Take risks, expand coverage: Nokia Siemens tell 3G operators
Following market liberalization and reform in the international telecommunications industry, Nokia and Siemens announced plans to join forces in a 50:50 joint venture under the banner of Nokia Siemens Networks (NSN), during the recent 3GSM (Global System for Mobiles) World Congress in Barcelona.
Boasting a combined 600 service customers in 150 countries, the merger is hoped to create a industry leader capable of meeting the needs of customers in the converging telecommunications industry by offering an end-to-end solution that focuses on broadband internet communication services.
With a vision of five billion people connected and "always on" by 2015, NSN, which will be officially established next April, estimates that three billion mobile subscribers will be reached by its services in 2007 and four billion in 2010, of which 80 percent will come from countries with a large lower-income population.
The Jakarta Post, together with a group of journalists from the Asia-Pacific region, spoke with NSN's head of radio access, Ari Lehtoranta, in Barcelona, about the merger and how it will affect the industry at a regional level, especially in Indonesia.
How do you see the 3G (third generation) market in Indonesia, and how will this planned merger effect the industry?
WCDMA (Wideband Code Division Multiple Access), one of the applications derived from 3G-based technology, is one of the good markets and I think you (Indonesia) have done very well.
Take for example, India, which had been quite a frustrating market for so many years, but look at it now, so everything takes a little bit of time.
The other example is Thailand, where one of the best selling phone we have there are 3G phones, and there is not even a 3G network there. Therefore, Thailand will be a very good market when the operators switch on to 3G because there will be millions of subscribers who will use the service.
In Indonesia, we are one step stronger than we were before. We are doing exactly that well in Indonesia because we believe we have better service capabilities.
We have a new product portfolio to offer. We will be stronger.
I have met some customers from that market, the message of our portfolio plan that we announced has been very positive.
Siemens has been a market leader in the network business in Indonesia, controlling about 40 percent of the market share, while Nokia has been a dominant player in the mobile phone business. How will you place yourself in Indonesia with this merger?
We are well positioned in Indonesia on the infrastructure side, as well as in the mobile side. (The merger) gives us a strong position for our customers. We are currently improving our portfolio now with this merger. We are getting stronger in Indonesia.
I don't think I can give you specific answer, but we are targeting to be number one in this communications industry, we have a good position today. Distance is not far between these big three suppliers in terms of revenues, Ericsson, Nokia Siemens, and Alcatel-Lucent.
However, we have different position. Ericsson concentrates on mobile only, Alcatel on fixed only, while we are the most balanced on fixed and mobile. This will be our differential factor in our portfolio, and we aren't setting any exact targets for ourselves.
Regarding your vision that five billion will be connected by 2015 through broadband connectivity and the fact that many Asian countries have relatively small numbers of internet users, especially in Indonesia, where only six million people using internet, of the total population of 260 million, how do you think this will work?
By 2015, there will be five billion people not only having basic communication but being always connected through broadband connections. A big part of the people in India and Indonesia should have the capability.
It will be through mobile connection or different types of fixed broadband access. These devices need to be developed, the tariff, the cost also for broadband service should also be reduced.
So while this affordability is improving constantly and the device trend is supporting this, we believe that we are becoming more and more aggressive.
Do you have any problems with regards to the regulations in Indonesia?
I must confess that I don't know the details of what your regulators have been doing so far. But it seems that your regulators are looking ahead and we don't see any problems with the regulations so far, given the fact that you were able to launch the 3G services last year and it is a positive signal for us to develop the network services.
How do you see the future of the 3G market in Indonesia? Is there any chance that it will expand massively, like the ones in Korea and Japan?
All these particular areas explain that we are moving to a direction, all we are doing is to make sure that WCDMA becomes more affordable, so it will follow the rule of GSM and become as affordable by 2015 as GSM today.
However, each country needs to continue investing in infrastructure generally. Together with operators, I think the operators should work with the suppliers to promote further innovations.
They need also to improve their efficiency. I think they should take risks, they should expand the coverage, provide the service even in the areas where they have enough traffic.
