Operators search for new revenue stream

As customer growth slows and per user revenue stabilises, operators of mobile phone networks are busy trying to find new services for which consumers will be willing to pay a bit more.

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By  Administrator Published  September 7, 2007

Intense competition in the telecommunications arena has steered market players towards finding alternative sources of revenue streams as voice-driven average revenues per user (ARPU) plummet. GULFCOMMS Times analyses the market trends.

The telecommunications market in the Middle East and Africa has been buoyed by the regional developments of industry and infrastructure. Despite unparalleled demand from end-users all tiers of the telecommunications industry are experiencing a dip in revenues as the regional trend towards market competition means vendors and service providers to lower prices.

Voice-driven ARPUs are decreasing across the global market with network operators in the ‘mature' markets of Europe, Japan and North America leveraging the relatively high levels of disposable incomes in order to buoy markets where penetration is either reaching or already surpassed 100%.

US-based provider of next generation converged services platforms and applications Telenity argues that network operators should look to the realms of ICT convergence in order to provide differentiated services in order to shore up their revenues streams.

"Mobile data applications should successfully follow the web2.0 success in the internet domain, service providers must deploy the right service delivery infrastructure from ground-up that will enable both new service creation and rapid time to market," says Didem Karabatur, Telenity's director of marketing communications.

The company also claims that the role of governmental bodies is crucial to the development of this market segment. "The regulatory bodies should creatively enable the liberated environment that would feed the growth of multi-model voice, data, location, content, messaging powered services," adds Karabatur.

According to figures published by leading research house iSuppli telecommunications companies across the globe will fork out US$41 billion during 2007 in a bid to offer enhanced premium content services. While this figure may appear staggering the firm highlights that it represents a slowdown in growth with representing a 1.6% year-on-year increase in telco spending from US$40.4 billion in 2006.

This figure seems paltry in comparison to the 10.7% year-on-year rise in spending 2005 and 2006, and the 8.3% rise during the 12 months prior to that, the report concludes.

Market players in the Middle East and North African region are regarded as lagging behind their counterparts in the west despite its population benefiting from oil-rich economies.

As a company specialising in providing communications software to small-to-medium sized businesses in the Gulf region, Avaya reports that many sectors of the region's industries are dawdling when it comes to the uptake of next generation services. "The amount of businesses in the enterprise and government sectors still using fax documents as a primary mode of communications is sizable, even when it comes to large enterprises," says Neville Perry, converged applications manager for Avaya MENA.

"There are certain financial reasons for this as a lot of companies in the region have upgraded to using fax systems as little as three years ago and they are now somewhat hesitant to throw them out," he adds.

"However, there are some companies and industries are making the move towards the e-channel. There has been some decline in the UAE's public sector use of fax traffic but in the banking and telecommunications sector I can see no substantive shift to using other forms of data transfer."

Network operator Jordan Fastlink, a subsidiary of regional telecommunications powerhouse MTC, acknowledges this fact but anticipates future growth in the segment claiming that data and value added services account for 12% of its total revenues.

"There is a lot of potential for both the Middle East and African Markets. The data and value added services contribute to around 4% to 12% of total revenue," claims Ziad Al Masri, senior manager, mobile data services at Jordan Fastlink.

"Fastlink, with 12%, is one of the market leaders in this segment in the MEA but compared to Western Europe and the developed Asian markets such as Japan and Korea, the MEA markets have a long way to go," he adds.

The company also reports that SMS messaging accounts for a significant amount of revenues in the consumer market, noting that regional competitions where contestants send their entries using text messages has bolstered traffic.

Telenity also acknowledges the importance of peer-to-peer messaging claiming that it provides the bulk of non-voice revenue traffic service revenues for operators across the global market.

However, it also maintains that location and rich multimedia enhanced community services such as ‘Friend Finder', location based chatting, video RingBack Tones, multimedia-blogging and content sharing, will spur the market both globally and regionally.

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