The grand assembly at the recent Mobile World Congress 2008 (MWC) hosted in Barcelona set the agenda for the global telecoms industry. CommsMEA examines the market developments facing the Middle East telecoms players.
Telecoms operators the world over are faced with declining ARPUs as traditional revenue streams are threatened by increasingly convergent business models of formerly disparate market sectors.
And with 2008 heralded as 'the year of mobile TV' by many, Sweden's Ericsson stated that at present there are more than 170 mobile TV offerings launched around the world, most of which are deployed over cellular networks.
Companies like Google are only just starting to work towards localising their mobile content in Western Europe. Operators in emerging markets realise this and appreciate that they are in a better position to localise content on their portals.
A recent study published by U.S. market-intelligence firm ABI Research suggests that the global number of mobile TV subscribers will grow to 462 million by 2012, driven largely by the expansion of 3G networks.
ABI Research's study also notes that Asia Pacific is likely to lead the world in mobile TV services with 38 million subscribers regularly using the service at end-3Q07. However, the proliferation of 3G networks and subscriber behaviour in the Gulf market indicates that the Middle East will also become a potentially lucrative market for mobile TV.
Mohammed al-Ghanim, director general of the UAE Telecommunications Regulatory Authority (TRA), recently announced that the TRA had commissioned a consultant to advise it on licensing issues, with a final report expected towards the end of 1Q08.
Exactly what the consultant will be examining also remains a mystery as a TRA spokesman declined to comment when approached by CommsMEA. The licence is expected to be awarded in 2H08, with al-Ghanim noting that it is still too early to estimate a commercial launch date.
Little other definitive information has entered the public domain, although speculation from inside the industry points toward a launch six months to a year after the licence is awarded.
More notably, sources approached by CommsMEA indicate that the TRA is unlikely to favour one operator over the other when issuing the mobile TV license.
Well-placed sources inside the UAE industry indicate the country's broadcast-mobile-TV licence is likely to be granted to an independent operator that will in turn lease spectrum to the country's two telcos. Although none would be drawn on how much the concession might cost such an outfit.
CommsMEA has been led to believe that the regulator will prefer to appoint a third party as the broadcast-mobile-TV licensee given that market competition in the UAE telecoms sector is still in its infancy.
Any prospective broadcasters bidding for the licence will almost certainly have to leverage the customer-service and billing expertise of one, if not both, of the country's cellcos, according to those approached by CommsMEA.
"Broadcasters are a very different animal to operators," one source said. "Mobile customers expect to be looked after, and that's what an operator can provide."
The Middle East Mobile TV standard?
Sources consulted by CommsMEA also indicate that the UAE telecoms regulator will take the cue of the European Union and adopt the DVB-H standard.
A six-month DVB-H trial, costing US$2 million, was recently conducted by Du and Tecom Investments - a private holding firm that belongs to the ruling family of Dubai and is based in Dubai's Media City Free Zone, the hub of Middle Eastern broadcasters.
The results of the study have been kept under wraps, though local media reports indicate that, as a result of the findings - which were recently discussed at a closed-door Tecom Investments presentation - the DVB-H standard will receive the go-ahead from the TRA.
With so many variables the business case for mobile TV remains unclear for all concerned.
However, with the backing of the world's leading handset manufacturer Nokia, and number-two handset vendor Samsung increasingly shipping the technology outside of its core markets of the Far East, the DVB-H standard looks set to edge-out the other technologies in the Middle East.
Battleof the brands
However, as convergent technologies blur the lines of the telecoms and broadcasting industries, the potential for conflict is never far away in the mobile TV sphere.
We have a stated corporate objective to become a top-ten global mobile company by 2011. Our presence here puts us on the same stage as the other giants of the mobile telecoms industry.
Many telcos in developed markets now have to bow to the brand-equity of both media and internet search brands, as exemplified by pan-European telco T-Mobile announcing that it would use Yahoo's mobile search engine on its mobile portal at MWC. However, certain voices assert that Middle East telecom operators are well positioned to better the fortunes of their Western counterparts.
"Companies like Google are only just starting to work towards localising their mobile content in Western Europe," says Lorcan Burke, chief executive of AdaptiveMobile. "Operators in emerging markets realise this and appreciate that they are in a better position to localise content on their portals," he adds.
This situation is a legacy of Google's heritage in the fixed-internet business and one that offers emerging market operators an incentive to learn from the mistakes of their western counterparts and keep tighter control of the content available on their networks. More importantly, this will also enable them to maintain tighter control over any new revenue streams the content might help generate.
Burke also asserts that telcos in emerging markets, such as the Middle East and Africa, can avoid the pitfalls of conceding the majority of mobile advertising revenues to internet search engine companies by making their content relative to their subscribers.