For the volume has been increasing in new growth markets, where the prices of mobile phone are going down; the infrastructure has become more efficient, and therefore operators in new markets could address more and more subscribers.
Boasting a combined 600 service customers in 150 countries, the merger is hoped to create a industry leader capable of meeting the needs of customers in the converging telecommunications industry by offering an end-to-end solution that focuses on broadband internet communication services.
With a vision of five billion people connected and "always on" by 2015, NSN, which will be officially established next April, estimates that three billion mobile subscribers will be reached by its services in 2007 and four billion in 2010, of which 80 percent will come from countries with a large lower-income population.
The Jakarta Post, together with a group of journalists from the Asia-Pacific region, spoke with NSN's head of radio access, Ari Lehtoranta, in Barcelona, about the merger and how it will affect the industry at a regional level, especially in Indonesia.
How do you see the 3G (third generation) market in Indonesia, and how will this planned merger effect the industry?
WCDMA (Wideband Code Division Multiple Access), one of the applications derived from 3G-based technology, is one of the good markets and I think you (Indonesia) have done very well.
Take for example, India, which had been quite a frustrating market for so many years, but look at it now, so everything takes a little bit of time.
The other example is Thailand, where one of the best selling phone we have there are 3G phones, and there is not even a 3G network there. Therefore, Thailand will be a very good market when the operators switch on to 3G because there will be millions of subscribers who will use the service.
In Indonesia, we are one step stronger than we were before. We are doing exactly that well in Indonesia because we believe we have better service capabilities.
We have a new product portfolio to offer. We will be stronger.
I have met some customers from that market, the message of our portfolio plan that we announced has been very positive.
Siemens has been a market leader in the network business in Indonesia, controlling about 40 percent of the market share, while Nokia has been a dominant player in the mobile phone business. How will you place yourself in Indonesia with this merger?
We are well positioned in Indonesia on the infrastructure side, as well as in the mobile side. (The merger) gives us a strong position for our customers. We are currently improving our portfolio now with this merger. We are getting stronger in Indonesia.
I don't think I can give you specific answer, but we are targeting to be number one in this communications industry, we have a good position today. Distance is not far between these big three suppliers in terms of revenues, Ericsson, Nokia Siemens, and Alcatel-Lucent.
However, we have different position. Ericsson concentrates on mobile only, Alcatel on fixed only, while we are the most balanced on fixed and mobile. This will be our differential factor in our portfolio, and we aren't setting any exact targets for ourselves.
Regarding your vision that five billion will be connected by 2015 through broadband connectivity and the fact that many Asian countries have relatively small numbers of internet users, especially in Indonesia, where only six million people using internet, of the total population of 260 million, how do you think this will work?
By 2015, there will be five billion people not only having basic communication but being always connected through broadband connections. A big part of the people in India and Indonesia should have the capability.
It will be through mobile connection or different types of fixed broadband access. These devices need to be developed, the tariff, the cost also for broadband service should also be reduced.
So while this affordability is improving constantly and the device trend is supporting this, we believe that we are becoming more and more aggressive.
Do you have any problems with regards to the regulations in Indonesia?
I must confess that I don't know the details of what your regulators have been doing so far. But it seems that your regulators are looking ahead and we don't see any problems with the regulations so far, given the fact that you were able to launch the 3G services last year and it is a positive signal for us to develop the network services.
How do you see the future of the 3G market in Indonesia? Is there any chance that it will expand massively, like the ones in Korea and Japan?
All these particular areas explain that we are moving to a direction, all we are doing is to make sure that WCDMA becomes more affordable, so it will follow the rule of GSM and become as affordable by 2015 as GSM today.
However, each country needs to continue investing in infrastructure generally. Together with operators, I think the operators should work with the suppliers to promote further innovations.
They need also to improve their efficiency. I think they should take risks, they should expand the coverage, provide the service even in the areas where they have enough traffic.
For the volume has been increasing in new growth markets, where the prices of mobile phone are going down; the infrastructure has become more efficient, and therefore operators in new markets could address more and more subscribers.