Will OTT finally come to the rescue of Middle eastern carriers?
The pressures on Middle Eastern carriers to update their networks to ensure high-speed delivery is huge. But can the carriers meet the demands of their customers and are the ott players and their descendents the answer?
The future of telecommunications in the Middle East lies in the huge volumes of data moving over the networks and how carriers can change or adapt to move this vastly inflating amount of data across the region.
Those at the front of this digital revolution are consumers behind the OTTs, pushing the creation and consumption of a new growth curve. Pools of digital value are being defined in the mature markets. New strains are being loaded onto wholesale networks via additional spectrum, Wifi backhaul tuning, infrastructure sharing, and the building out of new networks as telecoms and high-tech converge at a faster speed.
To prepare for the next generation of telecommunications growth, wholesale carriers will need to make enough investment in their businesses enough to maximise revenue while also investing in the intellectual and staff resources necessary to keep their organisations prepared for the future.
The Middle Eastern carriers must make long-term investment plans to build, buy or share the infrastructure needed to deliver services through fibre. The cost of not making such investments could lead to business failure.
Future success will depend on Middle Eastern operators’ ability to exploit the advantages of the five main opportunities presented by big data. Payam Maveddat, vice president of Viavi Solutions, says: “If they apply advanced analytics to the huge volumes of data they are collecting, carriers can help their customers, like ours, predict customer behaviour and monetise this information.”
Video and OTT content
According to McKinsey’s Telecommunications at Cliff’s Edge, Middle East carriers generate little revenue from video consumption – only $5 to $6 per person, compared with the average for Brazil, Russia, India and China of $30.
This is only partly due to low income. Even in the more affluent countries of the region, video penetration is still low. However, to capture the rising opportunity in digital video delivery, regional telecommunications operators may be better positioned than global providers, and the relatively advanced economy of the Middle East is seen by the OTT players as a very important new market.
According to recent reports from Deloitte, Middle East operators “need to realise 30% cost savings to stay competitive and meet the demanding economics of the data age. To develop sustainable cost efficiency, companies will have to transform their operating models”. Mavedat considers this to be achievable.
As far as digitisation is concerned McKinsey is adamant: “Once the master of customer value management and satisfaction, the telecommunications industry now needs to catch up and introduce a digitised business model to reduce operating expenditures significantly. Getting connectivity right is at the core of the carriers’ industry challenge.”
As in Africa, the rise in mobile payments and the convergence of telecoms and the financial sector will be an important indicator of the success of development of the region.
The recent News Corporation-backed Iflix deal to deliver streaming TV and movies to Zain customers in the Middle East and Africa is indicative of what will be increasingly popular alignments. The news organisations need the carriers and the carriers are increasingly hungry for high quality content.
The region continues to benefit from moves such as Bharti Airtel’s decision to enter into an exclusive agreement with Orascom to acquire the Middle East North Africa Submarine Cable System.
This should ensure that the infrastructure is capable of delivering the tsunami of content and data coming down the carrier’s pipes – the ones that they will be spending the rest of this year expanding and smartening. No dumb pipes here.