The fast changing dynamics will soon take the Mobile banking to new levels. Before coming to the topic, lets take a look at this Stakeholder Impact Diagram from the Mobey Forum.

This figure clearly indicate that they principal stakeholder of the mobile financial services (MFS) is the ‘customer’, with MNOs, banks and merchants playing the key role to provide MFS.

In Pakistani market, so far we have seen mobile bill payments and mobile money transfer (domestic) playing in action and attracting the consumers.

Exploring on more customer demands from MFS I came across a study report from Innovar, a financial service consultancy. The report reveals the following observations as obtained from survey involving more than 7000 consumers to aid MFS developments.

1. Consumers are most likely to use mobile financial services for six categories:
   • purchase of perishables
   • bill payments
   • unmanned vending payments
   • purchases on internet
   • pre-paid top up
   • person-to-person payments (money transfer)
2. Consumers see mobile payments is more suitable for remote payments than face-to-face retail payments
3. Consumers prefer to use credit, as a from of payment method for mobile payments
4. Consumers aged 20-40 appear to be most receptive to the mobile payment services
5. Consumers prefer to use existing handsets for mobile payments
6. Registration processes and user interface need to be simplified in order to encourage greater
   consumer adoption

The observations marked in red are what I see as the potential big things mobile banking in Pakistan could take up. For now, let us analyze the services currently offered – mobile bill payments and mobile money transfer (domestic) by easypaisa. We shall take a look at how are they different from similar traditional services, how are they seen in other developing countries and their growth and reach.

Comparison with traditional services

Lets talk about mobile bill payments first. The traditional way we all know goes through the banks and queues. If a person got to do it personally he/she needs to take sometime out for the task and this has to be done in the banking hours during the day. Whereas with the bill payment solution from easypaisa, he/she does not have to be at a bank in a queue and no special taking out time during the day. Pay wherever on the go at any nearest merchant, franchise or service center. Imagine missing out a payment during the bank hours on the last day before the bill deadline. Do it with easypaisa, it works anytime during the day till the merchants and franchises are open, so late hour bill payments are also possible and chances of missing out the deadline are greatly reduced.

The second mobile financial service offered is the money transfer. Traditionally it is being done through bank drafts, money orders and hundi/hawala systems. All having their pros and cons as listed below.

Whereas the mobile money transfer solution from easypaisa gives a secure branchless money transfer experience. One can avail this even without having a mobile phone. All a person needs is valid CNIC and the transaction takes just a second to be done without any form entries and queues at any nearest merchant, franchise or service center.

MFS in other developing countries

Mobile financial services are in its infancy in Pakistan and the concept is somewhat alien to the consumers as new products are being launched. However the social impact can be analyzed by looking at some of the mobile banking models that have been introduced in the developing world. Also, by understanding how these models have been adopted and practiced.

The uptake of m-banking/m-payments systems has been particularly strong in Philippines, where three million customers use systems offered by mobile operators Smart and Globe and also in Kenya, where nearly two million users registered with Safaricom M-Pesa system within a year of its nationwide rollout. In Pakistan, only within a month of easypaisa money transfer launch, the transactions that have been carried out has already exceeded a number of 50,000 and the mobile bill payment amount exceeding Rs.50 million . Customer feedback has been encouraging and merchants report a hefty walk in number on a daily basis.

Considering the kind of acceptance and reception of these services by the consumer so far, the impact is not extraordinary as yet but successful nonetheless.

MFS -  growth and reach

Needless to say, mobile financial services holds immense promise in Pakistan where banking infrastructure only caters to 12% adults, while 62% of the population uses a mobile phone. MFS will give branchless banking opportunity to the unbanked population of the country. The only limit of its reach is the mobile coverage, which is not the limit in Pakistan as we have coverage in every nook and corner of the country. Moreover, it will help to formalize cash flows that will not only bring new clientele but will also enable customization of services to suit client-specific needs.

The Prevention of Electronic Crimes Ordinance 2007 requires some serious revisions before it is passed by the Parliament in coming sessions. A PILDAT forum on the Prevention of Electronic Crimes Ordinance 2007  was held on October 26, 2009. The Forum included as its speakers Mr. Ejaz Khan, techno-legal expert and Partner Aqlaal Advocates, Mr. Tariq Khosa, Director General of the Federal Investigation Agency (FIA) and MNA’s Ms. Anusha Rehman Khan and Ms. Marvi Memon.

