It's refreshing, with all the hype about 3G and mobile TV, WiMax and IMS, to talk to a sceptic. Especially one who's CEO of a successful mobile operation with a healthy share price — and one who has actually launched 3G services.
|Neil Montefiore: We've|
got to get to about 10-15%
3G penetration before we
really start to see the
Neil Montefiore has been in Singapore for a decade now, and in late 2002 he took MobileOne — or M1 — through one of the first IPOs in the telecoms industry since the industry's crash.
So he's lived through the bumpy bits and survived. He has every right to be sceptical. Or realistic.
Take the way M1 started its 3G services. "3G, we built out a long time ago," he says. "We only launched it a year ago, February 2005, though we had full national coverage some time before that. We just felt it wasn't quite ready."
And even now he's cautious about the way it should be promoted and wonders how it will be used.
"We've always felt it was evolutionary rather than revolutionary," he says. "We've rolled it out and are letting the customers choose. A lot of their choice is driven by the handsets and a lot of the people using it are not the general consumers, they're the early adopters."
And early adopters are different from the general market, he says. "They're not attracted by the headline stuff that you see — the high profile media content."
He thinks mobile TV, for example, "is a little bit over-hyped, particularly to do with 3G".
But he admits: "On the other hand we are seeing good data growth. We are definitely seeing revenue uplift from 3G customers."
This scepticism is not a new feature for Montefiore, as he readily admits. About five years ago at a GSM Association meeting he took part in a debate about whether there was then a business case for 3G. He said it didn't, then.
"At the beginning of the debate 75% disagreed with me, and at the end 78% disagreed with me," he smiles.
Why was he so firm then. "In those days, with the cost of the infrastructure, I really felt that. Now I think it's OK. I think the 3G infrastructure is working better, and I think we can see it as a cheaper way of providing communications. It's looking quite good. And as we get HSDPA and HSUPA and we've got the capability of offering alternatives to other fixed broadband access so I think that's quite exciting."
So he concedes that "3G does have appeal" so "we'll continue to invest in 3G as the take-up grows, the usage grows". Nokia is M1's main infrastructure supplier.
At the same time, says Montefiore, "we're focussing more on how we make the 3G services appeal to the early adopters".
That's one of the reasons he's sceptical about what many people say about mobile TV.
Never a consumer product
"We know they don't really want to watch CNN live," he says. "And the practicality of course is if it does take off the number of customers that any network in the world can support is so small that it would never be a consumer product."
He chuckles: "But then small handheld TV has been around for a long time and nobody buys it."
So why the hype from most of the industry? "I think we're losing our way a bit on that. A lot of it's driven by egos," he says. "People just like signing contracts with media names."
M1 has been experimenting with TV-type content. There is live TV available for streaming, and M1 produces a its own Chinese drama series in three-minute episodes. It has been nominated for an award in Cannes later in the year.
"But I just think it's not that appealing to the early adopters, and that's really where the market will be over the next six to eighteen months. I think we've got to get to about 10-15% penetration of 3G before we really start to see the consumers coming in. It's very early to say what the consumers will want to do with it. So, yes, there is some scepticism from me on the high-profile content stuff."
Download, take, create and share
He thinks that, if video does take off, it's likely to be in a very different way, though the early adopters will prove him right or wrong. "We think there will be more interesting video once they can download, take, create and share," says Montefiore. "So we think sharing's quite important. I think content that they can share among their communities — amusing, critical or whatever — that will drive them."
Early adopters are "quite different from the average consumer", though. "They're not particularly influenced by brand names. They're not that bothered about small hiccups either. That's the plus side."
But before video sharing services are offered to "the real consumer market", then technical hitches have to be sorted out. "If the consumers press a few buttons and it doesn't do exactly what they want they don't try again. We're a little bit away from that."
Meanwhile the early adopters of 3G "are using more data — they're using it for communications in their own way. It can be just email, it can be more media-centred stuff — video and picture — but it is group and remote access type communications. That seems to be what's driving the traffic".
