As the newly licensed cdma and Gsm operators commences roll out, indications are very strong that their might be some displacement in the Nigerian Telecoms Race. Clear favorites and pioneers like Mtn, Celtel and Glo are poised to face stiff competition from late entrants, Etisalat, Alheri and Visafone.
Ordinarily, Visafone should not be classified as a major threat since they will operate in the CDMA range but the class of additional license(800Mhz spectrum) that was bought after taking over cellcom, places the company in good position to provide some unique services and Coupled with the speedy roll out plans and the pedigree of the chief promoter, Mr Jim Ovia.Visafone is presently offering Very reliable and fast internet in the Nigeria Mobile space.
Etisalat is a clear leader with innovative products with foot prints in the Middle East market and many years of Experience and good financial position. They are a formidable organization.
Little known Alheri is backed by Nigeria’s leading Business magnate,Alhaji Aliko Dangote. This will be his first known foray into the rewarding Nigeria Telecoms market. Despite the seemingly little dog status in the telecoms market, they possibly have what it takes to challenge the dominance of the big operators. Alheri, holds a 3G license which enables an operator to engage in more data intensive applications and the backers also have deep pockets.
Early and dominant operators provides a significant and sustained market-share advantage over later entrants. Still, later entrants can succeed by adopting distinctive positioning and marketing strategies. Experience has shown that in the Nigerian Telecoms market, innovations and financial muscles is a major factor for acquiring subscribers. Late entrant Globalcom is an example of such innovative spirits. Pioneers in most industries, once they have reached the status of incumbent, are powerful. Sometimes, however, they get complacent or are not in a position to cater to the growing or shifting demands of the marketplace. New entrants can take advantage of gaps in the offerings of these aging pioneers, or find innovative ways to market their product or service. Globalcom was able to break into the Nigeria Telecoms market easier because other operators did not implement per second billing which should have slowed Globalcom’s race if already in place as at that time.
While it is fine to be a dominate player in a Telecommunications starved economy like Nigeria but it comes with a price of higher entry cost and product research. Late entrants do not need to go all the way anymore. It cost less to imitate a product than start from the scratch and with a penetration that is still less than 40 percent of the license under territory of 140 million people, there are still opportunities for deeper market share.
For the late entrants to quickly find their voices in the competitive Nigeria Telecoms market, they need to study the Mobile Value added services product portfolio offerings of the existing market leaders, Market environment and positioning. Some Basic strategic planning for service offering and Product portfolio is for late entrants to look for new geographic (where possible) and segments for their products. Presently, most Mobile value added service offerings of Dominant operators are focused on mass and youth segment market and the chief products are entertainment based which do not offer any real life benefits in any manner.
Strategic market entry plans for Telecoms late entrants include price reduction in an existing market. By introducing a product at a lower price than Dominate Operators, a late entrant can attract new subscribers who would not have otherwise signed for the service and in effect such a product ¬¬will lead to an expansion in the total market. An operator can also subsidize low end phones to reduce entry cost for people that ordinarily that might not be able to pay a lump sum for handset or even acquire one.
Product and service innovation with focus on a niche market, can help to establish late entrants as dominant players. Companies can compete by being innovative in the marketplace. The innovation may be radical or incremental. One example of incremental innovation is an enhanced version of an existing product. The enhanced product can compete directly with existing products, or it can be positioned to attract a smaller segment of the existing market. In addition, the improved product or service can sometimes attract new subscribers that are not the current target for the existing product or service. For example, Blackberry phones are currently without international language translations for emails and Sms. All the unique selling points for Nigeria Mobile operators for BlackBerry phones is the email service while neglecting the value added on for Blackberry, that has potentials to earn data revenue, change the face of e-commerce interactions in Nigeria and also further differentiate the operators offerings of Blackberry.
Late entrants can adopt the above to make in roads into the Nigeria Market but they should also be mindful of the barrier set up of the dominant players with substantial research and development investments, being early in the market are well positioned to stifle the growth of the new entrants.
