CommsMEA - August 2010

AUGUST 2010

Critical analysis for telecommunications executives

Jewel of the Levant Jordan remains one of the most competitive markets in MEA

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Licenced by Dubai Media City

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Strategic disposals How operators can gain from the sale of non-core assets

POWERING CHANGE Why it is time for telcos to consider investing in renewable energy

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COMMENT 1

COMMENT

By Roger Field

Virtual victories

J

Win McNamee/Getty Images

ust two months after launching Virgin Mobile in Qatar under a brand licencing deal, Qtel has fallen foul of the country’s telecom regulator, ICTQatar.

To most industry insiders who have followed the case closely, the outcome of Qtel’s attempt to circumnavigate some important telecom regulations in the way it launched the Virgin Mobile brand was not too surprising.

Vodafone Qatar, which paid $2.1 billion for the second mobile licence in Qatar in 2007, was ICTQatar ruled that Qtel was in breach of telecom laws with its Virgin Mobile brand. understandably enraged when Virgin Mobile launched services in the country in May, boasting its for taking legal action against Qtel, the incumbent also own website, shops, and mobile packages. declared victory, stating that ICTQatar had “refuted The way that Qtel presented Virgin Mobile to the Vodafone Qatar’s misleading claims” that Virgin Mobile media and the general public was also undoubtedly Qatar was an illegal mobile service provider. ambiguous, and led to immediate speculation about Certainly, both Vodafone Qatar and Qtel had whether it was an MVNO of some kind. sufficient room for manoeuvre to declare a victory of Soon after, Grahame Maher, Vodafone Qatar’s CEO, sorts, but Qtel, which now stands a good chance of said that his company planned to take legal action being hit by a big fine, appeared to be clutching at against Qtel and ICTQatar. And ICTQatar in turn said it straws. The operator’s claim that there were no clear would investigate whether Qtel was operating within guidelines about brand licencing agreements when it the country’s telecoms laws. launched Virgin Mobile Qatar did not fully stack up, ICTQatar published its conclusions in late July, and especially in the light that it broke a number of existing its verdict appeared to side with Vodafone, although telecom regulations anyway. both operators claimed victory.

It seems far more likely that Qtel tried to use the The regulator’s findings were balanced and fair, lack of regulations around brand licencing agreements concluding that Virgin Mobile Qatar was a brand as an excuse to stretch the definition further than it licencing agreement and not an MVNO or third should have done, and Qtel even admitted that “it could operator. The agreement itself breached no rules, but and should have been more proactively open about the the way it was launched, and the way Qtel presented concept behind the launch” of the service. the Virgin Mobile brand to the general public Qtel will now have to make some significant contravened three telecoms laws. changes to the way Virgin Mobile Qatar appears, “The potential for confusion was, and remains, high,” including changing its web address to include the Qtel ICTQatar said in a statement. name, and the removal of some mobile packages.

ICTQatar further ruled that Qtel must “pay a penalty While it will take some time to see just how much to the State of Qatar for its unlawful actions” and impact these changes have, it was reassuring to see added that it had referred the case to the Office of the ICTQatar defend the country’s telecoms regulations, Attorney General for assessment of the appropriate fine. especially when such a big investment is at stake.

While the outcome strengthened Vodafone’s case roger.field@itp.com

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www.itp.net August 2010 | CommsMEA

2

CONTENTS

THIS CommsMEA | August 2010 www.itp.net

9

26

Mohamad Al Ghanim said the UAE’s telcos are “technically ready” for fixed competition.

6

NEWS • • • • • •

21

Operators in the region are considering renewable energy to power their networks.

15

Etisalat plans Asian expansion Nawras launches fixed services Qatar demands changes to Virgin Mobile Etisalat and Du to compete on fixed line Vodafone Qatar launches 3G services Bharti invests $600m in Nigeria

FEATURE

26

Strategic disposals Many telecom operators in the region are considering selling non-core assets, but must exercise caution to ensure operational continuity is maintained.

ANALYSIS

Vendor consolidation Nokia Siemens Networks agrees to acquire Motorola’s wireless infrastructure unit for $1.2 billion, in a move that will expand its reach in countries including the US and Japan.

FOCUS

Green technology Vendors are increasingly touting the benefits of renewable energy to power mobile networks, and operators in the region are starting to listen.

21

Parting company: Many operators are considering disposals in a bid to raise cash and increase focus on core operations.

CommsMEA | November 2007 www.itp.net

4

CONTENTS

CommsMEA | August 2010 www.itp.net

31

Jordan’s mobile sector is one of the most competitive in the region, but its fixed sector remains below par.

31 PROFILE

38

Wireless technology has the potential to transform healthcare delivery in the MEA region

38

Focus on Jordan Jordan was the first telco in the region to liberalise its telecom market, but the country’s fixed line and broadband sector lags behind.

36

FOCUS

Convergence Osman Sultan, CEO of Du, says convergence is creating a sea change in telecoms, and that understanding the customer is key.

38

NGNs at a national level can have a huge impact on economies and society, according to experts at Booz & Co.

CommsMEA | November 2007 www.itp.net

FOCUS

Mobilising healthcare Experts from Qualcomm and Booz & Co discuss how telecoms technology can help in revolutionising healthcare delivery in the Middle East and Africa.

48

BACKCHAT

Gift of airtime Eric Barbier, CEO of TransferTo, tells CommsMEA about global mobile airtime transfer and why operators are offering it as a value-added service to customers.

www.comptel.com

Take Charge of Your Services!

Policy Control and Charging

NEWS BRIEFS MTN and Arieso sign optimisation deal South African mobile operator MTN Group has signed a deal with Arieso, a UK-based mobile network optimisation specialist, to boost its 2G and 3G network capacity.

Under the agreement, Arieso will be the preferred supplier of optimisation software and systems for MTN Group across its 21 operations in Africa and the Middle East.

Arieso’s mobile network management and optimisation technology is targeted at mobile operators with high growth in data traffic, but whose radio network quality suffers capacity.

The technology uses information about the location of subscribers and their usage patterns to improve network performance.

Shirin Dehghan, CEO, Arieso, said the agreement with MTN was a “significant step forward” in Arieso’s ongoing global expansion.

MONTH IN NUMBERS

26% The stake in Reliance that Etisalat is reported to be interested in.

$390m The sum Nawras is investing in its fixed network in Oman.

$1.2bn The sum Nokia Siemens Networks will pay for Motorola’s wireless network infrastructure unit.

CommsMEA | August 2010 www.itp.net

Etisalat plans expansion in Asia UAE telco closes in on Reliance deal and plans major investment in Sri Lanka MANAN VATSYAYANA/AFP/Getty Images

6

India is attracting investment from Middle East operators that face saturation in their home markets.

UAE incumbent Etisalat looks set to strengthen its presence in the Indian Subcontinent with reports suggesting it is close to buying a 26% stake in Reliance Communications, India’s secondlargest mobile operator, and is also poised to invest some $163 million to expand its Sri Lankan operation.

Sources close to the negotiations between Etisalat and Reliance said that the deal was close to being finalised and could be completed by August, according to a report from UK broadsheet, the Financial Times.

The deal, which is thought to be worth about $3 billion, would give Etisalat an immediate presence in India, and also give Reliance, which has 100 million subscribers, additional funds for the roll out of its 3G network.

A deal with Etisalat could also give Reliance access to the UAE operator’s African assets, which include operations in Central African Republic, Gabon, the Ivory Coast, Egypt, Niger, Nigeria, Sudan and Tanzania.

The report added that the two companies were also considering ways of merging Etisalat’s Indian

unit, Etisalat DB, with Reliance in a bid to overcome regulations that prevent a single company from holding stakes of 10% or more in two operators competing in the same area.

However, an earlier report from Dow Jones Newswires said that Etisalat had started talks to sell its stake in Etisalat DB. In other news, Etisalat said it was planning to ramp up its investment in Sri Lanka. Etisalat, which entered Sri Lanka in 2009 through its $207 million acquisition of Tigo, intends to invest some 18.5 billion Sri Lankan rupees ($163 million) to expand its presence, with a particular focus on the north and east of the country, according to a report from AFP. Dumind Ratnayake, CEO of Etisalat Sri Lanka, said the company, which has almost 3 million subscribers, planned to add 480 new base stations, taking the total to 1,580.

The company competes with four other mobile operators in Sri Lanka; market leader Dialog Telekom, Sri Lanka Telecom, Hutchison and Bharti Airtel.

Nawras launches fixed services for consumers Nawras, Oman’s second operator, launched its fixed-line voice and broadband services for consumers, using a combination of fibre and WiMAX technology, in July.

Nawras, which launched fixed services for businesses in May, said its fixed network already covers 54% of households, and that it hopes to increase this to more than 80% by 2011 as it seeks to take market share from

incumbent telco, Omantel.

By using WiMAX technology, Nawras said that customers can set up internet access “within minutes”. To access the service, customers need to register with a Nawras dealer, buy a modem, and plug it into their computer at home. Postpaid packages start from 15 Omani riyals a month, which includes a 6 GB data allowance with speeds of up to 1 Mbps. For 5 Omani riyals a

week, prepaid customers can enjoy a 2 GB data allowance with speeds of up to 1 Mbps.

Nawras said that customers who sign up for fixed services before this October 13 will receive double data allowances for free and 50% off on Nawras broadband modems.

Nawras is investing 150 million Omani riyals ($390 million) in the next two years to expand fixed line services.

NEWS 7

Qatar demands changes to Virgin Mobile Qtel “misrepresented” its brand licencing agreement with Virgin Mobile, says Vodafone

Qtel introduced the Virgin Mobile brand to Qatar in May but drew citicism from Vodafone Qatar.

Qatar’s telecom regulator has issued a decision on the dispute between Qtel and Vodafone Qatar regarding Virgin Mobile, with both operators attempting to claim victory.

The dispute arose in May after the UK brand Virgin Mobile launched in Qatar through a brand partnership agreement with incumbent operator Qtel.

Soon after the launch, Qatar’s second operator, Vodafone Qatar, said it viewed Virgin Mobile Qatar as a third operator and a breach of its licence conditions, and said it planned to take legal actions against the telecoms regulator, ICTQatar.

ICTQatar yesterday released a statement saying that it had issued a decision on the dispute.

However, the regulator only revealed its decision to Qtel and Vodafone, which were both quick to issue individual statements welcoming the decision.

Vodafone said that the regulator had “determined that Vodafone was correct in its complaint that Qtel had illegally

violated the Qatar telecoms law and significantly mislead the people in Qatar” through introduction of Virgin Mobile in Qatar.

Grahame Maher, CEO, Vodafone Qatar, also confirmed to CommsMEA that his company planned to take legal action against Qtel.

Maher added that the regulator’s decision would allow Vodafone Qatar to take legal action against Qtel because of the way it had “misrepresented” its brand licencing agreement with Virgin Mobile.

“The judgment that ICT Qatar made is that the contracts that were signed between Virgin and Qtel did not break the law, but the way it was implemented is misrepresentation and is not what is represented in the contract, so there is a breach of the telecoms law and other laws.

“I think our case is much stronger now,” he said.

Maher added that regulator’s decision meant that Qtel would have to make changes to the

presentation of some components of Virgin Mobile Qatar’s business, including its website and some packages.

“The main thing is that it can only be seen that Virgin is a brand relationship and it can’t look like another operator. The website still looks like a Virgin Mobile website and that is not allowed,” he said.

However, Qtel brushed off Vodafone’s claims, and said that ICT Qatar’s review found that Vodafone Qatar’s core complaint - that Virgin Mobile was a third mobile service provider or MVNO - was “baseless and without foundation.”

But Qtel did admit that “it could and should have” been more open about the concept behind the launch of its Virgin Mobile service in Qatar.

A spokesman for Qtel, told CommsMEA that he did not expect to see any “operational changes” made to Virgin Mobile Qatar, and added that the “brand experience won’t change for customers”.

Both operators also welcomed ICT Qatar’s decision to set clearer guidelines on how such brand licencing agreements should be presented.

“Prior to this, there weren’t any rules on how brand partnerships could be represented because there weren’t any brand partnerships, so they have laid out rules in relation to how you market and promote brand partnerships,” the Qtel spokesman said.

Vodafone paid $2.1 billion for Qatar’s second mobile licence back in 2007, and launched services in 2009.

