Forging ahead

The Arab Advisors' Conference brought together the top telecom executives in the Arab world to discuss the defining issues surrounding the industry today.

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By  Administrator Published  July 16, 2008

The Arab Advisors' Conference brought together the top telecom executives in the Arab world to discuss the defining issues surrounding the industry today.

With multiple operators, a laissez-faire regulator and pro-liberal sensibilities, Jordan's mobile sector has been allowed to flourish into a low-cost, ultra-competitive landscape. The international brands of Orange and Zain have been reaping the rewards, while Batelco's Umniah enjoys its share of the market.

It is a good stomping ground for operators, content providers and infrastructure giants. And this is also where one of the region's most respected analyst groups resides - the Arab Advisors Group.

The equity of the telephone call plays to compensate for a lack in infrastructure to a big degree, hence people are willing to pay a bigger percentage of their disposable income on their telephone calls.” Saad Al-Barrak

Every year, Arab Advisors gathers the top brass from the industry to discuss pertinent challenges and issues facing their businesses. This year's 5th Annual Media & Telecommunications Convergence Conference stuck to its billing - with rigorous talk about convergence and new threats the industry faces.

From the outset, the conference made clear that the Middle East and Africa region has its own unique challenges. With the MENA region covering such a wide and diverse geographical area, including many politically turbulent countries, as well as areas with high levels of low-income households, the meaningful deployment of communications infrastructure is problematic. This doesn't just mean telecom base stations and other equipment directly related to telecoms; it also includes proper tarmac roads, which are essential for any company to set up shop and work effectively.

"If you come to the emerging world, we suffer from a lack of infrastructure," says Zain Group CEO Saad Al-Barrak, in a colourful keynote address. "If you look at countries such as the Democratic Republic of Congo, with a population approaching 70 million people and [spread over] a huge area. The total amount of constructed roads is no more than 5km - so you can see how difficult it is to operate in such areas," he added.

Essential device

But, he continued, where the region lacks in infrastructure, the equity of a traditional voice calls is much higher. Many people who don't have access to banks or basic services see their mobile phone as an important and must-have tool - arguably more than any citizen in a developed country.

"The equity of the telephone call plays to compensate for a lack in infrastructure to a big degree, hence people are willing to pay a bigger percentage of their disposable income on their telephone calls," Al-Barrak says.

He argued that this was one of two fallacies in which industry perception and forecasting for this region have been based on. The other is that the size of the addressable market has been grossly underestimated. With populations in the MEA region experiencing huge growth, while their Western counterparts experience stagnation - there is a real drive to look more earnestly at the youth segment in emerging markets with fast growing, young populations.

Bo Erik-Dahlstrom, head of the market unit, Ericsson Middle East & Africa, sounded out the importance of this demographic, referring to them as ‘digital natives'. "These are people born after the 1980s," he explains. "As opposed to people like myself, ‘digital natives' are more into using the Internet, digital technology and network technology. For them, it is not only a technical capability - it is how they work and interact with friends," he said.

Indeed, for Erik-Dahlstrom, these people are primary users of technology, and a therefore the greatest contributors to ARPU, whether it's on broadband, mobile or TV. According to Dahlstrom, a typical user is 21 years old, has exchanged 250,000 emails and messages, either instant messaging or SMS, played about 5,000 hours of video games and racked up 3,500 hours of social online networking.

To be able to capture this type of end-user holds the key to success at large.

Fighting off the competition

Another recurring theme discussed at the event was the idea that the convergence of telecoms, broadcast technologies and the internet is opening the door to new entrants and more competition. Telecom operators will have to revise their strategy in order to fend off these new players. Internet companies such as Google, YouTube and Facebook are the names that will strike fear into any traditional telco's mind.

"For these new players, advertising is the main source of their revenue. They are giving away content for free, and yes they are attracting more people to their sites, because their revenue is based on how many people they attract. This is extremely dangerous for an operator," Dahlstrom warns.

But operators know they're greatest asset is their customer bases, and the information they keep about them. "For the operators, vendors and network providers there is a lot of competence and knowledge about the end-user," Dahlstrom adds.

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