Hard competition on Russian Far East

There was a land part on Russian Far East where Beeline wasn't operating. Vimpelcom (Beeline brand owner) gained 3G license on that area (Primorskij region with capital in Vladivostok). 3G network is almost built there. Before Beeline there was 4 MNOs: NTC (local MNO - current leader - owned by Korea Telecom), MTS, Megafon and SvyazInvest daughter - Akos (which Beeline tried to buy many times).
NTC is the leader because of made in Vladivostok (local provider) - they have about 1.2 mln subscribers. And now competition is becoming hard one. One of the main differentiations is the Mobile Internet speed. Beeline owning 3G license after building wide spread network will be the most effective in this field and MNOs are trying to decrease this negative influence. As example NTC is considering Mobile Internet acceleration tools.
I'm sure that Mobile Acceleration is eally important solution in operator's network. Average web site volume is continiously increasing while speeds are still the same (except new 3G technology), radio channels problems with delays are still the same. Using smartphones for web access is really hard because of up to 5 minutes upload time. Subscribers don't need these high level details in pictures. Mobile Internet often used for news serfing, mail access, chats etc. It is significant to increase upload rate 2 or may be even 3 times by cutting images quality and additional optimizations. Many of my colleagues decided that accelerated Mobile Internet is much more attractive and they are ready to pay additional fee for acceleration. Moreover after switching off Mobile Acceleration they are not willing to use it in many cases. As example to check mail on mail.ru with Mobile Acceleration is attractive from smartphone but without it they would better wait until getting home.
Additional reason to implement such service is a clear trend to flat tariffs - MNOs are becoming Mobile ISPs and trying to compete with fixed broadband ISPs. Compression of Internet traffic inreases network volume (decreases radion expenditures) and maximum performance and in same time inreasing Subscriber Experience.
Most of European MNOs already implemented such solutions. It could be very effective step against 3G expansion. But unfortunatelly there is strong term of switching to "Great Three MNOs" - their brands are strong and aggressive advertising is much more powerfull than local players could afford. Of course crisis will give some time for local players concentrated on better offerings especially in case of cheap services.
Another local player BWC in Siberia launched Internet Acclereation from Venturi Wireless (http://bwc.ru/gsm/internet/venturi/) I think because of the same reasons. As I know such activities performed Megafon which decided to have Venturi Wireless (with local St Petersburg Olenkom partner) solution for its Mobile Internet acceleration - soon we should see first results. Another vendor Byte Mobile teamed with Reksoft - Russian outsourcing software developer - to get on russian market with their solution.
I think this solution soon will be in every MNO infrastructure. Let's wait for Beeline and MTS steps in this direction. I'll be glad to know your opinion about Mobile Internet acceleration usability.

Thanks,
Denis.

New Year Tariff

New Year is the most valuable holiday in Russian people mind. It is very significant for MNO to attract as more Subscribers as possible during this timeframe. In this year Beeline is concentrated on dealing with the crisis and gaining synergy from previous merge with Golden Telecom. I think that's why there is no aggressive advertising of Beeline now - budgets are cut. Many projects are postponed until better days and money are being collected for credit payments in the beginning of 2009. Even more, I heard rumors that all payments are frozen now there. So, lets switch to other MNOs :-)
I spent some time on watching "New Year Tariff" movie. I strongly believe that it is one of the most effective product placement I've ever seen. Mobile communications are strongly tied into story line. You may see MTS only twice during all movie: at the early beginning and at the end. MTS office manager is a wizard presenting love to everyone who comes and buys New Year tariff. Magic love story happens with guy whou bought New Year tariff - he gets connected to a girl from different time (one year ago). He sends her MMS, makes video calls and of course talks to her... MTS makes it true - real lovely mobile communications. At it works!
MTS brings redundant communications (even between different times), love, magic. I think this movie could be the real New Year theme for future holidays every time raising MTS popularity. I would recommend such steps to almost all MNOs all over the world. It is a good experience from Russia with love and friendship.

Happy New Year! I wish you a great success on all markets, especially on the Russian :-)

Thanks,
Denis.

Mobile Operator movies

Product placement is very popular tool of effective advertisement. One year ago Beeline was engaged in making remake of famous russian movie "The irony of fate 2" where one of main characters worked for Beeline and was solving problems with base station during film :-) You may find trailer here http://ru.youtube.com/watch?v=E-gqC0khKa0 This film is being shown in all cinemas of Russia.

Now Beeline main competitor - MTS launched New Year tariff and made special film called simply "New Year tariff" where main characters gain his luck with help of MTS new tariff. You may find trailer at the bottom of my blog or here http://ru.youtube.com/watch?v=jO9SBpLsOwg

I think it wont help New Year tariff to be popular but it will increase MTS brand in case film is more or less interesting. Similiarity of ways is seen even by child but movies with famous actors improve brand knowledge.