BRIEFS Etisalat’s profits slide in Q2 UAE incumbent Etisalat posted disappointing results for the second quarter of the year, as competition from rival operator Du continued to bite.

Etisalat’s net profits declined by 21% to AED 1.9 billion ($517 million), compared with AED 2.4 billion in the same period in 2009, while its Q2 revenue remained unchanged from a year ago, at AED 8.1 billion.

The operator said it had 7.8 million mobile subscribers in the UAE, an increase of 90,000 compared with the 7.71 million subscribers it announced in Q1. But fixed line subscribers continued to decline in Q2 to reach 1.28 million, with the company losing 20,000 fixed line customers in the quarter.

The results were worse than expected, with a recent poll conducted by Reuters having predicted an average net profit of $560.8 million for the telco.

QUOTE OF THE MONTH “People are looking to take assets off balance sheets and realise an upfront gain, and they sort of disregard the fact that they are handing over the jewels of the network to somebody else.”

Matt Glynn, head of technology, media and communications at DLA Piper. (See Strategic disposals, p36)

CommsMEA | August 2010 www.itp.net

NEWS 9

Etisalat and Du to compete on fixed line UAE telcos “technically ready” for fixed competition, says telecoms regulator UAE telcos Etisalat and Du are “technically ready” to share their fixed line infrastructure, paving the way for open competition in the fixed sector between the operators, according to the UAE’s telecom regulator.

The UAE Telecommunications Regulatory Authority (TRA) confirmed that both operators will be able to provide all fixedline telephone, internet and television services “everywhere in the UAE” within nine months.

H.E. Mohamad Al Ghanim, director general, TRA, said that both operators had completed negotiations on “complex technical and operational details of the network sharing arrangements” and were in the process of testing their networks and systems interfaces.

“Users of fixed telecommunications services across the UAE will be able to access services from both operators once these are commercially launched in the coming months,” he said.

Osman Sultan, CEO, Du, said the development was “a major step in the liberalisation of the UAE’s telecoms sector”.

“All consumers in the country will have an opportunity to choose their preferred operator for internet, voice and TV services,” he said.

Nasser bin Obood, acting CEO at Etisalat, said the operator was looking forward to competing for new customers within the Dubai free zones and new residential areas.

He added that Etisalat was in the process of completing its fibre optic network, which now covers most UAE households outside of

H.E. Mohamad Al Ghanim, director general, TRA, is pushing for greater competition in the UAE.

Du’s fixed coverage areas.

Milan Sallaba, an independent telecoms consultant based in Dubai, said that the opening of the fixed line sector was good news for consumers. “It addresses the current monopoly situation in the UAE where only either Du or Etisalat are offering fixed line services in any given location,” he said.

“Price reduction and more aggressive bundling of services will be an immediate benefit to both business and residential consumers as the telcos promote their value propositions to primarily hold onto their existing market shares.”

He added that Etisalat could initially be the main beneficiary of the development, by opening up access to the “comparatively concentrated and lucrative areas” of New Dubai, including the business-centric free zones of Internet and Media City, and the densely populated Dubai Marina and JBR. “Du should worry about losing share here as Etisalat will no doubt specifically target these

well-identified areas. And whilst Etisalat too could do a lot to improve convenience and their customer service in general, it may nonetheless benefit from a competitor that lately appears significantly below par when it comes to customer care and experience,” Sallaba said.

While the TRA’s initiative will open up “vast geographical areas” for Du, Sallaba questioned the telco’s ability to take on its bigger rival in these areas.

“Given that their [Du] current customer service and on-site engineering already appearing to be struggling to provide what most customers consider an acceptable level of service without the added pressure of serving a broader geographical area, it will be interesting to see whether Du manages to shape up sufficiently quickly in these critical areas before alienated customers start to switch in large numbers due to poor service experiences, particularly if pricepoints for products and services are coming down and converging between competitors,” he said.

BRIEFS UAE TRA tightens up spam rules The UAE’s TRA has confirmed that it has put in place a new policy to cut down on the amount of spam received in the UAE. The initial policy will focus on mobile SMS spam, with both UAE operators, Etisalat and Du, required to gain consent from users before sending them marketing SMS. HE Mohamed Al Ghanim, director general of the Telecommunication Regulatory Authority (TRA) said: “After receiving many complaints from customers about random marketing SMS messages, the TRA decided to introduce this new policy to curb the annoyance of such messages.

Al Ghanim said that the policy would be enforced during July 2010, and that all consumers would receive messages from their service providers requesting their consent with regards to receiving marketing SMS. “Clients will not receive commercial SMS unless they approve it. Approvals are stored and retained either in paper or electronically for later review as per the Policy requirements,” he added.

Customers will be able to file complaints with the operators if they continue to receive spam messages, although the complaints procedures, and the penalties for businesses that continue to send unsolicited messages or for operators that fail to block such messages, has not been disclosed.

CommsMEA | August 2010 www.itp.net

NEWS 11

Vodafone Qatar unveils mobile broadband Second operator takes aim at Qtel with easy-to-understand tariffs Vodafone Qatar has launched mobile broadband services in the country with a range of flexible tariffs designed to lure price conscious customers.

The operator launched two mobile broadband packages, called Red and Freedom, both for QR100 ($27.4) .

Red customers can use 500MB of data for QR100 ($27.4) prepaid, valid for 60 days, while postpaid Freedom customers can use 2GB of data valid for 30 days, with any unused credit carried over for another 30 days.

As a special introductory promotion, Vodafone Qatar is offering Red customers 1GB of data for the price of 500MB until 15th August, 2010. Vodafone Qatar customers can also buy a USB dongle for QR299, giving individual users access to mobile broadband via their laptops.

Meanwhile, Vodafone’s MiFi device, which creates a WiFi hotspot for up to five devices, is available for QR599.

Customers can also get a special bundle comprising USB Stick, SIM card and mobile broadband package for QR399.

Vodafone’s mobile broadband is also available with a Vodafone Micro SIM supporting iPad and

Grahame Maher said the mobile broadband tariffs offer simplicity and value.

iPhone 4. The mobile broadband sticks and MiFi are available at all Vodafone’s retail stores and its online store.

Grahame Maher, CEO, Vodafone Qatar, described the price plans for the mobile broadband service as being “simple, easy to understand and good value.”

Vodaone Qatar also forged ahead with its plans to deploy a fixed broadband network, with the launch of high speed broadband services at Qatar’s Pearl development.

The company had been offering services on a free

trial basis for a month, before officially launching services last month. Vodafone will be providing high-speed internet access for QR 550 per month for 5Mbps until October 10, 2010, after which it will introduce new plans of various sizes and prices according to demand.

In other news, Maher said last month the company was on track for its mobile network to be completed by October.

He said that the company had achieved 100% geographical penetration in the country, but that some in-building work remained to be completed.

“All major critical milestones in building Vodafone’s network are expected to be completed

by October this year,” he said in comments published by Qatar Tribune.

Maher also said there was a need for greater infrastructure sharing with Qtel. “Tower sharing reduces cost of operations, meaning better services and better value for all our customers,” he told the paper.

Currently Vodafone has 390 outdoor tower sites in Qatar, of which 22 are on shared land with Qtel while four other towers are hosting Qtel equipment.

Zain takes early lead with LTE trials in Kuwait Kuwaiti mobile operator Zain has taken an early lead in LTE implementation in Kuwait.

The company said it had achieved data transmission speeds of 150Mbps during LTE trials, while its rivals STC and Wataniya are yet to start LTE tests in the country.

Zain, which is the first telecom

company to start work on LTE trials in Kuwait, has already conducted tests in some of its other markets, including Bahrain and Saudi Arabia.

The operator was also the first telco in the Middle East to make a test call using LTE in Bahrain, in April 2010.

Khaled Al-Omar, CEO, Zain

Kuwait, said that LTE would allow its customers to download “mega files” and watch live television over the internet on mobile devices.

“Through this [LTE], we will be able to increase the connection capacity in a manner that allows us to enjoy the best mobile network in Kuwait,” he said.

BRIEFS KSA telcos fined over roaming fees KSA’s telecoms regulator, the Communications and Information Technology Commission (CITC), has handed a SR5 million ($1.32 million) fine to at least one of the country’s telecom operators for violating a ban on offering a free international roaming service.

The CITC initially ordered Saudi Arabia’s three mobile operators to stop offering their subscribers free incoming calls while outside the country back in February.

While CommsMEA was unable to make contact with telcos STC and Mobily, a spokesperson for Zain confirmed that Zain KSA had not been fined.

The CITC’s decision to prevent the operators from offering free incoming roaming calls angered many mobile users, who have complained that the regulator is supposed to protect the consumer rather than raise prices.

Du offers unlimited VoD The UAE’s second operator, Du, has launched an unlimited video on demand service for AED75 ($20.4) a month.

The operator said that the service will be free for its TV customers for a limited period as an introductory offer.

The service provides customers unlimited access to a catalogue of entertainment including movies, TV series, dramas, documentaries, music, and children’s shows.

CommsMEA | August 2010 www.itp.net

NEWS BRIEFS Mobinil completes LINKdotNET acquisition Mobile operator Mobinil has acquired the Egyptian operation of ISPs LINKdotNET and Link Egypt from InTouch Communications, a subsidiary of Orascom Telecom, for $130 million.

The sale excludes the nonISP part of Link Egypt’s business and LINKdotNET’s non-Egyptian operations.

Mobinil expects to benefit from various synergies and savings from the acquisition, through combined offerings and expansion of distribution channels.

Khaled Bichara, group CEO, Orascom Telecom, said: “As per the trend in the global telecom industry, the convergence between ISPs and operators enhances the value for both businesses.”

Bharti Airtel gains 3G licence in Kenya Zain Kenya, which is now owned by India’s Bharti Airtel, is set to deploy a 3G network after gaining additional spectrum from the country’s regulator.

Zain Kenya will become the second operator in Kenya to offer 3G services after Safaricom, which was issued a 3G licence in 2007.

Charles Njoroge, director general of the Communications Commission of Kenya, said that the “initial fee” for access to additional broadband spectrum had been reduced to $10 million, from a previous cost of $25 million.

CommsMEA | August 2010 www.itp.net

Three bidders vie for Mozambique licence Mozambique shortlists three companies to compete for the country’s third mobile licence

ISSOUF SANOGO/AFP/Getty Images

12

Mozambique has emerged as one of Africa’s most promising telecom markets.

Mozambique’s National Institute of Communications (INCM) has shortlisted three companies for the country’s third mobile licence.

The three successful bidders were Vietnamese telco Movitel, Portugal Telecom and Uni Telecom unit TMM, and a joint venture of Angola’s UNITEL SA and Mozambique’s Energy Capital SA. Speaking at a press briefing, Americo Muchanga, INCM director, said that the technical and financial proposals of the three bidders will be evaluated

over the next two months, after which the INCM will announce the winner.

The winning bidder will compete with Mcel, the mobile arm of incumbent Telecomunicaçöes de Moçambique, and the second entrant, Vodacom.

Mozambique’s government, which launched the tender in April, put a reserve price of US$25 million on the license.

Daniel Jones, a partner at research firm Onda Analytics, said that Portugal Telecom appeared to be “the main

contender” for the licence from the shortlist announced by the regulator, particularly given the country’s history of investment in Portuguese-speaking countries.

But Jones said that the winner will face some significant challenges. “The winner will have to be very careful in controlling both its capital and operating expenditure in order to run a financially sustainable operation,” he said.

“Vodacom, the second mobile entrant in Mozambique, became EBITDA-positive only in its last financial year and continues to make an operating loss, due to ARPU of only just above $3.”

Jones added that this loss came despite Vodacom building up a significant subscriber base of 2.3 million since its launch back in 2003.

“Typically a third entrant will struggle to match the performance of a second entrant for some time, as it builds up its market share. Vodacom’s results are a warning for bidders for the third licence to be cautious and expect to support the initial investment for several years.”

Bharti plans $600 million investment in Nigeria Indian mobile operator Bharti Airtel plans to invest $600 million in its Nigerian operation in the next three years, with half of the investment to be made in the next 12 months.

The news follows closely from the completion of Bharti Airtel’s $10.7 billion acquisition of most of Zain’s African assets last month and indicates that the Indian telco views Nigeria, which has a population of about 150

million people, as a key telecoms battleground.

