For Saudi Telecom Company (STC) CEO Dr Khaled Biyari, the dizzying changes taking place in the telecoms industry as part of the fourth industrial revolution mean only one thing: opportunity.
A 2015 report from the World Economic Forum (WEF) calculated that the “combined value” to society and industry from digitisation could generate more than $100trn by 2025, of which more than $10trn depends on the telecoms industry.
Such staggering figures are music to the ears of Biyari as he looks to the future of Saudi Arabia’s IT market, the largest in the Middle East. Abdulaziz Salam Al Ruwais, governor of the Communications and Information Technology Commission (CITC), expects spending in the sector to grow to SR138bn ($36.8bn) this year.
“We [telecoms providers] are the backbone. We are providing the connectivity, we are providing the access,” Biyari said at the recent Telecoms World Middle East event in Dubai. “Tremendous value can be generated and lots of savings can be accomplished just by deploying the services that our industry now provides.”
“We need to rethink our model,” he added. “That kind of incremental value is available for all of us on the telecoms side, and also clearly to the society side, but we are yet to exploit such value.”
In Biyari’s view, far too many telecoms companies remain stuck in traditional ways of operating – such as by providing voice and data services and “not much else” – while they have begun to delve into providing and managing services, such as cloud services. “Very few are yet venturing into the digital space, where further revenue is possible,” Biyari says.
“That is basically going downstream in the services side. Therefore you see them starting to operate as it relates to connected schools, connected hospitals, e-commerce managing, and things of that sort.”
Data and dominance
Companies in the telecoms industry, Biyari believes, are well placed to take advantage of the tremendous amounts of data that are now available, a fact which is further strengthened by the “solid” financial stability of the industry and the strong relationship that companies have with customers.
“We have what it takes,” he says. “Data analytics, data mining. We have tons of information that has not been exploited, and if you start scratching the surface, you’d be amazed by how much value can be generated.”
To fully move into the digital space, Biyari believes that telcos must “redefine” their core businesses, moving from networks designed for voice communications, SMS and simple data transfers, to more efficient, cloud-based networks that can cater to the requirements inherent in the explosion of data usage.
Nowhere is the exponential growth of data usage more evident than in Saudi Arabia, where – according to the 2016 Ericsson Report for the Middle East and North East Africa – 70 percent of people watch videos on social media outlets at least once a week, compared to the global average of 65 percent. Additionally, 44 percent of people said they cannot live without social media, almost twice the global average of 24 percent.
Tarig M Enaya, STC’s senior vice-president of enterprise notes that the expansion of data usage – and the company’s plans to deal with it – have been shaped by Saudi Arabia’s young population.
“Our younger generations are more tech-savvy, and expect things to move faster. They were born into a world where you can [do] almost everything online from a smartphone in your hand,” he says. “They have very high expectations. When we set our strategy in 2014 for us to become an ICT leader and reshape the market, they were the top factor driving our thinking.”
“You cannot just go on delivering connectivity services and then leave people to find the other bits and pieces, which in the case of enterprise today is mostly IT and, in the case of youth, entertainment and a sense of always being connected,” Enaya adds. “You need to deliver a total experience.”
To cope with that demand, in May, STC struck a SR7.3bn ($1.95bn) agreement with the Saudi government to offer high-speed fibre optic broadband services throughout the region, which will ultimately connect 1.3 million homes with fibre optic lines, 60 percent of which will the responsibility of STC. The project is expected to be completed by the end of 2020.
Additionally, STC is working to demolish almost all of its telephone exchanges and replace them with data centres, and in March announced the signing of a memorandum of understanding with Nokia to collaborate on trials of technologies such as 4.5G Pro and 4.9G, which are necessary before the adoption of a 5G network, which will enable advancements including connected cars, industrial networking and remote healthcare.
One of the biggest things Biyari is championing is an increased emphasis on the Internet of Things (IoT). STC is expected to soon roll out what he referred to as a “comprehensive IoT platform” that will “enable partners to work with us.”
According to Enaya, there is “huge potential” in the realm of IoT. “But expectations for what can be achieved with IoT have not been structured correctly,” he adds. “Yes, there is huge potential, but how we address that potential is key to the success of IoT and, more importantly, its transformative impact on our economy and society.”
A key measure of success for IoT, in Enaya’s view, will be in whether the customer sees the “real value” of such interconnectivity. As an example, he points to an area in Saudi Arabia’s south which suffers from frequent rainfall. There, he says, sensors – which are connected to a sophisticated environmental analytics system – help predict the risk of floods and give local residents vital time to prepare.
