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INTERVIEW:
Andy YB Chong, Chairman, GSM Association Asia Pacific Interest Group |
Judith Berck, Editor, GSM Data Today, October 8, 1998.
Andy Chong is Chairman of the Asia Pacific Interest Group of the GSM MoU Association as well as the Regional Director of Marketing for Cellular Services for ICO Global Communications in Singapore.
GSM Data Today spoke with Andy Chong at the GSM Asia Pacific Conference in Singapore in October. Andy Chong talked with us about the wireless industry and data services in the Asia Pacific region and issues regarding 3G.
GDT: Could you describe your general sense of what’s happening in the wireless industry in the Asia Pacific region?
AC: It is extremely dynamic, but cautious. The biggest driver for wireless in this region is the lack of infrastructure, be it wireless, or wireline. There is a lack of wireline in many parts of Southeast Asian regions, India for instance; whereas in more advanced countries such as Japan, Korea, and Hong Kong the demand for telecommunications services is still very healthy. You see opportunities for countries to try to ramp up their infrastructure in that sense. Based on experiences in the West, wireless is still the best way to deliver communications services, or at least the quickest way to meet the demands of basic communications services.
GDT: Where is the most activity taking place regionally?
AC: It would be difficult to pick a country in this region as the focus shifts around a bit. In my opinion, Australia and Hong Kong were two of the countries that moved boldly in terms of deregulation of its telecoms sector – and as for New Zealand, it has been a free-for-all in the relatively early days as well. Malaysia, Singapore, Philippines and in fact, many other countries, were also fairly aggressive in terms of deregulation, albeit with different intensities. And as usual, there are two school of thoughts – deregulation can be good or bad, but we can talk about that another time. Moving east, Taiwan was one market that deregulated its market, specifically the mobile sector, about 12 months ago, driven by the demand and supply situation and the need to be competitive. Back in Sept 97, the pent-up demand in Taiwan for communications was close to half a million. As a result of that, you could experience a shift of handsets going from Malaysia and Singapore into Taiwan to meet that demand situation.
GDT: What about Japan and China?
AC: China, which is the biggest GSM market in the world today and growing steadily, has been relatively controlled and conservative. I do not think we will see deregulation within the Chinese market at this point, but they do recognise the need to expand (capacity) as quickly as possible. They have capacity constraints now -- and capacity is China’s top agenda item. Similarly, Japan sort of hit that ‘capacity’ brick wall last year. And that is why the Japanese are keen to accelerate the overall 3G development and implementation program. They need something now to meet that demand.
GDT: Does the GSM MoU Association in this region have a specific agenda regarding data services?
AC: Yes, it was identified that data was something that has not been marketed well across all GSM regions. And if you look globally, Asia is still lagging in terms of data adoption, and for obvious reasons – people are in need of basic voice communications.
Just to highlight some of the GSM industry trends, if you pick a country like the UK, or any other European country where mobile communications is more mature, you will find data adoption today of some 7, maybe 8 percent. In Asia, it is less than 1% on the average. In my previous engagement with a Malaysian GSM operator, where it has the highest value customers, data adoption was less than 3%, although that was 12 months ago!
Having said that, one of the association’s activities has been to work on a program to market mobile data to further stimulate demand and adoption. The factors for the low data adoption are not unknown. While some are technical constraints, nonetheless, we have believe operators can improve mobile data adoption by implementing clever marketing campaigns with better messages, and generally raising awareness of mobile data.
GDT: Is there any country that stands out in terms of data adoption?
AC: Australia, Singapore, and Hong Kong have approximately five percent in terms of data adoption. However, in terms of traffic, it is some ten, twelve percent of total usage, which is still relatively low. This is not surprising given the maturity of the cellular market in these countries.
GDT: What needs to happen to improve the adoption rate?
AC: In my opinion, there are a few variables that influence data adoption. Price is clearly one, bandwidth is another. Ease of connectivity is another. And another has to do with how easy it is to communicate to the customer how to use this technology/service – educating customers about the data service. I think there’s still a lot the customer needs to know and understand before they can actually use it without getting frustrated. From a connectivity perspective, the ‘Bluetooth’ initiative will certainly go a long way to improving mobile data adoption. The concept is an excellent one and its success will be dependent upon the support for such an initiative across the whole industry.
But there is one other variable that is often overlooked - support. What needs to happen is improving the whole concept of using data. That includes education, buying the services, and support - when it does not work, what happens? I do not think the end-to-end bit for mobile data applications is there today. I think it has been ad hoc, and lack of a concerted effort to provide the necessary support. Over the last 12 months there have been discussions, attention and work on how to market the capability of GSM in terms of mobile data. That is something the Association is working on with its members.
GDT: How might you market data?
AC: For one, I do not think it is simple enough for the end user, the way it is offered to wireless subscribers today. There is a lack of a concerted effort from the mobile data perspective. It appears that operators are only doing what they do best, and there is a lack of focus on their part on data, because it is not a significant driver for adoption of mobile communications. Mobile data is merely something that’s good to have. If it works well and very easily, it would have happened a lot faster and better. Clearly, mobile data has not been a core business for the typical operator today, but it is something I would like to see changed.