The company’s decision to invest heavily in Nigeria could also help counter expansion plans from South Africa’s MTN Group, one of its main rivals in the country.

Last month, MTN Nigeria signed loan agreements worth more than $2 billion with 15 Nigerian banks and two foreign banks to fund its expansion.

Manoj Kohli, CEO international, Bharti Airtel, said his company planned to expand aggressively in Nigeria and also intended to bring its “ecosystem partners” to the country, India’s Economic Times reported.

Bharti competes with MTN, Globacom, Etisalat, and the mobile arm of incumbent Nitel in Nigeria, which is widely viewed as one of Africa’s most competitive markets.

NEWS 13

Banks warned over mobile virus threat Mobile operators and banks urged to strengthen security for mobile banking vulnerable. Mobile devices may be lost, stolen or hacked and are used in situations that are inherently less secure than sitting in an office or at a home computer,” said Graham Titterington, principal analyst at Ovum.

“Mobile networks may be intercepted either by breaking the wireless encryption mechanism or by Security is becoming a big issue as mobile banking services take off. hacking into the wired backbone of Banks and mobile operators the network where encryption offering mobile payment services is not mandatory under “must wake up to the threat” of telecommunications standards. malware viruses or risk being IT malware that compromises increasingly vulnerable to back-end servers, but is harmless potential attacks, according to a in the wireless environment, may report from research firm Ovum. be passed through the mobile Companies involved in mobile banking interface.” payment and banking services, Ovum believes defensive including banks, operators and systems for mobile financial handset makers must collaborate services should be designed to improve security, and “should “incrementally to a level that is at plan for living with malware and least equivalent to that deployed always assume the possibility” of in Internet banking”. an attack, the report added.

However, the organisation “Mobile banking is inherently

stressed that mobile security must not be simply a copy of Internet security. “While many of the concerns and strategies are similar, the approach must be tailored to the characteristics of the channel,” the report stated.

Furthermore, banks should also adopt a broad defense strategy that incorporates ways to detect and limit the effects of an attack, Titterington said.

“Network vulnerabilities can be avoided by adopting end-toend encryption of transactions, independent of any encryption provided by the network operator.

“The main objection to this in the past has been the limited computational power of the mobile device, but the time has come to reject this argument as mobile devices become more powerful. Encryption, while not a panacea, protects against eavesdropping, message alteration, and ‘man-in-themiddle’ attacks.”

The report adds that banks should be particularly rigorous in checking the creation of new payment mandates, while emphasising ease of use when making further payments using an existing payment instruction.

Local operators in the Gulf let users tweet via SMS Regional mobile operators are tapping into the popularity of Twitter and have rolled out Twitter SMS services to subscribers.

Saudi Telecom was the first to launch the service in June.

Once signed up, users can receive Twitter notifications via SMS free of charge but each outgoing

message costs SR 0.75 ($0.20).

Zain in Kuwait, who also launched the service last month, charges subscribers for each outgoing SMS. At the time, Basel Manasrah, director of Marketing at Zain lauded the new service, adding that: “... the world breathes the air of data revolution, and it is not

reasonable that Zain customers be deprived from the breeze of such digital revolution.”

Du is now the latest regional operator to join in, offering the Twitter SMS service to subscribers in the UAE. Like Zain and STC, registering for the service and incoming messages are free of charge.

BRIEFS Samsung confident of healthy Galaxy S sales Samsung is confident that its Android-powered Galaxy S smartphone will enjoy strong sales in the UAE, despite the fact that customers in the country won’t be able to make the most of Google’s application store - Android Market - as it still has not been launched in the country.

“In other GCC countries, the Android market is available and, as soon as it’s made available here in the UAE, we’ll switch.

Unfortunately, it’s not our decision but it’s something we’ll keep pushing for,” Sandeep Saighal, general manager of mobile phones at Samsung Gulf Electronics, told itp.net recently.

“Internationally, the Galaxy S has already seen impressive sales since its launch in key markets, and we are confident we will see healthy sales of the Android-powered device in the UAE market too. Through the launch of the Galaxy S, we hope for increased market share in the ever-lucrative smartphone sector,” Saighal added in a company statement.

The firm claims 200,000 units have already been sold in South Korea since its June 24th launch.

Saighal believes the new Galaxy S along with the Wave smartphone - the first handset released on the company’s own open mobile Bada platform, will help drive its MENA mobile phone market share from 17% to more than 25% this year.

CommsMEA | August 2010 www.itp.net

NEWS

ANALYSIS 15

NSN EXPANDS ITS GLOBAL REACH MARKKU ULANDER/AFP/Getty Images

European vendor NSN acquires Motorola’s wireless infrastructure business

By Roger Field Vendor consolidation continued in July when Nokia Siemens Networks agreed to acquire Motorola’s wireless network infrastructure unit for $1.2 billion in cash, in a deal that it expects to complete by the end of the year.

The Finland-based vendor said it expected to gain “incumbent relationships” with more than 50 operators and to strengthen its position with leading telcos including China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone, bolstering its market share in the US and Japan and cementing its position as a top-three infrastructure vendor.

Motorola’s networks infrastructure business, which brought in $3.7 billion 2009, is involved in most mainstream wireless technologies including GSM, CDMA, WCDMA, WiMAX and LTE. The business is a market leader in WiMAX, with contracts in 21 countries, and is involved in CDMA in 22 countries. It also has a strong GSM presence, with more than 80 networks in 66 countries, as well as a number of LTE pilots.

Motorola will retain its iDEN business and all patents related to its wireless network infrastructure business and other selected assets, the company said.

Some 7,500 employees will transfer to Nokia Siemens Networks from Motorola when the deal closes, including research staff in the US, China and India.

Speaking at a press conference to discuss the deal, Rajeev Suri, CEO, Nokia Siemens Networks, said there were “some very compelling reasons” why the deal made sense.

“This deal is about customers, we expect to gain an incumbent position with many new customers and expect to strengthen our position with others. Customers like Verizon, KDDI in Japan, China Mobile, Sprint, Clearwire and others,” Suri said.

“Secondly the deal is about scale and building our presence in some key regions.

We have never made a secret about our desire to expand in North America and this deal

certainly achieves that.”

Suri said the deal would “significantly strengthen” the company’s worldwide presence, particularly in “priority regions” including the US and Japan.

“Nokia Siemens Networks will see the benefits of a deal that is expected to enhance profitability and cash-flow and to have significant upside potential,” he said.

Nokia Siemens Networks has been keen to improve its market share in the US in recent years amid increasing competition from Chinese vendors Huawei and ZTE. The vendor lost out to rival Ericsson in its bid to acquire two wireless divisions from struggling Canadian vendor Nortel in 2009.

While the benefits of the sale are less clear for Motorola, the company’s co-CEO, Greg Brown, said that the sale would “further sharpen the strategic focus” of its remaining Motorola Solutions business as the firm prepares split into two separate publicly traded companies.

Motorola, which has experienced declining handset sales in recent years, said recently that it planned to split its handset business along with its set-top box unit, and network infrastructure divisions, and list them separately on the New York Stock Exchange.

But Julian Bright, senior analyst at Informa Telecoms & Media, questioned how easily Nokia Siemens Networks will be able to handle the integration post acquisition.

“Nokia Siemens Networks has set itself a huge challenge with this acquisition. NSN struggled with the original merger of the two companies and the integration with Motorola will probably add to its woes,” he said.

“The new entity represents a tough mix of nationalities, with the combination of US, German and Finnish cultures.”

He added that Nokia Siemens Networks could also face a tough task integrating some of Motorola’s technology into its own portfolio.

“While there are opportunities for the

Nokia Siemens Networks has long been keen to expand in the US.

merger to enable the creation of more integrated solutions such as Single RAN, NSN first needs to overcome the problems associated with integrating a new vendor’s RAN equipment with its own existing core network, backhaul, network and subscriber management products,” he said.

However, Julien Grivolas, principal analyst, mobile infrastructure and technologies at Ovum, said he considered the deal to be “a good fit” at a global level.

“Motorola was their last chance to quickly develop a footprint in the US, so in that sense it is not really a surprise. There are also good synergies on a portfolio basis because NSN have no enhanced solution in WiMAX.” “The deal brings a number of key customers or key operators outside of the US. If you add DoCoMo and KDDI in Japan, NSN is in a good position in this market.”

DEAL IN NUMBERS

7,500 $1.2 BN

Staff to be transferred from Motorola to NSN.

Sum to be paid in cash for Motorola’s wireless networks division.

$3.7 BN

Sales achieved by Motorola’s wireless network infrastructure business in 2009.

www.itp.net August 2010 | CommsMEA

16

OPINION

An end to spam in the UAE? The new TRA policy, which came into effect last month, should mean more consumer control over ‘unsolicited marketing messages’, but the policy, and its rules, are nowhere to be seen

By Mark Sutton

H

ad enough of spam in your email inbox or pinging onto your mobile handset at all hours? Well, finally help should be on the way for residents of the UAE, with the Telecommunications Regulatoy Authority’s new Unsolicited Electronic Communications Regulatory Policy, which came into effect last month.

The policy, part of UAE telecoms law, includes a number of different elements, but in short, it makes UAE telecoms operators (Etisalat and Du) responsible to do their best to control the flow of unsolicited electronic messages, particularly marketing, when those messages either come from within the UAE or are sent to the UAE. If anyone wants to send you marketing messages, the operators have to ensure that they ask you first, and have to do their best to stop those messages if you say ‘No”.

Effectively, the policy places the onus on the operators to use all practical measures to minimise the distribution of unsolicited mails, particularly marketing, over their networks.

The policy takes a few different approaches to this control, and makes some distinction between tackling email and mobile-based spams, but there are a few common requirement, namely that operators get consent from users to receive

CommsMEA | August 2010 www.itp.net

marketing messages, either by requesting that they ‘optin’ first, or by giving them the means to ‘opt-out’ - the sort of subscribe/unsubscribe line that appears at the end of most marketing messages originating with more reputable companies. Interestingly, the policy says it is perfectly OK for the government to spam you, but not government-owned commercial entities. Operators should also make sure that customers have some way to report unwanted messages.

So far, so good. I am quite cautious mentioning my mobile number or email to anyone, even if it’s a service that I want.

Late last year, I bought a new Du mobile line, and one of the big draws of switching operators was the thought that I could ditch my Etisalat mobile, and be free of all the spam

that’s built up on it over the years. Predictably, despite never having given the number out to a commercial organisation, ever, du themselves are already busy bombarding me with crap, and they’ve even got the cheek to charge me for responding to an unsolicited competition telling them to stop spamming me.

So a workable policy on unsolicited email marketing messages, and the ability to get your operator to cut off this sort of message, should provide a welcome means of reclaiming your inbox and stopping the spammers. But of course, it’s never that easy.

The policy itself isn’t one of the clearest such documents around, apparently, and while you might hope that 1st July marks day one in the big push against spam in the UAE, the operators and the TRA seem to

be quite silent about the subject.

Requests to find out some more information - namely will the operators start providing this sort of opt-in/opt-out ability, will they have a complaints procedure, will they publicize the complaints procedure and can I get Ohm Events organisers to stop sending me SMS every other day - didn’t get much of a response. Admittedly changes in personnel at the TRA meant our enquiries went nowhere for a while, but I still can’t get any one to explain the basics of the policy to me, or how rigorously it will be enforced.

So it looks like this policy is going nowhere for now, despite the fact that the operators were already supposed to have submitted the details of how they proposed to provide mobile spam opt-in/out and unsubscribe facilities to the TRA since January end.

A cynic might suggest that the operators themselves make plenty of money of spam or marketing messaging from valued third parties as the disclaimer probably reads, and therefore have no inclination to implement rules in a timely manner. But I am sure they are just sorting out a few last minute amendments and soon, I’ll be able to opt-out and unsubscribe, and those incessant spam SMS from Diamond Football Mania Challenge will be a thing of the past.

WORLD NEWS USA T-Mobile ramps up HSPA+ speeds T-Mobile US A plans to double the maximum download speeds on its new HS PA+network to M 24 bps by ,102according local reports. The company, which has not yet unveiled a migration strategy to LTE , is also planning to launch an HS PA+compatible handset by eSptember.

The company started to deploy its HS PA+network earlier this year in cities including eNw York and eNw eJrsey, and has plans to cover 01metropolitans by 012end.

