BAT-ERDENE GANKHUYAG: In today's interview, we invite a man who is boldly making many new changes in Mongolia's information and communication technology sector. Today's interview will be attended by Mr.Tatsuya Hamada, MobiCom Group's Chairman and CEO. At a time when the world is struggling with the pandemic, COVID's situation is having a strong impact on many areas of business. What changes have taken place in the telecommunications sector in 2020? How much it impacts? I would like to start the interview with this question.
TATSUYA HAMADA : During the Covid, everybody is having a hard time, but thank you for inviting me today for this interview. Firstly, in order to begin our conversation, I think it is a good question to start with. All over the world, many people and many industries are struggling facing huge challenge. I think this challenge is kind of historical challenge for the entire world. Then not only in Mongolia, but also many other countries, like my home country Japan, neighboring country China, Russia and also America, European countries, Asian countries, entire world is having this common challenge right now. Having common challenge around the world is quite in a sense unique when you look back at global history. Because each individual country has faced its own unique challenge in the past, and we have not seen such common challenge before. That’s why somehow all together we should collaborate, cooperate, support each user without any kind of ego. I think this is the first thing that comes to my mind.
Then when you look at industry and economy wise, this is creating huge damage. On the other hand, during this COVID period, some of industries have been able to accelerate their growth using this COVID situation. I think one of those industries could be telecom industry, IT industry, and ICT industry. Their businesses were in a sense pushed by this COVID situation because life style change and digital transformation on business. I will explain what has been taking place later. Total entire world, the entire Mongolian country’s economic damage, industrial damage, and human life damage had affection in a quite tremendous range that we have never seen in the past. In particular, services like restaurants, cafe and bars, supermarkets, department stores and also tourism which are very important for Mongolia got affected. Furthermore, air flight, transportation logistics variety of other services were really damaged since the COVID situation started last year.
In March 2020, the first infection case was found in Mongolia. But to be honest, there wasno serious impact during last summer, but we were unaware of the possible circumstances behind the outbreak of COVID. Then suddenly in November, we started to have really hard situation. In terms of our telecom industry, as I touched on before, some parts of our business development and growth were accelerated by COVID because of life style change and digital transformation on business, but there were other parts which were heavily damaged. As you know, telecom industry basically provides voice service to customers. Voice service customer usage volume has drastically declined since February in 2020. The reason is because human activities were restricted and limited due to lock down. For example, due to the school lockdown, children are now taking their school lessons in an online form. Consequently, voice call between students and their parents were reduced as they are both staying at home.
Business purpose wise, business person is not moving around within the city area actively which leads to lesser voice communication. In addition, an international call from outside of the country to inside and from inside to outside declined. Number of foreign people inside Mongolia sharply declined due to expat number decrease in Mongolia. And also tourist number as well. That’s why international call was definitely heavily affected and sharply declined. It also affected our business revenue.
-This change in the pandemic era was completely new to all of us. New challenges are being created in every field. So what will be done in 2021 to adapt to the current situation?
-Thanks for the good question. As I touched on before, ICT industry, IT sectors business wise, in a sense was able to develop more due to this pandemic situation. The reason is that traditional methodology of communication was transforming into a new way. Or in other words, digital communication: Messenger and video voice. Even business and political conferences are being conducted through video call. Plus in enterprise case, we see that they are more seeking for efficiency in productivity by using digital technology. We generally call it digital transformation, DX. (DX is not just technical implementation but comprehensive improvement of business operation process and methodology by digital technology).
That’s why in a sense this COVID situation has been accelerating the development and growth of digital transformation in industrial level.
That’s why in a sense this COVID situation has been accelerating the development and growth of digital transformation in industrial level. Not only business, but also human life itself has been changing. For example, birthday party, as it is prohibited to gather with many people, people has started to exchange messages or celebrate via video call or messenger. By the way, similarly, In Japan, “On-Line drinking” quite popular since the start of pandemic. Also in daily conversation with parents who live in remote area, people also started conducting conversation through video call. Plus human manual operations in companies are more transforming into digital and automated way. Such kind of new normal lifestyle has been implemented already in Mongolia.
-How does this affect MobiCom Corporation's operations?
-MobiCom is providing mainly mobile service. That’s why during pandemic situation, in order to accelerate digital transformation of human life and society, mobile data quality improvement is really important. That’s why in city area, we are continuously trying to improve mobile data quality to absorb tremendous increase of data traffic. By the way, actually this action cause extraordinary heavy investment for us since last year and this year. Then on top of that, there is Mobinet company business and also Mobifinance business I woud like to touch on. I think many people may know about Mobinet and Mobifinance company. To explain simply, Mobinet is providing home broadband service and internet access connectivity to enterprise customers, government plus providing VOO, which is OTT content service, Live TV and Video streaming.
Mobifinance is providing financial service based on monpay, a payment application service with e-money license. Both MobiNet and Mobifinance companies are focusing on digital transformation in society. Nowadays, home broadband is necessary for human life and digital communication, and for digital business. Plus, OTT, VOO is a very brand new recent technology in the industry over the world. We started providing VOO since last year.
Moreover, monpay, payment application service is one of the typical example of digital transformation of traditional cash transaction into application.
Moreover, monpay, payment application service is one of the typical example of digital transformation of traditional cash transaction into application. So we are really focusing on these two business portfolios as a group.
-You touched on Mobinet LLC. Please let us know Mobinet LLC further more. Mobinet seems to be strong competitor in the internet market. As an investor, how do you see Mobinet's business growth and market conditions?
- I am pleased to introduce what we are doing to the society through Mobinet. Mobinet is quite well known as a broadband internet service provider for consumer and enterprise. Then its most advantage is high-speed quality and stable connectivity. Following the digital transformation, internet connectivity importance has been increasingly sharply. That’s why we prioritize importance as firstly speed, secondly quality then stable connectivity. In terms of such internet service quality, I think Mobinet is one of most reliable partners.