As a result, "we've seen good growth, in data revenues and traffic", he says. "Traffic is up about 40% on last year and revenue about 25%. That's strong stuff, really. Promising, but we mustn't miss the fact that the little screen in your pocket is not the screen in the cinema and is not a big TV screen at home. It is a screen and it will be used by consumers — but we're not quite sure how, yet. I think."
There is an advantage in mobile TV: "It's with you the whole time." But the question is "what you can do with something that's with you the whole time", he notes.
And there are competing technologies: "If it's really genuine Hollywood content that people want, then possibly just downloading it onto your iPod, or equivalent, and watching it on a very lightweight screen, might be the way people want to do it — rather than on the phone."
There are other things Montefiore is sceptical about, too. Fixed wireless, for one, at least for the next few years. M1 has a licence and has been trying out different systems.
"We've trialled three of the proprietary systems, such as IPWireless. We're not convinced of the business plans in the Singapore environment."
There's a practical reason: 85% of Singaporeans live in high-rise, steel-framed housing, which is not sympathetic to such signals.
Fixed wireless standards
"We're now trying WiMax, using wifi mesh local deployment." Trials began in January and " it's looking very interesting from a consumer point of view", with a bandwidth of two megabits a second. "I'm not sure whether we'll deploy it commercially yet. It's still not fully there as a standard in the hardware — and in the software."
WiMax has been hyped "as they tend to do in the industry", he says, "and they say this is going to take off, and it's not."
There might be "interesting deployments in parts of Australia where you've got urban sprawl and wireless is cheaper", but in cities twisted pair with DSL and cable still have a few years to run. Fixed wireless "is two to three years away from delivery now", he says.
Cost effective HSDPA
And he doesn't think "that WiMax will ever really develop into a mobile version". He thinks "3G will displace it". Ah, so 3G has a future. Yes, particularly with HSDPA and HSUPA — the "u" in the second abbreviation standing for "uplink" rather than "downlink". The investment in the technology, in the chips, handsets and so on "will mean it becomes cost effective", he says.
Capex is being allocated to HSDPA. "We think it's quite important," says Montefiore. "We're looking at what's available from the different infrastructure providers. We're a Nokia network at the moment so we have to make sure that our plans are inline with the rest of the industry, globally. We think it's very important. It's a software upgrade, but there's always a little bit of hardware because you'll find it needs more backhaul, more power."
Meanwhile he's looking to try out some multimode wifi/GSM phones. "I think those are the things we want to play with, to see how we can work with customers to use both means of access. We'll trial that probably this year," he says.
"We're very much looking at voice over IP. We will be trialling various adaptations of it, some using fixed wireless, some using dual mode handsets. It's too early to say. The last industry it's going to affect is the mobile industry."
But fixed-mobile substitution in Singapore is slow. "The number of fixed lines connections is slowly edging down." Singapore has traditionally low local phone rates, so it's not easy for mobile to replace use in the home. "But it's definitely happening. Our minutes of use have been trending up for the last 10 years and I think they'll continue."
Where else does Montefiore's refreshing scepticism extend? IMS. "It's early days for IMS," he laughs. "You've got to see exactly how it will work."
There might be a case for "little bits of it" but otherwise it will have to wait until "we move to an all-IP network infrastructure, three to five years", he says. Then "we'll start to see it coming through".
But it has to result in "something that consumers want". And what is that? "We are looking at community and group-based communications as something we can grow and a lot of the IMS services may attract that."
He's "not totally sure" about presence services, "but I don't think we can guess what the consumers will do", he says. As with 3G services, "we'll just have to put things out there, enable them, and see what moves," he says.
"Part of our strategy is to focus 3G on things that early adopters want. Let them decide how to use it and then they'll spread it on through their peer groups. When there's about 10-15% of the market using it, we'll start to see the consumers coming in. They may use it differently, but they'll be driven by what the early adopters use."
But there's good business use for 3G. M1 is a Vodafone partner network and is marketing its 3G plug-in card for laptops, though prices need to be sorted, as there is too much risk of business travellers getting landed with huge bills for internet access. Even the early adopters don't link paying $100 for a few hours surfing. GTB