The operator, which is owned by Germany’s Deutsche Telekom, claims to have the fastest network in the US , with peak download speeds of M 12 bps, although the company’s main rivals including AT&T, have already outlined plans to migrate to LTE , which can allow for speeds of up to M 01 bps.

Oli Scarff/Getty Images

18

UK UK regulator cuts time for number portability The UK ’s telecoms regulator, Ofcom, has committed to halve the length of time it takes subscribers to transfer their mobile number to a new provider.

From next April, customers will be able to transfer their existing number to a new provider in u j st one working day rather than the two days it currently takes.

In 91it used to take consumers up to 52days to switch their number to a new provider via a fax-based system.

But web-based systems mean that faster switching times can now be achieved. The new regulations, which will require mobile operators to make changes to their systems and processes, will come into force on April ,1.102 Ofcom chief executive, d E Richards, said: “Being able to switch quickly and easily between mobile providers is an important part of healthy and effective competition.”

CommsMEA | August 2010 www.itp.net

CHINA Google’s China licence renewed h Cina’s Ministry of Industry and Information Technology renewed the h Cinese operating licence of Google in u J ly.

Guxiang, a company that operates Google’s websites in h Cina, was included in a list of more than 02companies that had their licences renewed by the Ministry of oCmmunications, Reuters reported. h Cina’s decision to allow Google to continue operating in h Cina ends a protracted dispute that led to the internet giant being excluded from one of the world’s biggest internet markets.

Google had been rerouting search requests from Mainland h Cina to its Hong oKng service since March, after the company said it would stop filtering search results considered subversive to the h Cinese government. Google took this step after it blamed h Cinese computer hackers of attempting to steal the company’s technology and contact information from human rights activists.

WORLD NEWS 19 FRANCE Orange unveils ambitious targets France’s incumbent telecom operator, Orange, launched a five year business plan intended to reinvigorate the company after a difficult past couple of years.

The plan, which is called “C onquest ”5102, is designed to tackle some of the main challenges the company is facing, including social upheaval in France, a fast changing telecoms ecosystem, and fierce competition from internet-based companies.

The company plans to focus more closely on “the conquest of networks” by increasing coverage and bandwidth for both fixed and mobile networks, in both mature and emerging countries. In France, Orange will invest U ER b 2illion by 5102to deploy a new fibre optic network.

MONTH IN NUMBERS

2 BILLION The amount in Euros that Orange plans to invest in France by 2015.

$393 MILLION

The reserve price set for 3G licences in Thailand.

100

The number of metropolitan areas in the USA that T-Mobile plans to deploy its HSPA+ network.

THAILAND Thailand plans 3G auctions Auctions for G 3 licences in Thailand could start by eSptember, after the country’s regulator, the aNtional Telecommunications oCmmission T N ( ,)Capproved the final draft of the country’s G 3 licensing process.

The latest draft plan raised the reserve price for the G 3 licenses to THB1 .28billion 39$(million), up from THB1 0 billion in the original draft, according to a report from eCllular eNws. T NCplans to auction three G 3 licences, which will be for M 51 Hzbandwidth and will be valid for 51years. The winning bidders will be required to cover % 05of Thailand’s population within two years.

To encourage rapid deployment, the T NCsaid that if licensees are able to cover % 08of the population within two years, they will be able to defer the final installment payment for their licence by a year.

RUSSIA Russian telcos demand 4G transparency Russia’s three largest mobile operators by subscribers, MTS , Megafon and iV mpelC om have asked the Ministry of oCmmunications to prevent LTEfrequencies being given to companies that plan to resell them, according to Russian newspaper, oKmmersant.

Mikhail h Samolin, MTSpresident, oj ined forces with MegaFon O E C eSrgei oSldatenkov and iV mpelC om head Yelena h Smatova to call on the Ministry of oCmmunications to ban such sales of LTEspectrum. In a signed letter to the Ministry, the three said they had information about LTEfrequencies being distributed to “smaller companies” and added that such a scenario would delay the deployment of G 4 and damage their companies and the country as a whole.

The operators estimate that creating a G 4 national network could cost as much as RUB2 .6103 billion 7$(billion), and take up to seven years, which could damage future investment opportunities, oKmmersant reported.

www.itp.net August 2010 | CommsMEA

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STRATEGIC DISPOSALS

FOCUS 21

PARTING COMPANY Operators can benefit from the disposal of non-core assets, but caution is vital

www.itp.net August 2010 | CommsMEA

22

FOCUS

STRATEGIC DISPOSALS

“I can’t think of an operator that is not re-examining its portfolio and also making an assessment of what is strategic and what is not.” Matt Glynn, DLA Piper Matt Glynn advises caution when planning to sell assets.

W

hile many analysts have been busy assessing the acquisition strategies of companies in the region’s telecoms sector, with Bharti Airtel’s acquisition of Zain’s African assets putting M&A firmly back in the spotlight, less attention is paid to the strategies being adopted by the sellers.

Yet many deals in the telecom sector are being driven by companies actively looking to dispose of assets, from entire operations to parts of their network infrastructure that are deemed to be non-core.

Matt Glynn, head of technology, media and communications at DLA Piper in Dubai, says that he is seeing an increase in operators looking to dispose of assets, particularly among companies that have achieved a level of regional scale.

“We are starting to see them come through for legal representation, while others are still at the stage where they are with their strategic management consultants, asking what is the way forward given what has occurred over the last couple of years,” he says.

For Maarten De Wit, a partner at the global strategy consultancy Oliver Wyman, the decision of different operators to dispose of assets may also hinge around the ownership structure of the company.

He points out that government-backed companies, which generate returns for their country, are less likely to look to make disposals to improve the balance sheet in the short term, although he conceded that they still need to maintain a “healthy portfolio”.

“If you consider yourself to be an operator

CommsMEA | August 2010 www.itp.net

and in the business of operating telecoms networks then the incentive to sell is going to be reduced compared to the holding structure that thinks of itself almost as a private equity house that maintains or manages a portfolio of businesses which needs to generate specific profitability targets that the shareholders are looking for,” he says.

Glynn agrees that the ownership structure of the business also plays a part in influencing the decision to sell assets.

He points out that while some people and organisations were “pouring money into telecoms over the last four or five years” some stakeholders started looking to exit when the global economy stalled.

COMPULSION TO SELL The rise in interest in disposals is partly due to operators taking a step back and assessing their performance over the past few years, and particularly the performance of assets that have been acquired in recent years, combined with the usual drivers of consolidation such as increased competition and falling ARPU. With many of the region’s powerhouse operators expanding so rapidly in the past few years, the global economic crisis has led operators to question how successful their expansion

strategies have been, according to Glynn.

“There is a sort of tallying up of a score card, and from a prospective seller point of view there are a number of drivers,” he says. “We have got the people who are looking to achieve opex and capex efficiency saying, ‘you know what, do we actually need this particular business division or core process?’”

This has probably been most obvious from the expansion of many operators into Africa, where it has proved difficult to generate strong profits. This, particularly when combined with the economic crisis, led operators to question their expansion strategies and consider selling assets, especially in cases where shareholders held influence, as Zain’s decision to sell most of its Africa assets to Bharti Airtel

CONSOLIDATION INEVITABLE For Maarten De Wit, partner, Oliver Wyman, further consolidation in the region’s telecoms sector is inevitable in the coming years.

“Perhaps it takes five years, 10 or 15 years but the economics in the end do prevail,” he says. “The moment that the markets further liberalise it will be all the more obvious.

The telecom sector is no longer the type of massive growth market it used to be and in fact it has some significant strategic challenges ahead of it, hence the business will require ongoing professionalisation.

“You will see more competition as a result of further liberalisation particularly with regards to virtual operators.

Competition will increase and as a result of that there is an increased incentive to consolidate in order to save costs.”

STRATEGIC DISPOSALS

FOCUS 23

“The telecom sector is no longer the type of massive growth market it used to be, and in fact, it has some significant strategic challenges ahead of it.”

Maarten De Wit, Oliver Wyman

Maartin De Wit predicts further consolidation in the telecom sector.

demonstrated.

But while it might be mega deals such as the Zain-Bharti deal that grab the headlines, operators throughout the region are also considering the merits of selling off divisions of their business such as network maintenance, allowing them to focus on their genuine core business of selling and marketing airtime.

“This is a clear trend, and we are going to see a lot more of it in the region, the parceling up of towers and offering them for sale,” Glynn says.

“I can’t think of a major operator that is not re-examining its portfolio and also making an assessment of what is strategic and what is not.

“My long term view is that operators are going to become thin operators, core network operations are going to be outsourced, operators will be more concerned with the end-user relationship, selling off smart services, offering valueadded content and that kind of thing, and less concerned about maintaining towers and the like.”

NEED FOR CAUTION But just as operators should conduct thorough due diligence before making acquisitions, they should also exert caution

before disposing of assets.

Indeed, the same kind of short term thinking that led some operators to make ill-advised acquisitions during the global economic boom can also be seen manifesting itself in the desire to dispose of assets.

“We tend to see people getting more excited about the upfront cash realisation of the sale and the improvement to the balance sheet straight away, particularly from the CFOs and the financial community, and they pay less attention to what it means to ongoing operations and their ability to deliver the product,” Glynn says.

“I don’t see as much attention as I would like to see on operational and continuity issues. It is the upfront carrot that seems to effect the decision.”

Glynn warns that this is particularly the case with an operator planning to sell-off network infrastructure, which can leave telcos open to various unforeseen risks.

“People are looking to take assets off balance sheet and realise an upfront gain, and they sort of disregard the fact that they are handing over the jewels of the network to someone else,” he warns.

Indeed, there are a number of issues, including varying regulations in the region, that need to be considered before selling off assets such as parts of the network

“Before you embark on a strategic sale, don’t just limit your assessment to the financial upside. You need to focus as much, if not more so, on operational continuity issues.” Matt Glynn, DLA Piper

infrastructure. “The jurisdiction you are in has clear implications in terms of the kind of network activities that can be bundled off,” Glynn says.

This raises the question of whether the person who is buying the assets is required to have a licence.

“The regulatory implications have to be carefully considered and perhaps they are sometimes not looked at as closely as one might like,” he adds.

In this case, operators can easily fail to conduct adequate due diligence on the company that is buying the network infrastructure, or parts of it, to actually deliver the operations on which the operator depends.

“Before you embark on a strategic sale, don’t just limit your assessment to the financial upside. You need to focus as much, if not more so, on operational continuity issues,” Glynn says.

However, despite a growing trend of disposals, Glynn remains bullish about the sector, and thinks operators in the region are poised to take a leading role in the emerging converged telecoms landscape.

“We are going to see a lot more divestment but also a lot more acquisition on the part of operators,” he says. “I think we are going to see them buy a lot more content and content delivery platforms. We really are living in a converged environment and I think in the next five or 10 years the operators in this region are going to play a leading role in terms of being the biggest beasts in the new converged environment.”

www.itp.net August 2010 | CommsMEA

FOCUS

RENEWABLE ENERGY

SIMON MAINA/AFP/Getty Images

26

POWERING CHANGE Operators are taking a second look at renewable energy as costs in emerging markets soar. By Roger Field

W

hile green technology might not be viewed as a priority by most telecom operators around the world, the growing cost of powering offgrid base stations as networks spread into rural areas looks set to create a sea change in attitudes to renewable energy.

Indeed, the GSMA, a trade association for the GSM industry, has already thrown its weight behind a global effort to promote the use of renewable energy to power base stations with its ‘Green Power for Mobile’ programme, which was launched in 2008 to advance the use of renewable energy sources by the mobile industry.

The organisation hopes to see 118,000

CommsMEA | August 2010 www.itp.net

base stations powered by renewable energy in developing countries by 2012, which it claims would save up to $2.5 billion on diesel and cut annual carbon emissions by up to 6.8 million tons.

In Africa and the Middle East, many operators and vendors are also making a concerted effort to introduce renewable energy, particularly solar, as a means to power base stations located in remote areas.

The growing attraction of renewable energy is being driven more by economics than concern for the environment, with operators, particularly in Africa, facing significant cost and effort to run remote off-grid sites with diesel. Indeed, according

to estimates from network vendor AlcatelLucent, a base station powered by average diesel powered generator costs about $20,000 to $40,000 a year to run, taking into account fuel and its delivery, and maintenance of the generator.