The session was not attended by Interior and Information Technology Ministries and Standing Committees of both the Senate and the National Assembly despite invitations.

Below is the briefing of the happenings at the forum via PILDAT.

On the occasion, Ms. Aasiya Riaz, PILDAT Joint Director, said that PILDAT organised the forum in order to generate public debate on this important piece of legislation before it is adopted by the National Assembly. Earlier, PILDAT had prepared and issued a legislative brief on the ordinance both in Urdu and English languages which was widely circulated to the Parliament, the news media and other stakeholders. The legislative brief has been part of PILDAT’s Legislative Development Programme and its objective was to assist parliamentarians to understand the context, objective and issues relating to the ordinance and to enable them to participate in a more informed debate and take well-considered position on the subject. Presenting an overview of PILDAT’s analysis, she said that despite the presentation of the report of the National Assembly Standing Committee on Information Technology on the Ordinance, there remain serious concerns that the offences outlined in the ordinance are vaguely defined, despite involving complex technological issues and carrying severe penalties. The offence of “cyber-terrorism,” is very broadly defined and carries a potential death sentence. Concern has also been expressed as to the potential overlap of offences within the Ordinance itself and existing provisions contained in the Pakistan Penal Code (PPC) . She said that the PILDAT Legislative Brief, also circulated to the participants of the forum, recommends that the jurisdictional definitions of offences be amended to require a significant link to Pakistan. The offence of unauthorized interception should be amended so as to include a requirement of malicious intent and the reversed burden of proof in relation to sensitive electronic systems must be removed, etc. She thanked active support from Ms. Anusha Rehman, MNA and members of the National Assembly Standing Committee on Information Technology for her support for background information on the ordinance and for organising the forum.

Mr. Ejaz Khan, the techno-legal expert and Partner Aqlaal Advocates, presented an overview of the existing ordinance, its provisions and their shortcomings. He said that in the context of ever increasing cyber crime, regulation was required, however, he expressed grave concerns over the existing law in terms of civil liberties, business continuity and the norms of international best practice. Essentially he proposed a careful amendment of the Pakistan Penal Code, to ensure coverage of electronic offences in terms of existing crimes, rather than a specialist law, whilst highlighting the need for safeguards for civil liberties and fundamental rights. His main concern related to the discretionary application of normal criminal processes in cyber crimes cases, which can be dispensed with by the Federal Government. He also drew attention to the lack of any third party protections, right to privacy or confidentiality or redress for economic damage arising from data loss or hardware damage. He proposed the use of the Budapest Convention as a model for future amendment, legislation and protection in relation to cyber crime, alongside robust capacity building of specialist knowledge in terms of the FIA’s specialist cyber crime cell.

Mr. Tariq Khosa, Director General of the FIA, spoke from an enforcement perspective. He explained the existing Special Cyber Crime Branch of the FIA and its work. He strongly defended the need for a specialist agency to investigate and prosecute this technical area of criminal law. He asserted the political independence of the FIA and gave the forum an assurance that the branch applied the Criminal Procedure Code in all cases and that there was “no chance of playing with rights” by the FIA.

Ms. Anusha Rehman, MNA, explained to the forum the role of the Standing Committee, its work in reviewing the Ordinance and the content of its report to the National Assembly that was presented in the last session. Ms. Anusha Rehman and Ms. Marvi Memon added a detailed dissent note on the committee’s report tabled in the House. She indicated that, in some respects, her views differed from other members of the Standing Committee. She highlighted a number of major concerns with the existing Ordinance, most notably the overlap of offences with both the Pakistan Penal Code and Electronic Transactions Ordinance, and the resulting risk of multiple liability and punishment. She drew particular attention to the copy of the FIR of the Khanani and Kalia case that the Interior Ministry provided to her on the floor of the House in response to her specific question noting that the FIR carried reference to prosecution under three separate legislative provisions. She raised particular concern regarding the vague definitions adopted for offences of cyber terrorism, which, in some cases, can attract the death penalty. She made clear that in her view the law must provide protection for basic human rights and freedoms and protect against possible abuse in the future, rather than placing reliance on good practice by law enforcement agencies. She also highlighted the need for specialist expert input to the Standing Committee and Parliament, in order to ensure that Parliamentarians can adequately understand and tackle technical areas of legislation. Finally, she highlighted the critical need for public debate on such an important issue before the National Assembly passes the law in its current form during the upcoming session in November 2009.

