The great divide

Despite convergence being a favourite buzzword of the ICT sector, many operators live in fear of the concept rather than viewing it as an opportunity.

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By  Administrator Published  May 6, 2008

For example, he says that companies are increasingly demanding communications systems that integrate email with fixed and mobile voice. He points to a new generation of technology where voice and data services sit on one infrastructure.

Operators, particularly those that offer fixed-line and mobile services can offer this type of service to their enterprise customers. Wade adds that Nortel is experiencing strong growth in this side of its business - by about 45% last year - which bodes well for operators in the region interested in entering the market.

The opportunity for operators is being fuelled by the fact that an increasing number of companies prefer to outsource the communication function of their business.

There are huge opportunities in the region for carriers and service providers in the region to be able to offer unified technology and communications solutions, VoIP, fixed mobile convergence to customers from a hosted solution base," Wade says.

"The carrier has to look after all the technology investment. It has to make sure everything is up to date, make sure that it is kept secure and virus free. The customer just has to look after running their business.

Short of talent

To lead the industry into a new era of technologies and growth, it is important to have the right resources available. Telecom operators don't have significant experience with new media, and will find themselves in difficult terrain without skilled leadership, Sabbagh warns.

"With the rapid growth seen in the region, new media is coming into play and developing new capabilities outside the realm of traditional telecoms services, which does not exist in any telecom operators - these are totally new areas to get into," warns Sabbagh.

He adds that this leads to a shortage of skills in the region. "Operators are expanding in new markets, and at the same time they're trying to growth to tackle these issues and develop new capabilities that never existed. This is really a blind spot for many telecom operators," he says.

A shortage of "good CEOs" extends to much of the global IT industry, according to Sabbagh, and there are plans in many countries to establish specialised courses to breed a new generation of skilled employees. But for some operators, forging partnerships with international and more experienced players is key.

"If we look at the issue of international talent and human resources in the Middle East, if you have collaboration and partnership then the operator will not have a need to hire people from the media within our environment," says Dr Wahaibi.

"One of the things we're looking for is an integrated partner, not specifically a fixed- or mobile-only player, because Omantel is integrated.

The technical capabilities of the partner should be far better than Omantel, where we can learn and use their resources of this partner to be able to grow and compete locally as well as in the region," he adds.

The power of customer relations

But it's not all bad news for operators. They hold a crucial advantage going forward, in that they have built up strong relationships with customers. The value of customer relationship is something that shouldn't be underestimated.

Operators are experts are measuring and communicating with their customer base and know how to keep them.

Often it is the case that companies pay exorbitant amounts to acquire new customers. eBay's US$2.6 billion acquisition of Skype allowed the online auction firm to branch out into new online areas, but also acquire Skype's 54 million-strong user base.

In the telecoms industry, the value of licences in recent times also shows the strength of customer relationships.

"This is what you're seeing today where financial markets value operators at high prices and people pay for these licences that are said to be at high prices," says Sabbagh.

It's not paying for the infrastructure, or value of ARPU generated in the next five to six years - it's actually the value of owning a customer base.

"People are paying for customer ownership. This is a very valuable tool that operators have, and very few others have. If you compare it to other industries, this consumer relationship is strongest with telecom operators," he adds.

Partnerships will become commonplace, but there are many types of models, including revenue sharing, outsourcing alliances, all the way to full-equity partnerships and joint ownership.

At present, operators still have the money to make strong investments for the future and can use its strong customer relationships to make favourable deals.

Jawad Abassi, general manager, Arab Advisors Group warns that huge increases in traffic will also pose challenges. "Traffic will increase 100-fold, and this presents new challenges," he says.

"To accept this and share values also means sharing ownership of the customers. Operators should make the game right while they are still winning today. Operators still have the cash, the liquidity and the power of the consumer relationships.

"It can still command good value on buying into or building new organisations that are outside of their environment and bring value from other industries," he says.

Du's Osman Sultan adds: "If the game is about content and design, the ISP world is ahead. Today, operators have the advantage in how much we know about our customers and we shouldn't let this go.

"I believe the potential of our industry is there. We have a great opportunity and privilege being an integral part of the transformation of our societies. If we see how this convergence is happening, we have not yet thought of the limitless possibilities and applications this opportunity brings.

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