In Mongolia, there are so many internet service providers like those who also provide IPTV service, general local ISP companies and mobile operators. As for Mobinet, they are using service from another group company MobiCom Networks LLC in MobiCom group, which has direct international access to Europe, the United States, Hong Kong and Japan, which makes a strong presence by providing international high-speed and reliable good internet services to its customers. Also I would need to touch on this. In terms of internet service quality in Mongolia comparing with global average, would you know how it would be like? According to statistical data from official source, the average internet speed in Mongolia is approx. 40 Mbps only against the global average speed of 98 Mbps (almost 100 Mbps), which is far less quality than global average. To be honest, this average speed of 40 Mbps of Mongolia looks quite better than my experience at home. I think real experiencing speed would be much lower. ( *Source Data “Global index by Speedtest.net”).
Historically Mobinet wished to develop and grow the internet industry and its environment in Mongolia since its establishment. However, we have been facing and struggling with very difficult situation for many years, then at the moment, we were not market leader even with its high quality and high speed rather we were minor player comparing to major players.
Would you like to know the reason why Mobinet could not achieve what they wished in the beginning? The reason is simple.
Would you like to know the reason why Mobinet could not achieve what they wished in the beginning? The reason is simple.
Even though the market demand has been “Triple use of IPTV, Home broadband and IP Telephony”, customers should have given an opportunity to choose any of the three services individually. The freedom for customers choosing one of the three services from one operator and another from other operator was limited in the market.
Secondly, as everybody knows Mobinet with Mobicom Group has not had TV service for many years. Then without TV which is fundamental service for every household Mobinet had to limit the investment for Home broadband business across Mongolia. Because, Mobinet struggled a lot with market approach and penetration only with Home broadband and IP Telephony services as customer was not able to choose another internet service from other ISP.
As result of less competition in the market for dominant and high share operators without operators such as Mobinet or others, supposing everyone could guess, internet environment in Mongolia is now facing far below quality and speed gap compared with global standard. And not only internet service, Mobinet is also focusing on digital transformation, and contribution to the Mongolian society. In this sense, Mobinet conducts ICT business, which is information communication technology business. Generally, we call it system integration like network provision like server PC, firewall, cloud service, cloud computing kind of IT-related business, including Microsoft O365 license provision or implementation which changes usage of traditional server to cloud type. That kind of our business domain is also really vital business of Mobinet.
-There are 4 mobile operators in Mongolia. IPTV services are provided by Unitel Group and Skytel Group, but MobiCom group does not. In fact, it seems that all the possibilities are there. MobiCom has household internet, set up of network in apartments. Why has not your company provided IPTV service still now?
-Thank you for asking this question. Maybe many of people must be interested in my answer and real history. Actually we, MobiCom group wished to launch the IPTV service many years ago. Recalling back to history, in 2009, current CITA (Communications and Information Technology Authority) former ITPTA gave opportunity to provide IPTV service for 4 operators through the policy paper. It means through the Mongolian ICT policy paper, it stated that up to four operators are allowed to provide IPTV service in Mongolian market. But at that time, because of some reason related to licensing, MobiCom couldn’t launch the IPTV service, but other operators Unitel, and Skytel both groups were able to start IPTV service and established Univision LLC and Skymedia LLC. Since then in 2011, 2012, and 2013, MobiCom continuously requested to CRC (Communications Regulatory Commission) /a regulatory body/, to allow us to provide IPTV service. But unfortunately, somehow our license request was not solved. In other words, even policy maker ITPTA allowed four operators to provide IPTV service business, MobiCom’s license requests in 2011, 2012, and 2013 were rejected. Again in 2014, we submitted our request to CRC pointing out the violation of policy that 4 operators are eligible to provide IPTV service and then finally, CRC decided to announce a tender.
We thought that we would be able to provide services based on the business plan and policy paper as well as our fulfillment of the tender requirement. However CRC made decision to conduct tendering, then at that time, through tendering Mobinet company was not succeed and somehow it was not qualified. Even another two companies were selected, in accordance with license condition, once you obtain the license, within one year period you have to start business operation, service provision to the market. Unfortunately, those two players, who were granted of the tender license failed to do so. That’s why two licenses were revoked by CRC.
I think, it’s fair and normal process to revoke licenses of theirs, however, CRC hasn’t issued license for us or for another player alternatively since then. We were still following CRC decision during this time. In 2016, it was a year when I came to Mongolia, I clearly remember I had lot of discussion with CRC about IPTV service and then finally CRC announced tender again and our proposal was selected through this tender. I personally appreciated their decision at that time as it was first time for us.
But honestly speaking, regrettably it was too late. Entire metropolitan market was occupied with two major players Univision, Skymedia. Although we obtained the license, when Mobinet started to introduce IPTV services to the market, the previous two service providers had taken up almost the entire market, so the project was stopped due to high investment in IPTV networking and limited access to customers because it was unprofitable for the business. We gave back license to CRC before expiring and revocation. I directly went to the CRC office to give back license with apologies. But unfortunately market was like that. That was the story.
-Mobinet has launched a new service called VOO, which provides television and content services. I understand that MobiCom is starting to invest in content production and entertainment industry. What strategies do you follow and invest in this sector?
-Firstly I would like to mention that our multichannel TV transmitting and video content delivery service called VOO, is totally different from general IPTV service which many of people are using right now.
Main different point is technology of the services. OTT is generally called “Over The Top”, which is transmitting and streaming TV and content through the public internet. That’s an important point. I think currently world trend is moving toward to OTT because IPTV is a fixed location service. Once you made a contract then you install box, you can watch variety of channel.
I think IPTV can provide many channels, contents and video streaming. But you can’t watch out of your home. Because your service contract based on specific location and infrastructure connectivity is directly connected there, but OTT’s advantage is that as long as you have internet connectivity wherever you are not only at home, but also anywhere in Mongolia or even outside of country you can watch video streaming, TV channels services using only internet. It means we are providing much more flexibility to users.
