The internet is growing at a phenomenal rate and is a major contributor to economic and GDP growth in the Middle East and across the world. Internet traffic in the region, delivered via fixed and mobile networks is on the rise and fueled by new, more capable devices and new high bandwidth services unleashed by […]
The internet is growing at a phenomenal rate and is a major contributor to economic and GDP growth in the Middle East and across the world. Internet traffic in the region, delivered via fixed and mobile networks is on the rise and fueled by new, more capable devices and new high bandwidth services unleashed by a fresh wave of innovation.
This will ultimately lead to telecom players looking to upgrade their infrastructure to maintain or increase their quality of service.
The increase in internet connectivity presents telecom players with the perfect opportunity to look at monetising content for the value created over the Internet. Consequently, government and regulators are showing an increased interest in the development of the internet as a universal service. Areas for innovations in the Middle East remain in business, entertainment, communication, and for some applications that provide the future public services.
The dilemmas of high internet traffic growth, limited revenues contribution to the telecom, and high CAPEX requirements are being debated in the Middle East along with solutions:
*
Telcos, media players and Over The Top Providers (OTTP) agreeing on regional collaborative models.
For instance, OTTPs contributing to the CAPEX requirements through paying higher and traffic dependent figures to telcos. This has to be seen in light of the spirit of net neutrality and also of maintaining the innovative nature of Internet Service Providers (ISPs).
* Traffic Optimisation – Traffic management techniques are being used to tackle network congestion at peak-hours. Such techniques are used to maximise the use of the “constrained” available capacity and network resources and to use specific actions to limit the impact of the congestion on end users. Applying network management practices can lead to a “win-win” situation where Telcos optimise network resources and customers benefit from an effective service.
* OTTPs and Telcos agreeing on traffic management techniques that would differentiate the network congestion based on Quality of Services or additional services is essential. There have been discussions between OTTPs (e.g., Google) and connectivity providers in USA. Regulators have intervened as the model should also take into consideration the concept of net neutrality, which has so far been one of the basic pillars for Internet in many geographies.
* Increase in retail prices – End users being charged higher fees for higher bandwidth and higher quality of services. As is becoming more common on mobile tariffs, the monthly fee would be partly based on download bands/caps, for example, 1GB per month and a higher price for 5GB.
Of course, being faced with new opportunities also presents new challenges. The end-game winning model and value chain players are still to be considered to take advantage of the new opportunities with the internet. Also, OTTPs are looking for ways to completely monetise the content they put on the internet (e.g., Google is still making most of its revenues from search rather than YouTube video traffic). Media players and content providers still need to fully utilise alternative digital platforms compared to their traditional ones. There is a significant role that digital platforms and new technology can play in the development of local content in the region. This includes the localisation of content, experimenting with freemium models and the collaboration of broadcasters and Telco players. The wide digital space offers plentiful opportunities for media players in the region to both extend their existing content to new platforms and to develop new content for those platforms.
Telcos, on one end, need to take full advantage of the internet for the creation of the national ICT ecosystem and on the other end, are trying to develop their content platforms as for IPTV, Mobile TV and so on. Regulators and Governments also have a role to play in identifying the most suitable national ICT and broadband plan, both for fixed and mobile.
To summarise, it is clear that the internet explosion, will continue for the next decade over multiple fixed and mobile platforms. New players are entering the industry and new business models are being created. All industry players are looking for the proper balance in preserving the economics and growth of telecom providers and promoting innovation through the internet and other players in the ICT ecosystem.
There lies a risk of overloading the network with data and services that are not monetised properly. Internet needs to proceed from a concept of being “Free content and services” to a concept of pay based on value and services, with monetisation directly from end users, advertisers and those who can seize the opportunity of the digital era.
Santino Saguto, a partner with Value Partners, Dubai, recently participated in a discussion on monestising content at the the 8th Annual Media and Telecommunications Convergence Conference in Jordan.
