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TMCNet:  `Telcos need to invest more' [Business Times (Malaysia)]

[January 01, 2014]

`Telcos need to invest more' [Business Times (Malaysia)]

(Business Times (Malaysia) Via Acquire Media NewsEdge) KUALA LUMPUR: MALAYSIANS are charging full steam ahead in their embrace of smartphones, and mobile phone service providers have their jobs cut out in providing services that match the consumers' bandwidth demands.

Tellabs (Malaysia) Sdn Bhd country manager Srinivasan Thukkaram said: "There is a significant penetration of smartphones in Malaysia because local consumers are early adopters, and this can be seen from the sheer number of smartphone users. This puts Malaysia two to three years ahead of other developing countries in the Asia Pacific.

"Their level of usage is far more sophisticated than in many other countries. And because consumers are more advanced, mobile operators here are also more advanced, making Malaysia an early adopter of 3G technology." Now, of course, mobile phone operators are on the 4G bandwagon to cater for the bandwidth demanded by the latest smartphones in the market.

As a result, mobile telecommunications companies (telcos) need to make bigger investments in long-term evaluation (LTE) or 4G mobile backhaul systems - the pipeline through which data is pumped to users - according to United States-based Tellabs Inc, a telco that designs and manufactures equipment for service providers.

(Mobile backhaul systems are made up of wired and wireless components, i.e. mirowave transmitters, copper wires, fibre optics, etc, for data transmissions. While 3G technology allows the streaming of 384 kilobits per second, LTE or 4G allows 100 megabits per second of data transmission.) Despite the present adoption of 4G technology and the hefty investments being made into LTE mobile backhaul by operators, Tellabs said the money will be insufficient. They will still fall short of meeting consumers' traffic demands.

The industry's standard practice is allocating 17.5 per cent in planned investments of total cost of ownership in LTE mobile backhaul in average.

Quoting research firm Strategy Analytics, Tellabs said with each US$1 (RM3.28) spent on backhaul (above the 17.5 per cent of total cost of ownership), mobile operators can protect US$4 in revenues.

Studies by Strategy Analytics have shown that when mobile phone operators failed to meet the bandwidth demanded by smartphone users, as many as 40 per cent of mobile users would list poor network performance as a reason for leaving an operator.

The Strategy Analytics study notes that up to 50 per cent of mobile network problems stemmed from mobile backhaul networks.

"Mobile phone operators must make sure that users in the fast-changing smartphone market can connect equally fast," said Srinivasan.

He suggested that the more fibre optics the operators lay, the less dependent they will be on other technologies. They will have an edge over their rivals as the bandwidth pathway will be substantial.

Just what is it about the smartphone that is driving the ravenous appetite for data? "The size of smartphone screens has gone up and the depth of image is getting better. When you have high-quality pictures on high-quality screens (i.e. retina display), data consumption will go up," said Srinivasan.

He said looking at how people are using their smartphones, it is only a matter of time before television broadcast permeates into the world of smartphones.

"Things like being able to watch football matches while one is on the move will become the norm." Also of interest is the way instant messaging has become "a completely different animal today".

"We have moved from the PC world to the smartphone world in text messaging and applications (like WhatsApp) which are non-intrusive and real-time - a kind of communication the world has never seen before. It has introduced a new way of communication with pictures and vidoes," he explains.

And what of users who have yet to embrace smartphones? "Mobile telcos cannot abandon 2G users, who are usually concentrated in the rural areas. If they do that, these users will leave the telcos when they upgrade. It is easier to retain a customer than to get a new one," cautions Srinivasan.

In four years, the Asia Pacific is expected to be the largest mobile broadband data market, followed by North America and Europe.

As a result, by 2017, LTE backhaul investments are expected to ramp up significantly from US$5 billion now to US$26 billion, according to Strategy Analytics.

Collectively, in Malaysia, market revenue for mobile phone operators was RM22.2 billion last year.

This year, said IDC market analyst Akmal Ab Wahab, the forecast for the industry points to revenue earnings of RM24 billion.

So, what will come after LTE? "LTE-Advanced (LTE-A), which will allow the transmission of one gigabit data to the smartphone," said Srinivasan.

He said Samsung is working on the 5G technology with a determination to be a market leader in the mobile telecommunications industry.

"This way, it can influence how a network should behave." (c) 2013 The New Straits Times Press (Malaysia) Berhad. All rights reserved. Provided by, an company

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