As I touched on earlier, already in city area market, many of people using internet connectivity. Users don’t need to change the contract. Then using existing internet connectivity, they can have our service. Because we just use their internet backbone. They don’t need to cancel it, then can keep it. Then we provide VOO service. But If VOO contents, video streaming service and content delivery service same us current IPTV service players, it doesn’t make sense. That’s why we focusing on content differentiation as well.
Mostly 80-90% of our contents are different from current IPTV service. By doing so, together with current IPTV service or internet service customers can additionally have our service. There is one more point. Of course if they would like to have better internet connectivity and also more cost reasonable TV channel services, customers are more than welcome to join us without any other service use. We are minimizing contents variation and minimizing unnecessary cost for users. In other words, it's important for them not to have to pay for 200 or 300 channels they don't watch.
-Mongol HD TV also has Ori service. Emerging players in the industry are also facing challenges compared to previous video streaming services. What advice would you give to new players entering the industry? What strategy do you think is right?
-I think this is very important question. We don’t have strong intention to compete with IPTVs because they are very gigantic players, and are the most dominant players in the market. That’s why against such dominant players, if we compete freely across Mongolia by same portfolios, same way, same methodology, same price, it doesn’t make sense. We will just lose time, and money, it’s not a successful business. That’s why we are now focusing on the differentiation and pricing.
As operating OTT we need to create differentiation as being OTT service, and we think it is uniqueness. Creating unique value, becoming unique presence is very important. How we can create uniqueness? Key is of course contents. Basically people are attracted to contents. If the cinema has really good, exciting contents and heartwarming service, people will go to this cinema to watch movie. It’s same. As long as we keep giving great, interesting, attractive contents, I think users will follow us even keeping existing IPTV. Plus not only contents, variety of programs and packages are crucial for creating uniqueness.
-There are some articles on some online channels that the VOO service is operating without any official permission or license. I don’t know if it’s true or false. But I think viewers want to know this. Could you give them some information? Is it really illegal or not. What’s going on there?
-Let me explain as much as possible because some parts might refer to some entities confidentiality. But I will describe as much as possible. I don’t know who initiated this article. Few weeks ago there was a particular article that is standing against our OTT service and VOO. But actually many OTT services are available in the market not only Mobinet. But it seems that article was specifically against MobiCom group service. I don’t know who is behind these articles. But let me explain. Actually the point is whether OTT is required to have license or not. That’s a one of the key points. Article was saying they are complaining policy and regulatory authority for supporting new technology provided by Mobinet. Of course, not only just in Mongolia, generally all of the policy and regulatory authority supports new technology. It doesn’t mean they are supporting Mobinet or MobiCom group. They are supporting new technology expansion, growth and industry development.
Let me explain little bit a in a time frame. As you know, in Mongolia, in order to provide TV channel such as MNB, Mongol HD etc through the IPTV or Satellite those service provider shall obtain license. For example Univision LLC, Skymedia LLC case, both of them have license, which is called multi-channel broadcasting license based on IPTV technology. But OTT case, based on internet backbone there was no license in the past and currently there is still no specific license.
In 2020 on first of July, Mongolian parliament implemented new Broadcasting Law. Prior to the enactment of this law, when there was a policy and regulation that did not require a license, we introduced the VOO OTT service, or Content and TV transmitting Service.
At that time, in order launch service we checked and get confirmation from CITA and CRC carefully because such type of service are always subject to license or regulation. In other words, even MobiCom or Mobinet, we can’t launch the service invisibly and suddenly to the market. In addition, following our previous practice, we followed policy and regulation and got confirmation on that from CRC and CITA before we launched our OTT service.
Although there were no restrictive regulations at the time, and there were no legal issues with our service as a source of CITA and CRC, the current IPTV service providers complained to competition agency, policy and regulatory authorities. It seems that a totally at least 10 complains submitted to CITA, AFCCP, and CRC against us.
Of course, I understand existing player will try to block new entrance, but on the other hand, it means it will slow down Mongolian market development and growth 100 percent surely. Blocking new technology means that majority of users will stick to the traditional technology and never know the price and cost revere.
Another point is after that implementation of new broadcasting law on the first of July in 2020, of course OTT was still an outstanding issue, because new broadcasting law was not touch on specifically about OTT. Because OTT was brand new technology, that’s why in the law, there was no clear mentioning and differentiation of technology based IPTV and also internet based. That’s why we purely understand if there is ambiguity in the law, there will be kind of conflict or discussion. Then we understand openly.
Unfortunately, major 2 IPTV players have their own unique interpretation of law, and then they started to complain to CITA, CRC, and AFCCP again and again.
Following the enactment of the law, the CITA has developed a clear policy in this area, based on the involvement of service providers. On the other hand, since the delivery of TV channels using OTT technology is a new type of service, the policy states that the rights of service providers who have introduced services before the implementation of the Law on Broadcasting and the Law on Compliance Procedures will be preserved. If CRC decides to provide special license for OTT service providers existing providers who launched their service before the new law shall be smoothly granted by license.
However still now, even after one year of law implementation, CRC hasn’t made any decision whether OTT needs license or not. We do not yet know what will happen in the market. If license is needed, of course we will obtain license based on regulation, if it’s not necessary, in that case we will not have license. We will just follow law, regulations and policy. That’s our stand point.
-OTT is an Internet-based video service. Do you think such services should be regulated by a license or not?
