My Thoughts on Technology and Jamaica: Why Digicel and FLOW Jamaica need 90 percent Postpaid Mobile to make Prepaid Mobile Data Profitable

Wednesday, October 5, 2016

Why Digicel and FLOW Jamaica need 90 percent Postpaid Mobile to make Prepaid Mobile Data Profitable

Telecom Providers are making more money from Internet. But what part of the Internet: Fixed Line or Mobile?

The latest Telecommunications Market Information Report published by the OUR (Office of Utilities Regulation) as declared in the article “Telecoms Revenue Tops $20b As Internet Picks Up Speed”, published Friday September 9, 2016 by Steven Jackson, The Jamaica Gleaner can help settle this debacle!

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Covering Q3 ending in September 2015, the results are a continuation of the increasing revenue trend being set by Internet revenue:

1.      JA$20 billion in total revenues from voice mobile, fixed and Internet segments
2.      JA$13 billion for Voice Mobile revenue
3.      JA$2.6 billion for Fixed Line revenue
4.      JA$4.5 billion for Internet revenue

These figures presented in the Telecommunications Market Information Report for Q3 of 2015 ending September 2015 are YOY (Year on Year) increases over the corresponding periods in Q3 of 2014 as follows:

1.      JA$20 billion in total revenues from voice mobile, fixed and Internet segments
2.      6.5% increase for Voice Mobile revenue
3.      16% increase for Fixed Line revenue
4.      53% increase for Internet revenue

In the previous Telecommunications Market Information Report for Q2 of 2015 ending June Internet revenues surpassed the $4.2 billion mark or 153 per cent higher year on year as noted in my blog article entitled “Why OUR Telecommunications Market Information Report indicate Jamaicans love Snapchat and High-Speed Internet”. 

So does this mean Internet usage is on the rise? And if so, what segment of the Internet Market is responsible?

Telecoms profit from Internet – Mobile leads the charge with 1 million subscribers

Good to keep the stats from the latest Economic and Social Survey Jamaica published by the Planning Institute of Jamaica in the back of your minds as you contemplate how much money Telecom Provides make:

1.      2.8 million Jamaicans
2.      1.46 million Jamaicans use the Internet

Breaking these figures down the users of Internet are as follows:

1.      1.3 million mobile Internet users
2.      161,000 broadband subscribers
3.      966 narrowband or ADSL subscribers

These users have also increased Q3 of 2015 ending September 2015 when compared to the same period last year:

1.      40% increase for mobile Internet users
2.      3.5% increase for broadband subscribers
3.      0% increase in narrowband or ADSL subscribers

So clearly the growth is coming from Mobile Internet, which now has 1 million subscribers and 1 million problems. This includes a recent Islandwide Internet outage where Mobile, Fixed line and Broadband Network, went down between Friday September 2nd and Saturday September 3rd 2016 as reported in my Geezam blog article entitled “FLOW Jamaica Network Outage due to 1 Million Satisfied Customers” 

So, with Internet being so important, what segment of Internet makes the most money?

Fixed Line vs Mobile - Postpaid Fixed Line Growing slowly but more profitable

As was the case the last time, data collection from Digicel wasn't easy, as they're not publicly listed as is FLOW Jamaica.

But clearly, Jamaican love for Social Media Apps such as WhatsApp and Instagram may account for the explosion in Mobile Prepaid Data; Snapchat is best used on Wi-Fi from a FLOW or Digicel Play Cable Service.

Still, 90% of the JA$6 billion per quarter is actually made by the slower growing fixed Line or Landline segment, being as they are postpaid. Albeit the figures appear to show the revenue is higher for Internet, which comprises mobile Internet, Broadband and narrowband subscribers, the reality is that Broadband and narrowband or ADSL subscribers are a part of Fixed Line.

Fixed Line customers, who are at home, subscribe to Broadband and narrowband in the form of FLOW Horizon Cable service and ADSL (Asynchronous Digital Subscriber Line); these are mostly postpaid subscriber, with the exception of Browse and Talk, which is a monthly subscription.

FLOW is in the process of upgrading to VDSL (Vectoring Digital Subscriber Line) with plans to introduce FTTH (Fiber to the Home) soon as predicted in my Geezam blog article entitled “How FLOW’s 70 Mbps VDSL in St. Ann means FTTH, 4G LTE on North Coast”. 

They, however, have not been focusing on launching LTE (long Term Evolution) as LTE's high CAPEX (Capital Expenditure) and low ROI (Return on Investment) means they'll not be investign in an LTE buildout as noted in the article “FLOW Hikes Mobile Data Plans To Boost Income - Cheapest Product Doubles In Price; Now Offering 'Recharge' Loan Facility”, Published Wednesday September 21, 2016 by Steven Jackson, The Jamaica Gleaner.

C&WJ/FLOW Jamaica Managing Director Garfield Sinclair made this declaration to shareholders at the company's annual general meeting on Wednesday September 7 and he'll most likely stick to that declaration. Their focus is instead on making more money from Prepaid Mobile Data, which they've done as noted in my Geezam blog entitled “FLOW Jamaica new Data Plans as FLOW ID, My FLOW App and Streaming Needed”.

The figures present by Telecommunications Market Information Report for Q3 of 2015 make it quite plain; Fixed Line not Mobile is the real money maker.

Albeit growing faster in terms of subscribers, until Mobile is 90% postpaid as argued in my Geezam blog article entitled “FLOW Jamaica FAM Postpaid needs FLOW ID, My FLOW App and Mobile Money”, Mobile Voice and Data will not match the revenues made by Fixed Line customer who are also Broadband and narrowband, which is mostly Postpaid.




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