Dominant operators like the MTN,Glo and Celtel in the GSM market and starcoms, Telkom-Muiltilinks in the CDMA market had established a presence in the market place, build brand equity and created an excellent distribution network. Also, a peculiarity of telecoms industry is that the quality of service is primarily determined by coverage. Having evolved over time, the first entrant's(MTN) network usually has much better coverage. The customers become used to enhanced coverage over time. So new entrants have to invest significantly to achieve this same coverage, an effort that is capital intensive and time consuming. All new networks have initial bugs that take time to fix. Subscribers are just not willing to go through another learning curve, when there is already a robust supplier of service. Another frequent constraint is access to property to build the towers, since the first entrants have already seized the ideal sites for coverage but Visafone will be leveraging on the extensive branch infrastructure of Zenith Bank to roll out while Alheri and Etisalat can opt for Co-location services of Helios Towers. But in the absence of these bail outs, the late entrants may require to invest larger amounts in network infrastructure to gain similar coverage. Given these hurdles, it can take two to three years before a challenger achieves coverage competitive with the incumbent's.
In addition to coverage and related quality of service, another huge barrier to entry for new entrants is the issue of number portability. The NCC has been making efforts and educating the dominate operators on number portability since they will most likely serve as the donor network while the late entrant will most likely be the recipient network. The success of number portability depends on the ability of the donor network to perfect the processing of the subscriber in a turn around time or hence the subscriber becomes frustrated while attempting to join another network while keeping his number.
The inherent advantages to being first in the Nigerian telecoms market are control of ideal sites; freedom to evolve and fine-tune network coverage; building of brand loyalty by offering superior customer service; locking in customers by subsidizing equipment for an extended period under fixed-service contracts, and gaining control of key channels of distribution.
Late entrants do also have its own advantages if they are able to learn from the pit falls of the dominate operators in offering a superior level of customer service, deploying new technology, so that a new entrant can offer similar or better service at a lower cost, the new entrant may also develop a new way to access the market, with an innovative distribution strategy and may simply be pricing aggressively, targeting selected segments by taking advantage of the incumbent's tendency to average pricing across all segments.
While the dominant operators do have their own advantages, so do the late entrants. They are coming with latest technology and more knowledgeable about the end-user experiences of that particular market. Examples abound of Telecoms operators that moved from late entrant position to dominant players by getting it right. Orange, successfully established its self as a dominant player from a late entrant in the British Market and Globalcom, did same too in the Nigerian Market.
I wish Visafone,Alheri,Etisalat and Nigomsat (If eventually awarded a license) an interesting journey into the fastest growing telecoms market in Africa!
Emmanuel Okoegwale
emmanuel@gomobileng.com
Thursday, March 13, 2008
Can Number Portability Drive Etisalat Nigeria Market Share
Farmed-out license holder,Etisalat Nigeria will utilize the Mudabala License in the very competitive and fast growing Nigeria market.Mtn the clear market leader with over 15 million subscribers with Glo and Celtel coming a close second and third with very impressive figures, the market is hotly contested for and operators will go to any length to acquire more subscribers even in the face of declining quality of service and poor mobile value added services.
Etisalat job placements in the newspapers signals the readiness to commence pre-roll out operations which is been speculated for the first quarter of 2008.The big question is,how will Etisalat pursue and join a race of six years with very formidable operators?
Nigeria’s third operator,Glo which came in later after the two dominant operators,MTN and Econet (Celtel),adopted the per second billing which provided the needed
Leverage to quickly establish in the competitive Nigeria Market.In the absence of killer mobile value added services that can clearly differentiate the new operator,Etisalat,Number portability will offer the best and sure way to acquire
Significant subscription level within a short time.
The Nigerian Communication Commission recently approved the use of number portability for the telecoms operators in Nigeria and the commission is making efforts to educate operators on the advantages of number portability. Number portability is a key aspect of deregulation in telecommunications. To ensure that there is competition in the marketplace for telecommunications services. Mobile Number Portability is the ability of a mobile subscriber to retain his/her subscriber number when changing network operators within a country.
