Telecommunication Article

MoU vs. ARPU

2008-01-21T20:49:00.000-08:00

MoU (minutes of use) is a measurement usually in minutes time unit that show how long each user (in average) consumes a product/service in a month. This measurement often used in telecommunication industries or other industries which the product/service consumption is due to time unit (time based pricing) such as : electric/power companies, gas companies, sterilized water companies, etc. The value of MoU can be used as one of performance indicators in some businesses.

Just like MoU, ARPU (Average Revenue Per User) is also one of performance indicators in running one business. This is the measurement usually in currency unit (such as : US $, ID Rp., Poundsterling, etc.) that show how much money each user spend to consume one or more products or services.

Both of MoU and ARPU are indicate the business performance that still could be related to the revenue as its end result. For example : a service company has 3,000 customers with MoU’s value is 120 minutes per month. If the unit price of its service is US $ 1.5 per minute (in average), we can conclude that the monthly revenue of that company is = 3,000 x 120 x 1.5 = US $ 540,000. Assumed if the next coming month the MoU increase to 150 minutes at the constantly unit price. We can easily calculate the revenue based on the previous month revenue. We just do the simple mathematics operation as follow : 150/120 x 540,000 = US $ 675,000.

Just like MoU, almost the same simple mathematics operation do in ARPU calculation, but a little more simple. For example : if the ARPU of a company is US $ 180 and the number of customers is 3,000 users then the revenue of that month is = 3,000 x 180 = US $ 540,000. Imagine if in the next coming month the value of ARPU increase from US $ 180 to US $ 225. The revenue will be increase also to : 225/180 x 540,000 = US $ 675,000.

In the reverse mathematical operation we can see the differences of these two kinds methods. We can see the differences from its formulated variables. Variables that effect to MoU are totally time usage (for all customers) and number of customers. In other side, ARPU’s variable are : the number of customers and the totally revenue. Either ARPU or MoU is indicate the using of each customer in a month or one periodic time. The only different is it’s the measurement unit. ARPU measured in currency but MoU measured in time unit. They both have the same variable, number of customers. To the increasing of revenue, they both still indicates the same symptomp too. The increasing of ARPU indicates the increasing of revenue, and so does the MoU.

The only question is : when do we use ARPU and when do we use MoU in our analysis ?

ARPU usually use for two or more products consumption combination, and usually the measurement unit also variated too. For example a telecommunication operator that provides voice call (pricing in US $ per minutes), data internet (pricing in US $ per Mbyte), and also mailbox feature (pricing in US $ per month). We should use ARPU method for analysis. For getting the ARPU’s value, we have to calculate the average of invoice of all customers we have. But if in case internet service provider which used flat rate time based charging method, we could use MoU method for analysis in order to evaluate the business performance.

Actually, MoU and ARPU would be better used in complementary one another. In case above, for heterogenic products we usually use ARPU for our analysis. But for further analysis, we could also use MoU (for detailed specific product) such as MoU for International Call, MoU for VOIP, and MoU for local call.
MoU also could be used for analysis which the objective is to know or evaluate the effect of marketing program especially in pricing to the increasing of the usage of every customers (in average).

Please Don’t Buy Headphone before you read this..!!!

2008-01-16T23:21:00.000-08:00

Wanna buy headphone or other electronic stuffs but still don’t know about the quality or specification in details ? Or you have limited budget for buy the stuff you want ? You could first read on this website : http://wize.com/ to help you build your consideration. This website contains Consumer research and consumer product reviews.

Each time before we make a decision to buy a product, we must consider about the functions, benefits, prestige, price, features, etc. Many people decide to buy a product after compare it with others, because people want to get the best quality with the cheapest price. Each product has its aspects or factors to fulfill the man needs. They are usually called by : technical parameters that build from the need attributes. For example : the need attributes from shoes are : the comfortably, weight, and the model. These need attributes can be transformed into technical parameters as follows :
- for weight : made by lightly material like : synthetic fiber, celluloids, rubbers, or other elastic materials with
less weight
- for comfortably : inside shoes made by foam and its tread made by abusive materials so could reduce the risk
of to be slipped
- for the model : the pattern of the shoes (colours, shapes) should be match with its users
The same analogy could be used in headphone products.

