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Thu 12 Nov 2009 04:00 AM

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Telco trailblazers

The UAE telecoms industry is in a state of flux. As infrastructure investments begin to pay dividends the region's media owners are armed with an arsenal of new delivery platforms. Digital Broadcast speaks to the three most significant players in the UAE, du, Etisalat and Yahsat.

Telco trailblazers
Mohamed Yousif, CEO, YahLive.
Telco trailblazers
Farid Faraidooni, EVP commercial, du.
Telco trailblazers
Khalifa Al Shamsi, Senior vice president of marketing, Etisalat.

The UAE telecoms industry is in a state of flux. As infrastructure investments begin to pay dividends the region's media owners are armed with an arsenal of new delivery platforms. Digital Broadcast speaks to the three most significant players in the UAE, du, Etisalat and Yahsat.

Globally, there is little debate that countries like South Korea and Hong Kong are leading the way in terms of internet connectivity, broadband speeds, mobile TV and IPTV penetration rates. The infrastructure in place has provided a full spectrum of opportunities for content owners to provide high-quality services across a range of platforms.

The Middle East has been accused of lagging behind rival markets when considering the above criteria, particularly broadband connectivity.

While some have pointed to the GCC nations' massive mobile penetrations (routinely above 100 percent and in the case of the UAE, 200 percent) the cost, speed and penetration of broadband services have provided little cheer.

Over the past 12 months however, the UAE has benefited from the launch of numerous new services and network upgrades that will advance its infrastructure towards the standards enjoyed in other regions, by media players and consumers alike.

Perhaps the most contentious telecoms issue in the Middle East is broadband access.

Limited coverage due to the challenges of installing infrastructure together with the very high access cost for consumers (admittedly, in comparison to developed markets) has limited the uptake of broadband services.

Etisalat has completed the rollout of its fibre to the home (FTTH) network to 700,000 homes in Abu Dhabi, with the rest of the UAE to be covered by the end of 2011.

"We want to develop the UAE as one of the best connected countries worldwide so that it can offer the best services for the business community and consumers," says Khalifa Al Shamsi, senior vice president of marketing, Etisalat. "The simplest measure of the quality of a broadband network is the speed. Last month, we announced the availability of 30MB/s internet speeds, which is the fastest connection in the region."

For the previous four years the UAE's incumbent telco has been challenged by newcomer, du. Many have questioned exactly how competitive the market has become since du's arrival. However, there are signs that this competition could widen.

"When du launched it bought the network assets from TECOM in Dubai, primarily in the Media, Internet and Studio City complexes," explains Farid Faraidooni, EVP commercial, du. "As a result our broadband availability in Abu Dhabi is very limited. It is not reasonable for us to go and dig the streets up and make major investments in infrastructure when there is a simpler solution - to share Etisalat's network infrastructure."

So what does the prospect of network sharing say about the level of competition in the UAE?

"The competition comes at the service layer, networks sharing does not mean that one will squeeze the other or one will be uncompetitive," affirms Faraidooni. "We are only talking about the sharing of the physical network sites. We already share mobile network infrastructure. This co-operation will not at all limit our competitiveness at the service layer. This is how it should be, the competition should occur in the services and applications that are offered to customers," adds Faraidooni.

The proposition of network sharing at a national level in the Emirates could prove to be a turning point, offering consumers throughout the country the choice of either operator. It is difficult to imagine any of this making a significant difference to broadband penetration in the UAE without a dramatic change in the pricing structure.

"Broadband is something that we are very keen to develop. The next stage, however, is to look at making it more competitively priced so that it offers more value," admits Faraidooni.

"Once there is scale in broadband availability, through the sharing of facilities and infrastructure that will allow us to extend the reach of our broadband services. We are talking to the UAE Telecommunications Regulatory Authority (TRA), Etisalat and other industry players on how we can encourage the spread of broadband in the country. Once that scale is available I think you will see a revolution in pricing structures," claims Faraidooni.

"We provide 24MB/s over fibre, which is something we are proud of. We were the first to reach that speed and we have many customers who are enjoying that service at home, but the prices must come down."

According to Faraidooni, the negotiations over network sharing (held under the supervision of the TRA) are already advanced and he expects the culmination of these and the resulting "price revolution" to take place in early-2010.

These sentiments are shared by Etisalat, which will be lowering broadband prices as well as upgrading speeds for its customers over the coming months.

"As more FTTH is deployed, this will be complemented by a reduction of the current broadband prices and an increase in speeds for certain subscribers. This is at the core of our strategy," claims Al Shamsi.

"It is increasingly the case that many of the lower speeds offered cannot support much of what the user wants to do. For example, the gaming community or heavy multimedia users have little to gain from a 256Kb/s connection. They need a higher speed and this is what we are focusing on."

Al Shamsi claims that the network technology in place is as advanced as any in the world, but he does acknowledge that this alone is not enough."The focus must be on the customer and the technology must only be a tool," he explains.

"Telco operators in any market become successful when they stop looking at what the technology can do, and start thinking about what the customer actually wants and how the technology can deliver that."

This is the point at which services, applications and content of all forms increase in value and begin to differentiate one operator from another.

These can take the form of branded content portals and online video services often tied up with a user's mobile account, linking their wireless and fixed line services. The final component of these triple play packages is of course the TV service.

Etisalat already has its own branded TV channels on its eVision TV service as well as via its online video portal, which is also used by MBC and Dubai TV.

"The major broadcasters in the region have shown a lot of interest in the online platform already. There were 10 million videos viewed during Ramadan on the sites, which reflects the hunger in this market for online video to be delivered not just to this region but beyond to Arab nationals in other countries of the world," Al Shamsi points out.

