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Thu 7 Jan 2010 04:00 AM

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Competing with content

UAE incumbent Etisalat generated some attention-grabbing headlines last month with its announcement that Abu Dhabi would be the world’s first capital city to have a complete FTTH network.

Competing with content


UAE incumbent
Etisalat

generated some attention-grabbing headlines last month with its announcement that Abu Dhabi would be the world’s first capital city to have a complete FTTH network.

Having the fastest and fattest pipes is all well and good, but without something compelling to push down them, operators will struggle to get a return on their investment and they are mindful of becoming guardians of ‘dumb pipes’, struggling to balance the costs of running a financially sound network capable of delivering large amounts of data in a fast and efficient manner, while younger, more nimble organisations monetise the growing demand for content and services delivered over the internet.

Mining the money pit

Khalifa Hassan Al Shamsi,
Etisalat

’s senior vice president for marketing, says that the fibre service with its top download speed of 100Mbps will allow
Etisalat

to recoup its AED5 billion (US$1.4 billion) investment in the project by boosting penetration and by selling higher speeds. But he also points to the prospect of increasing the availability of
Etisalat

’s TV services and its video on demand and high definition television and advances in multiscreen technology as additional potential revenue drivers.

At the moment,
Etisalat

’s ‘eLife’ proposition is a ‘double play’ pairing of fixed line and TV services. As the fibre is rolled out additional services will be added, with high definition TV, video on demand and “services combining TV with voice and internet with TV and many more such creative combinations” (although it should be noted that there was no mention of combining voice with internet for VoIP services),
Etisalat

said.

A few days before
Etisalat

’s announcement,
du

said that it would be launching the country’s first video on demand service, and it released details of a deal it had signed with Abu Dhabi Media Company (ADMC) to up-link several ADMC channels to the Nilesat satellite. Discussions between the two firms are also taking place regarding the future launch of additional standard and high definition channels.

Long term strategy

Mohamed Al Shahi, senior director for
du

’s Broadcasting division, said the deal was in-line with the telcos corporate strategy for growth and development and he said the next set of TV-based offerings would come with “next-generation sound and picture advancements”.

Just as offering TV has been a key part of
du

’s services since its earliest days, so
Etisalat

has been steadily gearing up for increased fixed services, and its October acquisition of a 16% stake in Soft At Home, a French software provider that specialises in delivering digital content was a sign of its intent.

The build up towards making sure it is not left behind as a ‘dumb pipe’ has been some time in the making, and the Soft At Home deal had its origins in an agreement signed way back in July 2008 with France Telecom to collaborate in the development of multimedia services at home.

Etisalat

has now packaged its internet, fixed line and TV services together under one brand, unifying the billing and reducing the overall cost so that customers only have to pay once for both services.

Clinging on to customers

Such a move is one way that operators can attempt to boost ‘stickiness’ on the basis that the more services a customer receives from an operator the less inclined they will be to ditch them in favour of a competitor. And, having a market-leading package of content and services also provides a greater incentive to sign up with a network in the first place. But at the moment, both of those points will be lost on the residents of the UAE because they cannot choose their service provider; the country is divided up with some sections served by
Etisalat

and others (largely newer developments) by
du

. Real competition will only arrive when users can choose between the services of
Etisalat

or
du

.

It is a situation that
du

CEO Osman Sultan hopes will change sooner rather than later. At the end of 2009 he said he believes it will happen at some point this year.
Etisalat

’s Khalifa Hassan Al Shamsi was equally bullish about the prospect of being able to offer
Etisalat

’s services to customers served by
du

, but the real proof will be provided by customers when they finally get to make their own minds up.

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