posted on June 30, 2009 12:55
Emerging markets are not just a major driver for WiMAX these days. Increasingly, they are moving away from duplicating models that dominate in developed countries (and that many WiMAX operators there follow as well) to create truly innovative models, that are based on the specific dynamics of the markets where they operate.
Yota is one of the best examples of this. I met them in February and I found them amazing, but at the same time I was a bit suspicious. Could they really pull it off? Well, a few months later, they appear to be moving in the right direction and if anything they are doing better than I expected. True, having deep pockets helps, but that does not guarantee innovation, and in some cases it may stifle it.
So what’s special about Yota? They are one of the many WiMAX operators in Russia, but they are the ones with the strongest focus on mobility. They have 2.5 GHz spectrum and $470 millions funding. Since their launch in June 2008, they have signed up 76,000 customers and claim to sign up 1,300 new subscribers a day (suggesting that demand has started to pick up lately).
Of their 850 employees, 200 develop software, because Yota sees itself as a content and application provider as well. The service offered includes voice and a subscription to video and music content, and it has been all tightly integrated since the very beginning. They are working with major content providers, like EMI, Sony, Universal, and Warner. All the services they offer are on based on unlimited use to make the service simple and attractive to subscribers. With the all-you-can-eat plan at $16/month, it will be challenging for Yota to offer all this and become profitable, but they may be able to generate the volumes needed. It is a big gamble though.
Yota has been the first operator to launch a WiMAX and cellular phone. The proposition they offer to their subscribers is very simple: they can choose the cellular operator they want and they are in charge of managing their contract with the operator as they wish. In most cases, this probably means that the subscribers simply move their existing SIM card from their old handset to the new one. The phone works like a regular cell phone where there is no WiMAX coverage. In WiMAX areas, subscribers can receive calls to their cellular number and their VoIP line, and can decide whether to place a call through the VoIP or cellular line. This leaves maximum freedom to the subscribers and removes the need for Yota to establish a partnership with one or more cellular operators. As a result, the WiMAX phone was introduced in the market right away, since lengthy negotiation with cellular providers could be skipped. More importantly, this approach provides subscribers with a device that combines good coverage (in cellular-only areas) with good throughput and lower cost services where WiMAX is available.
The phone is quite expensive at over $1,000, but not much more expensive than other smartphones, but that does not stop subscribers from buying it. In February, the company said that 20% of their subscribers had a phone. That’s quite a high percentage given the cost of the phone and the fact that the core WiMAX services typically appeal to the laptop users.
More devices have been announced, including a mass-market phone and a middle-range Android phone. It will be interesting to follow the evolution of their service.