As MobiCom group, we always follow law, regulations and practice. That’s why if regulatory body will decide to require license from OTT business, 100 percent surely we follow. We will do that. That’s our basic stand point. However, when you have a look at overseas, and industry all over the world, OTT case generally there is no license required. Maybe many of people may not know what OTT is available. To make it simple one is Amazon Prime, Netflix, and also Apple TV, those are major three over the world and plus Youtube and its users are using internet backbone to provide contents. Recently, general major broadcast TV companies are providing their news through Youtube live channel. That’s an OTT. But if license is will be required, are they going to request those super mega players to get license in Mongolia. Unlikely, right. That’s why I personally think that OTT should not be licensed.
OTT will create huge potentiality of farther development of internet (HBB) environment in Mongolia.
Moreover, I would like to advocate this strongly. OTT will create huge potentiality of farther development of internet (HBB) environment in Mongolia. Generally OTT, Internet based TV and Video streaming service will high quality and speed of internet. In this sense, if OTT will be spread into the market and well used by many people, it means naturally, it will lead us to further investment and development of internet environment in Mongolia. If so, how come, this trend shall be blocked by someone? Absolutely it should not be for the future of Mongolia.
-Services like our ORI are divided on whether to be licensed or not. In my opinion, it is unfair and unequal to ask for a license from Mongolian national companies if they cannot or will not apply for a license from Youtube, Facebook watch, Amazon Prime, Apple TV. In other words, if Apple TV comes to Mongolia and starts operating, the Mongolian government, or the CRC if ask for a license, but those companies will not be interested in Mongolia and will leave. In this case, only the Mongolian audience will suffer a loss. Therefore, these government agencies are of the opinion that they should not discriminate against Mongolian companies, even if they do not support them.
-Yes, I fully agree with you.
-What do we expect from VOO in the future? What are your plans for the future?
-Some parts are related to strategical confidentiality. Better to keep it in surprise for users to look forward from VOO, Mobinet. But as I touched on earlier, in order to penetrate not just market but also user’s heart, it is very important to create uniqueness. Uniqueness forms through contents type, contents attractiveness. We have just launched our service just one year ago, and we are still kind of baby in the market. That’s why we had a capability limitation to inject variety of contents, and more unique contents. Already one year has passed successfully and thanks to many supporters, subscriber numbers are sharply increasing. If so, our next stage is to propose, deliver and inject more unique contents. That’s very important.
By doing so, we try to make quite a differentiation from current IPTV, and also satellite TV players. I think at this point you are very professional in the market both as a content creator and ORI business provider. As a content creation case, I am sure you guys are providing very unique attractive content to the market. In this sense, this year and also in the future, myself and us, MobiCom group would like to seek mutual business opportunity, collaboration and co-creation of contents, movies, dramas or events. Such kind of entertainment attractiveness, we would like to propose much more. I think by doing so we can make clear differentiation from existing mega major players in Mongolia.
-On top of that, I think a lot of content creators will be very open-minded.
-So Batka, thank you for asking many valuable questions. Some parts were hidden stories, and some parts were very positive and bright for users. On the other hand, maybe some people may feel interested of one thing. I mean, Batka you are owner Mongol HD TV, content creator and broadcast company, one of most popular TV channels. In this sense we can collaborate, of course we would like to deliver your contents to the market through VOO. On the other hand, you are also operating ORI, OTT service. So many people may think that our two companies might be competitors in OTT industry. But I don’t think that we are OTT competitors, we are more like co-workers who are implementing new technology, new development. What do you think about this point?
-It’s a very important question. I think for content creators of Mongolia, at this point and time, we are not competing each other, we are competing on what contents are imported. So amount of imported foreign content consumed in Mongolia is our battle that we have to fight against. But good content is expensive to create, it takes time. So you need all the strength you can gather with your friends or collaborations. So instead of restricting content, it should be replaced. But in order to replace this, we need good team building, we need to co-create. So as long as we are importing probably 80 percent of what we watch from foreign countries, I think we should have more room to improve within the local content creator industry.
Okay, next question is the time when MobiCom is understood only as a telecommunications company seems to be behind us. MobiCom is still a comprehensive telecommunications service provider. How is the Group working with these new technologies to connect its services and create value for its customers?
-Actually this year we are being 25th year anniversary as a MobiCom. 25 years ago, MobiCom Corporation was established and we launched mobile operation service in Mongolia for the first time. I think all citizens were surprised and glad of our new entrance as mobile operator. During this 25 years period, in a sense mobile business service operation has gotten matured. Of course there are some technology differences between 2G, 3G, 4G, and now we are trying to implement 5G soon. There were technical differences but generally the first impact which was made 25 years ago was the largest one and a big surprise for users. As I said 25 years has passed and mobile service operation has been matured in market, now we are looking for next big surprise for customers. Big surprise itself is not a point, we would like to be closer to the city market, human life in Mongolia, human industry, economy. In this sense we are focusing on not only mobile operation but also home internet.
Home internet itself is just kind of platform, it is a tool. But we would like to inject some emotional impact, which could be VOO contents delivery, video streaming service. By using this, we can penetrate and approach to the users and society’s heart. I think that’s very important.
Also, not only VOO but also monpay app. If it’s just physical cash money transaction, there is no emotion. Just pay and receive, and credit card, debit card same as regular, put card inside then press the bottom that’s it. But application case is different. A variety of value will be added on your hand just on one screen such as news, coupon, gaming, all kind of lottery, point program, variety of valuable services. By doing so, we can deliver emotional experience to the customers.
-I think this is very important. In order to make our customers and society happier and more positive just giving 100 percent satisfactory level of service is not enough. It means we are providing fixed value. But beyond that if we could give emotional value it will be more valuable. People will get impressed by service and they will remember who is provider, the partner of life. We are aiming like that. That’s why not only mobile operation platform business, but also variety of business portfolios related to human life and society we are now building up gradually. Then we would like to accelerate together with digital transformation, digital technology for the future. This is what we are trying to do.
-It sounds very exciting. Thank you receiving our invitation and accepting to be the part of program. And we hope to see you again. And hope the best for MobiCom and to you. Thank you!
-Thank you!
