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A STRATEGY FOR ASEAN. 22 nd to 23 rd August, 2013 Shangri La Hotel Singapore. Organiser. Co- Organiser. Network ASEAN Forum 2013 CONNECTIVITY. 22 nd - 23 rd August 2013. 7_85. Connectivity context – Highly dynamic ecosystem with critical role for ASEAN economic development.

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22 nd to 23 rd august 2013 shangri la hotel singapore

A STRATEGY FOR ASEAN

22nd to 23rd August, 2013Shangri La Hotel

Singapore

Organiser

Co-Organiser

connectivity context highly dynamic ecosystem with critical role for asean economic development

7_85

Connectivity context – Highly dynamic ecosystem with critical role for ASEAN economic development
  • ASEAN telecommunications markets dominated by mobile - >2/3 of revenue in most markets except Singapore
  • Continued strong growth rates beyond mobile penetration rates of 100%, with slight declines in ARPU
  • Region characterized by high variance in market structure - by ARPU levels, pre- vs. postpaid, levels of data usage/smartphone ownership
  • Competition tends to be highly concentrated around top 3 players (>80% share), still with strong role of domestic-only telcos with select regional players
  • Ongoing massive shift to data and 3G on the back of rapidly declining smartphone prices; emerging markets to date showing better monetization on traffic than developed markets
  • Fixed connectivity in most markets at low levels of development with <20 connections/inhabitants – however strong push across region on fiber rollouts, with Singapore and Malaysia as early movers
agenda

3_89

Agenda
  • International roaming
  • OTT in ASEAN
  • New services - Mobile money/virtual CC; potential for mobile advertising
  • Regulatory maturity in ASEAN – spectrum, interconnect, local content requirements
roaming charges in asean countries are significantly higher than in europe and vary across telcos
Roaming charges in ASEAN countries are significantly higher than in Europe and vary across Telcos

Data charges

(per MB)

Range

Voice charges - calls made

(per min)

Voice charges - calls received

(per min)

n/a

SMS charges

Note: Charges are for usage within/across ASEAN countries; charges vary based on call or usage destination; charges exclude VAT

Source: Telco websites

roaming regulations in asean would need to be strengthened to reduce charges

6_85 14_85 15_85 16_85 18_85 11_85 13_85

Roaming regulations in ASEAN would need to be strengthened to reduce charges

Europe’s regulation on roaming is holistic & well-enforced…

…initiatives across Asia not commonly enforced, thus less impactful

  • Adoption of the Addendum of ATRC* Intra-ASEAN Mobile Roaming Rates to reduce roaming charges; countries to implement when ready
  • Bilateral initiatives common
    • Malaysia & Singapore
    • Malaysia & Brunei
    • Singapore & Brunei
  • Holistic regulatory approach to international data roaming services
  • Protect consumer interest
  • Good compliance in all member states
  • Ofcom, UK communications regulator, helps enforce roaming regulation

1

ASEAN

2007

  • Roaming I: Cap wholesale & retail charges for voice calls

2009

  • Public consultation on 2007 regulation; results not satisfactory
  • Roaming II: Cut in SMS and wholesale data roaming charges
    • Cut-off mechanism available once bill reaches €50
  • Addresses transparency measures & bill shock
  • Aims to remove regulatory barriers that cause high input costs for roaming

2

APT

3

2011

  • Roaming III: Caps retail prices for data roaming
    • Customers can sign up for a mobile roaming contract with foreign operators while traveling

APEC

  • Issued guidelines on provision of info to consumers on roaming & substitute technologies

Note: ATRC: ASEAN Telecommunication Regulators Council; APT: Asia Pacific Telecommunity; APEC: Asia Pacific Economic Cooperation

Source: Ovum “Regulatory Status of International Roaming”

agenda1

3_89

Agenda
  • International roaming
  • OTT in ASEAN
  • New services - Mobile money/virtual CC; potential for mobile advertising
  • Regulatory maturity in ASEAN – spectrum, interconnect, local content requirements
ott services in asean markets are growing likely a threat to sms revenue

13_85

OTT services in ASEAN markets are growing; likely a threat to SMS revenue

SMS as a source of revenue has been declining…

…likely due to growth in ott services

  • Many market drivers supporting substitution to OTT services
  • Increasing Smartphone penetration
  • Low price compared to regular voice
  • Ease of access
    • Apps and app marketplaces
    • Telcos start to bundle VoIP (in particular smaller Telcos in fragmented markets)
  • Technological development
    • Improved sound quality on 3G networks
    • Deployment of high capacity all-IP networks (e.g. LTE)
    • Availability of alternative networks (Wi-Fi)
    • Features e.g. video conferencing
  • Net neutrality regulation undermine attempts to block VoIP in certain markets
  • Increase in consumer demand as users of dedicated VoIP expect mVoIP

