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Dileep Agrawal, CEO, WorldLink: “When things don’t happen fast enough it can get frustrating.”

Dileep Agrawal, CEO, WorldLink, Nepal

If you have recently been frustrated by buffering while watching an HD video-on-demand stream, then hold that thought. For those in the less developed parts of the world, watching HD video at all, is, quite literally, something of a pipe dream.  In these countries, for those fortunate enough to be able to move past existential concerns such as food and housing, internet connectivity and bandwidth is still a mere fraction of what those in developed countries are used to. It’s a pain point of which Dileep Agrawal, chief executive of Nepalese ISP WorldLink, and a speaker at the Broadband Asia conference in May, is only too aware.

WorldLink has been serving Nepal with internet connectivity since 1995 and owns 90 per cent of the infrastructure that it uses to deliver services. This is a network consisting of Ethernet and optical fibre to both consumers and enterprise customers. ADSL however, if off the table, as the incumbent Nepal Telecom has not agreed to unbundle its network for others to use, and as such dominates that market.

Nevertheless, as of February 2012, WorldLink has a total of 22,000 customers and in addition to providing basic internet access offers VoIP, web hosting, network integration and support services which Agrawal sees as being all part and parcel of being a modern data services company. “Nowadays, it’s not just providing simple internet but providing value added,” he says. “Providing just simple internet services is a difficult job in any economy now.”

The major challenge facing WorldLink is dealing with the high prices it has to pay for backbone internet access compared to developed nations and the fact that it is land-locked that ensures that prices remain very high. As a result its customers on average pay for a relatively lowly sounding 384Kbps service. In practice WorldLink delivers a one megabit connection, consisting of 512kbs of international bandwidth and 512Kbps of local bandwidth. Agrawal admits this isn’t fantastic compared to more developed economies. “Penetration is traditionally lower [here] and the speeds are terrible,” he admits frankly.

The customer experience is boosted at least by the fact that Google has installed local caches in the country. It’s not purely for altruistic reasons though as Agrawal is quick to explain. “It’s for YouTube. [Google] wants YouTube to stream better. Its gives a better experience to get more people watching. They want advertising .” Still, he’s not complaining. “It’s nice that they have put servers in our country as our customers don’t complain to us that there’s too much buffering.”

But what about content located in other parts of the world? “Getting higher speeds [for customers] directly impacts us as we need to buy more upstream bandwidth to the internet. That’s the only limitation. And that upstream bandwidth is still not at the price levels that people buy at in Europe, America, or Singapore; any places where bandwidth is available in plenty. In major areas it would be US$ 5; we pay US$ 100.”

Worldlink buys most of its international connectivity from Indian operators Airtel and at present there’s a lack of competition to bring prices down. “It varies because there aren’t many operators selling bandwidth to Nepal, so the competition there is less,” Agrawal explains.

“We have connectivity to China but it’s not too reliable, and it’s not operational yet. So we have very few choices of who we can buy from on the Indian side, because there are very few people that have built their network up to the border of our country.”

There’s no immediate technical solution to this situation, but time and political stability will eventually enable a more competitive market to spring up. “It’s down to the political will on our side to negotiate with the government of China. We have not tried, as politically our country has not been that stable in the last few years.”

However, it’s clear that progress is being made. Where Nepal was paying US$ 300 per meg a few years ago, it’s now at US$ 110 and Agrawal believes that in five years it will be down to just US$ 5-S10, which is level at which developed countries would expect to pay now.

He’s keen to see that future pay dividends both for his company and for the prosperity of his country. “We still haven’t been able to experience the transformational benefits that have occurred in more developed economies where internet penetration is higher and the bandwidth higher”. Things are changing though, as those who are able to afford it, and those who live in coverage areas are turned on to the benefits of connectivity.

“I’ve been in the industry for 15 years now and initially it was just mail that people used. We could see people who did international business had a competitive edge and were able to close more deals. With the advent of the internet it’s given them a new edge in terms of being able to advertise and promote themselves globally.  And I’m pretty sure that with more bandwidth people will be able to access internet resources in a much better way. And once you have access that there’s a lot of educational content that you’ll be able to access and society will benefit from that.”

With ADSL blocked off by the incumbent, WorldLink has three methods of connecting up its customers, Ethernet, fibre and fixed wireless and Agrawal explains the technical reasons behind ow it makes the choice of what to roll out.

“The Ethernet service for residential customers is theoretically capable of delivering 100Mbps in the last mile, but the network is not reliable enough to deliver an enterprise grade service.  We pull fibre to the node, and from there, we pull outdoor (shielded) CAT5e cable on utility poles with outdoor switches at every 100 meters.  The switches are cascaded in series and then further branch out to extend the network into streets and lanes. A customer is connected to one of these switches using outdoor CAT5e cable.  The switches are powered using DC voltage passed through the CAT5e cable.  [However], we experience periodic cable cuts or switch and power failures, resulting in service outage.

