What’s the key for operators to succeed in 2022?
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What’s the key for operators to succeed in 2022?

What’s the key for operators to succeed in 2022?

Affordability is key to reaching out to the population yet to sign up for mobile internet

Gulf Business

When Steve Jobs launched the iPhone in 2007, the unique selling point was a phone, a music player, and a device to browse the internet with. Since then, we enjoy TV and film, Pro Camera capabilities and, with the help of 5G, cloud gaming is next on the agenda.

At the heart of any number of consumer use cases is the network that feeds the content consumed on devices. According to the GSMA’s Mobile Economy Middle East & North Africa report in 2020, 5.7 per cent of GDP in the area was generated by mobile technologies and services, and close to 280 million people in the region, or 45 per cent of the population, are connected to mobile internet.

When we consider that the daily usage in MENA has risen over a quarter over the last five years to just short of four hours per person, investment in network technologies is more important than ever. Therefore the focus for networks needs to be on bringing as much of the remaining population online and bringing in the much needed revenues that drive the estimated $70bn that will be spent on infrastructure rollouts up to 2025.

Although there is a sizable population of the region that are ‘online’, networks still need to make an appealing case for signing up for a mobile phone. This has consistently been a failing of operators in the region. Since 2014, while coverage has increased by a quarter to 93 per cent of the region, 50 per cent of the population that could take advantage of mobile connectivity have elected not to.

Affordability is key to reaching out to the population yet to sign up for mobile internet. The model of renewing mobile subscriptions and upgrading devices only works when there is a coherent reason to adopt the device in the first place.

Being able to boast music streaming, the best cameras, and the ability to communicate with friends and family is great, but those benefits are lost on those who can’t afford to subscribe in the first place. Currently, prices per gigabyte in MENA have been decreasing and are now in the region of 2 per cent of GDP. However, the cost of the cheapest internet-enabled device is still at 15.7 per cent of GDP.

Being able to offer a better rate will naturally appeal to a lot more people, but while making tariffs affordable is important, avoiding a race to the bottom needs to stay in the minds of operators. In Europe, specifically Italy, French operator Iliad came in with low tariffs which led to incumbent operators losing over 12 million customers, and the average price per gigabyte has since dropped to $0.27, compared to $1.47 in Saudi Arabia for example.

With those kinds of figures, operators in the Middle East will not be able to raise the money they need to invest into the network to kick off a 5G revolution already underway in East Asia, Western Europe, and North America. Thus, operators need to give consumers a reason to stay.

That comes in the form of benefits that customers can take advantage of – in Western markets, that has extended to zero-rating data used for video streaming, music streaming, social media, and roaming outside of the home country. Other operators have rolled in Netflix, Spotify, Disney+, and even sports streaming services into the plan in an attempt to save customers in other areas in order to make a sale.

A diverse set of services will also ensure a buoyant telecoms market. When there is a recognition that the use of mobile airwaves does not just extend to phones, operators can branch out revenue streams into home broadband with Fixed Wireless Access (FWA) for consumers and businesses, as well as open up the network to the Internet of Things (IoT).

One thing for sure is that operators should not just rely on one revenue stream. In many European markets, a race to the bottom has ensued, and American networks have long offered to give out new flagship devices in order to encourage new customers to join the network. In both of these markets, investment in network coverage has become a key topic over the past 5 years.

As Middle Eastern countries continue to develop, what will be ideal for operators is to integrate themselves into new smart city projects. Embracing the Internet of Things and being at the heart of the street lamps, traffic lights, public transport, CCTV, and other street furniture, giving operators control of the feed of data that different organisations will want to get their hands on, from traffic patterns to the humidity.

Add that to a thriving consumer and enterprise mobile business, reliable home broadband that is as simple to set up as pushing a button, as well as consumer IoT devices like pet cameras and car trackers and stability will ensure valuable investments are made. The key to success is an open mind.

Nilay Akdemir is the senior director of Simon-Kucher & Partners Middle East


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