The current market conditions in emerging markets for the telecom industry are somewhat unpredictable and influenced by the global macroeconomic developments.
Independent of how this develops during 2015 though, the demand for more reliable and higher-capacity data services are evident for consumers and enterprises and is increasing at a tremendous pace on par with any developed markets.
Mobile data services provided through cellular 3G technologies are prevalent globally today. LTE is emerging in most developing markets but operators are still working to expand service coverage and increase the subscriber base. Transmission costs are still a prohibitive factor in some markets but generally the available options are increased and prices are decreasing.
Wi-Fi technology has been widely adopted in emerging markets for a long time as it provides an affordable and high-capacity solution to consumers and enterprises alike.
The adoption of operator-provided Wi-Fi services has, however, been somewhat limited in many developing markets. Partly this is due to the mobile operators’ focus on implementing LTE, but also because they are unsure how to monetize these services and how Wi-Fi potentially could cannibalise other revenues.
Users want Wi-Fi for higher speeds and to avoid expensive data plans. With the proliferation of Wi-Fi-capable devices, it makes sense for carriers to offer Wi-Fi as a complement to 3G and 4G connections. The mobile industry association GSMA predicts that by 2018, 85% of mobile data traffic will be transported over Wi-Fi networks. Mobile operators without a clear Wi-Fi service strategy are facing an obvious risk to reduce their relevance among customers. It boils down to: less relevance = less customers = less revenues = less profit. Carriers are now waking up to this trend
For voice services, the user behavior already plays an important role. Widely used over-the-top (OTT) services like Skype and GoogleTalk provide users with free-of-charge voice services over Wi-Fi and fixed networks. Mobile carriers in developed markets are now considering implementing managed voice services over both LTE and Wi-Fi as a way to counter the OTT solutions. The available solutions typically require large investments (in IMS and mobile core) though so the business case needs to be solid before venturing into this.
Various fixed wireless solutions still play an important role in most developing markets since xDSL, cable and fibre options are limited for residential and enterprise customers. Some operators that adopted the WiMAX technology some six to eight years ago are now gradually migrating to fixed LTE solutions instead. However most existing networks and investments are still running as a stable, low-cost option for most operators and it’s fair to assume that they will live on for some time.
Current global macroeconomic wobbles will play a part in how the telecom industry develops during 2015, both for large internationally controlled mobile carriers and smaller local operators.
The proliferation of Wi-Fi in user devices will drive the need for operators to expand their investments in complementing high-capacity networks to meet the never-ending customer demand for faster data options. Mobile operators without a clear Wi-Fi strategy are facing an obvious risk to gradually reduce their relevance among customers.
Jonas Lagerquist is the Director of Business Development of Aptilo Networks.