BAT-ERDENE GANKHUYAG: In today's interview, we invite a man who is boldly making many new changes in Mongolia's information and communication technology sector. Today's interview will be attended by Mr.Tatsuya Hamada, MobiCom Group's Chairman and CEO. At a time when the world is struggling with the pandemic, COVID's situation is having a strong impact on many areas of business. What changes have taken place in the telecommunications sector in 2020? How much it impacts? I would like to start the interview with this question.
TATSUYA HAMADA : During the Covid, everybody is having a hard time, but thank you for inviting me today for this interview. Firstly, in order to begin our conversation, I think it is a good question to start with. All over the world, many people and many industries are struggling facing huge challenge. I think this challenge is kind of historical challenge for the entire world. Then not only in Mongolia, but also many other countries, like my home country Japan, neighboring country China, Russia and also America, European countries, Asian countries, entire world is having this common challenge right now. Having common challenge around the world is quite in a sense unique when you look back at global history. Because each individual country has faced its own unique challenge in the past, and we have not seen such common challenge before. That’s why somehow all together we should collaborate, cooperate, support each user without any kind of ego. I think this is the first thing that comes to my mind.
Then when you look at industry and economy wise, this is creating huge damage. On the other hand, during this COVID period, some of industries have been able to accelerate their growth using this COVID situation. I think one of those industries could be telecom industry, IT industry, and ICT industry. Their businesses were in a sense pushed by this COVID situation because life style change and digital transformation on business. I will explain what has been taking place later. Total entire world, the entire Mongolian country’s economic damage, industrial damage, and human life damage had affection in a quite tremendous range that we have never seen in the past. In particular, services like restaurants, cafe and bars, supermarkets, department stores and also tourism which are very important for Mongolia got affected. Furthermore, air flight, transportation logistics variety of other services were really damaged since the COVID situation started last year.
In March 2020, the first infection case was found in Mongolia. But to be honest, there wasno serious impact during last summer, but we were unaware of the possible circumstances behind the outbreak of COVID. Then suddenly in November, we started to have really hard situation. In terms of our telecom industry, as I touched on before, some parts of our business development and growth were accelerated by COVID because of life style change and digital transformation on business, but there were other parts which were heavily damaged. As you know, telecom industry basically provides voice service to customers. Voice service customer usage volume has drastically declined since February in 2020. The reason is because human activities were restricted and limited due to lock down. For example, due to the school lockdown, children are now taking their school lessons in an online form. Consequently, voice call between students and their parents were reduced as they are both staying at home.
Business purpose wise, business person is not moving around within the city area actively which leads to lesser voice communication. In addition, an international call from outside of the country to inside and from inside to outside declined. Number of foreign people inside Mongolia sharply declined due to expat number decrease in Mongolia. And also tourist number as well. That’s why international call was definitely heavily affected and sharply declined. It also affected our business revenue.
-This change in the pandemic era was completely new to all of us. New challenges are being created in every field. So what will be done in 2021 to adapt to the current situation?
-Thanks for the good question. As I touched on before, ICT industry, IT sectors business wise, in a sense was able to develop more due to this pandemic situation. The reason is that traditional methodology of communication was transforming into a new way. Or in other words, digital communication: Messenger and video voice. Even business and political conferences are being conducted through video call. Plus in enterprise case, we see that they are more seeking for efficiency in productivity by using digital technology. We generally call it digital transformation, DX. (DX is not just technical implementation but comprehensive improvement of business operation process and methodology by digital technology).
That’s why in a sense this COVID situation has been accelerating the development and growth of digital transformation in industrial level.
That’s why in a sense this COVID situation has been accelerating the development and growth of digital transformation in industrial level. Not only business, but also human life itself has been changing. For example, birthday party, as it is prohibited to gather with many people, people has started to exchange messages or celebrate via video call or messenger. By the way, similarly, In Japan, “On-Line drinking” quite popular since the start of pandemic. Also in daily conversation with parents who live in remote area, people also started conducting conversation through video call. Plus human manual operations in companies are more transforming into digital and automated way. Such kind of new normal lifestyle has been implemented already in Mongolia.
-How does this affect MobiCom Corporation's operations?
-MobiCom is providing mainly mobile service. That’s why during pandemic situation, in order to accelerate digital transformation of human life and society, mobile data quality improvement is really important. That’s why in city area, we are continuously trying to improve mobile data quality to absorb tremendous increase of data traffic. By the way, actually this action cause extraordinary heavy investment for us since last year and this year. Then on top of that, there is Mobinet company business and also Mobifinance business I woud like to touch on. I think many people may know about Mobinet and Mobifinance company. To explain simply, Mobinet is providing home broadband service and internet access connectivity to enterprise customers, government plus providing VOO, which is OTT content service, Live TV and Video streaming.
Mobifinance is providing financial service based on monpay, a payment application service with e-money license. Both MobiNet and Mobifinance companies are focusing on digital transformation in society. Nowadays, home broadband is necessary for human life and digital communication, and for digital business. Plus, OTT, VOO is a very brand new recent technology in the industry over the world. We started providing VOO since last year.
Moreover, monpay, payment application service is one of the typical example of digital transformation of traditional cash transaction into application.
Moreover, monpay, payment application service is one of the typical example of digital transformation of traditional cash transaction into application. So we are really focusing on these two business portfolios as a group.
-You touched on Mobinet LLC. Please let us know Mobinet LLC further more. Mobinet seems to be strong competitor in the internet market. As an investor, how do you see Mobinet's business growth and market conditions?
- I am pleased to introduce what we are doing to the society through Mobinet. Mobinet is quite well known as a broadband internet service provider for consumer and enterprise. Then its most advantage is high-speed quality and stable connectivity. Following the digital transformation, internet connectivity importance has been increasingly sharply. That’s why we prioritize importance as firstly speed, secondly quality then stable connectivity. In terms of such internet service quality, I think Mobinet is one of most reliable partners.