When considering that hybrid base stations that use a combination of solar power with a back-up diesel generator can give a return on investment in as little as two to three years based on current oil prices, it is surprising that more operators have not embraced the technology.

But while some operators have adopted solar power for some base stations, usually in remote areas, it is clear that the

RENEWABLE ENERGY

FOCUS 27

“There is a lot of caution in the market for making that initial investment and essentially a lack of long term thinking. That is one of the challenges that vendors face.” Lindsay McDonald Lindsay McDonald: Operators need to consider green initiatives.

technology is far from mainstream, with only a handful of operators, including STC in Saudi Arabia, and Orange and Zain in Africa, having deployed base stations that use renewable energy.

For analysts at Frost & Sullivan, a consultancy that is monitoring the environmental policies of telecom operators in the Middle East and Africa, the case for using renewable energy is clear.

Lindsey McDonald, consultant, ICT Practice, MENA, Frost & Sullivan, says that the company’s research has shown that in the MEA region, diesel for base stations emerged as one of the biggest contributors to opex for operators, along with staff wages.

While the case for using renewable energy might be strongest in remote off-grid sites, McDonald also points out that many countries in the region, such as Nigeria, also suffer from unreliable power grids, which means that base stations in many urban areas often rely on diesel generators for significant periods.

Despite this scenario, operators that have tested or started to use renewable energy to power parts of their network remain in the minority, and Frost & Sullivan has identified a number of reasons for this.

One problem is that the decision makers at many of the region’s telecom operators have a “short tenure of responsibility” according to McDonald, which in turn can lead to more short term thinking.

Senior managers are also nervous about making decisions that involve such as big sum of money, particularly when they might not be around to see the results.

do they think about how to power those “There is a lot of caution in the market base stations.” for making that initial investment and Given the cost savings and benefits that essentially a lack of long term thinking. hybrid base stations can bring, McDonald That is one of the biggest challenges that adds that it is vital for telecom operators vendors face,” McDonald says. to consider the issue earlier rather than But there is also a lack of knowledge later. “We are trying to make operators about renewable energy and its potential understand that they don’t have to go benefits and reliability. “Another side through that legacy type of lifecycle – they of things is perhaps the perception that can jump start their network if they invest renewable energy isn’t as reliable as now. It is going to be more cost effective diesel, so the worry that solar panels than if you invest in seven years or so.” might not always work, the worry that However, McDonald also concedes that wind generation might not always work,” use of renewables would perhaps be much McDonald says. greater in Africa and the Middle East if The situation is also exacerbated by regulations were in place to drive operators the fact that many operators in the region to reduce their carbon footprints and boost remain in a growth phase where issues sustainability. such as renewable energy – and other Indeed, one of the main drivers of wider environmental issues – simply do not feature.

“What we see is that a lot of CASE FOR RENEWABLES operators in the Gulf are still in their expansion phase and are concerned with getting Alcatel-Lucent is just one vendor that is increasingly looking the network up as quickly as at renewable energy solutions for operators. The company possible,” McDonald says. produces base stations powered by alternative energy and “They want to use tried and also offers services including consulting and design. tested methods so that they “Frederic Wauquiez, EMEA spokesperson for Alcatel-Lucent know their network is going green solutions, said that growth of this side of the business to work. is “really ramping up at full speed”.

“That is their first In Africa particularly, where operators are keen to priority. After that they are differentiate themselves by expanding into remote areas, concerned with upgrading renewable energy is attracting greater attention owing to their network to deal with the cost of using diesel and transporting it to the sites. increased capacity, and then “Just the pain of bringing the fuel to the site plus the they want to get to the point logistics and pollution drive operators to renewable,” where they think about Wauquiez says. putting in 3G, and only then

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28

FOCUS

RENEWABLE ENERGY

“You want to decrease your risk by having an initiative that can help you maintain your costs over time, and renewable energy can help you do that. It’s about risk management and controlling your costs over the long term.”

Gassan Mutwali

the practice of sustainable business is compliance and this is something that is lacking in the region.

“Coming from a European perspective, there has been a culture of eco sustainability for a good 10 years and there are a lot of regulations around this, but we don’t have the same level of regulations here in the Middle East. It is something that we are slowly starting to see – but it is patchy at this stage and not really a concerted approach,” McDonald says.

While major network vendors are becoming increasingly active in terms of developing and marketing base stations that incorporate renewable energy, they also face the challenge of convincing telecom operators of the merits of these systems.

“Indeed, according to McDonald, one of the problems the vendors face is a lack of hard data on the return on investment that can be achieved by renewable energy. This

Solar handsets are helping people in remote areas stay connected.

CommsMEA | August 2010 www.itp.net

is partly because the systems are new, and also because the needs of different operators vary widely, as do the environments they operate in.

“Despite the fact that they have this end-to-end portfolio of services, they are not always able to measure the return on investment for operators, and operators have different priorities as well,” she says.

However, while this is a challenge, McDonald stresses that it can also offer vendors an opportunity. Indeed, many operators need educating about energy efficiency and network efficiency, and vendors are already creating a revenue stream from such consulting services.

Furthermore, vendors also need to push the long term business case for renewable power compared with the cost of using base stations powered only by diesel, and the risks this can pose when oil prices fluctuate.

Gassan Mutwali, consulting manager, ICT practice, MENA, Frost & Sullivan, added that one of the major benefits of renewable energy for operators is the reduced and more stable opex.

“Where oil prices are going we have no idea,” he says. “You don’t want to be in a situation where a barrel today costs $100, tomorrow $120, and then $70.

“You want to decrease your risk by having an initiative that can help you maintain your costs over time, and renewable energy can help you do that.

“It’s about risk management and controlling your costs over the long term, and reducing fluctuations that come with oil prices,” he adds.

Furthermore, by reducing opex over the long term, renewable energy can also help operators extract value from remote villages with low ARPUs. This presents a powerful case for operators in the region that are expanding into rural areas that are off-grid and have low ARPUs, according to Mutwali. “If suddenly you have a customer who is yielding you half of your ARPU, and you are going into a harsh operating environment, renewable energy can reduce your costs over time, and at the same time you don’t have to send out people to maintain the base stations every day,” he said.

ENERGISING AFRICA Roger Marsh, Nokia Siemens Networks’ energy solutions head for Middle East and Africa, is one industry insider familiar with this situation.

He says that the Africa and the Middle East is the region showing “most potential” in terms of the use of renewable energy in the telecoms sector, mainly owing to the growth of the mobile sector in remote, rural parts of sub Saharan Africa.

He adds that there are many operators in the region working with a bad grid or no grid. “They are expanding their networks in remote areas and fuel is expensive, so we are getting a lot of enquiries for offgrid solutions, mainly batteries, remote monitoring, solar and wind,” Marsh says.

“The good thing about renewable energy is that the results can be fairly immediate.

If you’re reducing your fuel consumption because you are operating greener or more

RENEWABLE ENERGY

FOCUS 29

“What we are seeing in the first half of this year is a lot of operators in the Middle East and Africa taking up trials, references and some smaller pilots.”

Roger Marsh

Mats Vilander is optimistic about the potential of wind power in Africa.

green field sites you are going to see your fuel bill reductions in the first month or 45 days at the latest,” he adds.

The company, which has worked on renewable energy projects with operators including Zain, Orascom, Telenor and Vodafone, is now taking renewable energy “very seriously” at a board level, according to Marsh.

“What we are seeing in the first half of this year is a lot of operators in the Middle East and Africa taking up trials, references, and smaller pilots,” he says.

The company has seen particularly strong growth in East Africa, and Zain is one of the company’s biggest customers in the region for green solutions.

The growing potential of renewable is also evident from Nokia Siemens Networks’ ambitious growth targets, with the company looking to double sales of renewable energy in the second half of 2010, compared with the first half of the year.

OPERATOR DEPLOYMENTS One operator that has first hand experience of the benefits of using hybrid base stations in a remote region is Telenor in Pakistan.

The operator, which worked with Nokia Siemens Networks and DWP Technologies on the deployment, says that using renewable was vital to allowing it to expand into remote areas of Punjab and Sind that had previously lacked mobile services.

Affan Haider, head of corporate communications and responsibility at Telenor Pakistan, says that the company deployed 49 base stations that are run on

battery and backup diesel generator. hybrid solution using solar power with Olaf Heinkel, head of mobile enablement back-up diesel generator. at Vodafone Qatar, says that the trial, which The project was backed by the Universal is part of a wider green energy programme Service Fund (USF), a scheme which helps at Vodafone Group, saw about 85% of the fund telecom projects in emerging markets, cell site’s energy requirement provided by to provide mobile services to a region in renewable energy.

Pakistan with no access to electricity and a “We have to provide 100% coverage population of some 1.63 million people. nationwide geographically for the Haider says that the hybrid base stations population, do we need to cover the desert run off solar power for between 20 and areas where we are sure we will never get 22 hours a day, with diesel generators connectivity to the power grid,” Heinkel only providing power at peak times or for says. “We don’t expect to get connected to relatively short periods at night. the grid in the very rural areas.”

“The opex is significant,” he says. “When Vodafone Qatar hopes to be able to use you are deploying it, the capex is quite high hybrid base stations at up to 15 of its offbut over the longer period of time, it makes grid sites, and while Heinkel admits that a lot of difference in terms of opex.”

He adds that the main benefits of the project diesel is relatively cheap in Qatar, he says that renewable energy can still save money have been the increased access for people over the lifecycle of the base stations. and the increased footprint for Telenor.

While the case for renewables may appear to be clearer in BLOWING IN THE WIND remote off-grid areas in emerging markets, more While solar power tends to be the first choice of renewable developed markets can also energy in the Middle East and Africa, Mats Vilander, general benefit. For example, STC, manager, EMEA Central Office at wind turbine manufacturer Saudi Arabia’s incumbent Zephyr, sees significant potential for wind energy. operator, has deployed The Japanese company, which produces turbines with a some 500 solar powered capacity of 1 Kilowatt, is looking closely at the telecom base stations in the country, sector as a potentially lucrative market. according to the GSMA. He points to Africa, Iran and Iraq as having significant Another company that is potential for wind power. “We went into the telecom market looking at renewable in the two years ago and have had many requests,” Vilander says.

Gulf is Vodafone Qatar. The The company has already worked with five operators, operator is currently working including Turkish mobile operator, Turkcell. “Our turbines can with Alcatel-Lucent to test save up to 50% on diesel consumption. That is our value a base station that combines proposition,” he says. solar and wind power with a

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COUNTRY PROFILE 31

COMPETITIVE EDGE

Jordan’s mobile sector is among the most competitive in the region, but its fixed sector needs greater liberalisation.

I

t was perhaps no great surprise that Jordan topped a recent index measuring the competitiveness of the mobile sector in each of the Arab countries.

Jordan, which was the first country in the Middle East to begin opening up its mobile sector and to privatise its incumbent operator, Jordan Telecom Group, earned top spot in the Arab Advisors’ Cellular Competition Intensity Index, gaining a score of 80.7%, placing it ahead of its closest rivals Saudi Arabia and Palestine.

But while the accolade was no doubt welcomed by Jordan’s government and telecoms regulator, the operators are probably more concerned with an even more important set of numbers.

As one of the region’s most competitive mobile markets, Jordan has experienced stellar growth in the past few years. Indeed, according to data from Delta Partners, a

Dubai-based research and consulting firm, Jordan’s mobile penetration rate increased about 13% between December 2008 and June 2010, when it reached 101%.

Jordan has three mainstream mobile operators and an IDEN operator, which caters mainly for the corporate sector. Zain, which was the first player to start mobile services back in 1995, has a market share of about 39%, while Orange Jordan follows closely with 34%, and Umniah, a unit of Bahrain’s Batelco, has a respectable 26% share, according to figures for June 2010 from Delta Partners. Xpress has a market share of just 1%.

The mobile market also looks set to benefit from the launch of Friendi Mobile, an MVNO that operates on Zain Jordan’s network, in June.

Antonio Carvalho, a partner at Delta partners, says that the mobile operators are

engaged in “a strong battle” for customers, which is driving competition.

But while he admits that Jordan was the first country in the region to liberalise its telecom market, he adds that plenty of work remains to be done, particularly in the fixed line and broadband sectors.

“It was the first to liberalise its telecom market in the Middle East by privatising the incumbent and opening up the mobile market for competition. It offered licences that allow national transmission and international gateways to be built,” he says.

