Smartphones For India and Pakistan

“The times they are a-changin’,” said Steve Jobs in a recent e-mail exchange on Apple's iPhone, “and some traditional PC folks feel like their world is slipping away. It is.”

Google CEO Eric Schmidt has started talking up his company's new motto "Mobile First", urging its developers to start creating versions of new services for smartphones before converting to run on PCs.

"There is a huge thirst for smartphones in emerging markets," Microsoft said in a statement. "For many people, the phone rather than the PC is the main entry point to the Internet, resulting in a high demand for rich communication devices. In order to meet this demand, we have teamed up with MediaTek to facilitate the provision of affordable smartphones," the company added.



As the smart phones prepare to take center stage among computing and Internet access devices, there seems to be a rare consensus emerging among the American technology titans at Apple, Google and Microsoft that the smart phone will be the primary device used to access the Internet...particularly as it relates to demand in the developing world where mobile phones have much higher levels of affordability and market penetration than the personal computers. A logical outcome of such a consensus is the increasingly fierce competition which will significantly drive down the cost and dramatically increase availability of smart phones globally, particularly the developing nations like India and Pakistan where the telecom companies are already building mobile broadband networks. PTCL currently offers 3G service in Pakistan, and a 3G license auction is planned for this year to add more service providers. In addition, the growth of Wi-Fi in South Asia will be an added low-cost data option for smartphones.

BlackBerry service is offered by a number of telecom service providers and widely available in Pakistan's cities, towns and villages. Last year, Time magazine reported from Faridkot, a Pakistani village, that "straddles a paved road about 2 1⁄2 hours' drive from Lahore, and two new gas stations mark the village boundaries. Beyond those are factories and fertile farmland. There is even BlackBerry service". However, the high cost of Blackberry device and mobile Internet service limits it to only about 60,000 elite subscribers in a nation of over 100 million subscribers, about 64% of the population. India, with about 50% cell phone penetration, has nearly 400,000 Blackberry user. The number of Internet users can be expected to rise exponentially as affordability significantly increases to satisfy what Microsoft calls "a huge thirst for smartphones in emerging markets".

The key cost reduction drivers are likely to be similar to the ones seen in the earlier PC battle in 1990s between Wintel (Windows on Intel) and Apple Mac platforms which I personally observed and enabled as a CPU pioneer at Intel. While Macintosh represented a major advance in ease of use with Apple controlling it, the Wintel platform opened up hardware competition with multiple vendors leading to lower prices and tremendous growth in terms of applications and hardware availability. In this new era, the two biggest entries are expected to be Apple iPhone and Google Android, with each trying to outdo the other in terms of ease of use, number of applications and prices.

While Apple currently enjoys dramatic iPhone growth, it's future market share is likely to suffer from the cost barriers it is building into its pricing model which designed to maximize its profits with ongoing revenue stream from third-party content. According to Newsweek, there’s only one place where anyone can buy iPhone apps: Apple’s online App Store. And Jobs keeps a 30 percent cut of the revenue. As for ads, Jobs will sell those, too, and he’ll keep 40 percent. Of course, Jobs also sells music, movies, and books via his iTunes Store, keeping 30 percent. So instead of a one-time sale of a Mac, each iPhone and iPad becomes an ongoing revenue stream.



Currently, Q1/2010 market data shows that Apple iPhone and Google Android are running neck and neck, each selling at an yearly rate of 36 million phones each, while RIM's Blackberry is slightly ahead with about 40 million phones a year. Nokia (Symbian OS) still leads the pack with sales of 86 million smartphones a year. The overall smartphone shipments of about 230 million units still lag the 275 million PCs sold annually. However, a number of forecasters expect smartphones annual sales to equal or exceed PC unit sales by 2011.