Number Portability is not to be regarded as a subscriber service, which a subscriber can subscribe to. It is a network feature that allows the subscriber to keep a unique mobile phone number but must be agreed to among different mobile operators within the defined national or regional boundaries.
Number portability though a recent phenomenon has recorded significant successes in Asia markets which is very similar to the Nigerian scenario. Singapore was the first to implement in 1997 and Hong Kong in 1999,Taiwan recently implemented in 2005. These markets had already achieved the 50 percent mobile penetration rate during that period compared to Nigeria’s penetration rate of 25 percent which still offers a huge underserved market with a population under licensed territory of 140 million people and mobile phone subscription of over 40 million.
Number portability can be locality based which enables a mobile subscriber to move from one location to another without changing mobile number. This will significantly reduce capex cost and reduce roll out time in different regions in the vast Nigerian land mass for a new operator like Etisalat.
Second type of Number portability is Service Portability that enables a mobile subscriber to keep same number when changing different telecoms services and this is commonly used for mobile value added service. If a subscriber on a donor network wants to access a particular service on a receiving network, there will be no need to change number for the duration.Lastly,the Operator Portability that enables a subscriber to switch mobile operator without changing the mobile phone number,is essential for fair competition among mobile operators and to help new entrants gain market share.
In a market with poor quality of service where mobile operators are still chasing to sign on new subscribers rather than maintain existing ones and increasing the average revenue per user through innovative mobile value added services, number portability will be an advantage to Etisalat if the network offers better quality of service and superior customer service which is lacking with some mobile operators.
There are advantages for implementing Number portability and like wise challenges.
New operators can quickly acquire subscribers though not necessary at lower cost because there are cost elements to number portability. Service providers will often want to charge an administrative fee and recurring monthly fees for number porting services. These fees could discourage some potential porters, as they do not see the justification for such service charges. There is also a waiting period for subscribers to enable the ported number from the donor network to the receiving network and if the waiting period is not reasonable short, subscribers might get wary of the signing up for the service.
Finally,the dominant operators which will provide the bulk of subscribers wanting to move away to new operators like Etisalat,should not see the entrance as a threat but a health competition which will improve the over all satisfaction of the subscribers whom they called Kings.
Emmanuel Okoegwale
Etisalat job placements in the newspapers signals the readiness to commence pre-roll out operations which is been speculated for the first quarter of 2008.The big question is,how will Etisalat pursue and join a race of six years with very formidable operators?
Nigeria’s third operator,Glo which came in later after the two dominant operators,MTN and Econet (Celtel),adopted the per second billing which provided the needed
Leverage to quickly establish in the competitive Nigeria Market.In the absence of killer mobile value added services that can clearly differentiate the new operator,Etisalat,Number portability will offer the best and sure way to acquire
Significant subscription level within a short time.
The Nigerian Communication Commission recently approved the use of number portability for the telecoms operators in Nigeria and the commission is making efforts to educate operators on the advantages of number portability. Number portability is a key aspect of deregulation in telecommunications. To ensure that there is competition in the marketplace for telecommunications services. Mobile Number Portability is the ability of a mobile subscriber to retain his/her subscriber number when changing network operators within a country.
Number Portability is not to be regarded as a subscriber service, which a subscriber can subscribe to. It is a network feature that allows the subscriber to keep a unique mobile phone number but must be agreed to among different mobile operators within the defined national or regional boundaries.
Number portability though a recent phenomenon has recorded significant successes in Asia markets which is very similar to the Nigerian scenario. Singapore was the first to implement in 1997 and Hong Kong in 1999,Taiwan recently implemented in 2005. These markets had already achieved the 50 percent mobile penetration rate during that period compared to Nigeria’s penetration rate of 25 percent which still offers a huge underserved market with a population under licensed territory of 140 million people and mobile phone subscription of over 40 million.
Number portability can be locality based which enables a mobile subscriber to move from one location to another without changing mobile number. This will significantly reduce capex cost and reduce roll out time in different regions in the vast Nigerian land mass for a new operator like Etisalat.
