I have this fault in my DNA, which I call the "delay gene" (an obvious tribute to Guy Kawasaki's killer gene). Thankfully, it prevents me from responding to hot topics uninformed or too early. I think I have waited enough to write about Turkcell's new 3G network announcement, promotions, branding, meetings and whatnot.
Turkish Telecommunications Authority awarded (Turkish only) all 3 operators in Turkey with 3G licenses in December 2008; Turkcell received A-type license, providing widest frequency band, for a consideration of €358m, excluding VAT. Keep the number in mind for a minute.
If you're into Turkish pop culture after '90s, you've probably heard about Cem Yılmaz. Behind his fabulous stand up show lies a feature I admire most; he's one of the best observers I know. In one of those shows he joked about how Turkish men are tempted to calculate costs and revenues of any business they bump into and teased how a visitor of his show would grossly calculate the revenue and find it reasonable.
With your permission, I'll do a quick entrepreneur-minded intentionally-blind shot at guessing costs and revenues of Turkcell's 3G network investment. According to a story from Cellular-News they have secured up to $750M of export financing to buy network equipment from Ericsson. Everybody knows that Huawei and Alcatel-Lucent are other vendors. Probably it's safe to assume that the adventure will cost them about $2bn including marketing efforts to build subscriber awareness. Add the license fee, and you're somewhere around $2.5bn.
It seems like there's no widely accepted, culture-changing, ground breaking success of 3G and its ISP business model anywhere around the world. Will Turkey be the first? I have my doubts; revenues won't be skyrocketing. They probably will see little bumps from time to time. On the other hand the new business will obviously open doors to new opportunities, make new friends and enemies, probably piss off or scare off some partners.
Turkcell claims to have around 32m subscribers. I'll take this with a grain of salt. If... 10m subscribers use 3G for something and increase an average revenue of $5 per subscriber a month, that makes $600m a year, but this is EBITDA. Lets assume $400m of net annual 3G revenue. It will take a bit more than 6 years before they can see first net, clean return from the $2.5bn investment. I find it, sort of, acceptable -- when everybody else is doing something and you're not doing something else to compete, you lose. I guess they would have spent the money even if the return timeframe stretched long into the next decade.
Interest-free ROI might come earlier, or god forbid, later than 6 years because market conditions will probably change. Internet penetration of Turkey is still way below Europe-average, there's a lot of growth potential here.
Enter their 3G marketing.
Before I say some bad things I'd like to clarify a bit so you hopefully don't get me wrong. I'm a Turkcell customer myself. I've worked at and with Turkcell's partner companies. I've managed and worked in many of their projects. I have many friends working at Turkcell. I like most of their operations. It's one of the most vibrant technology companies in Turkey. I love Turkcell.
Their "aren't you curious" TV commercials are very sad. To my surprise, they have failed at making 3G personal, and personalization is something they have in their DNA. Marketing a $2.5bn investment through targeting curiosity doesn't sound wise to me, and I keep hearing this from many people. I'm no marketing expert, but you really don't have to be a cook if you want to say some food tastes awful, do you?
I think Avea and Vodafone TR commercials, on the press, outdoor, radio or on TV, outperform Turkcell's from many aspects. Because 3G is essentially almost the same for everyone, it actually doesn't matter who educates the customer base. By this, and luck, I don't think the bad marketing campaign will cause a lot of loss for Turkcell. Wonders of marketing magic, you know. Say it loud, rinse, repeat, it will work. Whatever. It's not my marketing money they're converting to toilet paper. Some poor marketing company makes good money and avoids bankruptcy is what annoys me.
What I won't leave aside is the general public perception of 3G. I don't think all this technology-education-through-commercials will have any impact on the majority of subscribers (of any operator, FWIW) in short-medium term because:
- Vast majority don't need fast mobile Internet, because their life is not so complicated. Whatever that is, it can wait for a while. No one sends important urgent e-mail. If you're gonna tell something important, you better call.
- Our society and culture is not ready for video-powered services, like video calls or video mail. It's simple: People won't be able to distinguish between a video call and a voice call (this means you'll see ears instead of faces), you can't take a private video call because you have to look at the screen and use loudspeaker to hear and when you do that everyone else can watch and hear, any video call would interrupt whatever you're doing (you can't both drive and video-talk yet) and so on. There are easy fixes but they're not available yet. In the mid term, maybe in 5 years, we'll learn video. But it needs digging for now.
- Technology and its interfaces are not ready for public consumption. Most cellphones don't have front cameras, and they're not designed for video calls. Most cellphones can't pair with computers easily. Most cellphones don't have large enough screens for rich media content. There are some models, like iPhone, which are okay to some extent, but they're way beyond affordable for Turkish people, even after subsidizing. We like gadgetry, but there's a bar somewhere.
These are the reasons why probably, IMHO, in turn, a longer ROI timeframe 3G investors would expect, including Turkcell.
You know, I'm running a startup, called Construia. We do software engineering for mobile networking industry. Before that I was working for partner companies of Turkcell. I've been to Turkcell headquarters many times for many different occasions, but the last time it was really fun.
One of their marketing agencies, Mese, decided to invite well known bloggers for a party on the roof of Turkcell HQ, a week before the launch of 3G services. Obviously they're testing the word-of-mouth power: good move. To that day even service fees were a matter of speculation. As a blogger, I was invited too. We the blogging people got to try Turkcell's 3G network firsthand. We tried their VINN, "roarrrrrr" for Turkish, USB 3G modem (which is essentially a re-branded Huawei E180). There were some more gadgets, like a battery powered 3G-equipped mobile camera you could use for surveillance or video calls. A Turkcell gal was wearing a watch-shaped wrist phone, an LG model. I think wearable technology is sexy, there's some growth potential for sexy things.
I'd like to thank Alp Solak from Mese for inviting me and fellow bloggers.
Overall, I'm pretty much excited for 3G because it's a good step towards right direction: push the limits to do something useful. It has the potential to make meaning and make lives of some people easier. Only if marketed properly.