Ms. Marvi Memon, MNA and also a member of the Standing Committee on Information Technology, made a strong plea for a public debate on the issue and cautioned that approval of the Ordinance in its current form would lead Pakistan towards “a police state.” She described the Ordinance as a law bulldozed through Parliament and the Standing Committee and her view that efforts at presenting alternatives had been blocked by Government. She called for the business community, whose interests could be irreparably damaged, to enter the debate and expressed her view that the issue was now time-critical as the National Assembly could pass the law in its current form at any point once the National Assembly session starts on November 2, 2009. She expressed disappointment at the lack of debate on this critical issue to-date and said that if the civil society, particularly the Overseas Investors Chambers and the FPCCI, did not protect its interests by intervening now, it will be too late. Parliamentarians are doing their job but the stakeholders must also come forward and present their reservations now, she urged. She highlighted that a revised law has been proposed by them the text of which is available at her website.

In the ensuing discussion at the forum, that mainly included representatives from the IT business community, telecom industry, media and Parliamentarians, a number of provisions of the law and its practical use were discussed. It was highlighted by the business community, through the anecdotal evidence of their experience, that even though the FIA Director General maintained the agency will never stoop to abusing basic rights, the law was applied indiscriminately by corrupt officials. It was highlighted that a badly drafted law can not be left to be implemented on the integrity of the implementing agency but the job of the Parliament was to ensure that no unspecific, duplicate or badly-drafted law should be passed that is liable to misuse at the stage of implementation. The industry deplores this Ordinance, many participants said, terming the ordinance as an “atrociously drafted law.” Mr. Khurram Dastgir, MNA noted that if the law violates basic human rights which are enshrined in the Constitution of Pakistan, these constitutional rights can not be left to be protected or abused on the discretion of implementers. The session ended with a call for further public debate and expressions of disappointment that the Interior and Information Technology Ministries and Standing Committees of both the Senate and the National Assembly which chose not to participate in the forum despite invitation.

I have been debating a lot on 3G here, its upgrade paths and benefits. I also looked at the other side of the picture, how we can grow on our data services. At once it seemed that the 3G license was just on the edge with PTA conducting workshop on it and promising to support the technology. Now its almost a year now, nothing have happened and the licenses are still not auctioned.

We very well know that with technology things change rapidly. I just read few days ago that AT&T have changed their road map, and now they will focus on 4G. They tend to bypass the HSPA+ (an upgrade version of HSDPA) and be more aggressive on LTE plans.

When the world is racing for 3G and 4G, what are we doing? What will we follow? When will we follow?

I see the current state of industry being in an equilibrium, only an introduction of new technology can make way for growth in it. In conclusion of my Final Year Project on Evolution towards HSDPA, I proposed that we are already late for 3G as it has been introduced in the rest of the world, including a few of our neighbors including India. If PTA is unable to auction 3G licenses within the next four to five months, I would suggest they should then focus themselves on LTE technologies and start planning for LTE to keep up with the latest trends in the telecommunication industry worldwide.

This time around they are coming with a forum on a larger scale bringing together telecom and internet professionals in ‘Are You Online’.

Field of telecommunications and internet together have contributed a great deal to Pakistan’s economy, its image and has called for great investments that led to a new era of progress. Lot more needs to be done and this event will act as learning ground for top cream of Pakistan to learn what and how technologies have done to change the lives of normal people. And how they can use these technologies to enrich their career lives?

The event is scheduled on October 17, 2009 at Avari Towers, Karachi. To know more about free registrations, agenda and speakers profile visit the event website here.

‘Are You Online’ is exclusively sponsored by Telenor Persona Weblounge. Along with TelecomPk.Net event partners include Dawn, FM107, Teletimes, Personality Quotient and  Hire Labs.

Churn refers to the tendency of Internet and cell-phone subscribers to switch providers. It is the most common problem faced by telecommunication industry globally.

This post discusses on some of the churns faced by the telecom operators in Pakistan, their causes and how to detect and treat them.

Competition stimulation

The customer changes from operator to take advantage of an attractive offer. Like we have in our industry the acquisition trend. The first step to deal with this is by understanding the marketing campaigns of competitors and their impact on churns and then launching loyalty campaign to counterattack the competitor’s offer.

Internal churn

The customers migration for post-paid tariff plan to pre-paid tariff plan is sometimes seen as a churn. This is one common habit in our industry driven by needs of customers and financial constraints. Such migrations should now be considered as a churn but a record of reasons for such movements must be maintained.

