Proving the case

Bahraini broadband operator Mena Telecom is proving the potential of WiMAX in an already competitive market

Tags: BahrainMena TelecomTelecommunications Regulatory Authority - Bahrain
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Proving the case Dr Laith Sadiq, CEO, Mena Telecom, is optimistic about Bahrain’s broadband sector and the potential of WiMAX. (Khatuna Khutsishvili/ITP Images)
By  Roger Field Published  August 3, 2009 Communications Middle East & Africa Logo

While WiMAX has had its share of detractors and most analysts have mainly plugged the potential of the technology in developing markets, some operators are proving that WiMAX can hold its own in far more developed markets.

Bahrain-based Mena Telecom is one such case, with the company – which uses WiMAX-e technology – having already gained some 20,000 users to its broadband and fixed voice offering since it launched operations back in November 2008.

The company’s CEO, Dr Laith Sadiq is familiar with some of the arguments that are used against WiMAX – such as there being too much competition from rival mobile broadband technology HSDPA, and fibre and LTE in the coming years – and he is quick to dispel them.

As he points out, Mena Telecom, which offers broadband and fixed voice services throughout Bahrain, is already gaining traction in one of the region’s most competitive markets, competing with mobile broadband offerings from the likes of Batelco and Zain, with STC also expected to soon step into the fray.

“We are already in this market competing aggressively against HSDPA. Batelco is offering one of the highest speeds which is 14.4mbps, I don’t think many countries offer this,” Sadiq says. “We also already have Zain offering HSDPA, so we are already in a competitive market where the end user expectation is high.

“What we have shown in the last six months is WiMAX can already compete in a market which is relatively sophisticated, where the packages are at the high end in terms of speed and capability, and the penetration relative to the Gulf is on the high side, or at least somewhere in the middle,” he adds.

For Sadiq, one of the most important factors in establishing a broadband business in a country such as Bahrain is to focus on the customers’ needs.

“The key thing we focused on is the end user experience, everything from the buying experience to the speeds, prices, how easy it is to access the internet, how quickly you can access it,” he says.

He adds that a new customer can enter one of Mena Telecom’s shops, buy an internet package and have the service running at their home within about four hours. While some WiMAX services have been criticised for relying on cumbersome hardware that sometimes has to be installed on the roof of the user’s house, Sadiq stresses that a new breed of “plug and play” WiMAX-e devices give a far more user-friendly experience.

Furthermore, the company also conducted extensive research before launching to ensure that it had knowledge of any areas or buildings that might have problems receiving the WiMAX signal, eliminating the chances of a new user plugging in their CPE only to find it doesn’t work.

“We have a very detailed map of where the coverage is and that is one of the key things we implemented at the beginning,” Sadiq says. “We know exactly what kind of coverage a customer can get, what kind of speeds he can get and what packages are available for him.

“It is not a trial and error sort of thing, when he gets it he knows, and the percentage where we got that wrong is less than 2%. You need to understand right at the beginning and make it clear to the customer what it is they can get.”

The company has also invested heavily in retail outlets and marketing, ensuring that customers have easy access to the operator.

In terms of pricing, Mena Telecom has tailored its pricing packages to cater for a range of customer budgets, although the company aims to compete more on broadband speed than price. In the consumer space, Sadiq says Mena Telecom has a competitive package offering 8mbps broadband for 13BD ($34) a month, including the device costs.

All of this has been instrumental in helping Mena Telecom gain more than 20,000 customers, which Sadiq estimates could represent a broadband market share of anywhere between 15% and 20%, depending on the overall size of the country’s broadband sector, for which estimates vary.

Market potential

For most analysts, the Bahraini market continues to hold potential for data services. Indeed, for Xavier Anglada a partner at Dubai based Delta Partners, the market retains significant growth potential, particularly for mobile data services.

“Broadband in general, and specifically mobile broadband significantly increased during 2008 and almost tripled in terms of number of official subscribers, so there is clearly a latent demand for broadband,” he says. “Still today we are at 10% overall broadband penetration and we do believe that there is a significant growth potential in the next two or three years.”

He adds that with the major mobile players such as Batelco and Zain pushing ahead in Bahrain’s mobile broadband sector, and with STC likely to be pushing for broadband connectivity quite soon, this trend of high growth ratios in the mobile broadband space is likely to continue through 2009 and 2010.

Mobility challenge

In this light, mobility is likely to be one of Mena Telecom’s major drawing cards, although the company will have to wait until November 2010, when regulations in Bahrain will allow it to start offering mobile broadband in the country.

This will also help Mena Telecom to differentiate its WiMAX offering from that of Zain, which uses WiMAX-d, a fixed version of the technology.

