By: Jesse Cryderman

It would be hard not to see that these are some of the most exciting times to be involved in telecommunications. Many analysts feel there is greater change afoot in the current decade than in the previous 100 years, and it’s easy to see why: “the Internet of Things” is evolving from concept to reality, high-speed mobile connectivity is becoming pervasive, the cloud is lowering the cost of IT as well as the barrier to entry for new businesses, and Big Data analytics are helping everyone make smarter, more personalized choices. More importantly, the sheer number of people who are connected is rapidly growing: the next one billion members of the global internet community will come from developing countries and gain online access through mobile devices. Even people who actually live in caves will soon be part of the connected planet.

On the one hand, global communications service providers (CSPs) stand to gain a billion new customers. On the other hand, profiting from this opportunity requires new strategies, and the challenges in developing markets are many — business models that have been successful in the United States and Europe won’t work in, say, sub-Saharan Africa.

In many developing countries a cell-phone store is just a bench with an umbrella overhead, and basic mobile phones, not smartphones or feature phones, predominate. Customers consume far less mobile data than here in the US, for instance, and often top up one of their multiple SIMs (subscriber identity modules) on a daily basis; billing systems must profitably accommodate micropayments and microtransactions in real time. Utility infrastructure can be unreliable, and in some regions safety and lack of stability are lingering concerns as well: at Mobile World Congress in February I spoke with a project manager from Comverse about the risks in Africa, where he often works, and he showed me photos of the security detail that accompanies him as he travels between work sites.

If these hurdles can be overcome the rewards have the potential to drive global growth, which is generating intense interest in the remaining greenfield markets. “Emerging markets are the engine of global economic growth, but how to capitalize on opportunities in this challenging environment is a persistent question on the minds of CXOs around the world,” said Ken Hu, deputy chairman of Huawei Technologies and chairman of Huawei USA, during a recent speech in Tokyo. 

Despite the challenges, there is a wealth of valuable information that CSPs can leverage to crack the code in emerging markets. The following are five strategies that will prove effective.

1. Control network costs

Compared to markets in Europe, Japan and the US, customers in emerging markets generate relatively diminutive ARPU, or average revenue per user. High-ARPU, postpaid strategies are simply not applicable, nor is the network spending (and design) that typically supports such subscriber strategies; resources must be provisioned in radically different ways to drive down network costs in these markets. This is especially true in remote, rural areas, where service delivery has been prohibitively expensive for potential customers who would benefit greatly from the telecommunications revolution.

Highly efficient base stations and optimized satellite backhaul can significantly alter the network cost structure, providing a favorable platform from which operators can deliver services. Urban deployments typically require terrestrial backhaul or a relatively short distance from offload sites for the use of Wi-Fi or microwave backhaul, but those things don’t exist in the Australian outback, to name one example, so building out such a solution to serve 1,500 new customers just isn’t feasible.