So what we hope to come up with is, a proposal-cum-program that all member operators of the association can take away to implement, to stimulate data adoption within its markets. It could be as simple as coming up with a common message. For example, I think a lot of people do not realize you can use it while roaming, and so on. And in the roaming environment, not all networks have data, so there needs to be some consistency in terms of making seamless service availability, to further stimulate the demand for wireless data. That is something operators can do. The other is finding a specific application that is simple and that people want – we all refer to as the killer application, or rather the elusive application! And haven’t found that yet!
GDT: Looking at the longer term, what is your outlook for data adoption over the next few years?
AC: If I were to predict the trend for mobile data adoption, and given that some of the more mature markets today have 7-8% adoption, I would believe that in five years time, it could be as high as 20% without the need for third generation systems. And that assumes you have the right parameters in place. I think you need at least deliver 64 kbps capability to see this kind of take up rate, amongst other conditions that we talked about earlier.
GDT: Now with the "two-plus" and the third generation services, what is the GSM MoU Assocation going to do in terms of making the public aware of these services as they come on?
AC: Firstly, we need to understand how networks evolve from the current Phase2+ to the next generation, or even GPRS, or EDGE or whatever in-betweens that may be. The actual development is still not obvious or clear – at least in terms of the economics of implementation, and what exactly it will allow the operator to deliver and at the other end, what customers can expect.
As for what the Association is doing to raise public awareness of these services, firstly it is through continual participation of its member operators in the various work programs with frequent reviews to ensure that the outcome of this reflects members’ needs. Having done so, then what needs to be done to raise the public awareness of services, is really up to the members in each of their local markets. And this dependent on how a particular new service is packaged, offered and communicated to its customers.
GDT: When are you expecting the 3G specs to be solid enough to allow deployment and development to really be under way?
AC: This is a tough question. I can be guided by a dateline that is set by the ITU for recommendation on the 3G standard, which is March 31, 1999. Even then, I’m not certain what the outcome is going to be or what is actually going to be defined. I think there’s still quite a lot of work even beyond the date to further define what the next generation of mobile communications will look like and the commercial matters plaguing the standardization process.
GDT: Why would an operator who has invested in current GSM want to be going towards 3G?
AC: There are several drivers why you need 3G. It depends on what 3G is - is it just capacity, or is it bandwidth? It probably means different things to different audiences. I don’t think the industry is very sure what it will be. But clearly, it will support very high bandwidth applications - instead of just voice and basic data, the common wisdom is it will support full-motion video. For most operators in the Asia Pacific region, however, the only driver I see today, right now, is capacity. And beyond that, I think there are a lot of nice things that you can do, but I can’t see it coming to reality until the year 2005, and probably beyond.
GDT: What is the likelihood of having a single 3G standard?
AC: Slim. That is the reality, I think. It will be difficult to come to one compromise - I think there probably will be more than one compromise. And what’s going to drive who adopts what, is the market itself, that is, it will be an economic driven decision. From a GSM perspective, there are huge investments out there (some US$70 billion), just as there are for the other systems. Clearly each one need to have a proposition for their existing customers. What we have seen happened with the successes of the GSM platform will certainly be an excellent demonstration of what standardization can deliver, and will be a serious consideration for many operators looking at the next generation of mobile systems. If you tell me implementing 3G is going to be a two-step process, and I don’t lose anything and my customers can be forward and backward compatible, sure, they would look into that today. But apart from that, the first driver in Asia Pacific is still capacity. For some, it could be bandwidth -- some networks might want bandwidth for different applications. Again, what these applications will look like is still sketchy, and not defined, and if there were defined, what the demand is for such applications. That pretty much sums up the Asia Pacific demands and requirements as far as 3G is concerned. And clearly, we can only hope that there will be a common 3G platform within this region and the rest of the world.
GDT: What do you expect to be the major differences for users of third generation technology compared to what’s available today, in regards to data services?
AC: A shift clearly would be in the information environment. Today, if you look at fixed networks, the usage of Internet services is enormous, and growing rapidly and steadily. That includes the Internet, e-mail, all kinds of data or entertainment transactions. The biggest shift from the wireless user’s perspective would be from voice to that kind of environment. That needs to be supported not just efficiently and adequately from an operator’s perspective, but it needs to be from the end user perspective as well, for example, education and end-to-end support.
GDT: What are the biggest challenges to resolving the 3G specification issues?
AC: The biggest or most important issue that I am aware of is the IPR [intellectual property rights]. Everyone in the industry is concerned about that, and it does not matter which camp you are in. Various IPR’s are held by various companies, and we do not have a common consensus on how we treat these IPR’s. Some precedents have been set on how it should be treated, which is fair, very equitable, and non-discriminatory. We would need something that our member operators, the customers or the stakeholders would say is fair. Basically, what we need is something that makes economic sense.
© 1998 Intel Corporation. Judith Berck is an employee of Intel corporation.