Dissatisfaction with post-sales service

This includes all dissatisfactions with the post-sale services. e.g. billing complaints, technical issue complaints. This can be dealt with careful monitoring the complaints call to customer care centers and proactively resolving it.

Dissatisfaction with quality of services

This is mostly related to network coverage of the operator. e.g. call drop, voice distortion, cross talk etc. Improving on both the indoor and outdoor coverage will greatly reduce the chances of such a churn.

The figure above shows critical points in churn management along the customer life cycle.

[Reference: Churn Types - Prepaid and Postpaid a presentation by mmC Group]

Cross post from telecompk.net.

The latest numbers from PTA reveal that the total subscriber base of cellular services has reached 95.5 million, and the trend between Moblink and Telenor as discussed earlier continues.

The neck to neck race of subscriber acquisition continues between Mobilink and Telenor as Mobilink gained 414K in July 2009 and Telenor added 406K.

A significant increase as compared to May 2009 in subscriber base of Warid can also be seen, possibly due marketing comeback from Warid and introduction of the Glow prepaid package.

Ufone despite their intense marketing gained less than Zong in July.

The month to month subscriber change for the first half of 2009 shows a consistent increase in subscriber base over the past three months.

If the current growth pace is sustained, the subscriber number should be close to 100 million by end of December 2009.

Strengths

• Exponential growth.
• Skilled Human Resource at low-cost.
• Access to Infrastructure - optical network and satellite links.
• Favorable policies (to some extent) and regulator.
• Strong international brand names.

Weaknesses

• Quality of Service.
• Low revenue per user (ARPU).
• Customer retention.
• No clear strategic direction.
• Poor organizational structure.
• No research and development programs.
• Employee skill inconsistency.
• Very low employee morale.

Opportunities

• Huge market size.
• Local handset manufacturing.
• Making technology accessible to all (e.g. broadband).
• Adopt latest technologies.
• Removal of international trade barriers.
• Adopting MVNO.

Threats

• Recession in economy.
• Inconsistent and adhoc decisions from regulatory authorities.
• Political Instability - Security issues.
• Adverse shifts in trade policies of government.
• Churn in OPEX.
• Revenue leakage
• Grey traffic

References: State of Telecom Industry in Pakistan and TelecomPk.Net.

President Asif Ali Zardari on Saturday called for the setting up of a Telecom University, a telecom research and development center and a plant to manufacture and assemble mobile handsets in the country. He said that the government will provide land for the Telecom Varsity in Haripur where the nucleus of telecom training facilities already existed and also offer facilities for establishing an R&D Center in Islamabad and the mobile handsets manufacturing plant. Spokesperson to the President former Senator Farhatullah Babar said that the call was made when a delegation of Chinese Telecom conglomerate ZTE called on the President in the Presidency today.

When the telecom industry in Pakistan was booming we had no university offering telecommunication degrees here. At that time the electrical/electronics graduates with some training managed to make their place in the industry. Then with the deregulation paving way for foreign investments in the telecom sector, the boom took a new form and then came the need for qualified fresh telecom engineering.

Many universities both public and private started to offer telecom engineering programs. I myself, graduated in Telecom Engineering from FAST-NU (Karachi). But now when I have the specialized telecom engineering degree the need for fresh engineers have died. Possibly due to global recession and low foreign investment coming in this sector, the companies are reluctant to hire fresh engineers and train them so they prefer the easy way, hire experienced professionals.

My Question: Do we really need more telecom universities?

Mr. President a better approach can be to use the existing resources, our unemployed telecom engineers. We have hundreds of them out here. Realize our core needs. The university establishment should not be the priority. The establishment of mobile handsets manufacturing plant should be the priority. The very much delayed 3G license should be the priority; it will bring in foreign investment. Giving us opportunities should be the priority.

Invest now for a fruitful return in future. We need to understand that present should be our priority because it is what will make our future.

According to sources, Telenor group is interested to sell its shares in Pakistan and is holding talks with the China Mobile.

Though both the operators have denied any such development, sources said that negotiations were being held secretly at the group level.

Though Telenor, a Norwegian company, has a subscriber-base of 20 million or so in Pakistan, it has been deliberating to sell its management shares since long because of ‘security issues’.

The Telenor group has already focused on India for investment, as it recently sought to buy about 67 per cent shares of Unitech Wireless and telecom arm of Unitech Ltd in India.