“We chose to go with WiMAX-e from the beginning, so we have mobility built in to it, which will be available next year. It basically gives is more market segment to go after than what you can do with the other generations of WiMAX,” Sadiq says.

To ensure users can benefit from mobility with their laptops and netbooks, Mena Telecom launched a service called MyKey last year, which allows users to have wireless connectivity within their home, and will allow mobile internet access throughout Bahrain from November next year.

But challenges remain to Mena Telecom’s mobile proposition, with a lack of devices such as laptops and netbooks available embedded with the necessary WiMAX chip in the Bahraini market.

“I would have expected by now that these devices would be available in Bahrain. It has been disappointing that these devices haven’t shown up yet in the region and generally across WiMAX 3.5 spectrum,” Laith said.

“Some devices have appreared in the region with chips embedded for WiMAX operating in the 2.5 spectrum, but the appearance of embedded devices in 3.5 spectrum has been much slower.

“My expectation is probably the end of this year or the beginning of next year before we start to see these devices,” he adds. “We would also like to see devices embedded with chips for the different spectrums, which could enable roaming to other countries.”

While Mena Telecom is mainly focused on consumers, about 10% of its customers are business users that have taken either a plain broadband service, or broadband plus voice. Sadiq said the company is targeting all types of business, from smaller companies that can benefit from plug and play packages through to larger business and corporates that might need multiple connections.

Regulatory climate

As one of the region’s smaller operators, Sadiq thinks regulators in the region could do more to help new players develop in the market by liberalising the sector further and reigning in any incumbents that behave in an uncompetitive way.

He points to a lack of seamless access to international links as one problem facing operators such as Mena Telecom.

“One of the main reasons that internet prices are high is because the dominant players in the region have a monopoly on international links, and that is keeping the prices high and keeping the penetration low. This needs to be liberalised aggressively otherwise the situation will continue,” Sadiq says.

However he adds that the situation in Bahrain is generally better than most countries in the region, with the regulator taking an active stance in making the market more competitive, although he adds that TRA Bahrain “has a long way to go to make the market more competitive”.

He points to the need for number portability, access to international links, and the removal of monopoly contracts from dominant players as being among problems that need to be resolved.

Operators such as Mena Telecom could benefit from the introduction of a unified licence, which is an issue that TRA in Bahrain is looking at. This type of licence would allow operators in the country to offer multiple services, including more bundled services, under a single licence.

While Mena Telecom is mainly focused on being able to offer mobile broadband services as a major milestone, Laith admits that beyond that, the unified licence would help by giving the company the ability to bundle other services.

Speaking to CommsMEA, Alan Horne, director general of Bahrain TRA said the regulator would issue a consultation on unified licences “in the coming month”. He added that the idea is mainly to simplify the 12 licences the country currently has, and develop a common set of terms and conditions for licences that require “scarce resources” such as number, spectrum and access to land.

A further challenge that faces WiMAX-e operators is a lack of provisioning for international roaming. While HSDPA operators are accustomed to establishing roaming agreements with other operators without too much difficulty, the situation is more complicated for WiMAX operators, for the time being at least.

While the WiMAX Forum, an industry body representing the technology, has made some recommendations for the architecture for roaming, Sadiq thinks there is a need for wholesalers that work to connect WiMAX operators to other operators internationally, similar to the way wholesalers connect GSM operators internationally to multiple players.

“We haven’t seen those yet for WiMAX. If I want to do it now I have to do individual roaming agreements, which takes a long time. We need to see players that allow you to have multiple roaming agreements with one agreement with the operator,” he says.

However, he is optimistic that the situation will improve, and that WiMAX could follow a similar pattern to GSM, where roaming agreements took some time to gather pace. “WiMAX operators are focusing on launch and getting the subscribers and that is what happened with GSM, in the first four or five years you didn’t see a lot of GSM roaming, and until these roaming agreements, you would be lucky to get four or five countries.

“It took a long time, but I think with WiMAX it will be a lot faster. We will definitely see more of it towards the end of this year and the beginning of next year,” he says.

Market divers

Mobile operators increasingly view broadband as the growth driver and a way of creating “stickiness” for retaining high value customers, according to a recent report from Dubai based consultants Delta Partners.

“We believe that nearly 70% of the broadband subscribers in MEA will in fact be delivered over wireless networks by 2011 up from about 38% today,” says Joao Sousa, partner at Delta Partners.

“This will translate into a significant growth potential for mobile broadband in MEA, with subscribers expected to grow from 2.5 million today to about 40 million in 2011,” he adds.

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