Open for competition
With the arrival of Vodafone, the last telecom monopoly in the Gulf has opened its doors to competition. The CEOs of both of Qatar's operators told CommsMEA about their plans for developing the sector
More pics ›
Qatar's move from telecom monopoly to duopoly has been a protracted affair. From the license process that began in 2007, through to eventual winner Vodafone Qatar providing many updates on the stages of its launch, from the initial rollout to the testing of the network in March, to the full launch at the end of June.
Dr Nasser Marafih, CEO of incumbent operator Qtel, says that his company has been planning for competition for more than five years, and he feels that so far everything has gone according to plan. He highlights the "milestone" of two million mobile customers, which Qtel reached in July, as an example of the operator's readiness for the challenges posed by Vodafone Qatar.
"Our primary strategy continues to focus proactively on providing our customers with consistent choice, greater value, highest service quality, and services that really meet their needs and exceed their expectations," Marafih says.
Network vendor Ericsson is helping Qtel to "strengthen its value proposition" in the face of competition from Vodafone. In particular, Ericsson's country manager for Qatar, Christer Bergmark, says the vendor is deploying solutions that will allow Qtel to offer "more innovative services and tariff plans" for pre-paid users, including services that will ensure the correct phone settings are automatically distributed to Qtel customers.
Grahame Maher, CEO of the country's new network Vodafone Qatar, says that the phased approach to the launch was part of the operator's launch strategy, and that it helped the network to adjust to the customers' needs.
"There is a lot more that will come in those plans, it's a staged approach in an attempt to build over time," he says of Vodafone Qatar's mobile tariffs.
Motorola's account director and Qatar country manager, Mouhammed Madhoun, says that with Vodafone's arrival, Qtel is now concentrating its efforts on trying to retain its market share. "I think the focus today from Qtel's perspective is that they are trying to give the best service possible in order to maintain those subscribers."
At Vodafone Qatar's annual general meeting the operator set a target of 10,000 customers by the time it listed on the Doha exchange. Vodafone Qatar listed at the end of last month, and when CommsMEA spoke with Maher last month he said he was confident the target would be met.
Maher says that from a macro economic perspective and in comparison to other Gulf states Qatar is "looking reasonably good", although he says that there has been a slowing in some of the country's many construction projects.
Qtel's Marafih agrees that Qatar as a nation has had limited exposure to the global economic downturn that has affected other Gulf states, and he says that as a result Qtel has not suffered. "In fact, we have seen an increase in subscriber numbers and positive EBITDA throughout the group," he says."The telecommunications sector continues to demonstrate buoyancy in comparison to other industries despite challenging economic times."
Fixed line represents a lucrative sector of the market for telecom operators, with contracts for new developments a vital source of revenue. Vodafone was awarded a fixed line licence, but Maher says the details are still being finalised before final acceptance of the licence. "The bidding process that we put together was ourselves and Qatar DR, the government developer. We haven't yet been awarded the final details from ICT Qatar, and we are still putting everything in place around shareholdings to proceed with that," he says. Maher says that if a decision isn't made in the near term, it will most likely happen after the summer months.
Motorola's Madhoun says there are "a decent amount of DSL users" in Qatar, but he says the country would benefit from greater coverage and better service.
But Marafih points to figures compiled by research house Arthur D. Little, that he says show that Qatar's broadband penetration exceeded more than 50% of households in 2009, which he says is an indication of the success of Qtel's drive to increase penetration. In May this year, Qtel doubled the speed for all ADSL and Mozaic TV+ customers.
From the comments of both CEOs, it looks likely that data packages could be an area where both go head-to-head. Vodafone's tariffs were criticised by Qataris posting in online forum Qatar Living for being too similar to Qtel's, but Maher is adamant that the operator's data tariffs will not disappoint.
The tariffs are due to be launched in August, and it is expected that there will be two types of plans, with one for people using mobile internet on their terminal, and one for heavy duty broadband users of modems and people using data at high volumes, according to Maher.
"When we launch pricing plans for data they will be much more aggressive than the standard rate plans that we use for casual users, which are already launched. They will be significantly better," he says.
