interview


Principal Consultant, Middle-East Telecoms: “The Middle East region has consistently driven innovation”

Adnan Salkic, Senior Consultant for Strategy on projects for Middle East telecom operators

Adnan Salkic, Senior Consultant for Strategy on projects for Middle East telecom operators

Adnan Salkic, Senior Consultant Strategy on projects for Middle-East telecom operators, is speaking in the HetNets track on Day One of the LTE MENA 2013 conference, taking place on the 13th-14th May 2013 at the JW Marriott Marquis, Dubai. Ahead of the show we speak to him about the technology and techniques that operators in the region, and worldwide, will have to employ to cope with the incoming data onslaught.

What major developments has there been with regards to the LTE industry in your region this past year?

Network operators in the Middle East region have consistently driven innovation in the mobile communications market. The growth in mobile broadband stems from the general lack of wireline networks. This means that the mobile phone market continues to mature with high levels of mobile phone penetration. The region is unique because it has a high population growth rate and more than 60 per cent of the population is under the age of 30.

As LTE has a relatively simple architecture several operators have already launched their LTE network. The driver for them is the desire to earn bragging rights for telecommunications innovation in the region. Other operators in the region have adopting a “wait and see” strategy approach to LTE.  They will be watching to determine the short-term impact of the initial LTE rollouts in the Middle East and learn how to avoid any future missteps with their own rollouts.

Operators are attempting to compensate for losses in voice ARPU by focusing on cost rationalisation, and by introducing new LTE services such as videoconferencing, video streaming and video/image upload

What are the chief technical challenges the region is facing?

The key challenge for operators is trying to meet the ever-growing expectations of their subscriber bases. Efforts are constantly made to maintain ARPU and to improve the user experience through increasing network speed, coverage, capacity and quality.

The driving force behind the continuous improvement is the need to satisfy customer requirements and to maximise profit in an increasingly competitive market.

There is what I call a “revenue paradox”, where the more capacity mobile operators offer end users the less revenue they receive. Furthermore, to keep the data storm at bay, and the network stable is becoming more and more challenging. The introduction of small cells and wifi in the network adds complexity and makes optimising the network challenging. There is also a threat to backhaul capacity as mobile operators are constantly squeezing backhaul budgets.

Does it make sense to think of LTE as a fixed-line replacement in certain cases?

That’s a very interesting question. I think that those companies with both fixed and cellular infrastructure will move towards full Fixed-Mobile Convergence (FMC). In this scenario, they will have strong service offerings that are more attractive to customers with cross-sell and up-sell opportunities.

Where do small cells fit into future network plans?

The massive growth of data traffic is putting severe pressure on the capabilities of the macro-cell network to provide enough capacity. The main challenge for senior management in the network sector is to engineer network to carry larger volumes of data traffic, while keeping the customer experience stable in a cost efficient way. One response to this challenge is to use the HetNet concept, using small cells and a wifi network. Small cell and wifi is an important tool for operators to gain higher density especially in-congested indoor areas.

This strategic model needs to be built in tandem with between business and network units in order to generate more revenue and to reduce network congestion. The decision to use wifi or small-cells needs to be made with a clear understanding of the regional hotspots and market conditions. To determine the best approach user data traffic profiles need to be built up per region and with a pricing model for positive cash flow.

Pricing for LTE is a controversial subject. Are operators getting it right?

I agree that LTE pricing models are currently unsophisticated with LTE either priced at a premium or at the same level as 3G services. Most operators are not supporting unlimited data plans for LTE services because operators could not generate enough revenue from heavy users who would eat up network capacity.

If you look at segment users by data usage behaviour, tiered data pricing makes more sense as it means that users pay premium prices for different LTE services. I believe that when LTE competition builds up their will be pricing innovations and overall lower prices.

Is the still a need to establish a business case for LTE deployment or is the long-term ROI potential clear?

In order to achieve a positive cash flow for LTE, the network rollout must be handled with care in specific locations. For operators that have already launched, successful network utilisation and optimisation will be crucial too.

To achieve a ROI, mobile operators will have to unlock new revenue streams by creating an ecosystem of devices, services and applications. They need to have a cloud strategy. Using HetNets and small-cells technologies, MNO will be able to improve the customer experience on LTE and indeed 3G by increasing peak data speeds and overall throughput. This will enables them to win, at no additional cost to themselves.

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