However, he says the whole ecosystem for the migration from the current 3G to 4G may take a longer time than the infrastructure upgrade. “In 2005, we launched 3G but some 65% of customers still don't use a 3G phone. The whole ecosystem will take some time. Some customers are reluctant to move to new technology,” Das explains.
Last year, the Malaysian Communications and Multimedia Commission named nine companies as recipients of the 2.6G spectrum, which is mainly reserved for 4G services.
All the nine telecoms players have been allocated spectrum blocks for the 2.6Ghz although in smaller chunks than originally announced.
Maxis joint chief operating officer Mark Dioguardi says Maxis has been conducting preparatory work for its new network and 4G was going to be more efficient in delivery.
Das says telcos have just completed their 3G infrastructure and the migration to 4G would mean additional capital investments, thus he proposed telcos share their network with each other.
“We have a limited population, geographical... why duplicate or triplicate the network infrastructure,” he asks. He says incumbents including Maxis would have to swallow its ego and be rational by sharing its radio network in future.
Das said that besides monetising its network and bringing forward return on capital expenditure, the sharing of network in turn helps telcos not duplicate infrastructure and provides savings for enhancing customer service.
The need for data has also sped up the trend of collaboration between the players with several partnerships taking place this year, such as the network collaboration agreement between Celcom and DiGi.
Last October, Maxis and U Mobile announced they have entered into a multi-billion ringgit agreement to share Maxis' 3G radio access networks. (RAN), making it the first active 3G RAN sharing arrangement deployed in Malaysia.
The agreement, which will be for an initial period of 10 years, will also encompass LTE sharing when the spectrum becomes available and the technology is rolled out.
Das says Maxis expects at least RM1bil in revenue in the first five years of its 10-year agreement with U Mobile.
“This sharing will enable U Mobile to get to the market three to four years earlier compared with building the network on its own,” Das says, adding that Maxis was open to any form of sharing as it would allow the telco to monetise its unutilised network.
Dioguardi concurs that telcos should put aside their egos and share their network as it will benefit users. “It is already happening now. We should stop dragging our feet. We will be gradually ramping up sharing on our network,” he says. He says U Mobile would be contributing all its current and future spectrum and it goes into a pool.
“We have already build a large part. We will have a framework where Maxis will build the network and U Mobile will lease it. This way, the network can be optimised for better cost effectiveness,” Dioguardi says.
Separately, Das says Maxis' integration story was not over yet. “We have just put the building blocks in place. We are keeping pace with our growing customers. So, it is not an option for us. It is the way our consumer wants us to be and that's the way we are expanding our business.
“Consumers are expecting more and more from us. Five years from now, they will just not be a voice customer and will want more services. And we will have to provide it for them. There will be many of instances where there are different life cycles,” Das says.
He says the measure now for telcos was no longer what a customers needs from a certain business but what share of a customer's communication expenses does Maxis get.
“I may have had 70% of your mobile expenses but now 30% of your non-mobile expenses may come along with the extra services. So I am getting an additional share. Therefore we have to see it in the context of business expanding based on consumers requirement and, business measures changing from a mix of businesses which we can get revenue from,” Das says.
“It is very critical how we are going to deal with data explosion. Four to five years ago, 25% to 30% of our network was consumed by data but now it has reached 75% to 80%,” Das says, adding that consumer expectations on the Internet have also changed.
Maxis, he says, is making sure it can provide a better experience for its customers. “You may have the coverage but at the same time we need to ensure we have the capacity. Those are the investment we have to make,” Das says.
Separately, Maxis has also been stepping up its product offerings to include latest major devices such as the iPhone, BlackBerry or Samsung Galaxy S2. The recent launch of iPhone 4S saw a crowd of at least a thousand queuing up for their phones.
“If the product is good, it'll be an instant hit. You don't have to wait months for it to happen,” Das says,
However, he is quick to clarify that Maxis was not a phone distributor but a service provider and distributing a handset was not its core business. “We want to encourage people to be on our system. At one point, Maxis was the only service provider offering the iPhone and people will have to come to get it,” he says.
Das notes that the practice of bundling of phone with airtime is not something new to the telecom industry and in certain cases, it comes with reasonable data contract.
“We're not making margin from the phone. Affordability is a problem for some customers to own a smartphone, so we ensure consumers can afford these phones. We bring forward data revenue and any subsidy for the handset is really like a data subscriber addition cost to us. We are bundling the phone for users so they can afford it. But we're not a phone reseller,” he says.
Das says: “Yes, no doubt there's a long-term contract because there's subsidy for consumers. For some contracts, the phone is free. The subsidy is the cost for us to acquire a data subscriber. We get people to stay with Maxis for a longer period. At the same time, we could convert low data user to a strong data user.”
Das also addresses criticism that Maxis packages or services are more expensive than that of other telcos.
“We were tackling it in two ways. One is to put out packages in a manner that provides as much transparency as possible and that there's no opportunity for a bill shock. Don't create an opportunity for a bill shock in the first place. The first part we are doing now involves fresh plans. The second part is what we want to do with existing plans to see how we can improve on it.
“Let me state this, we are not in the business of overcharging our customers,” Das says.
He says consumers were less forgiving to Maxis than anybody else but Maxis has set the stage for that. “We build the reputation for consumers, so they are harsher towards us than anybody else. I think people are generally more critical towards us ... which is okay. We set those bars.”
Maxis, he says, is trying to provide more clarity and information for consumers as well as providing education for consumers on what will cost them and what will not.
“We are re-doing our packages so that high users can work within their budgets. We also have a notification system for them to alert them on their usage and what their bill currently is at.
“All these are part of growing up in the data space. We are very clear that we never overcharge our customers,” Das stresses.
On eroding margins, Das says that at this point in time, margins for voice are under pressure while margins on data are at an infancy stage.