Second type of Number portability is Service Portability that enables a mobile subscriber to keep same number when changing different telecoms services and this is commonly used for mobile value added service. If a subscriber on a donor network wants to access a particular service on a receiving network, there will be no need to change number for the duration.Lastly,the Operator Portability that enables a subscriber to switch mobile operator without changing the mobile phone number,is essential for fair competition among mobile operators and to help new entrants gain market share.
In a market with poor quality of service where mobile operators are still chasing to sign on new subscribers rather than maintain existing ones and increasing the average revenue per user through innovative mobile value added services, number portability will be an advantage to Etisalat if the network offers better quality of service and superior customer service which is lacking with some mobile operators.
There are advantages for implementing Number portability and like wise challenges.
New operators can quickly acquire subscribers though not necessary at lower cost because there are cost elements to number portability. Service providers will often want to charge an administrative fee and recurring monthly fees for number porting services. These fees could discourage some potential porters, as they do not see the justification for such service charges. There is also a waiting period for subscribers to enable the ported number from the donor network to the receiving network and if the waiting period is not reasonable short, subscribers might get wary of the signing up for the service.
Finally,the dominant operators which will provide the bulk of subscribers wanting to move away to new operators like Etisalat,should not see the entrance as a threat but a health competition which will improve the over all satisfaction of the subscribers whom they called Kings.
Emmanuel Okoegwale
Thursday, March 6, 2008
Mobile Marketing Africa Event 2008
The African Mobile Marketing & Advertising Summit is the foremost event of the year dedicated to communication and loyalty on the mobile in the emerging markets. With the huge growth of mobile communications in Africa, this event will be bringing together advertisers, communication agencies, content developers, and mobile service providers.
Estimates for the value of the mobile marketing market vary from $2billion - $11.5 billion by 2011. What is certain is that this industry is growing, and growing fast. By attending the first annual African Mobile Marketing & Advertising Summit 2008, delegates will learn how to take advantage of new revenue streams to drive growth in mobile data usage and generate highly profitable advertising revenue.
The mobile industry is gearing up for one of its biggest challenges to date and now is the time to make sure that you position your organisation to take advantage of the opportunities available. You will hear case studies from operators, big brands, advertising agencies and content providers to enable you to maximise revenue from the value chain.
This insightful Conference will roll out the powerful and state-of-the-art technology campaign strategies and tools in reaching customers and building brand awareness through mobile marketing.
There has never been a more important time to position your organisation with the mobile marketing value chain.
Learn powerful campaign strategies and techniques straight from the foremost international and local experts that will help your brand connect with the country close to 40 million mobile phone users.
Key benefits
- Network with executives from brands, telecom operators and agencies at the forefront of mobile marketing in emerging markets.
- Hear real life case studies on brands which have already implemented mobile marketing campaigns.
- Understand the challenges and barriers to mobile marketing.
- Hear from telecom carriers how they are breaking into the mobile third screen and how they can help drive uptake of the mobile through pricing plans.
3G and Nigeria Brands
Mobile Marketing is used to describe marketing on or with a mobile device, such as a mobile Phone. Mobile allows brands that have relied on traditional channels to create a more direct, sustained relationship with consumers. Mobile Marketing is yet to gain its foothold in Nigeria but with the upcoming 3G networks, this will allow data intensive applications,Brand and advert agencies will quickly see the opportunities in engaging the Mobile subscribers because of its uniqueness and interactivity.
South Korea is a classic example where Mobile marketing is striving. The largest network operator, SK Telecom, has some 500 clients and controls 80% of the country's mobile advertising market. AirCross pushes multimedia ads to about one million users who have opted in, lured by reductions in their phone bills. It also has a database of four million SMS opt-ins, though multimedia is growing at a faster rate, having pulled in big advertisers such as Coca-Cola, Mercedes and BMW since its launch last year.
The 3G Marketing is the next big thing in mobile services but how prepared are the Network operators, Brand owners and Brand marketers to move away from the traditional media to mobile?