In Mongolia, there are so many internet service providers like those who also provide IPTV service, general local ISP companies and mobile operators. As for Mobinet, they are using service from another group company MobiCom Networks LLC in MobiCom group, which has direct international access to Europe, the United States, Hong Kong and Japan, which makes a strong presence by providing international high-speed and reliable good internet services to its customers. Also I would need to touch on this. In terms of internet service quality in Mongolia comparing with global average, would you know how it would be like? According to statistical data from official source, the average internet speed in Mongolia is approx. 40 Mbps only against the global average speed of 98 Mbps (almost 100 Mbps), which is far less quality than global average. To be honest, this average speed of 40 Mbps of Mongolia looks quite better than my experience at home. I think real experiencing speed would be much lower. ( *Source Data “Global index by Speedtest.net”).
Historically Mobinet wished to develop and grow the internet industry and its environment in Mongolia since its establishment. However, we have been facing and struggling with very difficult situation for many years, then at the moment, we were not market leader even with its high quality and high speed rather we were minor player comparing to major players.
Would you like to know the reason why Mobinet could not achieve what they wished in the beginning? The reason is simple.
Would you like to know the reason why Mobinet could not achieve what they wished in the beginning? The reason is simple.
Even though the market demand has been “Triple use of IPTV, Home broadband and IP Telephony”, customers should have given an opportunity to choose any of the three services individually. The freedom for customers choosing one of the three services from one operator and another from other operator was limited in the market.
Secondly, as everybody knows Mobinet with Mobicom Group has not had TV service for many years. Then without TV which is fundamental service for every household Mobinet had to limit the investment for Home broadband business across Mongolia. Because, Mobinet struggled a lot with market approach and penetration only with Home broadband and IP Telephony services as customer was not able to choose another internet service from other ISP.
As result of less competition in the market for dominant and high share operators without operators such as Mobinet or others, supposing everyone could guess, internet environment in Mongolia is now facing far below quality and speed gap compared with global standard. And not only internet service, Mobinet is also focusing on digital transformation, and contribution to the Mongolian society. In this sense, Mobinet conducts ICT business, which is information communication technology business. Generally, we call it system integration like network provision like server PC, firewall, cloud service, cloud computing kind of IT-related business, including Microsoft O365 license provision or implementation which changes usage of traditional server to cloud type. That kind of our business domain is also really vital business of Mobinet.
-There are 4 mobile operators in Mongolia. IPTV services are provided by Unitel Group and Skytel Group, but MobiCom group does not. In fact, it seems that all the possibilities are there. MobiCom has household internet, set up of network in apartments. Why has not your company provided IPTV service still now?
-Thank you for asking this question. Maybe many of people must be interested in my answer and real history. Actually we, MobiCom group wished to launch the IPTV service many years ago. Recalling back to history, in 2009, current CITA (Communications and Information Technology Authority) former ITPTA gave opportunity to provide IPTV service for 4 operators through the policy paper. It means through the Mongolian ICT policy paper, it stated that up to four operators are allowed to provide IPTV service in Mongolian market. But at that time, because of some reason related to licensing, MobiCom couldn’t launch the IPTV service, but other operators Unitel, and Skytel both groups were able to start IPTV service and established Univision LLC and Skymedia LLC. Since then in 2011, 2012, and 2013, MobiCom continuously requested to CRC (Communications Regulatory Commission) /a regulatory body/, to allow us to provide IPTV service. But unfortunately, somehow our license request was not solved. In other words, even policy maker ITPTA allowed four operators to provide IPTV service business, MobiCom’s license requests in 2011, 2012, and 2013 were rejected. Again in 2014, we submitted our request to CRC pointing out the violation of policy that 4 operators are eligible to provide IPTV service and then finally, CRC decided to announce a tender.
We thought that we would be able to provide services based on the business plan and policy paper as well as our fulfillment of the tender requirement. However CRC made decision to conduct tendering, then at that time, through tendering Mobinet company was not succeed and somehow it was not qualified. Even another two companies were selected, in accordance with license condition, once you obtain the license, within one year period you have to start business operation, service provision to the market. Unfortunately, those two players, who were granted of the tender license failed to do so. That’s why two licenses were revoked by CRC.
I think, it’s fair and normal process to revoke licenses of theirs, however, CRC hasn’t issued license for us or for another player alternatively since then. We were still following CRC decision during this time. In 2016, it was a year when I came to Mongolia, I clearly remember I had lot of discussion with CRC about IPTV service and then finally CRC announced tender again and our proposal was selected through this tender. I personally appreciated their decision at that time as it was first time for us.
But honestly speaking, regrettably it was too late. Entire metropolitan market was occupied with two major players Univision, Skymedia. Although we obtained the license, when Mobinet started to introduce IPTV services to the market, the previous two service providers had taken up almost the entire market, so the project was stopped due to high investment in IPTV networking and limited access to customers because it was unprofitable for the business. We gave back license to CRC before expiring and revocation. I directly went to the CRC office to give back license with apologies. But unfortunately market was like that. That was the story.
-Mobinet has launched a new service called VOO, which provides television and content services. I understand that MobiCom is starting to invest in content production and entertainment industry. What strategies do you follow and invest in this sector?
-Firstly I would like to mention that our multichannel TV transmitting and video content delivery service called VOO, is totally different from general IPTV service which many of people are using right now.
Main different point is technology of the services. OTT is generally called “Over The Top”, which is transmitting and streaming TV and content through the public internet. That’s an important point. I think currently world trend is moving toward to OTT because IPTV is a fixed location service. Once you made a contract then you install box, you can watch variety of channel.
I think IPTV can provide many channels, contents and video streaming. But you can’t watch out of your home. Because your service contract based on specific location and infrastructure connectivity is directly connected there, but OTT’s advantage is that as long as you have internet connectivity wherever you are not only at home, but also anywhere in Mongolia or even outside of country you can watch video streaming, TV channels services using only internet. It means we are providing much more flexibility to users.
