Global mobile transformation unleashed

Emerging markets will lead the global economic recovery in 2010, with China and India likely to show the most obvious signs of upturn, but prospects for other emerging economies are also promising. Developed economies are expected to grow about 1.7% next year, while emerging markets will increase their GDP by 4.9%, according to a recent report by Bank of America Securities-Merrill Lynch Research.

There are currently 28 emerging markets in the world, constituting approximately 80% of the global population and about 20% of the world's economies. With most consumers located in emerging markets, we simply can’t ignore them and the unique, innovative consumer trends we see coming out of these markets.

In the communications industry, companies have lagged the market’s recovery since March, according to Bank of America Securities-Merrill Lynch Research. But despite the fact that there were wide variations across markets, emerging economies will continue to develop at a pace surpassing developed economies and probably further influence the future of our industry, particularly in the mobile sector.

China's communications market is already the second largest telecommunications services market in Asia Pacific after Japan, according to Pyramid Research, and it will surpass Japan by 2014.

As we move toward a more customer-centric business model, we can’t ignore the power of 80% of the world’s population. These consumers buy products and services, love or hate brands, influence their peers and demand services from their providers in their own, particular way. As globalization forces continue to expand, these consumers can influence the wider “global village.” Service providers in emerging markets are preparing for the future. That is why they have continued to experience healthy growth in IT spending this year despite the global financial crisis.

The mobile revolution

As the world becomes more and more mobile, the global communications market is expected to recover in 2010, with mobile data being the major engine of growth. Global mobile penetration is estimated at 60% and will jump to 84% by 2013, led by growth in India, China and other emerging markets. China and India will add 829 million mobile subscribers in 2009-2013, representing 44% of the world's total net additions during that period, says Pyramid Research. Given this data, it’s clear that organic growth will come mostly from emerging markets.

China’s mobile penetration now stands at just over 50%. In Indonesia it is at 63% and India at 34.3%, which is expected to pass 54% by 2010. In other emerging markets in Asia, mobile penetration is close to or has exceeded 100%, like in Malaysia and Taiwan.

Elsewhere, mobile penetration in Peru and Mexico has reached 66% and almost 75%, respectively. But in countries such as Brazil and Colombia, mobile penetration is already at 81% and 83%, respectively, and well over 100% in Argentina and Russia.

While there’s still room for organic subscriber growth in markets such as China and India, the future for service providers in emerging markets – that have focused so far on increasing connections – will be in increasing the level of additional, innovative services and improving the quality of customer experience. Saturation is around the corner, and the expansion of triple- and quad-play offerings has turned the telco-cable competition increasingly fierce in many emerging markets.

In a recent column published in TM Forum’s Inside Latin America, Wally Swain, Yankee Group SVP Emerging Markets, indicated that “churn management becomes even more critical of an issue, and keeping customers from churning is the best way to improve the bottom line. Prepaid churn management is all about using sophisticated data mining and CRM techniques to target offers that appeal to a particular client’s profile.”

“This is the OSS challenge as penetration rises: growth slows and it is no longer sufficient to merely hang out a sign for clients to know where to sign up. Using advanced OSS tools to reduce prepaid churn and also the percentage of inactive customers is the route to an improved bottom-line in these difficult economic times,” he said.

This is the right strategy even beyond this challenging economic stage – and beyond Latin America.

The innovation of services has been mainly about delivering an “integrated” offering that is mostly just about combining the bill with a discount for a package of services. That is a relatively easy move, but according to Ignacio Perrone, Frost & Sullivan ICT industry manager, the next step will be a much more significant and qualitative effort, as service providers move from bundling to “blending of services.” In an even more complex mobile world, this is determined by not just one device, but a scenario of multiple mobile devices per consumer and an overload of content.

What is consumed and how it’s consumed will radically change. How services are packaged, offered and paid for will have to change, too. This new, more complex type of convergence will further affect the customer experience. This is a challenge that affects both developed and emerging markets. It is a world with more of everything, everywhere: services, devices, content

According to Perrone, whoever understands it first and develops the necessary capabilities and appropriate business model will be the clear winners.

We don’t really know where the global mobile market will be 10 years from now, or how OSS/BSS will continue to transform themselves to support our industry’s needs. But one thing I know for sure, I’d be looking in emerging markets for clues. The customer is king, and the greatest percentage of future global subscriber growth is in those markets. Watch closely, many of the most innovative solutions are flourishing from emerging markets these days. 

Monica Zlotogorski is an editor of TM Forum’s Inside Latin America and vice chair of TM Forum’s Latin America Advisory Board