Convergent connections

Convergence is creating a seachange in the telecoms and media sectors, according to Du CEO, Osman Sultan

Tags: BroadbandEmirates Integrated Telecommunications Company Social networkingUnited Arab Emirates
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Convergent connections Sultan: Operators are yet to realise the significance of social networking. (ITP Images)
By  Roger Field Published  August 15, 2010

For Osman Sultan, CEO of Du, the UAE’s second telecom operator, one of the most important things for operators to understand is just how rapidly the telecom and media landscape is changing, and how difficult it is to second-guess shifting consumer tastes.

Speaking at the recent Arab Advisors’ Telecoms and Media Convergence Conference in Amman, Jordan, Sultan said that the development of mobile technology and the convergence of telecoms and media in particular are creating a sea change in both sectors, and has also opened the door to new types of competitors, such as Facebook and Google.

“We have heard the word convergence a lot over the past decade and it can mean a lot of things. It is about media and telecom convergence, and it seems like they are mixing with each other,” he said.

“We are all doing things differently from how we used to do a few years ago. Four or five years ago, I was not moving everywhere with my email the way I am today.

“We speak about the different worlds that are now converging, the world of content, internet and telecom operators.”

Shifting borders

To give some context to the changes taking place in the media and telecoms sectors, Sultan offered an overview of the “transformation of borders” that is occurring between the telecom and media sectors.

Sultan said that on one side, there has traditionally been the world of content, including big publishing houses, music, film producers, and the press, which distributed their content through media such as newspapers, CDs, telecom operators, and TV and cable networks. And then, at the final stage, there are the appliances, which include devices such as TV sets, laptops and gaming consoles.

But the borders are becoming blurred as devices become connected. Sultan pointed to a statement from the chairman of electronics giant Sony, who said recently that about 90% of devices they produce should be network enabled.

“You see that the issue of this convergence between the industry of the appliance and the industry of telecom is at the heart of the issue,” Sultan said.

In music, film and literature, the flow of information has changed dramatically, with music and literature being distributed via downloads, and video content via websites such as Youtube.

“There are new competitors and completely new models,” Sultan said. “Just when you think that Apple – not with their core business, not with the iPhone or the iPad – but the iTune business, transformed completely the borders of a music industry that was decades old.

In much the same way, Youtube has shaken the film industry, at least in terms of the amount of content generated. Sultan quoted Google’s CEO Eric Schmidt as saying that some 20 hours of video are uploaded to Youtube every minute, which is the is the equivalent of Hollywood releasing 86,000 new full length movies into theatres each week.

Social networks

But despite the success of new music and video distribution models, it is social networking that Sultan views as the most significant innovation of the past decade.

“In this industry, or in the sphere of ICT, I believe that the only real innovation that happened in the last 10 years is social networking.

“Social networking is the name of the game for the coming years. I believe that we are still underestimating its impact. We just have to look at our children to see how their behaviour is completely changed, how they are spending their time, how their values are changing.

“Customers took the capabilities that were offered and did what they wanted. And they will continue to be ahead of us.”

One of the interesting aspects of the rise of social networking, and other services that make use of the telecom operators’ infrastructure, is the fact that the operators were unable to predict the potential success of such services.

For Sultan, this offers operators a sobering reminder of how it is customers that dictate such trends. “The customers are constantly ahead of us,” he says. “I have been for years and years in these meetings and we were always discussing what will become the killer application. But it never happened that what we thought would become the killer application actually became the killer application.”

Despite the huge popularity of new services and content, Sultan believes that operators should avoid becoming directly involved in content. “I don’t think telecom operators should get close to working on content. We don’t have the culture and capabilities in our companies to deal with this type of domain,” he says.

Regional focus

But amid the rapid growth of new online services and content, Sultan believes there is an untapped demand for more “regionally specific” content and services.

“You have to go to the first 15 websites in each country of the Arab world to discover one site that is coming from this part of the world,” he says.

“Regional specificity and creativity will become more and more important. This is not the trend today. The trend is that these global players are dominating, but I strongly believe, even if it goes against the stream, in regional specificity, because it is about how we live our lives.”

Indeed, people in the Arab world live their lives differently and interact with their family and friends differently from people in other parts of the world, Sultan says.

However, he concedes that the likes of Google and Facebook have built such strong brands for themselves throughout the world that they are likely to remain dominant forces in the region. He warns against creating pale imitations of existing services, but believes successful, homegrown content and services will appear.

Broadband for all

Given the growing importance of internet access, Sultan believes that broadband will become a “basic human right” and will become a main differentiator in the way countries are able to advance their economies and standards of living.

Sultan bases this view partly on his experience of the rapid uptake of mobile phones in Egypt, and the fact that there are already some four billion people on the planet with access to a mobile phone.

Indeed, Sultan, who helped establish mobile operator Mobinil in Egypt in 1998, said that the company and the regulator had originally anticipated that mobile penetration would reach about 8% within 10 years of the launch. In fact, Egypt’s mobile penetration reached about 51% in 2008, five times higher than the original estimates.

“Customers dictate, and mobile phones meant something different to the people than we anticipated,” Sultan said.

“The next thing is to consider what we do with this mobility. It is no longer just about being reachable, and again, this always has been a basic human need.

“It is not a coincidence that civilisations were created along the natural ways of communication such as rivers and roads between mountains, because it is a basic need for people to communicate with their fellow man,” he said.

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