The need to stay connected anywhere and anytime has made mobile phones indispensable for most people today. Mobile internet adoption and speeds are surging globally but especially in Asia, which has the fastest-growing internet population and most tech-savvy consumers in the world.
While voice services will remain the primary source of income for mobile operators across the region with the exception of Japan and Korea, with their fast and advanced broadband networks, Asian operators are turning the global megatrend toward data into local opportunities.
“Over the past few years, mobile data usage in Thailand has been growing at breakneck speed, while voice calling is most likely to remain stable or drop slightly,” said Pratthana Leelapanang, senior vice-president for digital products and services with Advanced Info Service Plc (AIS), Thailand’s largest mobile phone operator.
“I think we are now at the beginning stage of an S-shaped growth curve and it will take three to five years more for revenue from data services to overtake revenue from call services in Thailand.”
According to the most recent financial results from AIS, in the first half of 2013 mobile data revenue continued to show strong growth of 63% year-on-year, underpinned by smartphone penetration which reached 22% of all handsets.
Mr Pratthana said data service would be the growth driver in the future as more and more people are expected to increase the frequency of video consumption on their mobile devices, both phones and tablets.
The fundamental strategy of AIS, he said, was to deliver a good “data experience” for customers and encourage them to migrate to its new network. Since it formally launched commercial 3G services on the 2100MHz band in May, the company has witnessed strong customer take-up. It signed up 3.9 million 3G users as of the end of the second quarter, representing 10% of its total subscriber base.
“We are trying to create incentives to increase 3G device penetration among mid- to low-end customers. These include promoting richer digital lifestyle applications and also providing greater variety of affordable 3G smartphones and feature phones,” said Mr Pratthana.
“Upgrading mobile customer service staff in order to be well-equipped in helping users with the ever-changing development of technology for all customer segments is also one of the areas the company emphasises.”
Pakorn Pannachet, senior vice-president and head of marketing at second-ranked Total Access Communication Plc (DTAC), agreed that Thai consumers’ adoption of mobile internet had been “phenomenal”.
“More than 10 million of our customers are using the internet on their devices on a regular basis,” he said. “Social network services have enabled and changed the way people communicate. As an operator we need to adapt our corporate culture to the revolution in a very timely fashion.”
Mr Pakorn said the new channel allowed customers to shift from one-on-one communication to one-to-many communication via group chat and social network applications, which certainly fits perfectly well with Thai social behaviour.
In terms of business strategy in response to the trend, he said DTAC would continue to enjoy healthy overall growth because of a high growth rate from data. At the same time, it will attempt to maintain revenues from voice service.
Ultimately, it all comes down to the quality of the network.
“Without connections the internet won’t work. We are well-positioned to play a major role in this value chain. Facilitating all the connections with the best services, prices and packages for our customers is the main role for us. We also provide very low prices on voice and SMS to maintain customer usage,” said Mr Pakorn.
“Changing price plans is not a short-term strategy but it is a part of our plan to get users to adapt to mobile internet as simply as possible. In the last five years, we haven’t increased any prices to increase revenue. On the contrary, we have been reducing price to enlarge our customer base.”
The experiences of Thai operators are similar to those across the region. The three largest Indonesian mobile telecom companies, Telkomsel, XL Axiata and Indosat, have reported significant increases in telecommunication traffic compared to previous years.
SMS and data traffic makes major contributions during the holiday seasons such as Eid, while a significant drop in voice service usage has been found.
“The concentration span of Generation Y is only three seconds; they are becoming very impatient and always want faster data,” said Alexander Rusli, president and CEO of Indosat, the second largest cellular operator in Indonesia.
“They no longer want to talk on the phone anymore and that is why everyone is trying to design an application that can get the message across within a span of three seconds.”
Mr Rusli said that understanding this shift in behaviour lies at the heart of many of the company’s promotional activities. For example, Indosat has introduced a prepaid brand called IM3 aimed squarely at the youth market to provide affordable and cost-effective social networking and blogging access.
“This is an industry-wide trend for the entire region, as now it is all about chatting on applications,” he explained.
“The challenge is to provide applications that continuously provide streams of three seconds of data. Unless we do, these young-generation consumers will eventually move to something else if that application cannot deliver their needs in a timely manner.”
Vietnam may be the only country in the region where the rise of mobile data is being perceived as a threat. The government recently floated a proposal to ban mobile chat applications such as Line, WhatsApp and Viber in order to preserve the revenue of the state-owned telecom companies.
“We will lose 40 to 50 percent of our revenue if all of our 40 million customers use Viber instead of traditional call and text,” an executive of Viettel Telecom told Reuters.
Other major operators across the region are also riding the data wave. In many emerging markets, promotions focus on broadening the customer base by getting affordable devices into the hands of lower-income consumers.
According to the research company GfK, Southeast Asia’s overall mobile phone market expanded over the 12-month period between April 2012 and March 2013 by 8% in unit sales to more than 108 million units. The growth was mainly attributed to smartphones, as consumers spent almost US$3.4 billion more on the additional 16 million units from the previous year.
Further rapid growth in the Asean smartphone market is assured since as many as two-thirds of the region’s population has yet to make the switch to internet-ready devices.
Once they do, it becomes the job of the operators to make sure that they have the network capacity, value-added services and prices to deliver on the rich promise of mobile internet.
About the author
Writer: Nithi Kaveevivitchai