Megafon has chosen different way - they launched special present - pack of Megafon branded phone and SIM card. They position it as a present, very cheap but still valuable present. Which presents are now popular? Yes :-) New Year ones.

Beeline still didn't confirmed any special New Year actions (I believe their previous year film The irony of fate 2 will be shown on some of federal TV channels for free) except preparing network for high usage during holidays.

Thanks,
Denis.

Russian mentality

In the recent news posts of CNews you may find an article
http://telecom.cnews.ru/news/top/index.shtml?2008/12/25/333381
regarding not efficient deployment of CRM in MTS - the biggest Russian MNO. I do not know who is the Customer of the story but results are very clear. MTS bought CRM deployment from its affilated system integrator Kvazar Micro and spent more time and money than usual.

All russian MNOs have affilated partners. In Russia going to the right door (with right partner) is extremly significant. Of course it is the root of many problems with inefficiency but it is so and will be so. Russian businessmens often sick with an idea to make all value generating cycle with their own hands. Is it hard to develop billing for big MNO or gain experience to deploy CRM? Not so hard in Russia :-)

As mentioned in the article MTS often works with affilated Sitronics and Kvazar Micro. Hint: do you understand who is able to push vendor solution to MTS? Yes, companies which closely works with Kvazar and Sitronics. In same time Beeline has much more honest procurement of system integration and solutions and there is no such a lovely partners. Frankly speaking some preferences exist but they are 90% from previous good cooperation experience. Megafon has their good partner Telecom Design.

From VAS point of view MTS is pretty open for Content Providers making direct connections without affilated Content Aggregator. But Beeline and Megafon works through them. Megafon has Incore and all connections (Voice and SMS) are being done through it. Beeline has Temafon for such deals. In this case I think Incore is much more exerienced in VAS area rather than Temafon. That's why Beeline content portal is s ugly. About 4 years ago there was direct Beonlin portal for content providers and situation was much better for Beeline. As result such affilated business bring inefficiency in content VASes and poor VAS offer from MNO.

Thanks,
Denis.

Tariffs VS VASes

I believe one of main problems here in Russia is that MNOs are trying to launch new tariff for different types of subscribers differentiation. During my study I found tariffs for:

• Social groups (tariff for military men from Beeline, students from Megafon, children)


• Typical usage scenarios (Mobile Internet, Messaging, Long calls, Typical Mobile calls,Typical fixed calls)


• Geographical (Moscow suburban)


• Holidays (New Year tariff from MTS - Does anybody want it???)


• Subscriber mentality ("Sharp billing" :-) from Beeline, about 5 tariffs "Business usage" from MTS - they think that Corporate pack of tariffs is not enough)


• Amount of included services (minutes of calls, SMS, MMS)

In same time almost all European MNOs offer Price based differentiation of tariffs and sell services (so called VASes). What Subscriber is realy care about in choosing tariff is price. Let Subscriber choose amount of money to spend on core services and after that let him choose additional services.

I'm sure that Jack Trout idea about positioning works perfectly and it describes why it is almost impossible to decide difference between our MNOs. "Great Three" MNOs have more than 15 tariffs (I'd like to mention that Megafon policy is much better that others) and it is hard to decide which suits my needs. I tried to choose new MNO provider about two months ago but I so tired investigating Beeline portal that I decided that it is too early to change something.

Tariff is a product for MNO. MNO has to decide product line ad it should be clear for Subscriber which product suits his needs. There are a lot of examples in Jack Trout book called "The new positioning". It worths mentioning Chevrolet example - on early success stage they had cheap family cars and now when they have broad range of products they are experiencing troubles. What is Chevrolet now? It is not family car anymore. It competes with different car models of same corporation.

Exactly the same we see on Russian market of mobile communication. Are there many mothers decided to choose Beline because of "Mobile Mother" tariff which includes special wap portal and direct line to mothers consultation? I don't tink so. There is no clear product line here hence there is no clear targeting. Launching new tariffs brings Subscribers to confusion. If I'm a physical subscriber why I'm offered by range of business tariffs from MTS? These mistakes don't allow me to choose good for me operator:

• Is MTS targeted on business users?


• Is Megafon targeted on low cost communicatios?


• Is Beeline targeted in family users?


• May be they are targeted on all segments? It doesn't work with such big amount of products...

Just think about 29 MTS tariffs, 25 Beeline tariffs and 13 Megafon tariffs.

Do you understand difference between "Exciting things 08", "Monster of talking" and "Monster of talking+"? Are these products differentiated enough to be different products? I'm sure that NO.

