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Friday, 10 October 2014

Malaysian Internet users, technology trends, evolution and change in telco industry

MAXIS: Data takes dominance

Net effect: According to Lundal, productivity for the future depends on the degree of Internet adoption.

When I came to Malaysia last year, I was assuming that I was going back into an emerging market which is a transition from the place I worked (London).”

“But my perception now is that this is actually a very advanced market,” says Morten Lundal, chief executive officer at Maxis Bhd, whose tenure at the company just crossed the one-year mark as of Oct 1.

Among the reasons that he feels differently about the nation’s technological progress is because of the high smartphone and broadband penetration rate.

“Malaysians’ adoption and smartness when it comes to using (mobile) applications is fully comparable with Europe,” he says.

People on our network use about 1GB per month. Some devices use more. Android more than iOS devices, I’ve noticed. We have people on Android using about 1.3GB or so per month. Both on prepaid and postpaid, people are using a lot of data in Malaysia.”

However, he points out that the local e-commerce market has yet to fully develop.

“Companies here are still fairly traditional in the way they operate. People have much more (technologically) advanced experiences personally,” Lundal says.

“This is going to change in the next five years, but it hasn’t come about yet… The corporate sector is lagging behind more mature markets in Europe.”

However, on the whole, he regards Malaysians as being “very savvy.”

In addition to common online activities such as the use of search engines, social networking sites and real-time GPS services like Waze, Lundal has noticed several distinct trends amongst Maxis’ various user segments.

For instance, he says youth between the ages of 18 and 25 years tended to favour mobile games and streaming video services such as YouTube. He also found Asian youth to be more attracted to image based social media sites such as Instagram as compared to their European counterparts.

“The Chinese are driving more online shopping than other segments and that’s quite interesting,” he says, adding that the Malay segment is active on online forums, games, social networking and instant messaging whereas the Indian segment is more focused on sports, news, instant messaging and social media.

As for the older generation, Lundal says they tended to be more “news savvy” and spent a lot of time online surfing news portals.

“They also use much more hobby and personal interest sites which are less important to the youth. So they are the more functional users of the Internet whilst the youth are the social users.”

Meanwhile, the migrant workers segment had an obvious preference for international news, particularly from their respective home countries. They also liked online comics more than most Malaysians.

Internet breeds change

One of the good things that Lundal sees out of the growing mobile networks across Malaysia is that it enables the general population to gain better access to the Internet.

Besides that, he says that “innovation for IP (Internet Protocol) communications is tremendous”.

However, he sees the ongoing buzzword of the Internet of Things (IoT) as a mere cliche.

“I first heard about IoT in 1998, I think. It’s like a very old expression and the enablers have been in place for years, but it really hasn’t happened yet. I think it is going to happen now, but in a five year perspective,” he says.

As the Internet continues to impact the way society operates, Lundal envisions a shift in the way things are done in the corporate and public sector.

“Productivity for the future more or less equals to what degree you’ve adopted the Internet,” he points out.

“As the younger workforce demand a more advanced technological infrastructure where they work, I think this will drive a big change in how enterprises and the government operates.”

Another disruptive trend that Lundal has noticed is the way users are moving away from preprogrammed content and websites.

“It’s fascinating to see how people are choosing very segmented niche content and making that their default,” he says.

In particular, he points out that youth, especially in countries like the United States, are preferring to consume news via late night comedies and social networks instead of through traditional channels.

“This unpackaging and unbundling of these channels will cause a massive societal impact and change.”

Courting change: As disruptive technologies and trends take hold, telcos including Maxis are faced with the challenge of evolving its business to meet the growing needs of its subscribers.

Telco evolution

As these trends continue to take shape, telcos across the globe, including Maxis, are faced with the challenge of evolving its business to meet the growing needs of its subscribers.

“As an industry, we as mobile operators were used to connecting people to our services. Now we connect people to the Internet,” says Lundal.

“We’ve gone from a decade of selling enablers like phones and connections to now really leveraging those enablers to change lives and companies.”

One of the major changes being faced by the industry at the moment is the dwindling emphasis on SMS and traditional voice calls.

“As an industry, we haven’t innovated on SMS… It’s the same product as it was when it was launched which is unacceptable, I would say, from a consumer’s perspective,” Lundal says.

“SMS is declining a lot globally and will be gradually replaced by IP communication. But for now it’s still widely used because when people want to be sure that the communication is getting through, they use SMS.”

In contrast, he says voice calls are also declining in importance, but at a much slower pace than was expected.

Lundal expects to see SMS fading in importance within the next three to five years whereas for voice communications, he feels it would only decline over a span of four to eight years.

In response to that, he says revenue models for mobile operators are changing globally to become more data centric.

“About 99% of our costs are driven by data,” Lundal says. “It’s a very dangerous situation indeed to have your revenues coming from voice (calls) while your costs are driven by data which is why there is a shift all over the world. That’s a bit slower in Malaysia as players are getting weaned off their old habits.”

However, he adds that he does not view this change in product emphasis as a threat, but rather “a transition that we all have to go through.”

Road to improvement

Over at Maxis, Lundal shares that the company is keeping pace with these changes in technology in three ways.

Firstly, it aims to project itself as an Internet showcase within the Malaysian economy.

“We would like to be in the forefront on how we adopt the Internet ourselves,” he explains. “We also want to change how Malaysian companies operate and help them in their process of being digitised.”

His vision for the future is that Maxis ought to be viewed as a mobile app.

“I like to take extreme positions in order to make people think differently,” he says. “I said to management that we should close our website in three years’ time. Not entirely close it, but probably it will morph into something else. The key interactions with our company should be through an app.”

Besides that, Lundal shares that Maxis is working on ensuring it offers an “unmatched customer experience” to its subscribers, calling it the company’s “flagship programme.”

“We have just built a new network for 70% of our customers this year. The rest will have that experience by next year. This is so that when it comes to the speed of data networks and dropped call rates, we will be world class,” he says.

He is quick to point out, however, that “top class doesn’t mean it’s perfect.”

But according to him, the number of complaints directed to Maxis in the past year has decreased by as much as 50%. As for dropped calls, he says it is currently at the rate of one in 300 calls.

“There are two reasons for that: our network is dramatically improving even though it’s not perfect and we have also taken some pretty drastic, proactive measures to make life better for customers by taking away any pay-per-use charges (for data usage).”

He is referring to the MaxisOne postpaid plan here, whereby subscribers of this Internet plan are not charged for their phone calls and SMSes.

As for the prepaid side, the company also offers a free basic Internet connection of 64Kbps (kilobits per second) for its Hotlink product which Lundal claims is fulfilling a need that most users face.

“Most Malaysians prepaid customers are connected to high speed data (networks) only six to eight days per month and they’re buying daily passes. For the rest of the time, they’re unconnected and they’re trying to find a WiFi connection,” he says.

Last of all, Lundal shares that Maxis is transforming the way it operates internally as well.

“We’re going to rid ourselves of this habit of using paper processes and use more Cloud and mobile instead,” he says.

He says Maxis plans to implement a new human resource system that is Cloud based and accessible via mobile. It has also launched a new intranet and social networking platform for its employees.

On the whole, Lundal says Maxis is setting new benchmarks for itself to achieve.

“We don’t compare ourselves anymore (to competition) nationally, we compare ourselves internationally,” he says.

Contributed by Susanna Khoo The Star/Asia News Network

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