Friday, Jan 17, 2014

Dubai

Telecom operators in the Gulf are seeking to add new capabilities and diversify not just into international markets but also into new business streams due to the high mobile penetration levels.

“We expect mobile data will continue to remain a cash cow for operators in 2014, contributing nearly 40 per cent to mobile services revenues,” Paul Black, director of telecommunications and media at research firm International Data Corporation, told Gulf News.

Fixed voice revenues are expected to contract nearly 12 per cent to just over $400 million in the UAE this year while mobile data is expected to grow eight per cent.

However, the growing popularity of data-hungry applications and services, particularly video, will contribute to an exponential increase in data traffic and make network investment economics difficult to justify.

The exponential increase in mobile data will force operators to rethink their network and data sources strategies.

With growing impact, competition and recent introduction of MNP in markets like Qatar and the UAE, he said mobile voice has been getting increasingly commoditised for some years. This trend resulted in bringing mobile data services related strategies to fore in operator’s business models.

IDC predicts that changing customer preferences, the growing usage of applications, rising smart device penetration, and the increasing prominence of over-the-top (OTT) services will continue to transform services and business models. The rise of the internet economy, supported by improving data services, especially mobile services, is blurring the line between traditional telecommunications services and digital media services.

“The common trend we see is the evolution to the networked society, where connectivity will lead to new ways of innovating, collaborating and socializing. People, things, interactivity and great ideas will come together to create a revolution in the way we live,” Anders Lindblad, President of Ericsson Middle East, said in an emailed statement.

For the Middle East to reach the networked society, he said people need to be connected anytime, anywhere, on any device, and we are working with operators across the region in deployments that will satisfy the consumer demand for this year and beyond.

“As operators gain control of content and content delivery, they are able to boost the uptake of their data services, which means additional revenues,” Black said.

He said one obvious solution for entering into the digital space is the greenfield approach, in which operators build a new business organization. However, it is time consuming, and, at times, players miss the boat while waiting for the new organisation to become operational.

“An inorganic alternative is to acquire other stakeholders in the value chain. We believe operators will aim to acquire content aggregators and platform developers in order to maximize their share of the communications and media market,” he said.

As markets continue to evolve, more customers are eschewing core telecommunications services in favour of rich OTT services and this is forcing regional operators to reevaluate their business models, data offerings, tariff packages, and even network rollout plans, as well as go-to-market strategies.

While traditional services are still offered, operators are expanding their role in the digital value chain by promoting local content generation and application development. Operators are also looking at adjacent markets and exploring “new digital services opportunities,” Black said.

STC, Etisalat, MTN, Safaricom, Vodacom, and Mobily, among others, have launched their own app stores, but the success of these stores has yet to be validated despite strong competition from the app stores of mobile platform developers, OEMs, and OTT players.

“Operators are also looking to use the app stores of platform developers and OTT players as a means of extending the reach of their customer services,” he said.

In defining an OTT strategy, he said regional telcos will have to decide whether they will compete with current OTT providers or collaborate with them. These telcos will continue to align business models to gain maximum benefits and focus on partnerships.

A number of partnerships with OTT providers currently thrive in the region, including Mobily and Nawras (Oman), Airtel Nigeria and WhatsApp (Nigeria), STC and Viva (Bahrain), and Etisalat and Facebook (Eygpt). These partnerships will continue to gain prominence, as they can help operators to reduce the long service innovation cycle and significantly reduce the risk associated with failing to emulate OTT services successfully.

By Naushad K Cherrayil Staff Reporter

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