“That saves lives,” he remarks. “That is value.”
STC’s focus on the future of IoT in the company is born out with statistics. According to Paul Black, the director of telecoms for IoT at intelligence firm IDC Middle East, Turkey and Africa, spending on IoT solutions stood at $858m in 2016. This figure is expected to grow at a compound annual growth rate (CAGR) of 21.6 percent between 2016 and 2021 to reach $2.281bn. Black adds that the adoption of IoT by STC and other Saudi telecom companies are crucial if the country hopes to achieve its Saudi Vision 2030 aim of successfully building a digital economy.
“From an IoT perspective, it’s not just about connectivity, it’s about end-to-end solutions. It’s the platform,” he says. “What STC wants to do is position itself as a leader, as telecom companies are the ones that need to bring this ecosystem together.”
Among the challenges Biyari points to in the region is lack of venture capital funding for digital start-ups, on which the future of the digital economy depends. In May, however, STC announced the establishment of STC Ventures, a $500m, independently managed venture capital fund with the stated aim of empowering entrepreneurs to create and market leading technology businesses.
In an effort to create an environment conducive to finding potentially profitable start-ups to invest in, last month STC launched – with Saudi Arabia’s Ministry of Economy and Planning – a crowdsourcing platform which Biyari says will open doors for tech-savvy entrepreneurs throughout the kingdom.
“It’s a platform that will enable people to come with their ideas to the platform, and get exposed. Those ideas will be evaluated,” he adds. “We will, as a company, enable those innovators [by giving] access to our cloud, to all kinds of support, and then, if down the road they start having their own form, they will be hosted in our own incubator.” So far, the incubator has received “tens” of projects, which “have used modern technology”.
“Then, if they are successful, they will be eligible for the venture capital fund support,” he adds.
Enaya, for his part, says that STC welcomes any ideas, pilots, research or models that can “truly reshape our everyday life.”“We want to hear from them and engage them,” he notes. “We are also looking at non-ICT focused innovation across all verticals that leverage our ICT platforms. Anything you can imagine, from the medical industry, security sector, compelling educational projects, industrial automation, autonomous vehicles, anything that has transformative value. We want ideas that are big and daring. But more importantly, we want entrepreneurs and innovators, who have what it takes to walk the path to bring their ideas to life.”
In Biyari’s view, small and medium-sized enterprises (SMEs) have significant amounts to gain in the kind of economy that STC is helping to form.
“The digital economy is an opportunity to increase the rate of acceleration and growth (of SMEs) in particular,” he says, noting that companies are now reaching a billion dollars in profit in four or five years, in what would have taken 20 years in the “conventional” economy. To help SMEs flourish, STC has increased its purchases from them to 15 percent and created special services for the sector to facilitate their businesses at a competitive price, Biyari says.
All STC’s investments and projects, according to Enaya, are being now being done with Saudi Arabia’s Vision 2030 in mind. “Our cloud, our IoT platform, our local and global partnerships, our network, our venture capital funds, these all contribute towards achieving on the Vision 2030 goals.”
“I would like to point out that none of these platforms were structured with Vision 2030 per se in mind; rather, we took this direction with the ambition of having all these platforms there to trigger transformation,” he notes.
“When Vision 2030 was announced, and the volume of digitisation initiatives spiked, for us, it confirmed the validity of our strategy and gave us even more encouragement to keep moving in this direction and build on it.”
Jobs and digital
Another challenge going forward will be what Black describes as the “continual” need to find people with the necessary skillsets to build, innovate and deploy the solutions that the telecoms industry – both in Saudi Arabia and around the world – need to move forward.
For Biyari, imparting the necessary skills on the telecom workforce is vital – and must begin early.
“Job creation is an issue in almost every country in this region, and with digital it will be different kind of jobs that will be usable for youngsters in this region. This region, by its own nature, is very young. The percentage of youth here, clearly, is much higher than the average,” he says. “Digital can really make the difference.”
“Within the region, there is a huge need for a transformation,” Biyari adds. “Illiteracy now doesn’t mean only that you can’t read or write, I think it’s an inability to use apps and read codes. We need to re-look at that.”
STC, in Biyari’s view, can serve at the forefront of the massive transformation called for by Saudi Arabia’s long-term plans. “You need to make sure that you impact the environment that you are in,” he says. “You need to be a catalyst with society and government to make sure their objectives are met.”
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