"We are positioning the company to have a big say in the development of future services including content. We can now use our presence in 18 countries to work with broadcasters, networks and aggregators on the content side. It can be a difficult position to be in when you are a single operator, because of the limitations on the size of the opportunity. Right now we are talking about 18 countries covering 1.6 billion users, that gives Etisalat more negotiating power. We also have the ability to exploit rights across our own infrastructure on a number of platforms, which puts us in a strong position."

In the past three months, it has been these TV services - the most visible aspect of the bundle - that have seen the most development in the UAE.

Etisalat's eVision service has been adding content, including HD channels. In the UAE, it now competes successfully with the region's big two pan-Arab pay TV networks.

In early September, du switched its IPTV services to the Microsoft Mediaroom platform, upgrading the existing basic, linear service to a fully interactive, true IPTV service with PVR set top boxes and access to the region's, albeit limited, HD channels.

"There are more than 10,000 customers on the new platform already and the migration of existing customers is in full swing and should be completed by the end of this year," says Faraidooni. "We launched the new IPTV service in early-September. There is a tremendous difference between the old and new platforms, the PVR and HD capabilities being the big incentives."

The competitive edge in TV services that du has arguably now gained, has not gone unnoticed by Etisalat it would seem.

"We have completed ten IPTV trials using our own experts in the market and a large number of focus groups to tell us exactly what customers want," claims Al Shamsi. "We want to use an open system that enables market intelligence and will allow developers to pitch in and contribute. Enabling third-party development is the valuable lesson of the iPhone story."

iPhone race heats up in UAE

Du recently announced that it would be the first operator to bring the iPhone 3GS to the UAE market, with Etisalat following shortly after.

The significance of the iPhone reaches beyond that of other handset releases given the effect it has had on mobile media usage.

"We have made sure that we have a simple data plan," says du's Faraidooni. "The next step is to put together the content. We have to make sure our plan suits the vast majority of our customers and is easy to use throughout. Once these fundamentals are established we will begin to look at the next layer, the services and applications.

"It's too early to name any specific partners but we have begun to talk to the TV networks, studios, content creators, aggregators and providers," he added.

While IPTV services look set to continue their growth in the UAE the region at large is unlikely to be able to ween itself off satellite as the primary platform for TV delivery.

Given this fact and the increasing demand for capacity from broadcasters looking to roll out HD channels, the timing of Yahsat's arrival in the satellite operator market appears very timely.

YahLive - the company's broadcast service arm - recently appointed former Arabsat CCO Mohamed Yousif as its CEO.

With competition from established satellite players and the increasing penetration of IPTV, is Yousif  confident that there is room for a new entrant?

"Any new entry to the market has to offer something extra and different," says Yousif. "It could be a nice technological feature, it could be they are having issues with their current provider, it could be the way you conduct business... something that lures clients to use that new operator."

"There is no one-fits-all solution, I am a firm believer in that. IPTV could be right for one location but it won't be good for another. FTTH is an interesting approach but satellite has always remained resilient and always finds a way to adapt to the market. Many people said when cellular telecoms arrived that satellite telephony would die. Instead, satellite is used by the networks for cellular backhauling. This industry always evolves to change."

YahLive will have 23 transponders on Yahsat's 1a hardware scheduled for launch in early-2011. The satellite will be positioned at 52.5 east, outside the hotspots filled by the likes of Nilesat and Arabsat.

"We will have to do something to differentiate ourselves in the eyes of the public so more and more consumers will buy a new dish or add a new feed to their existing antenna so that they can watch channels on 52.5 east," admits Yousif.

The answer to this could lie in HD content with YahLive's clean slate offering it an opportunity to comfortably host as many HD channels as the region is likely to produce in the immediate future.

"One SD transponder will take 10-15 channels, in HD you can fit four, perhaps five. There is likely to be a lot of demand for bandwidth as more and more broadcasters switch to HD. It will put a lot of strain on capacity, even though there is a lot of new space in the pipeline," claims Yousif.

"The number of channels on YahLive is not that important, people would point a dish at Yahsat 1a even if there was one channel they wanted to see. What viewers are interested in is the type of content. If you have the content that people want to watch they will do what is necessary to watch channels on YahLive. We are focusing on bringing in quality channels on SD and HD."

There could be a simpler selling point for the new entry however - lower prices.

"Businesses do not just look at cost alone. They consider the overall value they receive for the service they are provided with. During the economic slowdown everyone is looking at how they can save money and how they can get more for their dollars, and so that is one approach that we are focusing on now," says Yousif.

The developments in the UAE over the past year and those scheduled for the next, have accelerated the country to the forefront of the telecommunications race in the Middle East. The opportunities for broadcasters and content owners are stacking up: mobile TV, online video, interactive advertising, VOD... The challenge now is to monetise these new offerings quickly and efficiently.

"The competition in the UAE has pushed both operators to provide the latest technologies and projects with competitive pricing. This has not ceased," says Faraidooni. "Competition in services and pricing is improving and we are all seeing the benefits. It's good for this industry, its good for consumers and its good for the economy."

Etisalat hard at work with Soft at Home

Etisalat announced last month it that has acquired a 16.6 percent stake in SoftAtHome, the digital home networking initiative founded by Orange, Thomson and Sagem Communications.

Etisalat is using the SoftAtHome Operating Platform (SOP) to power its range of home gateways that combine VOD, DVR and IPTV functionality with broadband access, internet TV and multiplatform digital storage and content consumption.

"Fixed telephone lines have been used so far as a static, dumb pipe that customers don't use until the phone actually rings. What we will see now is the phone line together with a media hub becoming the centrepoint of the home," says Etisalat's Al Shamsi.

"You can browse audio or video content, listen to internet radio, watch YouTube on your TV or have your own applications for checking prayer times, monitoring your stocks or the weather."

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