Marafih says Qtel will continue to invest in a "world-class internet infrastructure, under the ‘Broadband Qatar' strategy, which he says has enabled the operator to provide "faster speeds and a wider range of services for business and consumers". "We are primed to see a range of new value-added services in the coming weeks and months. In particular, we see significant scope for data usage and data packs," he says.
Bergmark adds: "I hope we will see an acceleration of the modernisation of the infrastructure allowing higher bandwidth and better user experience, and with deploying the latest technology we will see an easing of the economic pressure of delivering services which will translate to cheaper prices for end users. I think that the free WiFi zones will drive an increased usage and change of behaviour but they will also highlight to end users that coverage is a challenge with WiFi, resulting in increased demand for mobile broadband via 3G. On the regulator side I expect ICT's e-government initiative will start to materialise and we shall start to see some initiatives in e-Health and e-Education."
With its established network already in place, Qtel is in a strong position to maintain the dominance enjoyed by an incumbent network. Vodafone has struck agreements with Qtel to share some of its network, but it is not a process that has gone entirely smoothly. Maher is philosophical about some of the obstacles that he and his team have come up against.
"I would say Qtel has competitive advantage, and they don't want to share it I guess," Maher says. "And they would also claim there are issues of technology and it could be impacting their service and so on. This is just normal for new entrants, and I'm not saying they are being unreasonable and I fully understand their position."
Ericsson's Bergmark echoes Maher's thoughts. "It's always difficult for an incumbent operator to warm up to the notion of sharing anything that they've put a lot of time and resources into and we fully understand that. One thing we're finding though is that regulators are looking for a more sustainable and less disruptive roll out of coverage and as such sharing becomes a more common solution, so that new concrete, transmission, power and so on doesn't need to be built a second time."
In Qtel's defence, Marafih points out that the incumbent is among the few operators in the region that have agreed to share its infrastructure with a second entrant. "By sharing sites, we will both be able to provide extensive mobile network coverage, streamline costs and reduce environmental and community impact by avoiding the unnecessary duplication of towers across Qatar," he says.
Maher says that Vodafone has 98% of the population covered now, in keeping with the operator's licence requirement. "That's in the vicinity of 280 cell sites. And the next step is to cover the main roads and areas in the interior of the country, i.e. across the desert. That's outdoors, maybe another 100 sites, and these are the diminishing impact sites." Some of Vodafone's cell sites are temporary, as the operator hopes to share more with Qtel.
Maher admits that Vodafone has "lots of work to do on indoor coverage", and in-building is now a priority for the operator, with work taking place on increasing coverage in the main buildings and hotels of Qatar. "There is in the vicinity of 100 indoor sites we need to build and today we have about 20," he says. "We hope to get the bulk of them done by the end of the year.
"We have been pushing to try to share these, but we've not been allowed to share, so we are having to build. We are sharing new buildings, as a result of regulation, but on the old buildings we've got to get access. And the older the building the harder it is."
Bergmark says that Vodafone is likely to get an initial boost from the fact that it provides Qataris with an alternative, but he warns that it will not necessarily be very easy for Vodafone to "sweep the market".
"Qtel has a very strong position in its home market with a long established presence and organisation. I think it is crucial for Vodafone to quickly secure a better network quality and coverage, as Qtel has an advantage here. However, judging on past history with the Vodafone team here I would say that building an equivalent network performance and basic offering are factors that Vodafone will no doubt deliver to the market. Their real differentiation will be on customer service and experience at every touch point. This then enhances basic propositions to become differentiated propositions."
Value added services
Madhoun says that voice remains the best application on cellular today, although SMS and MMS has picked up. But he says that with the increasing demand for user generated content there is a push towards increased capacity. "Everyone wants high speed broadband with large bandwidth for services like Youtube, video and movie downloads. All this requires better faster speed and bigger bandwidth, and I think this is the plan."
Meanwhile, Ericsson's Bergmark thinks that Vodafone's personalised numbers will prove popular, just like Qtel's new loyalty program Nojoom. For its part, Qtel expects the market to continue to grow over the next twelve months, especially on the data side and entertainment side. "We are also seeing a drive from the regulator ICT Qatar," Madhoun says.
"A lot of their projects are focused around e-government and e-education and that requires a huge investment in the backbone and fibre network in order to deliver these services to schools and government, so I think that will be the plan going forward."