During the opening keynotes for the GSM>3G Middle East Telco World Summit recently, it became apparent that some of the heaviest hitters in the Middle Eastern region are looking to mobile data and other value added services (VAS) to stimulate future growth. Yet this drive will be powered by content because the regional operators are refusing to become so called 'bit pipes'.

James Middleton

December 12, 2009

3 Min Read
Making data pay bit by bit
Dr Nasser Marafih, CEO of Qatar-based Qtel

During the opening keynotes for the GSM>3G Middle East Telco World Summit recently, it became apparent that some of the heaviest hitters in the Middle Eastern region are looking to mobile data and other value added services (VAS) to stimulate future growth. Yet this drive will be powered by content because the regional operators are refusing to become so called ‘bit pipes’.

Dr Nasser Marafih, CEO of Qatar-based Qtel made no bones about that fact data has always been a very clear part of the operator’s strategy. “It’s clear that data is an untapped market and it was very important to focus on from the beginning,” Marafih said. “This is the next area of growth in the region – consumer wireless, low speed data services over GSM, and consumer broadband, using 3G and 4G, including WiMAX.”

But Marafih was quick to acknowledge that while data would be a key driver, it will be more difficult to exploit than voice because of the level of competition, not just from rival operators, but also from other internet savvy companies like Google, Microsoft and Apple, muscling in on telco territory.

“What is important is who owns the customers? It’s important for us [Qtel] to keep the customer relationship, we don’t want to become a dumb pipe,” he said.

Yet Marafih acknowledges the predicament that many operators are finding themselves in – the need for partners, much like Google. “We [operators] are good at developing services, but not yet good at building content. So we need to find the right partnerships to deliver value. Content is important, because in the Middle East it is limited. But growth is going to come from content.”

The trick then is finding the right applications to monetise that capacity. As Mark Newman, Informa Telecoms & Media’s chief research officer pointed out, some applications like mobile health and mobile payment services are the most promising means of expanding non-SMS data revenues. An oft cited regional success story is Safaricom’s launch of M-Pesa in Kenya, which in the six months to the end of September 2009, spurred its data revenues on 93.6 per cent year on year, to KES7.2bn ($96.58mn), equating to 17.7 per cent of the operator’s total revenue, up from 10.8 per cent in the six months to the end of September 2008.

Qtel’s Marafih revealed that the operator has a dedicated team looking into such services as mobile health, science and academic information delivery and finance as well as Machine to Machine and Location-Based Services LBS) as they offer a better opportunity for monetisation than those from internet-based service providers.

Meanwhile, Jamal Jarwan, group chief investment officer for UAE-based operator Etisalat, said that in the last two years, the company has introduced more than 15 Value Added Service offerings, including the BlackBerry. In the Saudi Arabian market, where Etisalat operates as Mobily, the firm says that the data friendly BlackBerry has proved a smash hit with consumers, pushing a review on the concept that the BlackBerry is only an enterprise tool.

Sherif Hamoudah, SVP and GM for Middle East, Africa and Pakistan at messaging company Acision, spoke about how to increase revenues without increasing opex and capex at the event yesterday, noting the importance of shifting from traditional ARPU to a ‘profit per megabyte’ model.

“For success in mobile broadband it is clear that operators need to find a way of turning mobile broadband into a profitable, long term, mass market business model,” Hamoudah said. As mobile broadband uptake increases in the Middle East, just as it has in more developed markets like Western Europe, so will the bandwidth consumption on the network, which will eventually present problems for mobile operators.

About the Author(s)

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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