MNOs should drop their tariffs and get new ones based on price. After that tariff constructor from broad range of services should be provided. These addons will help Subscriber to get needed services from MNO and pay optimized price for them. I think good examples are:

• http://www.o2.co.uk/mobilestariffs/tariffs/paymonthly/boltons


• http://www.three.co.uk/Pay_As_You_Go/Do_more_with_Add_ons

This approach will:

• Target MNO on solving subscriber needs!


• Simplify decision to be MNOs Subscriber


• Concentrate Subscriber on MNOs VASes


• Make MNO's product line clear

Dear colleagues, I'm very interested in your opinion regarding this theme. Feel free to send your comments :-)

Thanks,

Denis.

Who is the leader in Russia VAS?

Not so long ago held 5th VAS Conference announced VAS leader in Russia. I was a little bit surpised that it is MTS but after competitive analysis decided that committee was right.

MTS has the most attractive conditions for content providers.

• Internet traffic revenue sharing is a real plus for many projects: it makes several of them possible at all.
• Direct connection to MTS infrastucture is possible. Megafon and Beeline offers connection through affilated Content Aggregators.
• Broad range of technological interwoking: Voice, MMS, SMS, WAP, WEB. Megafon and Beeline aren't able to offer MMS connection.

I believe that MNO allurement to Content Providers is the key to VAS success. Moreover community is the main contributor in VAS business development. Content aggregation paradigm in this case is a limitaion factor.

MTS was the most active in launching new services to commercial stage.

• MMS portal is very impressive (with UGC model implemented). Megafon has very weak MMS portal and Beeline doesn't have it at all. UGC model guarantees income of huge amount of interesting content, subscribers are involved in service development.
• Music shop is the biggest in Russia and effectively promoted by MTS.

I'm really excited by MTS MMS portal. It is very innovative service and it is alreay gained popularity all over the world as MMS usage booster. Even mobile phones vendors like Nokia are promoting such services on ther dedicated platforms. Mogreet is another independent provider of such service (www.mogreet.com).

It shows that MTS isn't concentrated on only building 3G networks but in offering competitive VAS proposals. It is strong point to offer rich content services in order to load 3G networks.At the moment rich content services are boosting MMS and mobile internet usage all over Europe and Americas.

I'm sure that Beeline didn't manage to be the first in time but soon should be the leader because of big amount of efforts spent on new services. As example, Mobile Commerce implementation in Beeline is the most effective on Russian market and they have potential for further development of this service.

From another point of view the crisis will definetly influence on VAS ativities and only "quick winning" projects will be started. This trend will decrease possibility for innovative and interesting services but not so good in quick revenue generation.

The answer about future leader could be in HR area - definetly will win that MNO which wont loose right people. It will be interesting to watch at Blackberry competition between MTS and Beeline. As far as I know Megafon doesn't have such activities.

I'd like to know your opinion about VAS leadership in Russia. What is the most impresive VAS on Russian market?

http://polls.linkedin.com/p/13689/dnyiw

MTS situation

Dear colleagues,

Here you may find rough analysis and my forecasts on MTS. Initially you may find some information here: http://www.iks-media.ru/news/2390304.html
and here: http://www.cellular-news.com/story/34739.php

As you may see situation looks like in VimpelCom:

• short-terms debt is >$800mln
• rubble deprecation causes big losses (not meeting previous forecasts)
• debt problems with brother companies in AFK Sistema (Sitronics and Sistema GALS)
• AFK Sistema much more influent on MTS divident payments (than Altimo on VimpelCom) and will try to get as much as possible from MTS to cover its losses in other companies

There are several rumors about future 10% jobs cut in MTS - I think it is about efficiency improvement during crisis. CAPEX on projects isn't frozen but projects are moving very slowly. I'd like to mention MTS's ongoing investments in 3G network - new cities continue to get 3G coverage. It will cause increase in revenues from Mobile Internet traffic but special 3G services are still not anounced.

I'm pretty sure that in 2009 year the most popular reason for buying solution will be cost-cutting (efficiency improvement). Several 3G services should be launched too for marketing purposes.

Thanks,
Denis.

VimpelCom situation with crisis

Please, have a look at http://www.lightreading.com/document.asp?doc_id=168602
Here you may find good explanations about VimpelCom performance over the crisis. Having VimpelCom as a client I may add only that written in the article is the truth :-(

Thanks,
Denis.

Crisis influences on MNO

Dear guests,

I'd like to know your opinion about results of the crisis on Russian MNOs. Very soon I'll publish my estimations on this issue. Will any of operators win in this crisis? Who will travel through crisis with less losses?

Here is poll for statistics:
http://polls.linkedin.com/p/12391/ozxhh


Thanks,
Denis.