Note: Non-voice revenue include data, messaging & VAS; does not include all Telcos in each countries

Source: Wireless Intelligence; Gartner; Ovum; Informa

asean players are expanding networks partnering with ott players pushing apps usage

8_85 16_85

ASEAN players are expanding networks, partnering with OTT players & pushing apps usage

INDONESIA

Singapore

Malaysia

*Rich Communications Services provide similar rich-featured messaging standards as OTT apps

Source: Analyst reports; Bain analysis

agenda2

3_89

Agenda
  • International roaming
  • OTT in ASEAN
  • New services - Mobile money/virtual CC; potential for mobile advertising
  • Regulatory maturity in ASEAN – spectrum, interconnect, local content requirements
a significant portion of the asean population is still not served by the formal financial sector
A significant portion of the ASEAN population is still not served by the formal financial sector

Unbanked

Banked

Note: Banked population defined as percentage of the population 15 years and older that has a formal relationship with a bank or other financial institution via a current savings account, checking account, credit card or a combination of these products”

Source: Euromonitor

rapid growth in mobile usage presents a unique channel to reach both banked and unbanked segments
Rapid growth in mobile usage presents a unique channel to reach both banked and unbanked segments

EXAMPLE Indonesia - Mobile penetration overtook banking penetration since ’06…

…Presenting an opportunity to target both banked and unbanked segments in innovative ways

With the Indonesian population at approximately 250 million people, these new mobile banking services will help us attract new customers and expand our market share significantly

- Strategy & Finance Director

CIMB Niaga

In contrast [to the banking sector], the Indonesian telco sector has been extremely effective in moving down market. … Combining FS expert with the broad market capabilities of the mobile telco channel presents a unique opportunity for gov’t and commercial entities to develop new business opportunities

- USAID Report

Source: USAID, Sybase, Bain analysis

opportunities in mobile money along three categories of usage
Opportunities in mobile money along three categories of usage

Transactions Services

Mobile Commerce

Mobile Banking

1

2

3

M-Wallet

Mobile consumer services

Mobile Banking

  • New mobile consumer payment technology (NFC, QR code, …)
  • Banking inquiries
    • E.g., account balances, SMS alerts
  • Mobile/online savings accounts
  • Mobile/online loan applications and disbursements
  • Insurance
  • Stored value account
  • Mobile top-up
  • Mobile wallet-to-wallet transfers (P2P)

Mobile merchant services

  • New mobile merchant payment technology (mobile POS, P2P on the spot, …)

Traditional Payments

Mobile shop/portal services

  • E.g., online shopping, online games, media, virtual products
  • Utility bill payments
  • Remittances (domestic, international)
  • Cash-in/cash-out
    • Via banks, retailers, agents
    • Including government cash payments

Mobile marketing services

  • E.g., customer loyalty, mobile ads, coupons and offers

Source: Bain analysis

agenda3

3_89

Agenda
  • International roaming
  • OTT in ASEAN
  • New services - Mobile money/virtual CC; potential for mobile advertising
  • Regulatory maturity in ASEAN – spectrum, interconnect, local content requirements
slide15

19_85 48_85 50_85 51_85

Regulatory challenges across ASEAN similar with potential for learning from other markets – select examples

Spectrum

Interconnect

Local content

Fiber rollout

  • General trend to reduce interconnect charges across markets, e.g. recent efforts in Thailand, which typically enable more level playing field for challengers
  • Few exception like SMS Interconnect in Indonesia to reduce amount of spamming
  • Emerging trend to push local economic participation in technology sectors related to telecoms, with efforts particularly in Indonesia
  • Questionable net benefits as competition gets disrupted
  • Only Singapore and Malaysia with broad rollout to date
  • Key future challenge to enable broad-based rollout in other ASEAN markets, where telco economics often do not justify investments but significant multiplier benefits for other sectors are expected – various forms of public/private partnerships can be used
  • Various approaches to shaping competition, from focusing on few key players to fostering new entrants
  • Increasing emphasis on assigning common spectrum blocks across ASEAN to facilitate connectivity (e.g. digital dividend blocks by 2020)
thank you
THANK YOU

Organiser

Co-Organiser