The Indian market is experiencing a major growth in mobile penetration and currently it stands at 27 per cent with a total population of about 1.2 billion.

There has been a lot of potential in the market and the global operators see it a best place for future market.

China Mobile’s first international business venture, Zong, currently has over six million subscribers.

Before the merger talks with the Telenor group, the China Mobile had offered to buy the management shares of Warid Telecom Pakistan.

However, deal could not materialise owing to price issue.

Mobilink, Telenor, Ufone, Warid and Zong (CM-Pak) have reportedly conveyed to the PTA that there was a room for only ‘four’ players.

A PTA official said there were chances that by 2010, the country may have four operators.

The number of cell-phone users in Pakistan has reached over 90 million. Though Average Revenue Per User (ARPU) shows declining trend over the last few years, aggressive marketing and expansion of network has enabled mobile operators to grab more subscribers on their networks.

[via DAWN.COM]

This trend to higher data rates over wireless networks will culminate in the introduction of Third Generation (3G) System UMTS (Universal Mobile Telecommunications System).

High Speed Downlink Packet Access (HSDPA) technology is a cost-efficient upgrade to UMTS systems and promises to deliver performance comparable to today’s wireless LAN services, but with the added benefit of mobility and ubiquitous coverage.

Mobile operators who have invested heavy amounts in existing infrastructure will obviously show reluctance towards deployment of new 3G infrastructure. An extremely flexible expansion and migration strategy along the road to the 3G would be “soft” network evolution that does not render existing installations superfluous.

Evolution Path

Investment risks are minimized and competitive positions strengthened through the gradual deployment of technology. Intelligently expanding existing infrastructures is often all it takes to be able to offer new forms of mobile data services in practice quickly and flexibly.

Basically four transmission systems play a role in the evolution from GSM to the Third mobile radio generation (3G), namely:

• HSCSD (High Speed Circuit Switched Data)
• GPRS (General Packet Radio Service)
• EDGE (Enhanced Data Rates for GSM Evolution)
• UMTS (Universal Mobile Telephone System)

The chart below shows the evolution path.

The present network architecture stands on EDGE, it stands for Enhanced Data Rates for Global (instead of “Global”, originally: GSM) Evolution. Based on the GSM standard, EDGE permits faster data rates - and so is intermediate step from GSM technology toward UMTS.

UMTS (Universal Mobile Telecommunication System) is the name given to a totally new performance dimension in mobile radio. UMTS is the cornerstone of what is called the third mobile radio generation (3G) for voice and data communication, both packet and circuit-switched. UMTS employs separate frequency bands so is free from the bottlenecks of GSM systems.

Once UMTS is implemented, it would pave the path for HSDPA (High Speed Downlink Packet Access). HSDPA provides a smooth evolutionary path for the Universal Mobile Telecommunications System (UMTS) networks to higher data rates and higher capacities, in the same way as Enhanced Data rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM) world. HSDPA is primarily implemented in the Node B (identical to a BTS in a GSM network) and the RNC (Radio Network Controller, both are the entities oF UMTS RAN (Radio Access Network).

Advantages of HSDPA

Eventually every UMTS market will see HSDPA deployments - the technology offers operators too much of an edge to be ignored.

Major advantages include:

• Peak data rates of up to seven times higher than those in the most advanced UMTS networks
• A four-fold improvement in network capacity
• Reduced round-trip time between network and terminals
• Sophisticated scheduling allowing favorable allocation of resources

HSDPA’s improved spectrum efficiency enables much faster downstream throughput - between network and terminal - than current UMTS technology. Although the theoretical maximum data transfer speed of HSDPA is 10- 14Mbps, the technology will deliver a 2 - 3Mbps downlink on average. Shared among users in an adequately covered area, this will provide each user with a 300K - 1Mbps downlink, i.e. comparable to current wireless LANs and domestic fixed line broadband.

HSDPA is an extremely cost-effective path to higher data rates and provides more efficient use of valuable spectrum. It enables operators to compete effectively in increasingly converged markets and satisfy the need for enhanced QoS and bandwidth-hungry services in an efficient and cost-effective manner.

References:

[i] www.umts-forum.com

[ii] http://www.3gamericas.org/pdfs/gsm_to_umts-siemens.pdf

[iii] www.3gamericas.org/pdfs/lucent_hsdpa_paper_2005.pdf