As I touched on earlier, already in city area market, many of people using internet connectivity. Users don’t need to change the contract. Then using existing internet connectivity, they can have our service. Because we just use their internet backbone. They don’t need to cancel it, then can keep it. Then we provide VOO service. But If VOO contents, video streaming service and content delivery service same us current IPTV service players, it doesn’t make sense. That’s why we focusing on content differentiation as well.
Mostly 80-90% of our contents are different from current IPTV service. By doing so, together with current IPTV service or internet service customers can additionally have our service. There is one more point. Of course if they would like to have better internet connectivity and also more cost reasonable TV channel services, customers are more than welcome to join us without any other service use. We are minimizing contents variation and minimizing unnecessary cost for users. In other words, it's important for them not to have to pay for 200 or 300 channels they don't watch.
-Mongol HD TV also has Ori service. Emerging players in the industry are also facing challenges compared to previous video streaming services. What advice would you give to new players entering the industry? What strategy do you think is right?
-I think this is very important question. We don’t have strong intention to compete with IPTVs because they are very gigantic players, and are the most dominant players in the market. That’s why against such dominant players, if we compete freely across Mongolia by same portfolios, same way, same methodology, same price, it doesn’t make sense. We will just lose time, and money, it’s not a successful business. That’s why we are now focusing on the differentiation and pricing.
As operating OTT we need to create differentiation as being OTT service, and we think it is uniqueness. Creating unique value, becoming unique presence is very important. How we can create uniqueness? Key is of course contents. Basically people are attracted to contents. If the cinema has really good, exciting contents and heartwarming service, people will go to this cinema to watch movie. It’s same. As long as we keep giving great, interesting, attractive contents, I think users will follow us even keeping existing IPTV. Plus not only contents, variety of programs and packages are crucial for creating uniqueness.
-There are some articles on some online channels that the VOO service is operating without any official permission or license. I don’t know if it’s true or false. But I think viewers want to know this. Could you give them some information? Is it really illegal or not. What’s going on there?
-Let me explain as much as possible because some parts might refer to some entities confidentiality. But I will describe as much as possible. I don’t know who initiated this article. Few weeks ago there was a particular article that is standing against our OTT service and VOO. But actually many OTT services are available in the market not only Mobinet. But it seems that article was specifically against MobiCom group service. I don’t know who is behind these articles. But let me explain. Actually the point is whether OTT is required to have license or not. That’s a one of the key points. Article was saying they are complaining policy and regulatory authority for supporting new technology provided by Mobinet. Of course, not only just in Mongolia, generally all of the policy and regulatory authority supports new technology. It doesn’t mean they are supporting Mobinet or MobiCom group. They are supporting new technology expansion, growth and industry development.
Let me explain little bit a in a time frame. As you know, in Mongolia, in order to provide TV channel such as MNB, Mongol HD etc through the IPTV or Satellite those service provider shall obtain license. For example Univision LLC, Skymedia LLC case, both of them have license, which is called multi-channel broadcasting license based on IPTV technology. But OTT case, based on internet backbone there was no license in the past and currently there is still no specific license.
In 2020 on first of July, Mongolian parliament implemented new Broadcasting Law. Prior to the enactment of this law, when there was a policy and regulation that did not require a license, we introduced the VOO OTT service, or Content and TV transmitting Service.
At that time, in order launch service we checked and get confirmation from CITA and CRC carefully because such type of service are always subject to license or regulation. In other words, even MobiCom or Mobinet, we can’t launch the service invisibly and suddenly to the market. In addition, following our previous practice, we followed policy and regulation and got confirmation on that from CRC and CITA before we launched our OTT service.
Although there were no restrictive regulations at the time, and there were no legal issues with our service as a source of CITA and CRC, the current IPTV service providers complained to competition agency, policy and regulatory authorities. It seems that a totally at least 10 complains submitted to CITA, AFCCP, and CRC against us.
Of course, I understand existing player will try to block new entrance, but on the other hand, it means it will slow down Mongolian market development and growth 100 percent surely. Blocking new technology means that majority of users will stick to the traditional technology and never know the price and cost revere.
Another point is after that implementation of new broadcasting law on the first of July in 2020, of course OTT was still an outstanding issue, because new broadcasting law was not touch on specifically about OTT. Because OTT was brand new technology, that’s why in the law, there was no clear mentioning and differentiation of technology based IPTV and also internet based. That’s why we purely understand if there is ambiguity in the law, there will be kind of conflict or discussion. Then we understand openly.
Unfortunately, major 2 IPTV players have their own unique interpretation of law, and then they started to complain to CITA, CRC, and AFCCP again and again.
Following the enactment of the law, the CITA has developed a clear policy in this area, based on the involvement of service providers. On the other hand, since the delivery of TV channels using OTT technology is a new type of service, the policy states that the rights of service providers who have introduced services before the implementation of the Law on Broadcasting and the Law on Compliance Procedures will be preserved. If CRC decides to provide special license for OTT service providers existing providers who launched their service before the new law shall be smoothly granted by license.
However still now, even after one year of law implementation, CRC hasn’t made any decision whether OTT needs license or not. We do not yet know what will happen in the market. If license is needed, of course we will obtain license based on regulation, if it’s not necessary, in that case we will not have license. We will just follow law, regulations and policy. That’s our stand point.
-OTT is an Internet-based video service. Do you think such services should be regulated by a license or not?
