MWC: The Coming Year in Emerging Markets

Now that the dust has settled after Mobile World Congress, I’ve had time to collect my thoughts following on from some of the conversations I had at the show.

The Congress is a great opportunity to discuss telecom trends and share insight with some of the industry’s leading minds, and it’s always an eye-opener to see just how much perspectives have shifted in the past year as technology marches inexorably forward.

While there are always contrasting views, this year there was a fairly firm consensus that the overlap between emerging markets and their developed counterparts is becoming ever more significant – but intriguingly, emerging markets are not quite following the predicted blueprint and distinct differences in their development are becoming apparent.

LTE build-outs are almost as prevalent now in emerging markets as they are in developed markets, but they are presenting operators in these regions with problems that they haven’t faced before. The increased sophistication of services is actually pushing up ARPU rates in developing markets, but only because LTE data services are charged at a premium that most subscribers in these regions cannot afford. Frankly, the majority of subscribers do not have the means to pay for data monthly, and this is stalling service uptake.

However, this has not slowed smartphone adoption in emerging markets, and in many regions - particularly Africa – growth is exceeding expectations. Affordable devices are killing off the feature phone market and the trend looks set to continue, with Mozilla unveiling a $25 Edge device that made waves at the Congress. It will be interesting now to see how operators take advantage of a growing installed base to use services as a differentiator.

By making full use of their available bandwidth to provide a better end user experience, operators will foster brand loyalty among their subscriber base as well as saving costs, so it’s critical that they optimise their LTE networks properly. Efficient optimisation will allow operators to further explore opportunities in the enterprise space, and this will prove to be an increasingly important market for operators looking for a return on their LTE investment.

In particular, customer data is a tremendous asset to the operator, and one that has enormous value to the enterprise sector – and if used intelligently, it could address numerous issues faced by operators in one swoop. Responding to customer usage habits via efficient bandwidth dedication will mean that services provide a better user experience, meeting heightened customer expectations and thereby encouraging further use.

In addition, analysing how subscribers use popular services and respond to marketing will result in the creation of new business models that are informed by user preferences. This in turn will drive service adoption and campaign responses, fostering a more harmonious relationship between the end user and the service provider.

Affordability is the key word in emerging markets. There are demands for increased capacity and data-hungry services, but this jars somewhat with the ability of the average subscriber to afford these services. At the same time end users are deserting traditional revenue generating services like SMS and voice in favour of OTT services like WhatsApp, Skype and Facebook.

Squaring these circles will be the main challenge for service providers and vendors/OEMs alike over the coming years. This will only be achieved by making services affordable, which will require innovation on all sides. The good news is that with smartphone market penetration in most emerging markets running at 10% or below, the upside potential in emerging markets remains huge.

Over the coming months, we will be exploring many of these themes in greater depth – keep reading Developing Telecoms for all the best industry insight.


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