Asian telcos need to spur demand

SINGAPORE – Asia’s telecommunications operators have to be more aggressive than ever if they are to ride out the malaise now afflicting the industry, a regional analyst with research group Gartner said.

The sector is suffering from a regional economic downturn, lack of high-impact innovation and a slowdown in Internet and cellular subscriber growth, said Bertrand Bidaud, Gartner regional director for telecommunications research.

Unlike the halcyon 1990s when the region’s telecommunications sector was driven by the explosive growth in demand for cellular and other services, operators now have to do more to spur demand, Bidaud said.

"I think they are not aggressive enough to be very honest," Bidaud told AFP after delivering a regional outlook report on the sector.

"They are too passive in expecting the demand to pick up by itself because that has been the case in the past," he said.

Revenue decline

Telecom operators face declining revenues and profits unless they start offering services that will encourage users to subscribe to the next wave of new technologies, essentially General Packet Radio Services (GPRS) and third-generation (3G) mobile services.

"Demand must be the driver for investment. The days of free money have disappeared. They didn’t have to do much to sell it in the past," said Bidaud.

Operators now face the prospect of slower earnings growth and revenue decline unless they create demand, he added.

GPRS is based on the intermediate "2.5G" prior to the rollout of the 3G telecommunications network, which will allow speedy access to the Internet and offer enhanced multimedia capabilities, including smooth video links.

Apart from Japan’s NTT DoCoMo which has experienced overwhelming success with its "i-mode" service, success has been rare for the region’s other telecom players when it comes to introducing high-speed interactive Internet access and features via handheld devices.

Bidaud said the sector is likely to see a pickup only in the second half of 2002.

Demand

Even then, demand will be a crucial factor in the revival of a sector which has seen close to a quarter-million job losses globally in the June quarter, he said. Figures for Asia are not available.

"We see it lasting until the first half of next year," Bidaud said.

"It will be pulled out by the growth in demand. So you really need the demand to pick up which means that you need users to move to the next adoption curve," he said.

Still, it is not all gloom and doom for telecom players, said Bidaud.

"The good news is that the upside potential is real. You only need the economy to be better or the demand for new services to accelerate," he said.

GPRS is one such new service which regional telecom operators have failed to capitalize on to spur demand, Bidaud said.

"I am a bit disappointed to be very honest by what I see in some markets in Asia with GPRS. There is no promotion of it," he said.

For GPRS to gain mass users’ acceptance, telecom operators need to offer users more than just the access to use the technology, said Bidaud.

"They need to do some enhancement if they want users to buy it," he said.