Headphone is a pair of relatively small loudspeakers (could be separated in single) which could be holding closely to man's ears in its way so he can hear himself the voice clearly from its sources (stereophonic, CD player, MP3 Player, etc) that connected to the headphone. Like other electronic stuffs, if we want to buy, first we ask or see about : the warranty, maximum power handling, the design, and also compatibility. Other considerable factors before buying headphone are : the sound quality (noise filtering capability), the sound type that could be supported (rock, pop, ballad), the sound mode (stereo, etc), frequency response, and the ergonomic (comfort to our ears). These all and maybe more of its are the technical parameters that must be assured before we buy headphone.
In wize.com we can see the comparison of two or more headphone products from different merk (models/vendors). Hereby the wize.com in display (figure 1.) :

From figure 1, we can see the display of this website. This display is a friendly user interface and also complete menu. With this display, make the users/readers easier to find what thing they want to know. This website completely with the feature like categorized product menu, filtering menu, reviews made menu, and also search button features.

This website is also able to compare the products we want to with 2 easy steps as follows :

As we can see in Figure 2, we just click in the empty boxes which related to the product we want to compare and then click the compare button. So simple, isn't it ?
.
After we do that 2 easy steps, we could see the result (comparison) in tabular like it shown in figure 3 and 4 bellow :

As we can see at those figures, beside the comparison of the related items (technical parameters) there are also the recommendation Level (the suggestion that made by simultaneously people's opinions). In this website is also contain other electronic stuffs.
Others that we can see in this website are as follows :
- Blog that contain the article, new, and writing of any products (we can see in : http://blog.wize.com/).
- Computers and Office Products (we can browse at : http://wize.com/computers-and-office).
- Kids and Baby products (we can explore in : http://wize.com/kids-and-baby).
- more over

Hopefully, this writing could help readers find the right headphone or other products as you need.

Tariff War....Is this the only solution in cellular competition in Indonesia ?

2007-10-08T00:59:00.000-07:00

Price…Tariff…Fee..is one of success factors in selling a product. In marketing theory “4P” (pricing, promotion, product, placing), pricing is the one of considered factors. In Indonesia, most of peoples are price sensitive. Whether for consumer goods, also for services, no exceptional in cellular. How far prices influence the cellular user ? Does the price is the only one strategy for cellular operators in the telecommunication business competition ?

In Indonesia, tariff war between all cellular operators is already happen intensively. All operator race to decrease the price of their

services, of course in parallel with promotion and communication to all customer intensively too. Even communications much more intensively than consumer goods. The objective is how to increase the customer based market that can get from acquisition and penetration. Beside it, with decreasing tariff, hopefully the volume of communication activities will increase too. As its barometer is : the increasing of ARPU (Average Revenue per User) and also MoU (Minutes of Use).

In Blue Ocean Strategy theory, its says that it’s better not to join the same battle with competitors, but we should make new opportunities where there is no competition. It means that tariff war should be sidestepped. Instead, we could concern in product development, coverage expansion, and improvement in outlet or distribution channel as service centers and also in promotion and communication. For new comers (new operators), low pricing is a must to look for new customers. In the other hand, for incumbent operators it’s not a problem to decrease the existing tariff for retention of being losses customers. In other words tariff war could not be avoided.

Pricing is one of marketing strategy that isn’t unique. This kind of strategy is easily to imitated. If one of operator decreases their service tariff then soon the others could do the same thing, or even with more off (more discount).

In several customer satisfaction surveys (made by independent surveyor), tariff is the most or primarily decided in making decision by customers.
Generally, this kind of survey do by divided it in three categories, such as : Voice Call tariff, SMS tariff, and Starterpack tariff. In this time, Telkomsel has the first rank, followed by Indosat, Excelcomindo, and Hutchinson Charoen Phokpan Telecommunication. But generally conclusion in that survey is all customers is already satisfied with the existing tariff. Other factors in customer satisfaction are : product quality (drop call ratio, cisrcuit fall, no service), after sales services (complaint handling, refill voucher supply), and also variation of features. Thereby, tariff is very important when we want to get customers with discount programs or other gimmicks that makes customer interest in. But, for incumbent operators that already have big customer based should be more concern in product quality and after sales services.