Currently, only 7% of Indians and 11% of Pakistanis have the Internet access, according to ITU. Growth in the Internet access anticipated via smartphones can open up a vast new world to a larger number of South Asians. Smartphones have the potential to spur mass literacy, significantly improve health, enable wider access to financial services, help enhance human productivity and afford new opportunities for e-learning for human development to reduce poverty. Growth of Mobile Internet with availability of a new wave of smartphone applications in India and Pakistan has the potential to revolutionize South Asia.

Related Links:

Haq's Musings

Wireless Broadband in Pakistan

ITU Internet Access Data by Countries

Phone Fight

Mobile Internet in Pakistan

Media and Telecom Growth in Pakistan

Poverty Reduction Through Telecom Access

Pakistan's Telecom Boom

Pakistan Tops Text Message Growth

WiMax Rollout in Pakistan

Mobile Internet in Pakistan

Low Literacy Threatens Pakistan's Future

Gender Gap in South Asia

Mobile Financial Services in Pakistan

Financial Services in Pakistan

Distance Learning in Pakistan

Top 5 ICT4D Trends in 2010

ICT4D in Pakistani Hospital

ITCN Asia 2010 Conference in Karachi

State of Telecom Industry in Pakistan

Wireless Broadband Access Growing in Pakistan

Motorola announced in 2006 that Pakistan planned the world's largest WiMax roll-out. "The deployment is a milestone in the spread of WiMax, a superfast wireless technology that has a range of up to 30 miles and can deliver broadband at a theoretical maximum of 75 megabits per second. The 802.16-2004 standard, which is used in fixed WiMax networks, is being skipped in favor of a large-scale introduction of 802.16e, which was only recently agreed upon by the WiMax Forum," the 2006 announcement said.

Let's examine the state of WiMax deployments and subscriber growth around the world since the Motorola announcement more than two years ago.

The broadband wireless access (BWA) industry has grown significantly in the last few years due to increased availability of spectrum for commercial services and the desire to close the digital divide, according to Wimax.com. A major shift from the industry has been the migration towards standards-based products.

The largest wireless ISP in the world, Clearwire, has more subscribers than the next four BWA/WiMAX operators combined. The majority of its user base relies on the desktop modem from its former equipment subsidiary, NextNet, which is now part of Motorola's operations. PC Cards and VoIP services are now part of the portfolio. The operator is expected to launch its first commercial WiMAX network (using Motorola's 802.16e-2005 radios) in Portland, Oregon before the end of the year. Regulatory approval to form a joint venture with Sprint Nextel to launch a nationwide WiMAX service in the US is eagerly anticipated. A successful joint venture would catapult Clearwire into a unique position as the only fixed wireless network operator to transition into a mobile carrier.



According to Fierce Broadband Wireless, the largest mobile WiMAX deployments reported during first-quarter 2008 were from Korea Telecom with nearly 150,000 subscribers and Wateen Telecom (Pakistan) with more than 10,000 subscribers at the end of that quarter. Wateen is today the largest mobile WiMAX Motorola deployment. In June 2006, Wateen placed an order for 198,000 CPEs from Motorola. Motorola has shipped 60,000 CPEs so far. Wateen has told Fierce that they had 25,000 subscribers by the end of June 2008. The operator expects to complete the order of 198,000 CPEs by this year. It is expected that the gap between mobile "16e" deployments and "16d" will narrow once trials of 16e equipment are complete and certified equipment becomes widely available.

The liberalization of Pakistan's telecommunications industry started in 1997 and accelerated under former President Musharraf and former Prime Minister Shaukat Aziz. In 2004, the Pakistan Telecommunications Authority (PTA) introduced two types of licenses for ISPs – regional and nationwide, and also exempted them from Central Excise Duty. Over the past four years, the Pakistani telecom sector has attracted more than USD 5.6 billion in foreign investments. During 2007/08, the Pakistani telecoms sector alone received USD 1.44 billion in Foreign Direct Investment (FDI) – about 30 per cent of the country’s total FDI. The pace of investment is likely to slow down this year because of the global financial woes.