3G Marketing has the capacity to reach mobile users in style and with rich contents for mobile subscribers. Content in many formats like video, sms, mms and audio and can now target the mobile users. It will put the creativity of Brand manager to task. Present Mobile marketing ecosystem in Nigeria is not buoyant with innovative services because the focus of Mobile operators still tends towards Voice where 95 percent of the accrued revenue comes from. Mobile Marketing is still in its infancy as Brand marketers are not even experimenting with what is available presently. Caller Ring Back and Bluetooth marketing do not require very complex technology but yet am yet to see one single deployment in the whole Nigeria.
The opportunities are immense and rewarding .More than 89 percent of Fortune 500 companies are dedicating more than 10 percent of their marketing Budget to mobile marketing in year,2008! The challenges for mobile marketing in Nigeria is tasking because Most Brand managers do not even understand the workings of the technology. Influx of low end phones will also inhibit the growth and spread of 3G Marketing and will be the immediate obstacle to mass-market 3G marketing because the user base is not sophisticated enough. Availability of 3G network in major cities will be a decisive factor if it will become a marketing medium of choice. Network operators are still battling with capacity issues and 3G might not be a front burner issues in low Average Revenue per user (ARPU) catchments areas and by implication brand owners may never be able to deploy a national mobile marketing campaign. They will have to manage with Regional.
The road ahead for 3G marketing is tough since Bandwidth issues will crop up intermittently. A key attribute of 3G is its ability to deliver high-quality MMS content, including streamed video with 3G subscribers able to tune into paid-for content from the likes of cinema owners like Numetro and silverbirds, showing cinema clips. Mobile Adverts can be streamed alongside a Tv programme and even Mobile users can be directed to a web site or WAP site that is dedicated to that ad.
Network operators should also allow media agencies to access their database so that campaigns can be more targeted based on the segmentation of subscribers but where they cannot allow that, then they can as well have an in-house agency because without a segmented database, there would be indiscriminate messaging to a mobile advertiser's user base or publisher base and this could seriously damage the development of this potentially lucrative advertising market. The mobile should not go the way of the internet in terms of spam. The time to put the structure in place is now.
Emmanuel Okoegwale
emmanuel@gomobileng.com
South Korea is a classic example where Mobile marketing is striving. The largest network operator, SK Telecom, has some 500 clients and controls 80% of the country's mobile advertising market. AirCross pushes multimedia ads to about one million users who have opted in, lured by reductions in their phone bills. It also has a database of four million SMS opt-ins, though multimedia is growing at a faster rate, having pulled in big advertisers such as Coca-Cola, Mercedes and BMW since its launch last year.
The 3G Marketing is the next big thing in mobile services but how prepared are the Network operators, Brand owners and Brand marketers to move away from the traditional media to mobile?
3G Marketing has the capacity to reach mobile users in style and with rich contents for mobile subscribers. Content in many formats like video, sms, mms and audio and can now target the mobile users. It will put the creativity of Brand manager to task. Present Mobile marketing ecosystem in Nigeria is not buoyant with innovative services because the focus of Mobile operators still tends towards Voice where 95 percent of the accrued revenue comes from. Mobile Marketing is still in its infancy as Brand marketers are not even experimenting with what is available presently. Caller Ring Back and Bluetooth marketing do not require very complex technology but yet am yet to see one single deployment in the whole Nigeria.
The opportunities are immense and rewarding .More than 89 percent of Fortune 500 companies are dedicating more than 10 percent of their marketing Budget to mobile marketing in year,2008! The challenges for mobile marketing in Nigeria is tasking because Most Brand managers do not even understand the workings of the technology. Influx of low end phones will also inhibit the growth and spread of 3G Marketing and will be the immediate obstacle to mass-market 3G marketing because the user base is not sophisticated enough. Availability of 3G network in major cities will be a decisive factor if it will become a marketing medium of choice. Network operators are still battling with capacity issues and 3G might not be a front burner issues in low Average Revenue per user (ARPU) catchments areas and by implication brand owners may never be able to deploy a national mobile marketing campaign. They will have to manage with Regional.
