managing telco ecosystem in developing...
TRANSCRIPT
Managing the Telco Ecosystem in Developing Country
Dr. Muhammad Suryanegara
Associate Professor
Graduate Program of Telecommunications Management
Dept. of Electrical Engineering – Universitas Indonesia
Prepared for class of 2019 @ University College London, 8th march 2019
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est. 1849
44,688 student
3,468 academic staff
oldest and largest university in Indonesia
Agenda
• The Socio economic characteristic of developing country
• Technological ecosystem in developing country
• Setting up the coming of new technology (5G, IoT, etc)
• Understanding market behavior
• Case in Indonesia
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Developing country
• Cambridge dictionary :: “Country with little industrial and economic activity and where people generally have low incomes”
• World Bank does not use the term “developing country” for its statistic and reports
• IMF use the term of emerging markets and developing economies
4• Image from https://marketbusinessnews.com
Human Development Index
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life expectancy, education, and per capita income indicators
• Image from https://Wikipedia.org
6• Image from https://howmuch.net
World’s economy by 2017 GDP
Why so significant for Telco business ?
• It is the market !
• The world population is to reach 9.8 billion in 2050.
• India will be the largest country by population (1.7 billion), followed by China (1.4 billion) and by Nigeria (411 million).
7• Image from https://Wikipedia.org
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How much the country spends on R&D
G20+ developing nations = around 60% of the world's population, 70% of its farmers and 26% of world’s agricultural exports
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Every country’s major export (non-service)
10Source : https://www.weforum.org/agenda/2016/03/this-map-shows-every-country-s-major-export/
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Source : https://www.fastmetrics.com/internet-connection-speed-by-country.php
Technological performance#1 Internet speed
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Technological performance#2 Disconnected Risk Source : https://www.vox.com/a/internet-maps
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Structuring the (Past) Ecosystem
• Government / Regulator may have proper and not-proper technological paradigm, • “Since our country don’t have rich natural resources, technology is the best
investment ☺ “ • “Our country is lag behind… let us catch up, open up the opportunity” ☺• “Accelerate the competition” ☺• “We don’t have much money… technology is not our priority” • “We hardly see how technology contribute to our national economy”
• Heavily depends on foreign Technology suppliers / Vendors• Market is special…• Service Operators are having multiple strategic choices and may implement
them all
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Case #1 : Tech. supplier in India…
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Case #2 Government & Service Operator in Middle east…
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https://www.zdnet.com/article/skype-banned-whatsapp-blocked-whats-middle-easts-problem-with-messenger-apps/
Case #3 Regulator in Peru…
• Main problem : Lack of effective market competition
• One of the most common incentives for private companies in Peru to invest in rural areas is the promise of government subsidies. Peru has one of the best environments for public private partnerships (PPPs) in Latin America
17https://1e8q3q16vyc81g8l3h3md6q5f5e-wpengine.netdna-ssl.com/
Telco sees Challenges & Opportunitiesof (current) ecosystem in developing country
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REGULATOR
TECHNOLOGY SUPPLIER
MARKET
TELCO = SERVICE OPERATOR
LOCAL STARTUP
INTERNATIONAL CONTENT PROVIDER
Anticipating new technology (5G, IoT, etc)
• For Telco, challenges are now coming from the OTT phenomenon• The Highway operator never jealous with Bus Operator (?)
• Who are now using SMS (?)
• People prefers to use Whatsapp voice call than GSM Voice (?)
• Google, Youtue, etc are the most accessed content (?)
• But… the coming of new technology should open up a window of opportunities for everybody !
• 5G and IoT are not belong to Telco only, but the ecosystem
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The opportunity lies on Service The now & future key ecosystem is Content provider ( Local startup & International )
• Products build upon one another and are interconnected in technological system (Freeman and Perez, 1988)
• Newcomers posses the new relevant knowledge and skills are lighter and faster
• New comers requires growing system and synergy, while to choose mature technology is not preferable• Mature technologies are less dynamic ones
• Why developing country need dynamism ? Fast growth is based on interrelated technological dynamism. • To make successive improvement across a wide range of technologies• To generate externalities for an even wider range of related activities → both will
lower the cost of entry for other firms
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Q: In which scenario, national industry may open up windows of opportunity ?
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Low Bandwidth utilization
=Revenue
per-Machine
People is never
satisfied with the speed of
data
Highly advanced
technology for
“normal society”
Formulating Strategy
• Updating the Vision and Mission• Vision : What do we want to become ?
• Mission : What is our business ?
• External Factor Evaluation• What is our Threat and Opportunity ? And how do we respond the changing
environment ?
• Internal Factor Evaluation• What is our Strength and Weakness ?
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MARKET is always changing !
The honeymoon IS
OVER
The importance of Local Innovation
• The design of services should combine the global trend with the local market characteristics.
• Under the local innovation perspective, opportunities may appear when they are matched with the local market situation 23
Ref: Suryanegara, 2013
The important one is to understand the market behavior• Catching messages (hidden & visible) exhibited by the market
• The national players enjoy a significant advantage, i.e. a deep understanding of the local market characteristics.
