3G is not an option for Digi

First of all, let's find out some basic background about 3G. 3G is a technology concept. The technology behind it is called the IMS (IP multimedia subsystem) .

What is IMS ?

It is actually a technology to cater for an interface between mobile (celular or analogue) and IP (digital). The vertical application is identified as multimedia services. It uses SIP technology.

So, IMS is actually a concept and standard developed by 3GPP; consortium taking care of 3G.

The enabler ?

To know exactly how IMS is being implemented, we may take a look at a company called Kineto Wireless which developed a sub-technology called UMA.

UMA (Unlicensed Mobile Access) technology is a 3G standard for mobile/WiFi convergence (Google also wants to play the WiFi game). Therefore, it is an extra extension for IMS.

Why 3G ?

According to Kineto Wireless, the reason for adopting IMS and hence UMA is due to the following elements:

1. Mobile Market Saturation
2. Looking for new growth while at the same time reducing cost

and with implementation of IMS, the following benefits are expected.

* Grow ARPU by increasing the adoption and use of mobile data/IMS services
* Lower CapEx and OpEx by offloading the radio access network from mobile data/IMS services
* Reduce churn by proving an enriched mobile data/IMS experience where subscribers spend most their time

In other words, 3G is not an option for the telcos, it is a must for them; it is part of the milestones. This is interesting really because in Malaysia, currently there is one celular carrier operator who doesn't have a 3G operating license; that is Digi.

Previously, when the government announced that Digi will not be given the license, Digi counter-reacted by down-playing the importance of 3G; according to the CEO Morten Lundal, 3G is just another option. Well, it may not seem so unless the could make sure that the following actually happen:

1. Market would NOT become saturate
2. New growth is not important as well as cost management.

They then followed-up with announcing capital repayment for its shareholder(April 2006). Similar corporate strategy was demonstrated by Redtone during 2005 when their CEO was wrongly slapped with legal case (which was eventually over-thrown). Redtone followed-up with a big coverage on The Star Biz with interviews on the CEO and future growth of company.

Personally, I feel bad for Digi because the government already stated explicitly that the award of 3G license to MiTV and Time Dotcom is politically driven. However, other analyst have other opinions.

Let's see what Jeff Ooi says about this? --> Blind Spots

So how now ? We will wait and see how Digi react further (If you don't research on it, you will never know). This will be something interesting.

So far, Digi have carried out the following counter strategies:
1. Digi brand refreshes
2. New packages offering
3. Market Segmentation

Many years ago, I also recalled that some "telco" experts predicted that Malaysia will never ever having 3G implementation because it is so costly for the Telcos (Maxis, Celcom, Digi). Looking back, it looks absolutely ludicrous now. The accountants must have misquoted the "expects". Any way, even from Yahoo news, others claim that it will take longer time for UMA to be fully implemented.

But would this affect FDI(foreign direct investment) to Malaysia ? I hope not.


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