Broadband potential

Anders Lindblad, president of Ericsson in the MEA region, discusses the latest trends and challenges in the broadband space.

Tags: BroadbandEricsson
  • E-Mail
Broadband potential Lindblad believes operators can profit by focusing on new services
By  Nithyasree Trivikram Published  April 5, 2011

Increasing mobile data demand is forcing operators to increase network efficiency. Anders Lindblad, president, Ericsson, Middle East and North East Africa, tells CommsMEA about mobile broadband growth, challenges in the MEA region, and future investment areas for MEA operators.

CommsMEA: How is mobile broadband growth in the MEA region?

Mobile broadband traffic in the Middle East is at least doubling every six months.  Every 10% of mobile broadband usage contributes to 1% GDP. So, it is a good investment from a country perspective. The other thing which is of particular importance is the low penetration of fixed broadband or voice, which means that mobile broadband will be a saviour. You will see more internet on mobile phones, which holds good for most of Africa and some of the countries in the Middle East as well.

CommsMEA: What are the challenges facing mobile data growth in the MEA region?

The need for mobile data in the Middle East is tremendous. However, we have had no applications in the native language, which has been a barrier so far. Now, this barrier is being removed both for iPhone and Android markets as there is Arabic language interface. If you look at the rate at which data is exploding in the region, and I see young engineers and entrepreneurs developing applications in local languages, which will see content starting to flow on the internet on these platforms.

The effect of having very little fixed penetration means that the capacity in the networks has not been built. So, the underlying highways in the Middle East and Africa are not there.

While we build the mobile network, we need to build a lot of fibre backhaul network as well which is going to take a lot of investment. This is one of the more concerning matters for regulators, ministers and operators who look to make sure they continue to build the basic infrastructure that they use to carry all this traffic.

As to how it looks now, many countries will not go FTTH on a large scale as it involves huge investments. They will actually see that it’s much more efficient and economical to go mobile.

CommsMEA: tell me about Ericsson’s recent tie-up with Akamai.

One of the things that we launched at this year’s Mobile World Congress was the Akamai collaboration, which is small, but is an important part of the networked society. People want to use the internet to consume content, and they want to do it quickly with high quality, in the palm of their hands. Akamai has been a world leader when it comes to doing this for fixed internet, and we are working closely with Akamai to also make sure that the mobile internet will have the same benefits as fixed internet.

CommsMEA: Tell me about Qtel’s partnership with Ericsson for global managed services.

We focus on the part where operators are looking at optimising their spend.
As Qtel deploys a lot of base stations or networks, Ericsson invests a lot of money on their sites. What we have seen is that a vast majority of investment is going into what we call auxiliary materials, and a very small portion of it goes into what brings ‘real value’ to the network for consumers. This is actually limiting operators’ ability to be efficient in bringing broadband and voice services to consumers.

Through our global network of acquiring these auxiliary materials, we try to push down these costs to a bare minimum. Through optimisation of auxiliary investment, we help Qtel in minimising the cost for equipment such as towers, antennas, and feeders.

While we help operators in increasing their revenues with new services and better experience for consumers, we also reduce their costs in operating these networks through managed services. We have a managed services agreement with Qtel for Palestine. We are managing 700 million consumers on a global basis in managed services, of which 400 million consumers are from the MEA region.

CommsMEA: How do you see the telco sector evolving in the coming years?

In the Middle East, there is only about 60% penetration of voice and hence a lot of potential exists for operators to grow in this space. This means having more efficient networks and cutting down operation costs into a model where affordable services are there for everyone. Another area where there is huge demand from all consumers is internet. This can be subdivided into areas such as smartphones, application markets and cloud services.

The trend is there, but it is unclear what the economic model will look like. This is something we are working on to see how we can manage between operators, application players, content providers and equipment vendors, to make sure that we can afford to create a networked society.

CommsMEA: What investment areas will be key for operators in the future, in your opinion?

While it takes a lot of investments to build these telecom networks, we need to find the right model to be able to segment areas that we see as gaining good momentum. If it is video, we just have to make sure that we develop technical and commercial propositions for consumers where they will be able to buy these services. We can see some small examples in the world where operators are starting to sell social network services by the day, for instance.

It has a very high margin for an operator because they are bundling something more into the access just because you’re connected. The more of these kinds of services that we see, the better the operators’ case will look, and the more they’ll invest.

A fantastic example is Egypt. When the internet was shut down, within 24 hours somebody had developed an application on Twitter that enabled people to get on to the internet. The need to communicate has brought this in [….]. It is a great investment case for any government, a great proposition for consumers, and it is the only way that operators will be able to play a role in the future - if they embrace it.

A reasonable figure for the MENA region is probably around 5 billion connected devices. Considering that we talk about 50 billion connected devices around the world, this region is corresponding to 10% of that. In the Middle East, there will be very affordable chipsets that will be able to fit into devices such as cameras and readers. It is a very good investment for governments, and can stimulate the GDP.

We have to realise that we are in a transition phase for operators, and I see three to five business model scenarios of what the future operator could look like. Sooner or later, the CEOs and board members will make their pick and you will see the transition quicker.

In 2020, I am sure you will see different tiered operators doing different things. Some will embrace the model of the applications and content, some will focus on the networks, and others on brands.

We don’t know yet, but the more we talk about it, the more we can explain to operators the way we understand the situation as a vendor. In the end, if an operator business model is changing, we as a vendor have to understand where we fit in.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code