Ringing in the changes

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Gulf telecom operators face a tough market this year as population growth stalls and mobile penetration hits triple digits. But a long-awaited gold rush in commercial internet services could prove to be the industry's saviour.

Vodafone qatar, the telco set to break Qtel's monopoly when it launches commercially this month, might not be launching into the best of markets but chief executive Grahame Maher doesn't seem overly concerned.

First, there is the fact that a country's second mobile carrier nearly always gains a solid market share. Second, statistics indicating that the average resident has more than one phone don't necessarily give the full picture.

"The population of Qatar, if you take the number of people coming and leaving, turns over every three or four years," says Maher. "Whether they are white collar or blue collar workers, people are usually on two-year contracts."

Third, there is the elusive surge in revenue from mobile internet-related services; a phenomenon that has been talked about in the industry since the beginning of this decade, but has yet to materialise.

With the rising popularity of smartphones - handsets such as the Blackberry and iPhone that offer advanced, often internet-based capabilities - some industry players believe they are seeing the beginnings of a trend that will be the main source of growth and innovation going forward.

"There's a big demand for things that are global, that are different, that are interesting," Maher explains. "It's not technology, because QTel can buy the same technology we can. It's the services."

His views are echoed by Etisalat's chief executive, Mohammed Omran.

"The number of customers is not the most important thing, it's the money coming from that customer," Omran said in a recent interview with Arabian Business.

"We focus on offering value customers better services and a variety of services. You have already seen us recently introduce the iPhone, and more things will be offered to our customers."

Vodafone's Maher goes one step further. His vision for the future is to make all handsets more like the iPhone, only cheaper. The company's Indian subsidiary is at the forefront of its efforts to develop the technology for this strategy.

"The iPhone issue is, it only works on an iPhone," he notes. "What we're looking at is how you get that experience to everybody in the world regardless of the phone. Some of those types of things are happening in India, because people there will use a hand-me-down handset and not even buy one."

To that end, Vodafone announced the launch of its own application store last month. Customers will be able to download tools and games to their mobile phones; a bid to emulate the success of Apple's iPhone ‘app' store, Nokia's Ovi and Microsoft's Windows Mobile Marketplace.

The site's unique selling point: developers will be able to offer applications to phones running on any software, as long as it's connected to the Vodafone network.

The arrival of the iPhone has fuelled lingering fears of telecom operators becoming little more than "dumb pipes" in the future. Through iTunes, Apple has racked up more than one billion downloads of ‘widgets', applications for everything from games to taxi-finding services, since the service launched last year.

Vodafone, however, might have an advantage when it comes to getting people to pay for their mobile downloads. The company will take a 30 percent cut of the sales on its applications website in return for offering developers access to its 289 million users around the world and, perhaps more crucially, its billing system.

"Vodafone will enable developers to use its direct billing capabilities to permit customers to pay for services wirelessly through their existing Vodafone pre-paid and post-paid accounts rather than having to input sensitive credit card data into multiple application stores," the company said in a statement. "This is expected to give customers a convenient and secure payment option for the different services on offer, and encourage greater take-up."

However, the specifics of what exactly is going to be put in each one of those 289 million handsets to make them compatible with the upcoming applications on offer has yet to be announced.

As a result, industry observers have also suggested that the portal's true number of potential customers may be significantly lower than anticipated.

Guillermo Escofet, a London-based analyst with Informa, says that in the iPhone, mobile phone content developers have found a "pot of gold".

In the past, producing content for operators meant making numerous versions of an application to cater to the hundreds of handsets that mobile carriers distribute, with their different operating systems, browsers, media players, and screen sizes and resolutions.

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