As MobiCom group, we always follow law, regulations and practice. That’s why if regulatory body will decide to require license from OTT business, 100 percent surely we follow. We will do that. That’s our basic stand point. However, when you have a look at overseas, and industry all over the world, OTT case generally there is no license required. Maybe many of people may not know what OTT is available. To make it simple one is Amazon Prime, Netflix, and also Apple TV, those are major three over the world and plus Youtube and its users are using internet backbone to provide contents. Recently, general major broadcast TV companies are providing their news through Youtube live channel. That’s an OTT. But if license is will be required, are they going to request those super mega players to get license in Mongolia. Unlikely, right. That’s why I personally think that OTT should not be licensed.
OTT will create huge potentiality of farther development of internet (HBB) environment in Mongolia.
Moreover, I would like to advocate this strongly. OTT will create huge potentiality of farther development of internet (HBB) environment in Mongolia. Generally OTT, Internet based TV and Video streaming service will high quality and speed of internet. In this sense, if OTT will be spread into the market and well used by many people, it means naturally, it will lead us to further investment and development of internet environment in Mongolia. If so, how come, this trend shall be blocked by someone? Absolutely it should not be for the future of Mongolia.
-Services like our ORI are divided on whether to be licensed or not. In my opinion, it is unfair and unequal to ask for a license from Mongolian national companies if they cannot or will not apply for a license from Youtube, Facebook watch, Amazon Prime, Apple TV. In other words, if Apple TV comes to Mongolia and starts operating, the Mongolian government, or the CRC if ask for a license, but those companies will not be interested in Mongolia and will leave. In this case, only the Mongolian audience will suffer a loss. Therefore, these government agencies are of the opinion that they should not discriminate against Mongolian companies, even if they do not support them.
-Yes, I fully agree with you.
-What do we expect from VOO in the future? What are your plans for the future?
-Some parts are related to strategical confidentiality. Better to keep it in surprise for users to look forward from VOO, Mobinet. But as I touched on earlier, in order to penetrate not just market but also user’s heart, it is very important to create uniqueness. Uniqueness forms through contents type, contents attractiveness. We have just launched our service just one year ago, and we are still kind of baby in the market. That’s why we had a capability limitation to inject variety of contents, and more unique contents. Already one year has passed successfully and thanks to many supporters, subscriber numbers are sharply increasing. If so, our next stage is to propose, deliver and inject more unique contents. That’s very important.
By doing so, we try to make quite a differentiation from current IPTV, and also satellite TV players. I think at this point you are very professional in the market both as a content creator and ORI business provider. As a content creation case, I am sure you guys are providing very unique attractive content to the market. In this sense, this year and also in the future, myself and us, MobiCom group would like to seek mutual business opportunity, collaboration and co-creation of contents, movies, dramas or events. Such kind of entertainment attractiveness, we would like to propose much more. I think by doing so we can make clear differentiation from existing mega major players in Mongolia.
-On top of that, I think a lot of content creators will be very open-minded.
-So Batka, thank you for asking many valuable questions. Some parts were hidden stories, and some parts were very positive and bright for users. On the other hand, maybe some people may feel interested of one thing. I mean, Batka you are owner Mongol HD TV, content creator and broadcast company, one of most popular TV channels. In this sense we can collaborate, of course we would like to deliver your contents to the market through VOO. On the other hand, you are also operating ORI, OTT service. So many people may think that our two companies might be competitors in OTT industry. But I don’t think that we are OTT competitors, we are more like co-workers who are implementing new technology, new development. What do you think about this point?
-It’s a very important question. I think for content creators of Mongolia, at this point and time, we are not competing each other, we are competing on what contents are imported. So amount of imported foreign content consumed in Mongolia is our battle that we have to fight against. But good content is expensive to create, it takes time. So you need all the strength you can gather with your friends or collaborations. So instead of restricting content, it should be replaced. But in order to replace this, we need good team building, we need to co-create. So as long as we are importing probably 80 percent of what we watch from foreign countries, I think we should have more room to improve within the local content creator industry.
Okay, next question is the time when MobiCom is understood only as a telecommunications company seems to be behind us. MobiCom is still a comprehensive telecommunications service provider. How is the Group working with these new technologies to connect its services and create value for its customers?
-Actually this year we are being 25th year anniversary as a MobiCom. 25 years ago, MobiCom Corporation was established and we launched mobile operation service in Mongolia for the first time. I think all citizens were surprised and glad of our new entrance as mobile operator. During this 25 years period, in a sense mobile business service operation has gotten matured. Of course there are some technology differences between 2G, 3G, 4G, and now we are trying to implement 5G soon. There were technical differences but generally the first impact which was made 25 years ago was the largest one and a big surprise for users. As I said 25 years has passed and mobile service operation has been matured in market, now we are looking for next big surprise for customers. Big surprise itself is not a point, we would like to be closer to the city market, human life in Mongolia, human industry, economy. In this sense we are focusing on not only mobile operation but also home internet.
Home internet itself is just kind of platform, it is a tool. But we would like to inject some emotional impact, which could be VOO contents delivery, video streaming service. By using this, we can penetrate and approach to the users and society’s heart. I think that’s very important.
Also, not only VOO but also monpay app. If it’s just physical cash money transaction, there is no emotion. Just pay and receive, and credit card, debit card same as regular, put card inside then press the bottom that’s it. But application case is different. A variety of value will be added on your hand just on one screen such as news, coupon, gaming, all kind of lottery, point program, variety of valuable services. By doing so, we can deliver emotional experience to the customers.
-I think this is very important. In order to make our customers and society happier and more positive just giving 100 percent satisfactory level of service is not enough. It means we are providing fixed value. But beyond that if we could give emotional value it will be more valuable. People will get impressed by service and they will remember who is provider, the partner of life. We are aiming like that. That’s why not only mobile operation platform business, but also variety of business portfolios related to human life and society we are now building up gradually. Then we would like to accelerate together with digital transformation, digital technology for the future. This is what we are trying to do.
-It sounds very exciting. Thank you receiving our invitation and accepting to be the part of program. And we hope to see you again. And hope the best for MobiCom and to you. Thank you!
-Thank you!