The road ahead for 3G marketing is tough since Bandwidth issues will crop up intermittently. A key attribute of 3G is its ability to deliver high-quality MMS content, including streamed video with 3G subscribers able to tune into paid-for content from the likes of cinema owners like Numetro and silverbirds, showing cinema clips. Mobile Adverts can be streamed alongside a Tv programme and even Mobile users can be directed to a web site or WAP site that is dedicated to that ad.
Network operators should also allow media agencies to access their database so that campaigns can be more targeted based on the segmentation of subscribers but where they cannot allow that, then they can as well have an in-house agency because without a segmented database, there would be indiscriminate messaging to a mobile advertiser's user base or publisher base and this could seriously damage the development of this potentially lucrative advertising market. The mobile should not go the way of the internet in terms of spam. The time to put the structure in place is now.
Emmanuel Okoegwale
emmanuel@gomobileng.com
Developing Nigerian 3G Mobile Contents
These are interesting times in the
Looking from what obtains presently with Wap, gprs and other multimedia services usage level presently in Nigeria, it will not be out of place to show concern about how operators intend to develop and drive usage of 3g which is highly content driven.Though some of the contents might run too on present networks but are best experienced on a 3G because it offers more for media bandwidth intensive contents.
Countries that made headway in 3G presents a very good example of what we should be emulating.
Revenues from 3g services come from two sources, the traffic generated by content and charges for content itself. According to UMTS forum, by year 2010, total operator-retained revenue will be over 300 billion dollars for generated 3G services.
The Nigerian regulator, NCC, should bring together industry players to pursue strategic content initiatives and bring to market, innovative 3g content and services. The NCC should aim to bring operators together and chart a way forward thereby accelerating the adoption of the technology. The target audience should be mobile operators, application developers, content providers, content aggregators, systems integrators and equipment vendors. The national regulator will play a vital role in content development by working closely with privately owned IT and telecoms training institutes, research and development centers, to develop curriculum that will address the upcoming opportunities and thereby reducing capital flight through content that are offshore developed or foreign owned.
The objective is that since downloading or streaming of video content is the main driver of 3G usage and to attract subscribers and enterprises to use this technology, the NCC should put incentives in place for the development and launch of new 3g content and services that fully exploit the capabilities of the 3g platform.
The success of the 3g will increase the demand for mobile data services and thus leading to higher 3G usage which leads to higher ARPU’s for the mobile operators. NCC need to start sensitizing content providers on the following services that can be money spinner for 3g,namely, online multimedia, gaming, multimedia messaging, video chat, mobile matchmaking, multimedia content delivery, surveillance, remote monitoring, mobile marketing and location specific information delivery services.
For the mobile operators, in the real business sense, 3g is important but nonetheless secondary. Voice remains the cash cow and killer application on the networks presently. They will need to develop an investment program whereby it will develop strategic investment opportunities with content aggregators and providers. They should invest in and partner with innovative content providers to develop innovative content distribution channels, mobile communities and other rich content that was not previously possible in a 2g world. Operators need to target all market segments, though some may not generate revenue as much as expected but what is important is to create an entire environment where mobile phone is used for a variety of purposes.
The choices open to operators is to either develop in-house content, therefore becoming providers of bundled lifestyle content with the advantage of big brand tie –ins. Second alternative is to work with independent content aggregators but without the advantage of brand tie-ins because most content developers tend to reach out to more than one operator for same content. The reason is not far fetched, present revenue share propositions will definitely be a disadvantage in the highly content driven 3g market.
A transition to 3g service will mean that phones have ceased being mere communications devices and will have taken on many of the characteristics of the rich content technologies like cable and internet. While government supports the development of innovative new communications services which provide access to the internet, mobile TV and Video clips, and the content services may also potentially carry offensive or harmful content and there will be need to ensure appropriate safeguards are in place to protect under age persons from exposure to such harmful contents. Safeguards might just be similar to those in place for traditional media.
Finally without operators investing in the appropriate infrastructures and taking a more holistic view of the content marketing function, the content on offer will unlikely engage subscribers and build the desired levels of demand. The whole world is watching if Nigerians will take advantage of the multi billion Naira Nollywood industry to develop Nigerian centric content for the Mobile phone market.
Emmanuel Okoegwale
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