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is one of the few companies to emerge recently with great promise for Pakistan. What I may call one of the most ambitious ventures the country has seen, the company hopes to roll-out a national fibre network, international connectivity, a WiMax based network operator, and telecom hotels all over the country.

The promise that they bring is a focus on empowering the smaller players, and the ‘telecom hotels’ will be at the forefront of this promise.

Telecom hotels are purpose-built data-center facilities built in major parts of the country. Each hotel will — I assume — connect with their backbone networks and be able to provide transit and international …

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Pitstops and Hotels for Telecom Traffic

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is one of the few companies to emerge recently with great promise for Pakistan. What I may call one of the most ambitious ventures the country has seen, the company hopes to roll-out a national fibre network, international connectivity, a WiMax based network operator, and telecom hotels all over the country.

The promise that they bring is a focus on empowering the smaller players, and the ‘telecom hotels’ will be at the forefront of this promise.

Telecom hotels are purpose-built data-center facilities built in major parts of the country. Each hotel will — I assume — connect with their backbone networks and be able to provide transit and international data paths.

The promise, and analysis after the jump.

This is promising because enterprises and other smaller players can choose these as co-location facilities. Thinking about rolling out data centers for their services stops being a nightmare, as they just need to rent-out hotels in all the cities they plan to operate. They get a purpose-built data-center facility with optimal connections to the network as well as utilities. It gives them flexibility in being able to expand and contract their data center as needed.

Transit services between cities just means booking space at two or more hotels — almost like choosing your entry and exit points on a highway for your data.

At this point, however, this only remains a promise. Typical challenges with network maintenance — such as criminal tampering of the transit lines — has often driven the costs of transit very high. With Wateen, an added need to recover investment at significant returns will also play a role.

At the end, the factors which turns the promise into a competitive offering is the Total Package Offering for the hotels (i.e. ‘what do I get when I check-in’) and Total Cost of Solution (the hotel, the highway, the flight abroad, and toll-gate prices to other networks). Usually I fear co-location and adding another person in the middle only bumps up the total costs.

I suspect Wateen will price backhaul access very similar to PTCL, while initially focusing on the promise of better customer relationships / network quality. I am not sure if they have enough incentives to compete on price, especially if they think that the added capacity on the backhaul network to Pakistan is enough value for their customers. If this is the case, the hotels will start to look like added cost. Maybe price wars can begin after Dancom’s national ring goes live.

Wateen should consider (if they are not already) investing in pre-built inter-connections between the hotels and all other networks in pakistan (operator networks, PIE, financial transaction / ATM networks, etc.) and charge for the interconnection if a client needs it. This would make this offer much more compelling, because it helps the clients avoid lengthy (2-3 month) negotiations for each interconnection, and lets them plan their business almost as simply as choosing the roads through which you want data to travel.

As value-added service, I hope Wateen keeps its pricing model simple. Make a flash-based control on the website which lets businesses just simply experiment with different routes on the network and see real-time affects on total cost.

A welcome effort for the country, but we wait to see the true value it could bring. Do you think it will have an immediate impact regardless of initial pricing? Let me know your thoughts on it.

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  • Given huge investment that is being done by Wateen Telecom in areas such as WiMAX, VoD, SOHO etc is there a good subscriber base for all such services? Thanks

  • Everyone is basing their business models on 1M subscribers within 2 years. It almost seems like everyone used the same market research firm :)

    Recently I read somewhere that now they are making lower estimates. Nayatel launched their consumer-side FTTH services 3-4 months ago and they just crossed 100 subscribers recently.

    I personally think there is a market here for VoD – video can move the consumer market to the next step but the interactive products really need to be ground-breaking. This is also the only way these telecos can hope to attract me as a consumer. If IPTV quality is lower than cable TV, and if I’ve already solved my cable-tv problem, then why would I consider paying 20k+ for the FTTH home gateway?

    I also think WiMAX could work in PK because of its much lower infrastructure costs, but Wateen will have to figure out a way of securing their wimax points from thieves. Wateen would also have to offer dramatically lower pricing on the Wimax network — just promised on techy terms like “quad-play” wont help them beyond the first 5000 customers.

    SOHO? Well, maybe VPN Access for SMEs, but most small business are not going to invest in bandwidth. Most startups built around web-based technologies or other innovative network-based ideas cant work here anywhere if their cost structure is 4 times the US and price points are 50%.

    All-in-all, what is really needed is a much broader involvement of the industry in creating an independent “national internet” segment that is (mostly) isolated from the international world — if it can be 4 times cheaper than regular internet for 5 times the bandwidth, I think it could open up the market to innovation. The small guy here making the “next IM application” will have to only compete with teh other small fry in Karachi, not with Yahoo or Google. If enough “local internet” applications are made that are relevant for Pakistanis only, then it might be able to drive up wimax subscriptions.

    I’ll see if I can write on that in a short while.

  • Wimax is still an unproven technology / business model. In theory it should be a great disruptive offering but we need to see equipment (CPE) prices fall … Wateen’s trials will tell a lot. See my post:
    http://telecompk.wordpress.com/2007/01/08/wimax-in-pakistan/

    About FTTH and VoD .. I have it at my home and it is great. If prices are reasonable it should be a winner. Wateen is about to offer triple play in Lahore Defence and I hope to try it in near future.

  • Thanks for the interesting IPTV story. I’m trying to learn everything I can about IPTV and glad I stumbled on your site. I find this new technology so amazing and exciting.

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