Five Major Challenges Facing Asia-Pacific Telecom Industry in 2012

With the overall mobile market growth slowing and competition for customers intensifying, the Asia-Pacific telecommunications industry will face significant challenges in 2012. As revenue growth slows, operators will be forced to improve efficiency and control costs in their operations. Although the specific conditions vary across markets, industry-wide profit margins will tend to tighten. For operators, strong internal management will be a key success factor, and operational transformation should be implemented to ensure sustained profitability. According to a survey by market research firm Ovum, the Asia-Pacific telecommunications industry will face the following five major challenges in 2012.

—Optimizing Costs and Improving Efficiency

Over the next 12 months, operators will face increasing competitive and margin pressures, making cost optimization increasingly important. Early cost optimization initiatives will involve relatively simple measures such as passive network sharing and outsourcing of non-core functions, while more aggressive cost optimization strategies, such as backhaul sharing and access infrastructure sharing, will also begin to emerge. Different markets require different approaches, but forming joint ventures with competitors will be highly challenging, particularly in developed markets.

Reducing operating costs should be easier to achieve than reducing capital expenditure. In 2012, operators are expected to further cut operating costs by outsourcing network management, customer service, and other non-core business functions.

—The Growing Importance of Customer Service

Many operators are seeking sustainable non-price advantages, with strategies including promotions, marketing, dedicated device relationships, better network coverage/reliability, and customer service.

Providing poor customer service will come at a high cost, while excellent customer service benefits both operators and customers. Operators around the world are investing heavily in improving their customer service systems. These investments will include 24/7 customer service and weekend fault repair hotlines. Some operators are now also using social networking services such as Twitter and Facebook to resolve customer issues. Customer service can become a distinctive feature for telecom operators, but any effort must involve the entire organization and ultimately lead to cultural change.

—Smart Devices Will Shape the Future of the Mobile Application Ecosystem

The ongoing shift from feature phones to smartphones and tablets running "light" operating systems will continue to influence operator strategies. This will have a significant impact on network investment and service pricing, and will drive operators to offer value-added service offerings. Application functionality and content will become increasingly dependent on network and cloud services.

When purchasing devices, consumers are no longer considering only hardware features and price. Successful devices will combine "applications, content, and services" in one. The challenge for operators over the next two years lies in adapting to this shift and meeting the needs of smart device users on their networks.

—Network Data Management Is Critical

With data traffic growing exponentially, operators are being forced to implement a combination of technologies to alleviate network congestion. Some advanced pricing schemes (such as charging based on service quality and priority) have been difficult for customers to understand, making them difficult for operators to implement.

In some markets, operators continue to favor Wi-Fi offloading solutions. In 2012, we expect to see more LTE network launches, broader Wi-Fi offloading, and more discussion of heterogeneous network solutions in the Asia-Pacific region.

Insufficient backhaul capacity will be a major factor in the capacity challenges operators face in 2012. Therefore, mobile operators will focus on migrating their backhaul to packet-based technologies (typically Ethernet) and upgrading capacity.

—Offering Bundled Services to Retain Customers

Operators' bundling strategies have gained momentum, and this trend is expected to become more pronounced in 2012. Telecom operators implementing bundling strategies believe that the ultimate results of bundling are increased revenue and reduced customer churn. In countries where government agencies are deploying fiber-based NGA networks, there is also a significant bundling opportunity for mobile-only operators.

--Excerpted from: People's Posts and Telecommunications News