion in 2013, with

>> Prepaid subs to drive mobile broadband boom

The number of prepaid mobile broadband users in the Asia-Pacific

>> Chinas 3G rollouts spark mobile data boom

Chinas 3G rollouts are spurring a wireless data boom, with revenue

>> IMS market gets boost from LTE migration

India cuts back 3G plans

ndias communications ministry

This lack of spectrum could