“For enterprise customers, we pull optical fibre cable from the node to their premises.  This is more reliable as it is not dependent on any intermediate switches or power failure.  Fibre media is more reliable as well.”

WorldLink is inevitably keen to explore any means it can to reach its potential customers,  and as such, has two fixed wireless technologies in its portfolio. The Motorola Canopy for its Enterprise customers, and a lower cost device from Ubiquity Networks for home users. Neither are based on WiMAX or LTE. “Both are proprietary,” Agrawal says. “We would love to roll out WiMAX but the spectrum for that is not available.”

With the proximity to India spectrum this is a situation that’s not likely to change anytime soon due to the recent political scandals round telecoms licenses. “The stumbling blocks are surrounding India today is that people are scared of spectrum. It’s a dirty work after what happened in India. Politicians are very scared of taking any decisions on spectrum issues for fear that it might backfire on them in the future.”

This leaves WorldLink to focus on rolling out its existing technologies to other areas outside the main areas of Katmandu. “We are moving our focus to underserved , semi-rural markets where we can get some customers who are happy with the fixed wireless that we provide. Katmandu is 60 per cent of the market and rather than just focus on it we’re trying to shift outside.”

With so many challenges, Agrawal is keen to come to attend the Broadband Asia conference to meet and talk with others to explore ways to innovate out of the constrictions it faces to improve its service and grow its customer base. “I’m looking forward to understanding what the feelings around Asia for broadband growth. What works; what doesn’t work? What business models are coming in? TD-LTE is coming into the picture and we’d like to try and meet different ISPs and operators that we can collaborate with.”

Armed with first-hand knowledge of how things are going in other areas of the world, Agrawal is confident that he’ll be able to improve things for WorldLink and its customers. “It’s a very exciting time but when things don’t happen fast enough it can get frustrating.”

The Broadband Asia conference is taking place on the 15th-16th May 2012, KL Convention Centre, Kuala Lumpur, Malaysia. Go to the website now to register your interest. – telecoms industry news, analysis and opinion

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Indian operators not investing enough in networks

Indian telcos plan to invest a significantly lower proportion of their revenues over the next two years than their Chinese, Indonesian and Philippine counterparts

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Over the next two years Indian operators plan to invest a significantly lower proportion of their revenues than their Chinese, Indonesian and Philippine counterparts, according to financial ratings agency Fitch Ratings.

The firm believes the low level of investment is attributable to the weaker balance sheets of the Indian operators in comparison to other Asian carriers. According to Fitch Ratings, Indian operators’ balance sheets have become stretched due to intense competition and large spectrum payments between 2010 and 2012.

The Indian, Chinese, Philippines and Indonesian telecoms markets are at approximately the same stage of data penetration, according to the agency. However, it stated that Indian telcos have indicated that their capital expenditure will decline over the next two years, while it is set to increase in the three other countries.

Capex per subscriber for Indian operators stands at $ 6 per subscriber, much lower than in China where it is over $ 50 per subscriber and in Indonesia and the Philippines, where both are spending $ 16 per cent subscriber.

Operators in these markets plan to invest in data infrastructure to expand their 3G and long-term evolution (LTE) networks over the period. Chinese telcos, for example, have raised their 2013 capex forecasts by 12 to 15 per cent, Fitch noted.

The agency also found that India is the most congested market of those studied. Subscribers per MHz of spectrum per operator for Indian telcos stands at around 10 million to 15 million, compared with five to six million for Chinese, Philippine and Indonesian telcos. This indicates that Indian telcos may need to invest more to decongest their network, Fitch Ratings concluded. – telecoms industry news, analysis and opinion

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Why wifi is enough for most Christmas iPad shoppers

They sold out of wifi-enabled iPad mini tablets at 8.30am this morning at the flagship Apple store in Regent Street, London. It has been a similar story every day this week. The nice Apple lady in the shop told me that the queues were now starting at around 6.00am.

If I had really wanted to walk away with an iPad mini today, they did still have some cellular-enabled versions available. But they only had the 32GB versions and these were £180 ($ 293) more than the 16GB wifi-only model that I had enquired about. The Apple lady didn’t seem surprised when I hesitated adding that “yes, the wifi-only versions are very popular and we hope to get some more in”.

I remember speaking to a senior executive at a European operator more than a year ago and his telling me that 4G-enabled tablets were going to be a fantastic revenue stream for them. Well, the iPad mini is 4G enabled (even though 4G is only available on one of the UK’s four networks) but it does not appear that this has made it a significantly more attractive proposition – at least in the minds of consumers – than if it was 3G-only.

The reality is that people are opting for the wifi-only versions of the iPad mini because they do not see the value in adding cellular connectivity. First there is the £100 premium for the device and, on top of that, whatever cellular price plan you chose to sign up to.

