Tuesday, February 6, 2007

Developing a content market in the SEE region (extract from my speech at a conference last week)

I have the chance to speak a at conference last week in Belgrade about the future evolution of telecom in the SEE (Southeastern Europe) region organized by local magazine Ekonomist and more precisely about the future of content and future strategies for telecom operators in terms of value creation
I spent the previous day listening to the different panelist and people talking about the future. Funny enough instead of speaking about developing ideas I just could hear different complaints about the regulator (probably more than deserved) and the incumbent and this and that, but nothing like ideas or passion or energy
At my panel I have the opportunity to share the scene with leading partner from PriceWaterhouse in the region, the CEO of a local Telco provider which only issue to talk about was about LLU (even so I am still wondering what this has to do with content)
Have had the chance to listen to PWC´s partner speak about the importance of broadband development for the content future and the important role of the regulator (once more) for this development I started my speech by sharing the development of the Czech market where I believe competition play as much of a role as the regulator. Czech Republic a country where the incumbent was slow on deploying broadband (in terms of country/population coverage) thus penetration growth was slow. Just in one year having the regulator (yes of course they have an important role to play) allow both #1 and #2 mobile operators Eurotel (now O2) and T-mobile deployed CDMA 450 (and TMO went further also deploying IP wireless using its 3G technology), consumer found an alternative to broadband fixed access and these 2 players experienced the largest wireless broadband penetration growth seen in Europe until date (having acquired 14% of total broadband market). At this point (2Q 05) broadband penetration was only 7,5%. Only a year later 2Q 06 broadband penetration was already 18%, ADSL offer from incumbent having acquired most of that growth and having rolled out most of the country (having covered 2400 localities from just 1000 a year before). Sometimes competition is way stronger than any regulator
Having shared this example with the audience I went back to the key question “what is it necessary to develop a mobile (and PC) content market in the region” and I approach this question from a startup point of view. I listed 6 necessary steps/points:
- Device capabilities: these are already there. Next year handsets will have 2-4Gb internal storage capabilities, having both screen and battery technologies improved dramatically. These devices are already in the market and the entrance of new players (e.g. 3rd GSM license given to Austria Telekom in Serbia) will force operator to keep heavenly subsidizing these devices, thus customers have the device in their hands
- Type of content: here we found no surprises, youngsters and teens in the region are as interested in Music, Video and TV as in any other market, and even more eager to get them as they usually have not been able to access this content through TV or radio. The digital world offers them a new opportunity
- Skills and learning to partner: having worked with some operators in the region I know that they are struggling for talent. In such environment, companies have to understand that the solution may not be bringing in-house capabilities but looking for partners and individuals that are developing these capabilities outside the company and can become the right partners
- Content availability: local content is key for attracting the interest of the target segment, and just as an example here small companies even individuals can create a mobile TV channel showing local music band videos and interviews with just 1,000 EUR
- Open environment: in those countries as Japan or the Nordic countries operators did create open environment where instead of trying to grab as much of the benefits as possible and control the user experience the did open their portal and create a win/win value proposition for consumers, content/application developers and operators. Fortunately we start seeing this positive and open environments at some operators in the region
- Private Equity/financing for small companies: the last piece of the puzzle but a key one. There was tons of bankers and investors in the conference but I still saw all of them looking at big privatizations, large companies, etc. being this area of the economy very important there is a need for this sector to create financing opportunities for small companies. We have seen (and this is still the case) that banks are not in the business of financing small companies (unless you or your parents have 2/3 houses you want to use to finance your company) so private equity/venture capital has to be able to provide 100-500k financing to small companies with good ideas and good management to move from idea to product development allowing them to become attractive companies for larger and more conventional financing
That’s was my speech

1 comment:

  1. Cris,

    Just one comment on your speech. What about the still prohibitive off-net data traffic tariffs charged by operators in EE and elsewhere? I think this is still one of the main barriers to the entrance of new users, who would otherwise be very happy to start consuming digital content on their handsets!

    Unless operators open the gate by lowering data transfer tariffs, the only other thing that could spark mass consumption of content over mobile networks is the content itself, and appart from adult entertainment (always a key driver), I see no other killer content out there that could do the miracle!

    Great to read you. Love your blog.