MobiCom at the gateway from Asia to Europe

30 November 2018 | Natalie Bannerman

Cover

Capacity speaks to Tatsuya Hamada, MobiCom’s CEO and a member of the board of directors about the opportunities that in Mongolia for the company. By Natalie Bannerman

Mongolia is situated strategically between the vast landmasses of Russia and China, making it home of one of the fastest transit routes for international capacity between these countries. As such, Mongolia acts as a key but underused gateway into Asia from Europe – but not enough of the telecoms industry are aware of this.

Because of Mongolia’s liberalisation a number of years ago, the market now has several telecoms players including foreign investors supporting in-country business.

One such case is when MobiCom was established over 20 years ago, with Japanese company KDDI as one of its three shareholders. Both private and state-owned companies have been operating in the Mongolian market under its independent regulatory body.

Tatsuya Hamada, CEO of MobiCom, says that, from a regulatory standpoint, Mongolia has some of the best conditions for increased telecoms investment.

“The Mongolian regulator issues several types of licences for international telecommunications services and transit capacity services to promote business and fair competition in the market – as result avoiding monopolisation and unbalanced domination of market share.” 

Hamada says that there are no specific barriers to entering the Mongolian market. The key is finding the right partner that can support your business locally and has experience of the market.

 

Terrestrial transit

MobiCom Networks “will focus on increasing our contribution in terrestrial transit capacity businesses between Asia and Europe by offering reliable transit-Mongolia services to our partners”, he says.

“The Mongolian market is unique in terms of marketing and its commercial point of view. It is also comparably competitive, even though market scale is not large compared with other markets over the world.”

As a landlocked country the main infrastructure the country has is high-capacity fibre networks. Each of the major telcos in Mongolia has its own network, meaning that end users and partners can enjoy diversified network services.

Increasing data demand is influencing operators on a global scale. Social media, video streaming and data hungry applications are all having an effect on business strategy.

How does this influence things in Mongolia? “Residents enjoy both Mongolian domestic content and foreign content,” says Hamada. Mongolian residents receive a number of over-the-top (OTT) services from abroad through the public internet – demonstrating the high standard it offers.

Aside from the internet-based services, the majority of content in the country is offered through IPTV, satellite TV and cable TV. However, the trend in the content space will also shift from fixed subscription to on-demand based subscription.

 

Rising data demands

MobiCom implemented 4G mobile in 2016 and extended the service nationwide in 2017. Since then, says Hamada, data demands from mobile users has exploded, with double-digit growth. At the same time he says that traffic volumes in fixed broadband have also been increasing year on year – all of which is directly as a result of users accessing OTT video content via the public internet, as well as the rise in online gaming.

MobiCom has a number of strategic advantages to help manage this trend, he says.

“We have the largest share of mobile subscribers together with fixed broadband users, who are the key driver of data traffic growth.”

MobiCom has its own large-scale fibre network across Mongolia, the second largest in the country after the state’s own network. And it has its global data centre in the capital, Ulaanbaatar – with a planned second phase in the works.

“We are only one with those strong advantages in Mongolia,” explains Hamada, making the company the “best and right” partner for foreign companies entering the market.

The company has an international backbone running between Russia and China and connecting its Russian and Chinese partners, plus a fully diversified international internet backbone to Frankfurt, Hong Kong and the US. This will be connected to MobiCom’s data centre.

Mongolia is a country whose terrain is made up largely of mountains and rolling plateaus. As a result rural deployments are important. Hamada says: “MobiCom has been working closely with the state company, which has capacity or last-mile connectivity. Sometimes we also work with other wholesale companies that have capacity where we don’t.”

 

Plans for 5G mobile

He says that 5G development will mostly be focused on Ulaanbaatar at first, as it won’t be required everywhere in its early stages. But he adds that there is still a lot of room to develop and improve 4G.

“Almost 45% of the Mongolian population is located in the capital city. Even if you include the second and third largest cities, it is still less than 55% of the total population. This means that the Mongolian industry is very centralised in the capital city.”

Looking ahead, should Mongolia be successful in attracting its desired level of investment, Hamada’s vision would be to extend and develop the country’s telecoms sector so that it can complete on an international scale.

As we head into 2019 MobiCom from Hamada’s perspective is homing in on a few key sectors. The first is vertical growth of the mobile core business by data, as well as horizontal growth “to extend cross industrial business portfolio based on our mobile and fixed data network and users”.

 

  • There will be a workshop focusing on Mongolia at Capacity Asia in Hong Kong on Thursday 6 December, starting at 12:15. For more details go to the event website