With devices and on-demand connectivity progressing at light speed, telecom companies engage in an arms race to predict the direction of technology and usage.
By Thomas Johnson
In this new digital era, where technology is advancing at light speed and consumers expect to be able to access online content anywhere at any time, the island’s telecommunications companies have shifted the priorities of their business models to prioritize data above all else. Now that data is king and online video content is prevalent in the marketplace, customers have begun to clamor for greater amounts of bandwidth, and the industry finds itself caught up in an arms race to upgrade their networks and customer service before the next big jump in technology hits.
“The biggest customer request in almost every instance is, ‘Give me more data,’” says IT&E CEO John Compton, echoing a sentiment voiced by telecom CEOs across the board. “It gets to be a bit of a broken record because we hear it so often, but on a personal level, I understand it because I want to watch Netflix without buffering, too. But as the content providers raise the standards and quality of the transmission, customer demand increases, and we have to up our game to keep up with it.”
Video streaming, in particular, is becoming a point of concern. As high-speed Internet access has become available across a multitude of platforms, Netflix, Hulu and other video streaming applications have come to dominate bandwidth usage on both fixed and mobile networks.
“We now estimate that about 90% of the consumption on the network is data, and the majority is video data,” says Robert Haulbrook, CEO of GTA. “It’s a big change from five years ago when you still built your network out to support voice and SMS.”
Rene Lao, chief financial officer of iConnect, says, the telecom trends that began several years ago are still very evident. “People are shifting from landline to mobile. SMS or texting is slowly giving way to more data messaging via applications, and smartphones have outsold the traditional cellular phone types. Everyone is eagerly waiting for the new wearables, online health apps and soon, the intelligent driverless automobile. Internet speeds and capacity are only going to get faster and more efficient. The ‘Internet of Things’ [technology trend] is surely on its way, if not already here in its early stages.”
Compton agrees that an increased desire for content on demand has created a driving force for mobility, but he says that it will eventually become necessary for providers to upgrade their existing networks in order to stay competitive.
“At this point, it’s no longer about phones,” he says. “We all sell the same phones, and you can get phones elsewhere. I’m not in the business of selling phones; I’m in the business of selling quality service, and 99 times out of 100, that has to do with faster data. Coverage isn’t an issue for us, but we have to provide more bandwidth ahead of the power curve. That’s the arms race that we’re all gearing up for, and I think that the telecom provider who does that the best will be the long-term winner in any market.”
GTA has been pushing particularly hard to meet the demands on bandwidth, given a growth in data usage of more than 200% between last year and the previous year. “It puts a lot of pressure on us in the industry to add capacity and optimize the network as much as possible,” Haulbrook says.
The company has also allocated more than $20 million toward expansion of its network over the coming year and is planning to add another 21 LTE sites to its existing network and increase its coverage on island from 65% to 95%. In addition to the growth of the network, Haulbrook adds that GTA will be adding another 100 employees to its current stable of 370 to better accommodate its growing user base and will be bringing its Genius Bar service to more locations in the coming year.
Even those telecom companies that don’t provide wireless service, such as Pacific Data Systems, which specializes in local exchange carrier services via landline and Internet protocol phone systems, are feeling the impact of the shift.
“It’s a huge change, and it’s driving all sorts of changes to our technology and the way we provide services,” says John Day, president of PDS. “It used to be that — well, even today — telecom companies have provided communication over copper wires for about 100 years, and a lot of Guam’s copper cables have been in the ground for three or four decades. That’s been the way we’ve communicated, and that just doesn’t cut it anymore. You can’t make copper wires fast enough to handle the type of content that customers want.”
What a lot of carriers are doing are a result, he says, is investing in fiber-optic networks, which are the only networks capable of handling the level of information that people are demanding.
“Technology is evolving at light speed, and demand is growing with it, and for carriers to deliver multi-megabit streams, let alone multi-gigabit streams, to whole neighborhoods is extremely demanding, and there’s no carrier on Guam that can do that today. There are a lot of carriers who are positioning themselves to try and do it, but it’s a work in progress,” Day says.
In regards to whether the growth of wireless and data consumption would have any adverse effects on the wired telecommunication field, Day added that he is not particularly worried about the development, due to PDS being more of a boutique provider dealing more with enterprise and government systems.
