Roundtable: Providing for the future of content in the Middle East
Capacity invited a group of key players in the Middle Eastern market to share their views on the future of content provision in the region. Participants: Rashid Ali Al-Ali (RAA), director international sales, carrier and wholesale services, Etisalat. Hosam El Sokkari (HES), head of audience, Middle East, Yahoo. Scott Sullivan (SS), VP strategy C&WS, Etisalat. Andrew Grenville (AG), EVP of investments (special projects), du. Erik Kreifeldt (EK), senior analyst, TeleGeography.
Rashid Ali Al-Ali (RAA), director international sales,
carrier and wholesale services, Etisalat.
Hosam El Sokkari (HES), head of audience,
Middle East, Yahoo.
Scott Sullivan (SS), VP strategy C&WS, Etisalat.
Andrew Grenville (AG),
EVP of investments (special projects), du.
Erik Kreifeldt (EK), senior analyst, TeleGeography.
The fierce growth and development of internet across the Middle East has meant domestic operators have had to react quickly to keep up with the demand. At this year’s Capacity Middle East in Dubai, we asked a group of leading regional operators, content providers and industry experts what lies ahead for the internet in this rapidly developing region.
Internet penetration in the Middle East is now estimated to be above the world average. What have been some of the key developments over the last few years in achieving this?
RAA: For the last seven years, it has been very obvious that internet penetration has been increasing rapidly. According to ITM research, fixed-broadband household penetration in the Middle East rose from 0.71% at end-2005 to 11.35% at end-2010. But for the last two years – in particular during 2010 – we have also noticed a lot of content being hosted in the region. This is really benefiting the network; enhancing both quality and speed. So really it’s not just the internet penetration that is just going up. The network utilisation is improving too.
SS: I also think it is a case of deregulation benefiting the region. There’s more competition – more competitive carriers in the region introducing mobile broadband and LTE services. If you look in the UAE, for instance, Etisalat has been pushing forward with its fibre-to-the-home (FTTH) deployments, and Abu Dhabi has recently become the world’s first fully connected FTTH capital. Other areas are following very quickly in this. There is simply a lot more broadband access now.
AG: I think that the population demographic of the region really adds on to the points which have already been made. Across the region, there is generally a very young set of consumers – and if they are anything like my children, they think they have an absolute right to data at any given time in any given place for very little money.
The demographics alone in the Middle East are helping to push the uptake of devices that consume more data on mobile or broadband.
HES: Having been in Cairo during the revolution, I think there is a lot to suggest there is a strong adoption of political activism in the region using internet-connected spaces and I think we will see more and more of that.
The internet is no longer being adopted just as a means of communication; it’s also there for achieving objectives – social, political or otherwise.
How can Middle Eastern operators partner with content providers to help generate more content in the region?
SS: I think it’s all about partnership with the content providers and sometimes that can be an uneasy relationship. Carriers don’t want to be reduced to the ‘dumb pipe’ so they are looking to provide more value to their customers and typically this is in partnership with content providers.
AG: There has always been a question of how operators can stop themselves being relegated to just carriers – and these discussions carry on today. Most operators have taken different strategies to try and move into different areas of the value chain. du, for example, has launched its own online portal called ‘Anayou’. The site is a digital destination that provides online shopping, entertainment and gaming. It’s an ambitious project that aims to be a part of the Arab community and encourage content to be generated and consumed here. There are also ways for operators with broadband networks to gain a share of the revenue. The way movies are consumed, for example, is changing from DVD rental to IPTV. Now if a family in the UAE downloads a movie via du IPTV, our company receives a share of the revenues. It may not be original content from this region, but it’s a new stream of revenue for operators.
RAA: In terms of most demanded content, this constantly changes. The leading one or two content providers might stay the same, but the rest keep changing and this is largely down to network utilisation. The platform itself is effectively sequential. Etisalat has therefore focussed on providing the right infrastructure – which is how we came up with the idea of the Smart Hub. The infrastructure, the capacity and the access is now available to host the most demanded content in the region. I feel the Middle East truly deserves further investment in content delivery networks and it will give a great user experience once the companies come here to host their content in the region.
HES: As more of a digital content company, Yahoo Middle East is trying to do what we call ‘bundle experiences’. Users are no longer interested in just pure information – they like to consume information and at the same time are interested in seeing people define the information they are viewing.
We are therefore working on running two parallel content channels on our gateway. We will have the media platforms and at the same time the relevant communities and forums. We have experiences round these that people are eager to consume, and the more they consume, they more reflect on what on they consume and create more valuable content that wants to be consumed.
How prominent is mobile broadband in the overall demand for internet in the Middle East?
SS: It’s going to be dominant. That’s where the demand for broadband in this region is primarily coming from – and in fact not just here but also in Africa and India, where fixed-line doesn’t really exist.
There are big investments being made to support the demand for higher speeds to support mobile data. And this investment isn’t restricted to just the networks – we are deploying more submarine systems to support the international content coming from overseas. In our case, we have also just announced a land cable – the Regional Cable Network (RCN), which will eventually offer a 12 terabyte connection from the Middle East to Europe.
EK: I think mobile broadband is now the presumption in the Middle East. In more developed cities in Europe and the US it is the other way round, where you do have a more dominant fixed-line scenario.
But the technology is there and the value is in the mobility, which is more than enough to compensate for the difference between a 100G fixed-line and 40G mobile broadband connection.
AG: There is a behavioural change that is also driving a lot of this. Today’s youth – their very lives centre on these Smartphone devices. I think the existing price points are very sensitive for the mass market level, but there is also the expectation that people will spend more as more of their lives centres around the mobility created by these devices. The mobile broadband uptake is only going to increase and while I think for operators the ability to generate and retain content in the region is going to be critical, the overall amount will be so vast that we will still be facing the challenge of providing enough cable capacity East and West to handle it.
RAA: I believe because of the network access charges, the broadband access in this region is still relatively expensive compared to what is available elsewhere. The region has already experienced a big drop in prices in 2004, but once the demand and supply breaks more even, the internet utilisation will be unbelievable.
Finally, the World Bank estimates there are more than 320 million Arabic speakers worldwide, but less than 1% of all online content is in Arabic. How can operators in the region help leverage this gap?
HES: Since acquiring the online Arab community Maktoob.com in 2009, Yahoo has access to a mass of end-users in the Middle East. Yahoo has provided the technology and experience to manage this content and we are also working with the Arab entertainment company Rotana to use and stream its multimedia content.
We are therefore investing heavily in this region. We aggregate a lot of content from the biggest publishers and media providers as well as producing and commissioning our own. Investment in Middle East content is a critical issue.
AG: The regulators here are moving in the right direction – but I think we need to see more local peering and access to critical facilities such as landing stations. Then, the operators will collectively be able to support the growth of content.
SS: There seems to be a pattern of how the content providers operate – they start in Los Angeles, move into Europe and then on to Asia. Only after that do they often start noticing the demand in the Middle East. We would encourage content providers to come here sooner rather than later as the opportunities and partnerships for distributing content in this region are now available.
RAA: Things are changing fast, but we are aware that content providers are sometimes concerned by the legal issues surrounding broadcasting in this region. We are working to find a way of taking care of these concerns, and providing a greater understanding of the situation in the region so that together we can develop a way to suit both requirements.
EK: It’s beneficial for the content providers to have content hosted nearer to the users as it enhances the user experience. There are challenges to doing this in the region at present – which is why the US, Europe and Asia are still at the forefront of hosting content. But the demand is there and so are opportunities for carriers to enter the value chain.