Pakistan's network operators are offering wide range of technologies like DSL, Cable, FTTH and WiMax. They have added 25,500 new broadband connections in the financial year 2007-08, which is around 150 percent increase compared to the previous financial year, Pakistan Telecommunication Authority (PTA) statistics reported.

At present Digital Subscriber Link (DSL) is the leading broadband service in the county with 65 percent of the market share. Major DSL providers in Pakistan are Micronet, LinkDotNet, CyberNet, MultiNet and PTCL.

Wateen is likely to see growing WiMax competition from operators including Wi-Tribe, Mobilink and LinkDotNet in Pakistan. Wi-Tribe is jointly owned by Qatar Telecom, ATTCO group and Clearwire. Motorola has signed a multi-year WiMAX contract with Wi-Tribe. Motorola has commenced deploying Wi-Tribe’s WiMAX network in the 3.5GHz spectrum. Commercial launch is expected during 2009. LinkDotNet, a subsidiary of ORASCOM Telecom, is working with Alcatel-Lucent for their WiMax deployment.

According to WiMax.com, Bharti TeleVentures, Reliance, SIFY, BSNL and VSNL (Tata Group) have all acquired licenses in 3.3 GHz range and are in various stages of trials. VSNL has announced Phase 1 pre-WiMAX deployment of Aperto gear in 60 locations, extending to 200 locations within the year. Although there is clearly insufficient spectrum to offer DSL-like service, several operators have indicated that there is still a huge market for 64 and 128 kb/s connections, which should alleviate the lack of spectrum.

Once the trials are over, analysts expect WiMax subscribers to grow to about 19m in India by 2012.

How is Wimax doing in the United States? Jon Fortt of Fortune Magazine recently visited Portland, Oregon, and saw a demonstration of it in a Lincoln Navigator while a "Knight Rider" episode streamed over the Internet to a screen mounted to the car's dashboard. Here's how Fortt sums up his findings:

"The good news is that WiMax appears to work pretty well (no latency or jitter as the KITT car was taking down bad guys), making it a potential competitor to telephone and cable companies' broadband offerings. The bad news is that most American cities may never get post-wired like Portland and Baltimore, the other city now boasting a full-fledged WiMax network."

Fortt believes that WiMax, with its ability to serve up broadband on the go, certainly could spark a fresh wave of innovation. The Obama administration's broadband measures in its latest stimulus package should help give a boost to WiMax deployments in the United States.

While the potential for Wimax in the US market looks very good, I believe the really big opportunity is in the emerging markets, such as India and Pakistan, where the mobile phone has achieved greater than 50% penetration and the PC/Internet penetration remains in single digits. South Asia is witnessing some of biggest planned deployments of Wimax with a lot of consumer interest in both fixed and mobile broadband.

According to Juniper Research, South Asia will be the driving force behind the growth of Mobile WiMax, or the 802.16e standard. The Asia and Australia regions are expected to account for more than 50% of the total WiMax deployments by 2013.

Pakistan, being among the first countries in the world to roll-out a functional WiMax service, is experiencing tremendous growth in demand after Wateen Telecom’s launch of its WiMax service and roll-out plans announced by Mobilink.

India's state-owned Bharat Sanchar Nigam Limited is rolling out a Wimax network for broadband access in response to government requirement that 20 million broadband lines be in service by 2010.

Given the growing demand for the Internet access and the ubiquity of mobile phones, Wimax roll-out will likely spur the largest adoption of mobile Internet in South Asia in not too distant future.

Related Links:

Pakistan Broadband Overview

Broadband Internet Access in Pakistan

WiMax in Pakistani Cities

WiMax Launch in Pakistan

State of Telecom Industry in Pakistan

Mobile Internet

Pakistan's Broadband Stakeholders Group

Google and Intel Boost Mobile Internet

WiMax Continues to Evolve in Pakistan

Motorola to Deploy Mobilink WiMax in Pakistan

WiMax's Last Best Hope