“However, the pace of liberalisation slowed and no other fixed licences were issued, and this has somewhat affected its overall level of competition in the region.”

Carvalho describes Jordan’s fixed sector, which is yet to introduce Local Loop Unbundling, as an “absolute monopoly” held

by Orange, which faces only very limited

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COUNTRY PROFILE

JORDAN

“The average connection speed from fixed line internet is 512Kbps, which leaves ample space for a competitive mobile broadband offering in the coming months.”

Antonio Carvalho, Delta Partners Antonio Carvalho: Jordan’s fixed line sector remains a monopoly.

broadband competition from a few WiMAX operations, including services from Umniah and Zain.

Jordan also lags behind many of its regional peers in the mobile broadband space. The country was late to auction its first 3G licence, which was awarded to Orange in 2009. The incumbent operator launched its 3G service in March 2010 and has exclusivity until March 2011.

While this may give Orange a better chance of extracting value from the $70 million it paid for the licence, it does little to instigate competition in the broadband space. “There is still room to introduce a more competitive environment,” Carvalho says.

“The average connection speed from fixed line internet access is 512kbps which leaves ample space for competitive mobile broadband offering in the coming months.”

Furthermore, Orange Jordan’s 3G exclusivity period could delay Jordan’s mobile broadband sector from catching up with more developed countries until as late as 2012, in terms of penetration, speed and price, Carvalho adds.

“If one considers the regulatory environment a measure of competitiveness, then I agree that Jordan tends to be a competitive market by Middle East standards, but there are still more regulatory steps to be made,” he says.

REGULATORY ISSUES Ihab Hinnawi, CEO of Umniah, agrees that there are a number of areas in which Jordan’s regulatory climate can be

CommsMEA | August 2010 www.itp.net

the telecommunications industry from the improved. He points to a lack of mobile number portability and a lack of unbundling network access space,” he says.

“If you look at the cost of spectrum in of the copper local loops, which are Jordan compared to European markets such necessary for last mile access, as issues that as Denmark or Sweden, the same spectrum need to be dealt with. you buy in Jordan for $50m you buy in these Jordan would also benefit from more countries for $1m. regulations to control dominance and anti“This is because the business model in competitive behaviour within the telecom these countries is very much applications sector. and solutions based, not network access Hinnawi also criticises the heavy tax based. I believe that if you introduce a burden that he says is imposed on the content- and solutions-based business sector. He estimates that the “continuously model, this would reflect positively on the increasing taxes” on mobile services have reached around 50%.

And Hinnawi is not alone in CONVERGENCE COMMITMENT his grievances concerning the amount of money that the government tries to raise Speaking at the recent Arab Advisor’s conference in Jordan, from the telecom sector.

HE Minister of ICT, Marwan Juma, stressed the growing Dr Abdul-Malek Al Jaber, importance of the ICT sector in driving the country’s CEO, Zain Jordan is critical economy and society. of the high fees that the Juma pointed out that Jordan needs to create 75,000 jobs government charged for the a year to maintain current emploment levels, and added 3G licence, and also of the that many of these jobs would come from the ICT sector. way it was offered as an He stressed the government’s commitment to help create exclusive licence, effectively a knowledge based economy, and said that the ICT sector giving the winning bidder a now contributes about 14% of Jordan’s GDP. He said that monopoly on 3G services. the government was also committed to “providing a flexible Dr Al Jaber says legislative and regulatory environment” that nurtures changing the mindset competitiveness and reflects the growing convergence in the of telecommunications ICT sector. He added that this was evident in the Statement authorities not only in of Government Policy 2007 and the new Telecom Law draft Jordan, but across the which converges the Telecom Regulatory and Visual Audio region, is one of the commissions into one entity”. biggest challenges facing “Convergence presents us with a great opportunity that Zain as an organisation. the media and telecom business can greatly benefit from, as “Unfortunately, governments new sources of revenue are emerging,” he said. across the region still view

JORDAN

COUNTRY PROFILE 33

“What benefits LTE can provide are outweighed by the possibility of a much shorter cell radius, which some have reported to be 100-200 metres.”

Ihab Hinnawi, Umniah

Ihab Hinnawi says the telecom sector bears a heavy tax burden.

government’s revenues, but sometimes it’s difficult for authorities to see this initially.

“Despite the fact we are still being charged according to the access-based model we remain committed to launching advanced applications because we believe this strategy is the best means of securing growth moving forward.

“When the pricing structure was announced by the government for 3G services they were still thinking in terms of access to the network rather than access to applications,” explains Dr Al Jaber.

“We expressed this to the government during the application phase and we said we didn’t want exclusive access to the 3G network. We don’t believe exclusivity is necessary – it is an old concept that should be behind us as an industry.

However, when Orange’s 3G exclusivity period ends in February 2011, Carvalho believes there will be “strong progress” in the mobile broadband sector.

FIXED FOCUS But while broadband is viewed as the main area of opportunity in Jordan, particularly given the country’s large population of young people, and its low broadband penetration, there are serious questions around the potential of fixed broadband.

And this is at least partly due to the increasing competition that will inevitably come from the mobile broadband space, and the speed of regulatory changes, such as Local Loop Unbundling, that could allow fixed ISPs to become more competitive, according to Carvalho.

And while Friendi CEO Mikkel Vinter “The major question is whether these has said that the operator is only targeting ISPs will have a relevant chance in front of high single digit market share, the presence a concerted mobile broadband efforts from of an MVNO is likely to make Jordan’s the big MNOs in the country, both because other mobile operators focus more closely of relative performance in fixed and mobile on the way they cater to various segments of networks and the attitudes and attachment the population. of young public to the mobile networks,” Meanwhile in the fixed sector, Jordan Carvalho says. is likely to experience continued fixed line In the next few years, Carvalho predicts substitution and increased revenue pressure significant changes in Jordan’s telecom in the fixed line voice, particularly as market and believes the three main regulatory changes allow competition from operators will have to “move outside VoIP providers. their comfort zones” as new technologies, regulations and customer behaviour come into being.

MIGRATION PATH In the mobile voice arena, the market is While there is much speculation about shifting from a period of significant growth where the next mobile broadband offering to relative maturity in terms of subscribers, will come from, Ihab Hinnawi says that his and this means that operators will need to company is currently focusing on expanding focus on customer retention and increasing its GSM and WiMAX networks, and has their ‘share of wallet’ rather VENDOR PERSPECTIVE than splitting their spend across multiple SIMs, according to Carvalho.

As president of Huawei Middle East, Yi Xiang is optimistic He adds that operators about the ongoing potential of Jordan’s telecoms sector. will also need to turn their “Huawei sees great potential and market opportunities in attention to quality of service the mobile and fixed broadband networks and services, and and customer experience encourages more investment within these areas,” he says. as the opportunity for In terms of the main challenges in the market, Yi says differentiation on price is that the mobile voice market in Jordan has reached a minimal. saturation point while the ARPU remains lower than other The launch of Friendi countries in the region, especially GCC countries.

Mobile Jordan, the first He adds that in this light, broadband is likely to play a MVNO in the country, key role in the coming years. However, he stresses that “the and only the second in the advent of mobile broadband is dependent on the industry Middle East, is also a sign of ecosystem’s understanding of how the key contributors work the maturity of the mobile together” with telecom operators. market.

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COUNTRY PROFILE

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“We must abandon the notion of selling access to the pipe. Instead, we must leverage the content and services found within the pipe.”

Dr. Abdul-Malik Al Jaber, Zain Jordan.

not yet decided on its exact path to mobile broadband.

“We are looking into our mid to longterm investment plan evaluating 3G or 4G technologies for the upcoming few years,” he says.

“We are still considering whether investing in 3G at this time is the right choice for Umniah in terms of timing or in terms of value to our subscribers.”

However, Hinnawi admits that the company sees little potential in LTE at this stage, mainly owing to spectrum issues, and that he sees HSPA+, which can give speeds of up to 21Mbps, as a “less risky choice”.

“What benefits LTE can provide are outweighed by the possibility of a much shorter cell radius, which some have reported to be 100-200 metres,” he adds.

“Non-harmonised frequency is also a key factor working against LTE; so far there are implementations in 700 MHz band, 880 MHz band, 900 MHz band, 2.1 GHz band, 1.7 GHz band and 2.6 GHz band, and some operators are discussing reforming the 1.8 GHz band for LTE.” Hinnawi thinks it is too early to determine what the “long term future” will hold, and says the operators will decide on its mobile broadband strategy at a time when it can make a more informed decision.

Whatever technology Umniah and Zain decide to invest in to compete with Orange Jordan’s 3G service, the thing that looks certain is that mobile broadband and data applications are going to play an increasingly important role in Jordan’s telecoms sector.

CommsMEA | August 2010 www.itp.net

And for Dr Al Jaber, this means that a change in mindset is essential.

“We must abandon the notion of selling access to the pipe. Instead, we must leverage the content and services found within the pipe. This is the new business model we are implementing in Jordan and this is why our customers are extremely happy,” he says.

Dr Al Jaber believes the bulk of this content must also be provided to subscribers for free, with revenues being generated by advertiser-related sponsorships.

“In Jordan, the business model that is in place relies on charging customers for

accessing content,” he explains. “Now we are saying let’s provide the content for free, but generate income by selling sponsorships to advertisers. Premium content should be advertiser-supported. It’s a challenge, but we believe this is the best model moving forward.”

“Looking forward, we believe that 4G or LTE will most likely prove the best platform for delivering advanced applications to our customers.

“We are following developments around the world with great interest in respect to 4G,” Dr Al Jaber adds.

JORDAN - WIRELESS SUBSCRIPTIONS AND PENETRATION (2005 - 2010) Total subscriptions

Penetration

6,564,500 6,137,700 101.73%

5,441,700 96.47% 4,691,450 88.05%

4,136,000 78.21%

3,137,000 71.10%

55.67%

Dec-05 Delta Partners. Source: WCIS

Dec-06

Dec-07

Dec-08

Dec-09

Jun-10

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FOCUS

CONVERGENCE

CONVERGENT CONNECTIONS Convergence is creating a sea change in the telecoms and media sectors, according to Du CEO, Osman Sultan.

F

or Osman Sultan, CEO of Du, the A UE’s second telecom operator, one of the most important things for operators to understand is just how rapidly the telecom and media landscape is changing, and how difficult it is to secondguess shifting consumer tastes.

Speaking at the recent Arab Advisors’ Telecoms and Media Convergence Conference in Amman, oJ rdan, Sultan said that the development of mobile technology and the convergence of telecoms and media in particular are creating a sea change in both sectors, and has also opened the door to new types of competitors, such as Facebook and Google.

“We have heard the word convergence a lot over the past decade and it can mean a lot of things. It is about media and telecom convergence, and it seems like they are mixing with each other,” he said.

“We are all doing things differently from how we used to do a few years ago. Four or

CommsMEA | August 2010 www.itp.net

five years ago, I was not moving everywhere with my email the way I am today.

“We speak about the different worlds that are now converging, the world of content, internet and telecom operators.”

SHIFTING BORDERS To give some context to the changes taking place in the media and telecoms sectors, Sultan offered an overview of the “transformation of borders” that is occurring between the telecom and media sectors.

Sultan said that on one side, there has traditionally been the world of content, including big publishing houses, music, film producers, and the press, which distributed their content through media such as newspapers, CDs, telecom operators, and TVand cable networks. And then, at the final stage, there are the appliances, which include devices such as TVsets, laptops and gaming consoles.

But the borders are becoming blurred as

devices become connected. Sultan pointed to a statement from the chairman of electronics giant Sony, who said recently that about 90% of devices they produce should be network enabled.

“You see that the issue of this convergence between the industry of the appliance and the industry of telecom is at the heart of the issue,” Sultan said.

In music, film and literature, the flow of information has changed dramatically, with music and literature being distributed via downloads, and video content via websites such as Youtube.

“There are new competitors and completely new models,” Sultan said. “Just when you think that Apple –not with their core business, not with the iP hone or the iP ad –but the iTune business, transformed completely the borders of a music industry that was decades old.

In much the same way, Youtube has shaken the film industry, at least in terms

CONVERGENCE

FOCUS

“In the sphere of ICT, I believe that the only real innovation that happened in the last 10 years is social networking.”