Is this something that operators should be worried about? Is it inevitable that only a small percentage of people – high-end consumers and business people – will want cellular connectivity on their tablet? We think that yes, it is something that they should be worried about and that no, it is not inevitable that only high-end users will want cellular connectivity.

We have just published our top 10 predictions for the telecoms and media industry in 2013. One of our predictions is about operators and wifi. This is the prediction:

Wifi will become a victim of its own success
There will be a shift in operator sentiment away from public wifi as it becomes evident that the growing availability of free-to-end-user wifi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of wifi.

The apparent preference for wifi-only iPad minis in London is already demonstrating that most people are happy with the wifi connectivity that they can get at home, at work, at their gym or at the local coffee shop. Are there really enough times and places where we need wide-area (cellular) network connectivity?

If operators (or Apple) want to persuade more people to buy cellular-enabled iPad minis, they will have to start introducing new marketing strategies and price plans that persuade people that it could be really useful to have cellular connectivity. Here are a few situations where cellular connectivity could be useful:

As a back-up when the broadband goes down at home: When I was away on business a few months ago and the broadband went down at home, I got a call from my eldest son at 6.00am in the morning because he needed an internet connection at home to finish his homework. At the time, I would happily have paid for a few hours of cellular broadband connectivity.

As back-up for wifi when networks are congested: In Japan and the US in particular, wifi hotspots in city centers and areas such as train stations are already massively congested.

When you go and visit your mum and dad: There’s a good chance that they won’t have wifi. What would you pay for a weekend package?

When you go on holiday – at home or abroad – and there is no wifi in your hotel, campsite or villa.

What is interesting about these scenarios is that they all involve occasional usage. In countries where there is a wide availability of wifi, it is going to be difficult to sell postpaid packages for each and every connectable device because people will not have a consistent, regular requirement for cellular connectivity. The options therefore are either to bundle the device into a shared price plan – which is what Verizon Wireless has done pretty successfully – or introduce a range of new, easy-to-use and affordable prepaid plans for the occasional user.

We are hoping that in 2013 operators will communicate the value of cellular connectivity better and start educating the customers about how and where it may be useful for them.

If they do not, we should not rule out the possibility that Apple will do it for them. Maybe if Apple was an MVNO and offered occasional mobile broadband usage via an app on the Apps store, it might have more success in selling cellular iPad minis in the run-up to Christmas. – telecoms industry news, analysis and opinion

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Iliad offer for T-Mobile US not enough, Dish still in the frame

The hunt for T-Mobile US continues

The hunt for T-Mobile US continues

The quarterly earnings season has provided a timely boost to the T-Mobile US acquisition saga. Apparently scared off by US regulators, Sprint ended its long courtship of DT’s US operation earlier this week, just after France’s Iliad had put in a surprise bid of its own.

But exquisite timing alone seems to have been insufficient to impress TMUS parent Deutsche Telekom, according to comments from its CEO and Chairman Timotheus Höttges, during DT’s recent Q2 2014 earnings call.

Not even waiting for the inevitable analyst question, Höttges got straight to the point in his prepared remarks, according to the transcript on Seeking Alpha. “Current TMUS business momentum puts the company in a strong position from which to consider any future M&A opportunities or proposal, which obviously would have to add more value to TMUS shareholders than a stand-alone case,” he said. “At this point in time, we are not aware of any actionable proposal that offers such superior value.”

Companies have to be very cagey on these quarterly calls as a single word out of place can have a massive impact on share price and business in general. But in plain English Höttges is saying that there are no bids for TMUS currently on the table that are worth considering, which means Iliad will have to dig a bit deeper if it wants to be a US player. He also seemed to acknowledge the US regulator’s role in scuppering the Sprint acquisition and decided to have a bit of a moan.

“The political and regulatory environment in the U.S. has to be open to considering further consolidation and to looking at the overall market evolution, not just on an isolated mobile market definition,” said Höttges. “If U.S. politics and regulation are of the opinion that the 4-player market in the U.S. is necessary, then they will have to take care of the ability of the smaller players to fulfill their role as a maverick and to be able to compete successfully. This applies, amongst others, to the auction design for the 600 megahertz spectrum auction, which is coming in 2015, as an example.”

In related Q2 earnings call news Chairman of Dish Network, Charlie Ergen, left the door open for his company to be a player in the TMUS saga with the following answer to an analyst question: “Obviously, on the more M&A side, a lot has happened in the last 24 hours, and we really haven’t had a chance to sit down and discuss that internally, but we remain interested in working to enhance our overall business, and that could include looking at the number of companies out there,” he said. “Obviously, the AT&T-DIRECTV deal have probably lessened some optionality that we had. The Sprint announcement last night probably increased some optionality we have.”

Assuming “optionality” is an equivalent word to “options”, Ergen is at the very least not ruling a move out.