He explains that multi-national telco groups, such as Vodafone, are employing this strategy as a point of differentiation when entering emerging markets. "Oftentimes large-scale telcos are encouraged by their investors to start localising content on their portals in order to dominate in developing markets," he explains.
Additionally, internet search engine companies are also hindered by the fact that telecoms regulators in emerging markets often strictly control the content that can be accessed on a telco's network. As a result operators are forced to police data traffic on their network and can be slow to offer subscribers access to content from outside of their network.
"If you look at markets like Saudi Arabia, operators are under tight scrutiny as to what content mobile subscribers can access and they have to keep that under control," explains Burke.
Elsewhere at the event, Middle East telecoms companies flexed their muscles to declare their presence on the world stage. In order to celebrate a year of exponential expansion, and its global rebranding, Kuwait's Zain rebranded an entire 2000 sq m, multi-storey restaurant called ‘La Font de Prades' in a historic Spanish town close to the MWC convention centre. Structural adaptations were made to the building, which accommodated Zain personnel and some 2,000 guests during the four day event.
Speaking at the event, Dr Saad Al-Barrak, CEO of Zain, said: "We have a stated corporate objective to become a top-ten global mobile company by 2011. Our presence here puts us on the same stage as the other giants of the mobile telecoms industry." Present at the spectacle was Joan Laporta, chairman of the city's beloved Barcelona Football Club. Zain delegates pointed to his presence as indicative of the group's growing stature in the global telecoms stage.
The operator group also used the event to announce the successful trial of a powerful advertising solution that will underpin its attempt to garner new revenue streams for Zain in Jordan (one of the most competitive markets in the Middle East telco space).
This solution, supplied by mobile platform provider Jinny Software, gives Zain Jordan the ability to take an early and strong position in an industry that is expected to earn US$18 billion by 2012.
Installed and tested since January 2008, the solution quickly provided Zain with the capability to deliver targeted advertisements over SMS messaging to its subscribers.
Ziad Al Masri, Zain Jordan's mobile data services senior manager, said: "We have been delighted with the results that Jinny's advertising engine has delivered during these trials. They have highlighted the potential gains Zain in Jordan will benefit from as a result of implementing this solution on our network, as well as the benefits that our subscribers will derive from this sophisticated new service."
Meanwhile, other multi-national telcos used the event to announce new initiatives in the Middle East and Africa's less developed markets.
Vodafone, one of the world's largest international mobile communications groups, and Afghanistan's Roshan announced the launch of the country's first mobile money transfer system.
The service, branded M-Paisa, is a mobile technology platform that provides financial services for those without access to banking and aims to facilitate economic activity in the region.
The M-Paisa system builds on Vodafone's much-lauded M-PESA mobile money transfer service in Kenya which has seen 1.6 million people register as customers since its launch in March of last year.
Roshan and Vodafone also used the event to promote their trial of an interactive voice recognition service which, when launched later in the year, will enable greater use of M-Paisa by consumers who might otherwise be excluded owing to high rates of illiteracy in Afghanistan.
In addition, Vodafone announced its intention to launch two new own branded mobile phones to grow its range of low cost own-branded specifically targeted at cost-sensitive emerging markets.
The Vodafone 227 and Vodafone 228 were launched at the event and are available across Europe and emerging markets.
The Vodafone 227 is a clamshell phone and the Vodafone 228 is a slider mobile. In addition to core text and voice services, both come with a colour display, vibrating alert and headset.
The launch of these mobile phones follows the successful introduction of seven own-branded handsets by Vodafone throughout 2007, which today make up on average one in six of Vodafone's annual handset shipments.
With emerging markets providing such opportunities for exponential growth, sub-Saharan Africa is also bound to attract the commercial interests of telecoms companies in the developed world.
Vodafone, meanwhile, used the Mobile World Congress to announce that it had deployed M-Pesa, a money transfer service launched in March 2007, with Kenya's Safaricom to 1.6 million customers.
The benefit of facilitating micro transactions via text in a land like Kenya where, in 2007, there were 400 bank branches, 600 cash dispensing machines and over 10 million mobile phones is plain to see, announced the operator.
In the first 18 weeks alone of the commercial availability of the service, some 200,000 customers had signed up to it. M-PESA is used by customers for a wide range of money transfer transactions, with an average value of Euro 30.
Companies CAN also use the service: Safaricom pays casual workers and has distributed 40,000 low value cash prizes to its subscribers using M-PESA. A number of small businesses, such as taxi drivers and grocers, accept it as an alternative payment mechanism and it is often used by consumers as a secure method of storing and transferring money in dangerous times.
Looking to the future, Vodafone anticipates that pension payments, and the payment of standard services such as Safaricom contract phones, water and electricity charges will also be made by mobile money transfer.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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