Osman Sultan, Du

Sultan: Operators are yet to realise the significance of social networking.

of the amount of content generated. Sultan quoted Google’s CEO Eric Schmidt as saying that some 20 hours of video are uploaded to Youtube every minute, which is the is the equivalent of Hollywood releasing 86,000 new full length movies into theatres each week.

SOCIAL NETWORKS But despite the success of new music and video distribution models, it is social networking that Sultan views as the most significant innovation of the past decade.

“In this industry, or in the sphere of ICT, I believe that the only real innovation that happened in the last 10 years is social networking.

“Social networking is the name of the game for the coming years. I believe that we are still underestimating its impact. We just have to look at our children to see how their behaviour is completely changed, how they are spending their time, how their values are changing.

“Customers took the capabilities that were offered and did what they wanted.

And they will continue to be ahead of us.”

One of the interesting aspects of the rise of social networking, and other services that make use of the telecom operators’ infrastructure, is the fact that the operators were unable to predict the potential success of such services.

For Sultan, this offers operators a sobering reminder of how it is customers that dictate such trends. “The customers are constantly ahead of us,” he says. “I have been for years and years in these meetings

and we were always discussing what will become the killer application. But it never happened that what we thought would become the killer application actually became the killer application.”

Despite the huge popularity of new services and content, Sultan believes that operators should avoid becoming directly involved in content. “I don’t think telecom operators should get close to working on content. We don’t have the culture and capabilities in our companies to deal with this type of domain,” he says.

REGIONAL FOCUS But amid the rapid growth of new online services and content, Sultan believes there is an untapped demand for more “regionally specific” content and services.

“You have to go to the first 15 websites in each country of the Arab world to discover one site that is coming from this part of the world,” he says.

“Regional specificity and creativity will become more and more important. This is not the trend today. The trend is that these global players are dominating, but I strongly believe, even if it goes against the stream, in regional specificity, because it is about how we live our lives.”

Indeed, people in the Arab world live their lives differently and interact with their family and friends differently from people in other parts of the world, Sultan says.

However, he concedes that the likes of Google and Facebook have built such strong brands for themselves throughout the world that they are likely to remain dominant

forces in the region. He warns against creating pale imitations of existing services, but believes successful, homegrown content and services will appear.

BROADBAND FOR ALL Given the growing importance of internet access, Sultan believes that broadband will become a “basic human right” and will become a main differentiator in the way countries are able to advance their economies and standards of living.

Sultan bases this view partly on his experience of the rapid uptake of mobile phones in Egypt, and the fact that there are already some four billion people on the planet with access to a mobile phone.

Indeed, Sultan, who helped establish mobile operator Mobinil in Egypt in 1998, said that the company and the regulator had originally anticipated that mobile penetration would reach about 8% within 10 years of the launch. In fact, Egypt’s mobile penetration reached about 51% in 2008, five times higher than the original estimates.

“Customers dictate, and mobile phones meant something different to the people than we anticipated,” Sultan said.

“The next thing is to consider what we do with this mobility. It is no longer just about being reachable, and again, this always has been a basic human need.

“It is not a coincidence that civilisations were created along the natural ways of communication such as rivers and roads between mountains, because it is a basic need for people to communicate with their fellow man,” he said.

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HEALTHCARE FOCUS HEALTHCARE

MOBILISING HEALTHCARE Wireless technology has the potential to transform healthcare in the Middle East and Africa. By Nithyasree Trivikram

D

irect health spending in the GCC will rise by 300% to $60 billion in 2025 compared with $15 billion in 2008, according to McKinsey & Company, a US management consultant.

One of the main drivers for healthcare in the GCC is the rapid population growth, which is paving way for the governments to embrace advanced technologies in improving healthcare delivery.

While telecoms technology has been deployed in healthcare for a long time now, the evolution of the internet has brought in a major transformation in the way healthcare is delivered, via various applications such as electronic medical records (EMRs), teleeducation and tele-consultation.

Don Jones, VP of health and life sciences at Qualcomm, says the Middle East healthcare industry is “at the early stages” of building an integrated ecosystem of electronic health (eHealth) and mobile health (mHealth), and is set to

CommsMEA | August 2010 www.itp.net

experience further convergence of wireless communication technologies in order to tackle the numerous challenges in healthcare delivery.

“Chronic diseases such as diabetes, cardiovascular and respiratory ailments are widespread in the region, with diabetes alone affecting 10-20% of the population in the GCC. Overall, the quality of health is not on par with that of the Western world, particularly in rural areas, but telemedicine can help bridge this gap and ensure high quality healthcare,” Jones says.

But these challenges also present an opportunity to companies involved in the mobile sector. For example, Jones stresses that access to timely information is critical in the healthcare sector. “Moving away from legacy infrastructure and processes toward next generation diagnostic services means healthcare will be provided quickly and efficiently while also reducing cost of healthcare. Initiatives by the government,

handset manufacturers, operators, and hospitals alike should work together for mHealth – both in developed and developing countries,” he says.

EMERGING MARKETS Jones says the Middle East and parts of North Africa have seen a rapid growth of high-speed wireless networks over recent years, and that this is making a significant difference to healthcare.

“Not too long ago, the extent of wireless communications’ contribution to saving lives was the emergency number or a doctor’s pager. Nowadays, people are starting to rely more and more on their mobile phones for services such as healthcare, and Qualcomm is working towards providing solutions to enable easier access to healthcare through wireless communications so as to improve overall healthcare services, by providing real-time diagnosis, and in certain cases, prevent the

HEALTHCARE

FOCUS 39

“Nowadays, people are starting to rely more and more on their mobile phones for services such as healthcare.”

Don Jones, Qualcomm

Electronic medical records are gradually moving into mainstream care.

occurrence of an episode with a patient,” said Jones.

“In future, mHealth solutions will integrate with hospital e-Health policies and regulatory initiatives to offer infrastructure services such as emergency response, continuous monitoring, say 24/7 heart rate monitoring, thereby offering a new breed of healthcare delivery services across the region,” Jones adds.

Qualcomm is also working on a number of projects in the Middle East and Africa with national governments and their health ministries.

“In Kenya, we have teamed up with telco operators to streamline the supply management of antiretroviral medicines (ARVs) using 3G wireless. As part of the project, participating sites in Nairobi, Kenya have been equipped with computers, software and support equipment for wireless connectivity. The system enables clinics and pharmacies to better track their medicine inventories, and thus make sure ARV medicine supplies are more efficiently tracked and dispatched to the clinics that need those most.”

Jones adds that Qualcomm is also working on wireless application projects in Thailand for online physician consultation, and in Portugal providing specially crafted text-to-speech solution for the physically challenged. “Mobile wireless makes these innovative healthcare solutions possible, and we are working to bring these types of creative solutions to the Middle East and other countries around the world,” Jones adds.

DATA TRANSMISSION

how telecoms technology can be deployed in the healthcare sector. “It’s definitely with Wireless technology is also bringing huge benefits to the way patients’ medical records the respective Ministry of Health (MoH) departments to take more active role in are stored and used. Indeed, electronic being good eHealth players, and I think it is medical records (EMRs) are gradually becoming more of a reality,” he says. moving into the mainstream in many In the UAE, Abu Dhabi Health Authority developed countries. is one government department that is “The EMR’s timely submission of patient moving in the right direction. “It is taking data helps government to fasten the process a very proactive role in being a regulator/ of identifying and prevention of disease policy maker in bringing together all the outbreaks and other critical emergencies. players so as to build a highly interoperable Wireless access for health utilises 3G healthcare framework,” Tohme adds. technology to enable a locally developed “It’s not just technology in healthcare, electronic health record system,” says Walid but it is also about changing medical data, Tohme, principal, Booz & Company, a for example, the availability of content management consultancy firm. to mobile applications such as receiving Furthermore, EMRs fit into a broader blood results from hospitals onto a patient’s system known as integrated healthcare mobile phone etc. Here, technology and networks (IHNs), in which EMRs are content are to play a dual role.” able to interface with various clinical and administrative systems, helping to drive efficiency in the healthcare FUTURE OF TELEHEALTH sector. Tohme says that in order to gain efficiency throughout the hospital, The use of telecoms and interactive audio-visual technology stand-alone EMR is to deliver quality services across distances by healthcare interfaced with other professionals, hospitals, and healthcare providers is called clinical and administrative telehealth. systems such as radiology This involves transmission of information using information systems, technologies ranging from a simple system that transmits pharmacy information pre-operative test results to satellite links, long-distance systems or lab information telephone lines, and high-speed switching systems that systems, to create what is depend on fibre-optic cable and computer modems. called an Enterprise EMR. Though most telehealth applications remain at an Looking ahead, Tohme embryonic stage, a current trend is for the collaboration thinks government between telecom and telemedicine sectors to transfer the departments responsible knowledge from developed to developing countries. for healthcare must assess

www.itp.net August 2010 | CommsMEA

SIA KAMBOU/AFP/Getty Images

RESEARCH 41

Submarine cable projects are helping boost broadband penetration in Africa.

MEA REGION IS SET FOR STRONG BROADBAND GROWTH Region’s broadband sector to grow by 20% a year until 2014, according to a report from Pyramid Research.

The broadband internet sector in the Middle East and Africa is set to grow by more than 20% a year until 2014, to reach 81.8 million fixed and wireless connections, according to a report from US-based analyst Pyramid Research.

The growth will be driven mainly by WiMAX and 3G deployments, as much of the region lacks fixed access, particularly in rural areas, the report added.

“MEA has the lowest broadband penetration rates in the world.

However, in terms of forecast subscriber growth rates, MEA represents an attractive opportunity,” said Hussam Barhoush, a senior analyst for the MEA region at Pyramid Research.

He added that the region continues to outpace all developed countries in terms of wireless technology growth, although Latin America, and central and eastern Europe are projected to experience slightly faster growth.

“We expect broadband penetration in MEA to be driven primarily by slow but steady economic growth and the region’s favourable demographic environment, in which more than 40% of the population is under the age of 15,” he said.

Furthermore, ongoing submarine cable projects in Africa are also expected to boost internet services in the region. Barhoush said the cables would “improve competitiveness” in the MEA region by allowing for the “stratification of broadband services” to the end-users across the continent.

Less than half of the telecom operators in the MEA region are offering WiMAX wireless broadband services, a new report has revealed.

“There are still no detailed regulations specific to WiMAX in some Arab countries. Still, a few have specified the type of licence that needs to be obtained to provide WiMAX service,” Alaa Numair, research analyst at Arab Advisors Group, said in the report.

LTE USERS TO HIT 500,000 IN 2010 Data usage growth and competitive pressures will ultimately push operators to migrate to LTE LTE subscriptions could reach 500,000 globally in 2010, mainly in North America and Western Europe, while the rest of the world is unlikely to embrace LTE (Long Term Evolution) technology in any significant way until 2012, according to a report from In-Stat.

TeliaSonera, an operator serving Nordic and Baltic countries, has the only LTE commercial deployment in the world with an estimated 50,000 subscribers, and with other operators such as Verizon in the US undergoing LTE implementations, LTE subscriptions look set to hit 500,000 by the end of 2010, according to Chris Kissel, an analyst at In-Stat.

“Among today’s key trends is migration from 3G towards WCDMA and HSPA technologies, and the continued growth in data usage and competitive pressures will ultimately push operators to migrate to LTE,” Kissel said.

The report further states that WCDMA, HSPA/HSPA+ subscriptions are to increase by 30% from 2010 to 2014.

Though the expansion of CDMA is in doubt as many operators such as Verizon transitioning to LTE, the CDMA-related technologies are to account for 566 million global subscriptions in 2010, with 3G subscriptions via WCDMA reaching 540 million in Western Europe.

MENA TELCOS SLOW TO EMBRACE WIMAX Less than half of the telecom operators in the MENA region are offering WiMAX wireless broadband services, a recent report has revealed.

The study by the Arab Advisors Group showed 26 out of 55 operators were licenced to offer WiMAX. It added that Yemen and Oman are slated to start WiMAX services in the second half of 2010.

WiMAX, the global standard-based technology for wireless broadband access, is commercially available in Algeria, Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Saudi Arabia, Tunisia and the UAE, the report said.

The Arab Advisors Group said it expects an increase of at least three more operators to offer WiMAX by end of 2010.

