The mobile telephony market in Mongolia is fast maturing, with expanding 2G and 3G coverage set to drive up connections and penetration surpassing 100% by the end of the year.
Industry growth has been boosted by fierce competition among the four players in the marketplace, Mobicom Corporation, Unitel Group, Skytel and G-Mobile, who are vying for just 2.8m possible subscribers.
However, progress has yet to make a significant contribution to private sector growth or translate into major investment, despite the expectation of an approaching data boom. Ireland-based analysis firm Research and Markets predicted in May that Mongolia would have 3.1m mobile connections by 2015, mirroring an expected rise in penetration rates from 30% in 2006 to 117% in 2012.
Its forecasts were supported by market leader Mobicom’s announcement in September that it had connected 359 urban centres through its GSM network, with coverage extended to the Undurkhangai soum (district) of Uvs province in the far west.
The changing face of the industry was also highlighted more recently in the annual “Measuring the Information Society” report, published by the International Telecommunication Union (ITU) on October 11, which saw Mongolia rise three places to 84. The country placed 13th in the Asia and Pacific region on the ICT Development Index, above both Thailand and Indonesia.
The Union noted that broadband penetration in Mongolia increased from 7% in 2010 to 13% in 2011, while the average bandwidth available increased from 4.8 Mbps to 5.3 Mbps and the percentage of households with a computer rose from 22.3% to 25.2%.
The industry’s fast-paced development has prompted the government’s Information, Communications Technology and Post Authority to introduce new regulations aimed at addressing the topical issue of call costs. The authorities said in September that from March next year, providers will be obliged to charge users by the second rather than rounding up call times to the next minute as is current practice. They will also be required to lower costs at weekends.
Although the upswing in internet access through mobiles is expected to put data pricing in the spotlight, Mongolia’s charges have proved to be competitive. The ITU found that 1GB of computer-based mobile-broadband access for a one-month period currently costs prepaid customers an average of just USD 10.40, which is one of the most attractive deals in the region.
Pricing is, however, likely to be scrutinised more closely as 3G coverage increases and 4G plans, touted by Mobicom, take shape. An estimated 49 soums were covered by 3G in 2012, up from 31 in 2010. Unitel launched a 3G network on HSDPA 2100 MHz in 2009, with MobiCom introducing 3.5G in the same year.
“Traditional voice and message services are changing and margins are getting lower, so future revenues lie in mobile broadband services such as IPTV, high-speed mobile Internet, voice over internet protocol, contents and applications,” D. Bolor, the CEO of Skytel, told OBG. “Within the next few years we expect to start rolling out 4G or long-term evolution (LTE) technologies.”
Around 25% of MobiCom’s subscribers, estimated at 1m, are already using smart phones and tablets that utilise the iOS, Android and Windows operating systems, according to the firm.
Coverage in rural areas has also improved, with a World Bank-funded project creating a network of 152 satellite public telephones to serve herders in remote areas beyond the reach of the mobile networks. Mongolia is the world’s most sparsely populated country, with an average of less than two people per square kilometre.
The World Bank attributes the success of Mongolia’s Information and Communications Infrastructure Development project to subsidies allocated to private operators that have enabled them to install and operate rural voice and internet services. “This approach managed to harness the power of the private sector by providing incentives to deliver services in rural areas,” it said.
While the telecoms industry is moving forward at a fast pace, the ITU’s report found that Mongolia’s ICT sector contributed less than 1% to the total value added of the private sector.
Critics say that forthcoming restrictions on foreign investment into the industry, such as a new law to come into effect in May requiring new foreign telecoms operators and investors to obtain Parliament approval if foreign ownership is greater than 51%, could have a negative impact on further expansion.
Analysts will also continue to highlight the need for the government to put measures in place aimed at encouraging greater private sector participation in the marketplace. Only then, they say, is ICT’s contribution to economic growth likely to significantly increase.
Source: http://ubpost.mongolnews.mn/
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