In this time, tariff war has already intensively happened. Its marked with intensively promotion (Below The Line and Above The Line). Perhaps, customers have already saturated with these many promotions and maybe not aware or less aware with the difference of tariff. This is probably makes the customer satisfaction index is very high in cellular tariff.

In the middle of the tariff war, cellular market/industry in Indonesia still rapidly growing. Predicted that from 2006 to 2007, cellular customers will increasing from 67.2 millions to 72.7 millions, and at the end of 2008 it will achieved 80.7 millions.

From this, it can be concluded that even with the tariff war, cellular industry in Indonesia still growing fast. The only question is whether the existing operators in cellular could be still stayed. From the market growth we see, it still could be possible for new comers. But, it’s all depend on the strategy that play by the existing operators. And the strategies mean not only with the tariff campaign, but also focused in product development and after sales services along with anticipated the turbulence of regulation changing.

Indonesia as a prosperously market target for 3G Technology

2007-10-05T17:42:00.000-07:00

Third-Generation Technology or which is often shortened by 3G is Telecommunications technology of wireless that makes customers can do communications of Voice, Data-Internet, and Video at a time of mobile.

If we see rear upon as a flash back, the growth step of cellular technology can be described as following :
1G

Technology of Cellular 1G (first generation) started in late of 1970’s and ended in 1980’s. This system still used the analogue signal processing. Telecommunication systems in this period such as AMPS ( Advanced Mobile Phone System) in United States, Amateurish Radio, NMT (Nordic Mobile Telephone) in Nations of Nordic and some State in Eastern European, and TACS (Total Access Communications System) in English. Available service was still limited to voice. That voice services is still half duplex (both way communications, but not yet simultaneously).

This technology started to expand in 1990’s and still used until now. Systems which at most used in this technology are CDMA (Code Division Multiple Access) and GSM (Globe System for Mobile Communication). This available service was expand to voice (full duplex), internet (low speed), and also text. These later continue to be developed for the next generation. In some other countries, there is also using system besides CDMA and of GSM, such as system that developed in Japan that called PHS (Personal Handy-Phone System), and also TDMA (Time Division Multiple Access). In this second generation system, the signal processing is digitally.

This system is the development of the second generation (2G), where the available services make users can do the both way communication in Voice, Data Internet, Video Call, and other multimedia services like Mobile Banking. Technologies used in this system such as : EDGE (Enhanced Data Rates for GSM Evolution) that is developed from GPRS (General Packet Radio Services), and CDMA 2000 1X that is developed from CDMA IS 95. The next evolution which sometimes is often called as 3,5G and or 4G, using system like : CDMA EVDO (Evolution Data of Only), CDMA VOD (Video On Demand), HSDPA (High Speed Downlink Packet Access), WCDMA (Wideband CDMA), and Wimax (Worldwide Interoperability Microwave Access).

Asia Pacific, including Indonesia is a very promise region for telecommunication market. Economic growth as cellular growth is very fast in this region. Implementation of cellular technology continuously developed for solving the needs of customers. Technological evolution of cellular in Indonesia even also pertained quickly. In recently 3 years, 3G is implemented in Indonesia with continuously developed any available service. From MMS (Multimedia Message Service), Internet Mobile, PDN (Packet Data Network), Mobile Banking, Cyber Media, even now the capability for Video Call and Mobile TV. This growth is very possible if we see the pattern of Indonesian people that very consumptive in telecommunication. This can be shown by the ability of market in pervading new models of handphones. With tariff war that make tariff more competitively, it’s not impossible for the cellular growth more faster like mushroom.

