Author(s): Kester Mann
At a recent seminar in London, I received an update from Telenor on its ambitious strategy to bring Internet services to its entire Asian network.
The Norwegian operator has a major presence in the region, with over 150 million subscribers spread over five countries:
- Bangladesh, where it has a majority stake in the Grameenphone network
- India, where it operates the Uninor subsidiary
- Malaysia, where Telenor holds a 49 percent stake in DiGi
- Pakistan, where it operates as Telenor Pakistan
- Thailand, where it runs the DTAC network
Telenor plans to launch in a sixth country, Myanmar, before the end of 2014.
The operator's head of strategy and digital, Henrik Clausen, said that "Internet for all" is one of Telenor's three strategic pillars. He highlighted pricing, devices, networks and partnerships as the principal elements behind a ubiquitous yet profitable mobile Internet strategy. The group's Asian markets are in different stages of development, but a series of operator-level presentations demonstrated a consistent approach across the region.
One of the most interesting aspects of the plan is the use of bite-sized pricing. In Thailand, for example, two-hour Internet packages and daily Facebook passes are proving popular among DTAC subscribers — less than a year after its launch in 2012 more than 1 million customers were paying 5 baht (€0.1) for daily Facebook access. Telenor has found these users now spend twice as much as its average prepaid customer.
Bite-sized pricing helps subscribers access mobile Internet affordably. Many Asian customers are paid daily, in cash, and don't have a bank account, making even a one-month top-up unattractive. The concept closely resembles the recharging model of prepay, which is the dominant payment method in the region. Telenor noted that social and entertainment apps (particularly Facebook) create an attractive first Internet experience that enables familiarity and quickly drives interest in other services.
One of the most crucial elements to driving long-term Internet adoption is falling device prices. DTAC has launched its own range of affordable Internet-enabled devices in a move parallel with the industry-wide trend towards low-cost smartphones. Its TriNet 3G range starts at 1,990 baht (€45) and the operator hopes to bring prices closer to €20 in the near future. The number of TriNet phones sold has more than trebled to over 190,000 since September 2013.
A major barrier to Internet adoption in Asia is that many customers don't believe it's relevant to them. Telenor is using targeted, below-the-line campaigns to overcome this, explaining the benefits to customers currently not using data services. It's also marketing on social media.
Telenor plans to drive Internet usage beyond basic social and information services, focussing on vertical segments such as health care, agriculture and financial services. This is particularly relevant given the often very low availability of fixed-line communications in Asia — fixed-line broadband penetration is only about 1% in India, for example.
Telenor says that 80% of the population in Bangladesh is unaware of the Internet, and many others consider access to be an elite phenomenon. Grameenphone aims to overcome this, implementing a programme with students to communicate benefits to retailers. It has also worked with the government to boost education in schools in a bid to grow the overall potential market. However, literacy remains a major barrier, with between 40% and 60% of the Bangladesh population unable to read.
Bringing a profitable Internet service to its 31 million customers in India is perhaps Telenor's biggest challenge. The market is fragmented and highly competitive, and many of its customers earn less than $2 per day. Uninor's strategy for the mobile Internet is based on 2G technology and focusses on offering access to services such as WhatsApp and Facebook in ways that do not consume significant volumes of data. This is important as the operator is constrained by a limited spectrum holding. Accessibility is being driven by $20 feature phones and a wide distribution network of about 350,000 outlets. The strategy appears to be working — the company's Internet users spend an average of 50 percent more than voice-only subscribers.
Telenor's strategy can be compared to efforts by Google, Facebook and the GSMA to drive Internet adoption in emerging markets. Google recently said that it plans to deploy a fleet of low-orbiting satellites to extend access to remote areas. The move raises the stakes in the fight for Internet supremacy, as Facebook pushes its Internet.org initiative with similar ambition.
The margins from low-spending customers in emerging markets will be thin for network operators and Internet players alike; costs can easily spiral and uptake is not guaranteed. However, there remains a huge segment of the world's population that has yet to embrace the Internet, and Telenor has created a sensible and innovative strategy that could offer significant rewards in the long term.