Business

WhatsApp driving mobile data boom

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Friday, April 11, 2014    

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DIGICEL says it has nearly a million mobile phone users actively using data on devices in Jamaica, against the background of a "massive explosion" in demand for WhatsApp and other mobile data platforms.

According to Digicel Jamaica CEO Barry O'Brien, there was a more than 150 per cent spike in the use of data among subscribers on the company's 4G network last financial year. And positioning the company towards facilitating the increasing demand for mobile data will be one of two major strategic areas of focus — the other being ICT — going forward as core voice revenues continue to be pressured by voice over IP applications and downward pricing, O'Brien said.

The Digicel boss noted that the move towards mobile data is a global trend. He supported his assessment by highlighting that mobile messaging platform WhatsApp has grown to almost 500 million customers across the world sending 64 billion messages each day. WhatsApp allows users to chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. Users can also communicate with people overseas without incurring expensive international texts or phone call charges.

Mark Zuckerberg, the CEO of Facebook, which is buying WhatsApp for US$19 billion, expects the platform to grow to a billion users within two years.

"What this means from a mobile telecommunications standpoint is that more traditional forms of communications such as text messaging are being replaced by the likes of WhatsApp, enabled by mobile data connections," O'Brien said in an address at the Jamaica Employers' Federation CEO Breakfast, at the Jamaica Pegasus hotel in Kingston on Wednesday.

"We are also predicting that many other mobile applications will play a vital role in the development of Jamaica, especially apps dealing with VoIP services, mobile financial services, media/content access and payment systems," he added.

Following on a $7-billion investment in its network between 2011 and 2012, Digicel spent an additional $4 billion last year and has committed to investing a further $4 billion in its 4G mobile broadband technology in 2014, primarily to increase penetration and capacity.

With the increased demand for mobile data, there has of course been an increase in demand for data-enabled handsets. In fact, Digicel reported earlier this year that it saw a 50 per cent increase in data-enabled handsets in 2013 compared to 2012. In order to attract data customers, the company last year invested in the development of its own data-enabled smartphone, with a reccommended retail price of less than $10,000, relatively very affordable compared to other smartphones on the market.

"Since launch, we have sold over 60,000 such devices," O'Brien said.

Digicel also has plans to aggressively diversify revenues through ICT, which presently accounts for about a tenth of sales. The company has invested heavily in ICT, including corporate and consumer WiMax networks for delivering wireless broadband, a Tier 3 data hosting centre and the current subterranean fibre roll-out.

"From these investments we have been rewarded with a greater than 50 per cent increase in ICT revenues in our financial year just ended," O'Brien said, adding "We see this continuing to increase with the target to get ICT to 25 per cent of total revenues over the next two years."

He noted that the growth in ICT bodes well for the development of the country, citing studies that show that every 10 per cent growth in ICT equals one per cent growth in an overall economy.

O'Brien also used the platform to reaffirm Digicel's committment to Jamaica, which is no longer the top revenue-earner for the company.

Currency movements and lower call rates resulted in Jamaica dropping one spot to the third highest revenue earning territory for the telecoms group, during its December 2013 quarter. Haiti remained the top territory, followed by Papua New Guinea, which surpassed Jamaica over the quarter, financials indicated.

The revenue decline in Jamaica came against the background of the group relocating key management from the island to Ireland at a new corporate office in Dublin, a move that raised questions as to whether Digicel's corporate base in fact remains in Jamaica, where the group has called home since its start-up in 2001. The group in 2012 opened an 11-storey office in downtown Kingston, Jamaica describing it as its global headquarters.

"Despite the main issue of currency depreciation, Digicel continues to believe in Jamaica," O'Brien said. "We plan to remain truly relevant as we play our part in the development of business in Jamaica."

Digicel Jamaica last week renewed its 15-year mobile license and purchased a Long-Term Evolution (LTE) licence for a combined total of US$85 million.

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