“We acknowledge that landlines are disappearing as wireless devices and data take up more of our lives,” he says, “and our business is affected by that in a positive way, but also in a challenging way. My daughters will never have a cable TV subscription because they were raised in a time when you can reasonably expect to talk to someone, watch video content and do a ton of other things without paying a dime. That’s the market that’s coming, and we’re all seeing big changes because of that.”
The industry changes are filled with opportunities, Day says.
“But the guys that are out there making $150 a month per subscriber — their business model is going to be turned upside-down,” he says. “It’s a disruptive effect, but like any disruptive effect, there are always opportunities involved. It’s just up to us to find them.”
Most telecom leaders agree that an extensive amount of foresight and preparedness will be required to sustain their current levels of success.
“I think a successful telecom company needs to combine strategic vision, cutting-edge technical knowledge and a deep understanding of one’s customer,” says Jonathan Kriegel, president and CEO of Docomo Pacific. “The communications environment is evolving rapidly, with increasingly sophisticated and demanding customers who want integrated, seamless and fast access to content across multiple devices. The CEO’s role is to ensure that all of our associates understand the future direction for the business and are working together to get there.”
Kriegel adds that he expects even more demand and more robust mobile and fixed services over the next year and that video will continue to become a crucial aspect of service for many customers. “We need to make new investments in the network and optimize the video experience,” he says.
Foresight is essential for telecom providers and the ability to follow quickly changing trends among customer desires.
“[…] You have to look at trends and think well in advance what customers are really going to want in two or three years,” Haulbrook says. “Some of these problems just aren’t solvable in six months’ time; you have to be a couple of years ahead of the curve.”
One of the ways he does this, he says, is being an avid user of the products himself, which allows him to see what’s coming and prepare for when the customer really needs those products and services.
Sometimes a company’s predictions of customer preference in the coming years don’t quite hit the mark, and in these instances, Compton says they have to be willing to fail quickly.
“We always try to stay ahead of the power curve on new products and services, but sometimes they just don’t work and you need to know when to cut bait,” he says.
However, in spite of their plans to expand their networks and keep them well ahead of customer demand, all CEOs agreed that the island’s current telecommunication infrastructure is at a very high level of advancement, with current networks being as good as, if not better than, many of their stateside equivalents.
“When I arrived on Guam last year, I was surprised by the range and quality of telecommunications services available to customers,” Kriegel says.
Guam offers four mobile networks, all offering the most advanced LTE services, he says, and on the fixed side, there are three providers, including two who provide TV services.
“This is an unusually rich set of choices for customers in a community of our size. In terms of next steps for Guam, customers should be offered more options for accessing their content and entertainment services anywhere on island from a wider variety of devices,” he says.
In fact, the island’s infrastructure needs very little, if any, advancement, according to Compton. “I’ve worked all over the world, and I’ll tell you that Guam benefits from some very advanced telecom networks,” he says. “There are any number of fiber-optic cables, because of where Guam is, that connect us to multiple places in the world. We have access to all the networks, all the phones, all the apps. We have access to anything you can access in the mainland.”
Lao says parts of the United States are still waiting for LTE and 4G signals, while Guam has already been offering them for the last couple of years.
“I foresee Guam’s telecom industry heading wherever the worldwide trend leads us. Faster data, mobility, wearables, smartphones, interconnected devices, smart homes, smart offices, smart cars and equipment, mobile payments/wallet and many other exciting things. Let’s just make sure that the development of technologies to safeguard data security goes hand in hand, as well,” Lao says.
Day, who has stood witness to the development of the island’s telecom industry firsthand over the past several decades, attributes much of the advanced state of the island’s networks to the Telecom Act enacted by the legislature in 2004.
“It’s had a really positive impact on the local telecom industry over the past 10 years,” he says. “It’s grown the market, it’s brought investment in, and it’s done everything that the legislature predicted would happen. When you look at the past 10 years, I think that piece of legislation is one of the most far-reaching and dramatic that Guam has seen in the last 15 to 20 years because it involved privatizing a government enterprise like GTA and releasing it into the free market. And because of that, there’s been a tremendous amount of investment and competition going on over the past decade. If you look at the cellular deals we have here on Guam, they’re as good as, if not better than, some of the deals in the U.S. Our technology is good, our network capabilities are good, and our coverage is good. And it’s only getting better as we go.”