• The national players should be the “early entrant” to gain early take-up and initial market control.
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AVERAGE
REVENUE
PER-
Case in Indonesia : Identifying changing behavior of the market after switching to 4G• to identify the changing behavior of the market with the switch from
3G to 4G and to investigate the strategic implications of these changes for mobile network operators.
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Question: After you subscribed to 4G services, please indicate your behavior regarding the following 25 activities.
Response instructions: Choose only one A. More frequent than when I was subscribed to 3GB. No change, similar to when I was subscribed to 3GC. Less frequent than when I was subscribed to 3G
Results in Suryanegara et al, 2017, What changes after switching to 4G-LTE? Findings from the Indonesian Market, IEEE Access
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The Indonesian changing paradigm of service experience on 4G and its continuous technological evolution.
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Profile of Indonesia…13,000 islands
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• 4th largest population in the world, with approximately 262 million people.
• 60% lives in Java island, 20% in Sumatera• 1.49% annual population growth • 28 years old is the median age• The GDP value in 2017 was 1,015,539 million
USD, and the GDP per capita was 3,876 USD
The Economic Potential
• 8th largest GDP in the world in 2016
• 5th most economic potential in the world in 2030• Mainly contributed by the predominance of people in the population who are near
the age of peak productivity.
• 572 universities are recognized in the global university ranking system
• Economy relies on the agricultural and trading sectors, with approximately 60% of the population being farmers.
• 54% of the population lived in cities, while 67% will live in cities by 2050 • This trend may indicate a move towards increased industrialization.
• The inflation rate is 3.18% (July 2018), and the Gini ratio is approximately 0.389 (March 2018).
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The Technological Regime
• Three leading operators started 2G-GSM in 1994, 3G-WCDMA in 2006, and 4G-LTE in 2015
• Mobile signal has covered 97% of populated area
• The number of fixed-phone subscribers is only 15 million.
• The number of mobile phone subscribers is approximately 254 million, in which 98% is prepaid users• This large number of mobile subscriptions can be attributed to a common behavior of
Indonesians, many of whom have more than one cellular subscription.
• The number of Internet users is 143 million, and 70% of them prefer to access the Internet from a handheld mobile device.
• Unfortunately, Indonesia can be categorized merely as a technology-adopting country because very few technological products are produced by the domestic market.• The market value of telecommunication products was 4,836 million USD in 2016, 95% of
which were imported
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Problem :
• Problem : There has been a decline in EBITDA (earnings before interest, tax, depreciation and amortization) for major operators in Indonesia. This shows a serious business concern related to operation in the saturated national market.
• Potential Solution : the exploitation of IoT as a new technology is absolutely necessary for existing operators to ensure their business sustainability and open up new potential revenue streams.• However, new technologies can also fail in commercial deployment when the
market profile is not properly characterized beforehand
• Therefore we have to characterize the profile of the prospective IoT market in Indonesia
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Results in Suryanegara et al, 2019, What Are the Indonesian Concerns About the IoT? Portraying the Profile of the Prospective Market, IEEE Access
PROFILECATEGORY
Specific questions
Category #1Willingness to use
What types of IoT services are most wanted byindividuals?
What IoT service areas are perceived to offer themost benefit to society and the country?
Category #2Rejection
and worry
What factors make the market reluctant or likelyto refuse to use IoT technology?
What factors lead to worry about IoT?
Category #3Hardware characteristics
What kinds of hardware characteristics of IoTdevices re desired by potential users ?
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Q: What are the interesting findings & what are the strategic implications ?
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Q: What are the interesting findings & what are the strategic implications ?
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Q: What are the interesting findings & what are the strategic implications ?
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Q: What are the interesting findings & what are the strategic implications ?
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Q: What are the interesting findings & what are the strategic implications ?
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The constraints felt by mobile phone users todayExpected hardware characteristic
Case of Indonesian Gojek• Similar business concept like
UBER, but it is MOTORCYCLE
• Giving solution for Indonesian living in cities! easy, cheap, no traffic jam, faster
• Matching Indonesian character ! Put the money on the apps, I enjoy many discounts
• Following the generations’ life style ! Just simply order the food, driver will pay for me.. And I just sit and relax..
• Giving solutions for daily activities ! Washing my car, massages in my house, cleaning my room, sending package within hours 39
Today’s Key Points
• Developing countries are having a large potential market
• Each country has its specific market profile
• Being the early entrant is the solid ingredient
• Create the local innovation by matching the local characteristic with the global trend
• The content provider (local startup and international content provider) is the key in current and future ecosystem
• Take control the market by choosing the immature technology
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Thank you
Dr. Muhammad Suryanegara
Google Scholar,
Scopus, ResearchGate 41
UCL, 2003
2019
It is more easy to identify the physical change of someone, but much more difficult to identify the hidden change of everyone
a.k.a. the market !!