In marketing concept, pricing (which trend decreased) and product (which make the availability services more variously with 3G) are two of the key success factor in marketing strategy. These are intensively doing by wireless/cellular operators in Indonesia. More, with promotion and communication that intensively doing by operators by many brandings (namely : Xplor 3G-HSDPA, Telkomsel Flash, IM2) for introduce the new technologies, and outlet (retailer) spreading to suburban, it’s no doubtful that the evolution of 3G will be occurred faster than anyone can thought. The question is : how about the wireline (fixed phone service) future with the prosperously development of 3G ? How about the government regulation in anticipating it ? Will the fixed phone have the same fate like Post ? when post function was changed by the telephony services ?

The effect of Government Regulation in telecommunication sector for the growth of Cellular Industry

2007-10-03T06:10:00.000-07:00

Telecommunication technology is growing very fast, from telegraph technology where codes transmitted and translated manually, until now the UMTS (Universal Mobile Telecommunications System) concept is established. The last is known as the basic implementation of the third generation technology of telecommunication that usually called by 3G. This growth is definitely triggered by the growth of needs in telecommunication, either for business, military, or daily communication. The basic needs that trigger the establishment of UMTS is the concept of anytime, anywhere, and anything. It means that whenever . we want, wherever we are, we could do the any kind of communication (voice, data/internet, picture/multimedia, video streaming, broadcasting). As the solution, there are many kinds of telecommunication technologies. One of them is called by cellular system.
Cellular technology is one of Mobile Services (define by ITU, Regulation 1994) that make people can communicate while they are in moving. Because of the telecommunication especially cellular always growing fast, then it’ll be necessary need to be regulated by independently under government authority.
There are several reasons below that can explain why we must need the government’s regulation :
- Because the cellular system still use the frequency spectrum that is a very limited resource of a country
- For the healthy of the nation (solve the public needs)
- Because the telecommunication business needed in race the economic growth of a country

The existence of regulator in a country is a must. In several countries, the function of this organization directly handled by one department/ministry (infocom-information and communication, Postel-Post and Telecommunication). In several countries, the regulator is an independent organization. These all depend on the policies of each government. The regulator that makes policies such as : Oftel (Office Telecommunication) in England, Telekom Control in Austria, ERT (Telecommunication Regulatory Authority) in Albania, ACA (Australian Communication Authority) in Aaustralia, Jabatan Telekom in Brunei Darussalam, ART (Autorité de Régulation des Télécommunications) in France, Infocomm Development Authority of Singapore in Singapore, ICASA (The Independent Communications Authority of South Africa) in South Africa, dan and also BRTI (Badan Regulasi Telekomunikasi Indonesia) in Indonesia. Whereas, for international scale there is ITU (International Telecommunication Union) as a guidance in telecommunication.

Policies made by government (as a regulator) are very affected in cellular industry. For example, one of the policy implemented in Indonesia, that the implemented of CDMA and GSM-3G based on tender (not only incumbent operators could do these services). This makes new comers to enter the markets. This regulation makes the market growing faster as long with the fast evolution of technology that inline with the needs of variously in telecommunication services. This shown by the occurred of new comers in telecommunication business in Indonesia now, such as : Natrindo, Hutchison CP Telecom, Sinar Mas Telecom, Bakrie Telecom, Sampoerna Telecom, Mobile-8 beside the incumbent operators like : Telkomsel, Excelcomindo Pratama, Indosat, and TELKOM. With the oligopoly policy in telecommunication sector, the telecommunication market size in Indonesia will be rapidly grow. Not only the operators becoming bigger, but also the network vendor and mobile phone vendor.
We can see this growth from the fact that in last June 2006 there are 50 millions cellular users. And now, there are about 95.5 millions users.

The policy of not restrict the technologies is also affected in the telecommunication industry growth. For example, there are several newest technologies such as : GPRS, 3G, HSDPA (High Speed Downlink Packet Access), and the next soon will be implemented is Wimax (Worldwide Interoperabillity for Microwave Access. The services that can be build from this technologies such as : Video Call, TV Mobile, and Mobile Banking. The last show us that the telecommunication technologies also supporting to the growth of banking business in Indonesia.
As the growing of telecommunication industry and the more competitively in cellular industry, the government should make the policies very carefully and also wise by still keep in the principal of transparency and independency. Thus the telecommunication service can be provided for the welfare of Indonesian people.