CommsMEA | August 2010 www.itp.net

42

RESEARCH

SMARTPHONE SALES GROW 21% IN 2010 Low-cost handsets gaining momentum in less penetrated markets

M

ore than 55 million smartphones were shipped during the first quarter of 2010, and the number is expected to grow to 224 million by the end of the year, giving a growth rate of about 21% for 2010, according to a report from ABI Research.

The global market is becoming more diverse with less expensive models, especially in those markets which witnessed less penetration by more expensive smartphones. While Apple’s iPhone and handsets using Google’s Android platform hold considerable interest levels in the market, the low-cost handsets segment is growing rapidly with handset manufacturers in Asia rolling out products such as WhiteBox, and Shanzai, which redefine the ‘look and feel’ of low cost handsets.

However, low-cost handsets such as the “BlueBerry” sail pretty close to trademark infringement, and also have very localised distribution and lack the full functions of genuine smartphones.

These low-cost model handsets are expected to notch up to 219 million sales in 2010, the ABI Research study indicates.

Meanwhile, shipments of USB wireless modem devices are expected to touch nearly 81 million this year, according to ABI Research. More than 50% of the modem models now available in the market use the ubiquitous USB interface. The main reason for the popularity of the USB modem is its versatility and low price.

Furthermore, as new networks using the latest 3G or 4G protocols emerge, the USB modem is ready to update the installed base of portable and mobile computers.

THE NUMBERS

224 MILLION 118,000

Number of smartphones expected to be shipped by the end of the year.

The number of base stations that the GSMA hopes to see powered by renewable energy by 2012.

370 MILLION The number of people expected to be using traffic information services in 2015.

1.2 BILLION The number of mobile users globally who have more than one sim card.

CommsMEA | August 2010 www.itp.net

Sales of dual-SIM phones are surging as people seek to cut costs.

COST REDUCTION KEY DRIVER FOR GROWTH Multi-SIM handset shipment volumes have increased rapidly and are expected to become a 100 million volume market in 2010, with growth primarily driven by low-income and price-sensitive markets, according to a report from Pyramid Research.

“Multi-SIM handset adoption is increasing and has reached a size large enough to attract global brands,” said Jan ten Sythoff, an analyst from Pyramid Research.

The report noted that a key driver for multi-SIM ownership was cost reduction, and that this has enabled low-cost vendors to dominate this segment. “The niche was developed by lowcost Chinese and Indian vendors who still dominate the market.

Currently, more than 1.2 billion users have more than one SIM, with a majority of them in the emerging markets, mainly driven by cost-reduction opportunities,” Sythoff said.

Low-income and price-sensitive markets that are competitive and predominantly prepaid tend to result in pricing strategies that foster multi-SIM ownership, according to the report.

Furthermore, the pricing strategies of operators trying to increase market share resulted in opportunities for price-sensitive users to optimise their costs by using different networks.

APPS OPPORTUNITY Traffic Information maintains its position as the most important feature of navigation services with the global number of traffic information users expected to grow to 370 million in 2015, up from 57 million in 2010, according to the latest market data from ABI Research.

The surge in handset navigation systems, which are increasingly available for free, is resulting in GPS probe data becoming more widely available and improving quality.

This helps boost adoption of high speed cellular connectivity technologies, replacing broadcast technologies such as RDSTMC and satellite.

While TomTom, IntelliOne, AirSage, and Cellint use cellular probe data as the main source for their traffic solutions, the lack of accuracy remains a major issue. The importance of fixed road sensors is decreasing, reduced to key junctions and highways.

44

WEB LOG

WWW.ITP.NET

The online home of

Getty Images

MOST POPULAR

MOST READ NEWS STORIES OVERALL

1 New Islamic search engine enters the market 2 India unveils the world’s first $35 latop 3 Iran targeted by industrial theft worm

IPAD DRIVES CONSUMER TECH ADOPTION The rising tide of consumer technology in the enterprise workplace is one that cannot, and should not be stopped, according to the results of a comprehensive study carried out by security vendor RSA. It found that 76% of CIOs and IT directors believe user-influence in IT purchasing decisions is on the rise.

According to the 400 executives questioned, core IT infrastructure decisions remain the domain of the CIO, but almost everything else from smartphones, through to even desktop computers, is up for discussion.

According to the survey, more than 60% of companies questioned reported that users have some input in smartphone purchasing decisions, with 20% even allowing their employees to choose their own smartphone.

EDITOR’S CHOICES

1 Etisalat plans Asian expansion 2 Qatar demands changes to Virgin Mobile 3 No Blackberry ban for United Arab Emirates

COMING UP NEXT MONTH IN COMMSMEA NEWS

NTT TO ACQUIRE DIMENSION DATA Japanese operator NTT has agreed to acquire the South African IT and data specialist.

NEWS

BHARTI TO INVEST $150M IN TANZANIA Indian telco to invest $150 million in its recently acquired mobile operation in Tanzania.

CommsMEA | August 2010 www.itp.net

MOST READ COMMS NEWS STORIES

TELECOMS IN YEMEN This feature will look indepth at the often overlooked telecom market in Yemen to assess the main challenges and areas of potential in the country.

HUMAN RESOURCES Companies are only as strong as their staff members, and this feature will look at HR issues from staff retention to recruitment.

CONTENT DRIVERS CommsMEA explores the growing crossover between telecoms and media.

OFFICIAL SHOW CATALOGUE 18 - 22 October 2009 Dubai International Convention and Exhibition Centre Dubai, United Arab Emirates

POWER UP YOUR BUSINESS

OFFICIAL SHOW CATALOGUE 17-24 OCTOBER 2009 www.gitexshopperdubai.com

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46

EVENTS CALENDAR

ICT EXHIBITIONS AND EVENTS The MENA region’s top communications exhibitions and conferences under the spotlight

The Internet Show Africa

Telecoms World Africa

2-3 August, Joburg

13-16 September, Cape Town South Africa

www.internetshow.co.za

Telecoms World Middle East 4-7 October, Dubai

Billed as Africa’s only internet business event, the Internet Show brings together big, medium and small businesses to find new ways of doing business online. The event, which focuses on business rather than technology, aims to help companies to evaluate new technologies and create new business and revenue streams. The event will focus on themes including digital advertising and marketing, and Web 2.0.

www.terrapinn.com/2010/telecomza Telecoms World Africa focuses on the opportunity, investment and strategy for fixed and mobile operators and investors in Africa.

The event will feature a CEO strategy forum and speakers from across the industry, and conference themes will include: strategy and growth opportunities, capacity constraints and challenges, investment and financing opportunities and convergence.

Touted as the Gulf’s leading telecom event, Telecom World Middle East this year expects to bring together more than 100 speakers from regional operators, ministries and content providers who will share their strategies for growth and future investment.

Speakers include: Ismail Mohammed Fikri, COO, Zain KSA, Peter Kaliaropoulos, group CEO, Batelco, and Dr Abdul-Malek Al Jaber, CEO, Zain Jordan.

Telecoms Law and Regulations ME

Gitex Technology Week

Iraq Telecoms

17-21 October, Dubai

2-3 November, Istanbul

13-14 October, Dubai

www.gitex.com

www.iraqtelecoms.com

www.informaglobalevents.com

Gulfcomms, the telecoms component of Gitex Technology Week, is an event aimed at the mobile, fixed IP and satellite sector.

The event will include speakers and exhibits, live demonstrations of communication applications, and product launches of various telecom solutions. The event, which will also include a conference, is expected to attract major operators and other players from the telecom ecosystem.

Iraq Telecoms provides an annual meeting point for various segments of Iraq’s telecoms sector including operators, investors, government officials and vendors.

With security and the telecoms regulatory climate still a major challenge throughout Iraq, this event will allow telecommunications executives involved in the sector to meet and discuss the current challenges and ways of trying to resolve them.

This event aims to highlight the regional legal and regulatory developments and is designed to help telecom professionals to manage legal challenges that are common in the sector.

Speakers including Andrew Sharpe, partner, Charles Russell LLP, Anneliese Reinhold, senior vice president, legal and regulatory affairs, and Eamon Holley, director of legal affairs TRA, Bahrain.

CommsMEA | August 2010 www.itp.net

48

BACKCHAT

GIFT OF AIRTIME Eric Barbier, CEO, TransferTo, tells Nithyasree Trivikram how global mobile airtime transfers are revolutionising the prepaid mobile space, with operators around the world offering it as a value-added service to their customers.

COMMSMEA: TELL ME ABOUT TRANSFERTO AND ITS SERVICES. Eric Barbier: TransferTo operates a global mobile airtime network interconnecting mobile operators globally on to a single platform. This network enables mobile subscribers to send small value transfers or top ups through their mobile phones to their relatives back home and to reload their own accounts while roaming. It is an innovative and differentiating service for the ethnic expatriate segments, which is by and large an underserved market with a high telecom spending usage.

Mobile phones play a significant role in emerging markets. Serving as a tool for economic development, airtime recharge transfer is increasingly regarded as a key mobile feature by expatriates and their families back home. With about 200 million migrants remitting $300 billion a year, and the prepaid model having around 80% market dominance, the real-time airtime transfer complements regular money remittances.

The service provides expatriates with a more convenient and cheaper method of allowing local workers to directly forward pre-paid mobile service credits instantly, through the introduction of international direct mobile top up reload transactions in real-time. Apart from operators, TransferTo also offers its services for retailers, banks and money transfer operators.

TransferTo has been offering its global airtime remittance network to various countries for over three years. Spread across five continents, we have interconnected our global airtime transfer platform with over 70 operators in 20 countries including China, Egypt, India, Ghana, Kuwait, Pakistan, Sri Lanka and Saudi Arabia. On average, mobile subscribers are using the service three times per month, which enables us to achieve more than 10% of the subscriber base with each operator globally.

COMMSMEA: HOW DOES THE AIRTIME TRANSFER SYSTEM WORK? Eric Barbier: To perform an airtime transfer, the subscriber sends his request through SMS directly from his mobile phone to a short code provided by his mobile operator. The amount and destination number are the only required fields for processing the request. Both sender and receiver are notified directly on their mobile phone by SMS upon a successful transaction. On receipt of payment, prepaid credits are stored electronically in a data repository. The stored value can be consumed as per the terms and conditions of the mobile operator as voice, messaging or data. Alternatively, the stored value holder can share the airtime with another subscriber of the service.

The service supports the IN interface protocols of most existing platform vendors, and allows connections to proprietary protocols so that the operator

CommsMEA | August 2010 www.itp.net

is not required to invest in new systems.

The mobile application is a complete out-of-the-box application for mobile operators to offer the service. It is available through SMS or USSD (Unstructured Supplementary Services Data) channels and can connect to any type of charging interfaces.

We are basically connected to two key data centres in Singapore and Europe. From our network, we connect to the gateway or SMS centre of the operator, and are also connected to the prepaid system of the operator. If it is post-paid, we are connected to another gateway, called the ‘Charging Gateway’. The transaction is processed in real-time through a secure platform.

TransferTo is designed to allow interfacing with the operator’s existing realtime top up system.

COMMSMEA: HOW MUCH POTENTIAL DO YOU SEE IN THE REGION? Eric Barbier: Airtime remittance is a $20 billion market globally. Migration corridors, remittance trends and new mobile technologies all add on to remittance top up services growth around the world. In the Middle East, there hasn’t been much focus on the expatriate market. Moving into the airtime transfer space proves to be beneficial as it offers mobile subscribers convenience and flexibility to send small value amounts to friends and families back home. Mobile operators offer these mobile top ups as a valueadded service to their customers.

In the Middle East, our first tie-up was with STC and the second one was with Wataniya Telecom of Kuwait. STC's service provides immediate transfers, which are triggered through SMS, and is currently open to customers with relatives in India, Pakistan, Jordan, Indonesia, the Philippines, Sri Lanka and Egypt. The Wataniya service enables communities of international workers in Kuwait to transfer airtime to reload the prepaid phones of their family and friends in India, Egypt, Bangladesh, Jordan, Indonesia, Pakistan and the Philippines.

COMMSMEA: WHAT ARE THE FUTURE PLANS OF TRANSFERTO? Eric Barbier: With a high expatriate population across the GCC, we plan to launch services through new and existing partnerships in the region. We plan to close deals with two operators, most probably in the UAE and Qatar, in the next few months, which will be followed by Oman and Bahrain. We target to add more operators in India onto our network. We will focus on extending our African network as well with more operators so as to create a migration corridor between Europe and Africa.

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