Quality of service is more than just a buzzword in Asia-Pacific

Quality of service (QoS) is emerging as the mobile industry’s latest buzzword, and is now viewed as the most important distinguishing feature of mobile broadband services by operators and vendors in Asia-Pacific. For the first time in four years, QoS topped Ovum’s Mobile Broadband Industry Survey, Asia-Pacific as the “most important differentiator in the mobile broadband market”. In comparison, last year’s survey found that coverage was the top issue. While coverage still proved to be a key differentiator between operators’ services, the gap between incumbents and challengers narrowed.

However, a major barrier to improved QoS still exists in a number of markets – unlimited data packages. Ovum was surprised to find that approximately 40% of respondents in this year’s survey believed that unlimited plans were the most effective way to charge for mobile data. As data usage increases, unlimited plans will only lead to the degradation of customer experience. Operators will need to abandon these plans if they are to differentiate themselves based on QoS.

Operators face revenue loss from poor QoS

In markets such as Australia and Japan, network coverage is still an important differentiator for operators. However, coverage as a service determinant fell to fourth place in this year’s Mobile Broadband Industry Survey, Asia-Pacific, while QoS rose to the top. As customers now expect a high-quality, reliable service that is available all the time, operators need to increase their focus on QoS. As operators in Australia, Singapore, Japan, New Zealand, and Thailand have recently experienced, network quality problems and outages can be costly due to bad publicity, higher churn, and a loss of revenue share.

To achieve good QoS, operators need to ensure that they have enough spectrum resources. However, approximately 50% of respondents stated that they expected to experience spectrum shortages in the short to medium term. A further 40% responded that RAN capacity was “currently a constraint on mobile services”. To address these concerns, 32% of respondents identified Wi-Fi offloading as the most effective way to handle macro-network pressures. In addition to ensuring that they have adequate spectrum resources, operators need to abandon unlimited data pricing and enforce transparent fair usage policies (FUPs) to control traffic levels. Operators will also need to partner with over-the-top players if they are to maintain a strong position in the mobile data value chain.

QoS will become a regulatory issue if overlooked

Regulators have a duty to ensure that operators are able to offer good QoS by having a clear and upfront spectrum roadmap. They also need to allocate spectrum efficiently, avoiding the temptation to split spectrum between too many operators in the name of competition.

While the responsibility of ensuring good QoS ultimately falls on operators, regulators will step in if they believe they can introduce measures to improve QoS. For example, the Hong Kong regulator, the Office of the Telecommunications Authority, has banned operators from imposing FUPs on unlimited data plans signed on or after February 13, 2012. This ruling has forced operators to replace unlimited plans with volume-based tariffs, which should result in a reduction in network traffic and an overall improvement in QoS.

The Infocomm Development Authority of Singapore (IDA) has also recently intervened in the Singapore mobile market to raise the minimum standard of 3G services. From April 2012, Singaporean mobile operators must increase their outdoor network coverage from 95% of the population to “more than 99%”. Indoor coverage must also be increased to “more than 85% of each building”. While the IDA also set minimum standards for voice services, including successful peak-hour call rates and dropped call rates, the regulator did not set similar standards for data. Ovum found this to be a strange decision given that Singapore has one of the highest smartphone penetration rates in the world.

As the findings from our survey show, many operators will increase their focus on QoS in 2012. Those that that don’t may well face the wrath of regulators.

Ovum’s report Mobile Broadband Industry Survey, Asia-Pacific: 2011-12 will be published in early 2012.