Interview: David Holliday
Which value-added services will drive growth for Mongolian mobile operators in the medium term?
DAVID HOLLIDAY: As tablet and smartphone penetration levels become more prevalent, the demand for data will grow exponentially. People are gravitating much more towards new applications for their mobile devices, and this shows that many Mongolians are hungry for cellular data packages. Developing new content for 3G users, especially vibrant Mongolian content, will be essential to growth in this area. Mongolia is rapidly becoming a sophisticated market, particularly in Ulaanbaatar, although we must not forget that the vast majority of people are still on feature phones and 2G phones. To some, texting is data. Mongolia is a particular market where new technologies and services need to be rolled out, but at the same time, those who do not have or need a smartphone must also be served. There is much that can be done with just a text-based service, especially in rural areas. The development of these types of new value-added services, both for 3G and 2G users, will drive growth in the sector in the coming years.
What needs to be done to reduce the gap between rural and urban areas in terms of profit margins?
HOLLIDAY: It is more about delivering a rural service that can be implemented and run cost-effectively. It is my belief that with private enterprise and government working together, we can better utilise the tax levied on our industry that is for rural ICT or service deployment. More engagement and transparency from both government and industry would allow firms to come together to better serve the community. Better engagement would allow the industry to know what the government’s priorities are in terms of particular areas to develop or regions that need more base stations. With this information, the private sector could help more. Mongolia could benefit from what is already being done in other countries, with the regulator paying for base stations in an area and firms providing services. Based on this structure, profit margins can become realistic (yet efficient) and communities can be better served. Although we try to serve as many people as possible, we are a business, which means there is a limit. We cannot put a base station where only a few people are living, as it wouldn’t make sense. However, with responsibility being shared between private and public enterprise, it may become viable.
How can network and infrastructure sharing help reduce operational and capital expenditure needs?
HOLLIDAY: Coordination between operators on infrastructure sharing, when it makes business sense, is something that can be leveraged to a greater degree. At the moment, there is a lack of progress on this, while the situation of unified licensing declared by the government becomes clearer. Looking at all the assets and existing infrastructure that could be shared, it really makes sense in some areas and it would be beneficial for Mongolian operators to be free to do this. However, on some occasions, legislating may actually work the other way around. There are large investments that the industry is ready to make in backbone infrastructure, but, due to the expectation of more government legislation, these are not being deployed. As a result, jobs are not being created. I believe the industry should engage government and have open and pragmatic discussions as to how more investments can be made, so we can all see the information and communications technology sector develop significantly.
What opportunities exist for 4G coverage in Mongolia? What are the challenges in this aspect?
HOLLIDAY: We are seeing considerable usage of 3G, and there is no doubt that Mongolian citizens will adopt 4G. It might not happen on European or US scales, but it will happen in Ulaanbaatar and some cities, and then gradually expand to other areas. The main concern we have is that this new technology needs to be deployed by private companies that are willing to take the risk.
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