Will 5G technology actually revolutionse the GCC telecoms landscape?

Telecom operators in the Middle East are going all-in on 5G. But is it really the future?



5G. 5G. 5G.

Have we mentioned 5G yet?

Speak with anyone in the telecommunications industry – most certainly including in the Middle East – and it seems all they want to talk about these days is 5G. There’s a simple reason, too: there’s big money to be made with 5G – potentially. According to Sweden-based telecommunications firm Ericsson, 5G technologies could be worth a staggering $1.2 trillion worldwide by 2026. Much of that money will also likely come from providing networks and services for corporate customers and governments; also according to Ericsson, there are expected to be just 30 million people in the Middle East subscribed to 5G services – such as with a 5G phone – by 2024.

Unsurprisingly, every telecommunications company in the region (and the world) has been pouring in enormous amounts of money in a race to roll-out 5G services for businesses and the general public. In the UAE alone, for example, Etisalat is busy building more than 1,000 towers to allow for the transmission of 5G signals, while du is constructing more than 800. Over in Saudi Arabia, STC has already built several hundred 5G towers – and is building several hundred more. Many more towers have also been built in Kuwait, Bahrain, Oman – even Iraq and Lebanon, where 4G coverage still remains spotty for millions of people.

Every telco has also been quick to proclaim itself as the “first” in the region to offer 5G services (who really has been the first is a matter of intense debate, but a strong candidate is STC, who launched a 5G network in Saudi Arabia in May 2018). Yet the difference between 4G and 5G, despite the hype, really isn’t that significant for the average person, at least when it comes to calling: while 4G has a “latency” – a term for the delay between sending a signal, such as saying something into a phone, and when that signal is received on the other end – of up to 30 milliseconds, 5G is about one millisecond. But these are milliseconds we’re talking about – 1/1000th of a second.

However, at the most recent Gitex Technology Week – the Middle East’s largest tech show, held over a week this past October in Dubai – the lack of currently available 5G devices was high on the list of every telco executive’s talking points.

“As we are in the roll-out stage, one of the challenges is scarcity and the limited availability of 5G-enabled handsets in the market,” said Saleem Alblooshi, chief technology officer at Dubai-based du, during a panel discussion on the pace of the regional 5G rollout. “But this will be overcome soon – almost all of the handset providers have announced their road map, and 5G will come soon.”

Fadi Pharaon, president for the Middle East and Africa at Ericsson added: “Everyone is looking at 5G as a way to improve the user experience, but the real step forward is the promise of creating new revenue streams for service providers.”

Hatem Bamatraf, chief technology officer at Etisalat, admitted to the challenges. “We know that 5G might be delayed in some specific countries because the business case is not viable,” he said. “However, if there were other players that could supply the technology with a cheaper option, then this could accelerate the introduction of 5G.” Bamatraf added: “Unfortunately, the vendor landscape has gone through a lot of changes. A lot of [players] merged, some of them have disappeared and exited the market, and we end up now with fewer vendors.”

The customer service conundrum

Excited as they seem to be to launch services (and, presumably, charge higher prices for what’s as of now still seen as a premium service), there’s concern telcos are focusing too much on 5G without doing enough to address what’s been a key issue – perhaps the biggest issue for telcos – for almost as long as they’ve been in existence: poor customer service. The stats are pretty grim – as they have been for decades.

According to the most recent data from independent consumer customer satisfaction index Service Hero – released this past August – telcos have the absolute lowest customer satisfaction levels of any industry in the UAE. Customer satisfaction levels were reported at lower than 50 per cent, with the companies labelled “unheroic” for “not doing the bare minimum.” Specific criticisms of telcos included high prices for services, rude/unhelpful staff, and taking too long to resolve customer issues, if they could be resolved at all. Some customers also complained of misleading promotions, such as mobile data speeds not being as fast as claimed, or customers not receiving as much “free” data as a telco’s offer promised they’d get. For customers, the other main issue from a telecoms perspective has been the ban on free international voice over internet protocol (VoIP) services offered by the likes of Skype and WhatsApp.

One of the most prominent critics of the ban has been Emirati lawyer Dr Habib Al Mulla. Last year, he said a “monopolistic mentality” by UAE telcos when it comes to banning Skype and WhatsApp was hurting development in Dubai and the country as a whole. In early August, billionaire Dubai businessperson Khalaf Al Habtoor – owner and chair of conglomerate Al Habtoor Group – also called for ending the Skype and WhatsApp ban. Like Al Mulla, Al Habtoor said telcos needed to end their “monopolistic mentality”.

“Allow audio and video calls through WhatsApp, Skype and other applications that allow these services for free to improve the lives of residents and investors. This is one of the services that must be provided as we strive to be a smart city. Stop the monopoly mentality of telecommunications companies,” he said. Whether the ban remains in effect when Expo 2020 kicks off in October 2020 – an event expected to draw more than 25 million visits from people all over the world when it concludes in April 2021– remains to be seen.

Going under the sea

5G means faster speeds. But faster speeds also means more people will be downloading and uploading more things than ever before – and this is before taking into account an exploding population and exploding numbers of connected devices (an estimated 29 billion by 2022, according to Ericsson). That, of course, means more demand than ever before on what’s known as capacity – how much data can be transmitted at any one time.

Middle East telecommunications firms are well aware of this predicament – which is why they are also investing heavily in increasing capacity to prepare for the pressure 5G services will put on their networks. One of the ways they are doing that is not just building more towers to transmit 5G signals, but also by laying thousands upon thousands of kilometres of cables – including under the sea.

The deep, dark depths of the sea might not seem an ideal environment for telcos to invest money in, but cables are still used to transmit large amounts of data from one continent to another, as the transmission speed is still faster than satellites (to say nothing of the amount of data that can be transmitted at a time). Cables have been laid for more than a century, and if anything, the pace of cable-laying is only increasing as data demands also increase.

To accommodate for the growth of 5G and IoT (Internet of Things) devices, Etisalat in late September announced that the Asia-Africa-Europe-1 (AAE-1) undersea cable had come online. The largest global submarine cable system in the world, the cable connects Europe and East Asia – and travels through the UAE thanks to a “landing station” (a term for where an undersea cable meets land) in Fujairah (where, it should be added, a number of other cable systems also come ashore). The cable system was launched in partnership with Etisalat and no fewer than 18 other global telcos, including Saudi Arabia’s Mobily, Oman’s Omantel and Telecom Egypt. It has a transmission speed of about 100 gigabits per second (making it one of the world’s fastest cable systems), and can hand up to 40 terabits of data at a time.

According to Ali Amiri, group chief carrier and wholesale officer at Etisalat, the AAE-1 will allow Etisalat to diversify its sources of data and increase speeds it can offer business and general public customers – while also reducing stress on its existing network caused by ever-exploding volumes of data being transmitted. Considering Etisalat in July reported a 3.1 per cent rise in net profit to Dhs4.4bn ($1.2bn) for the first six months of 2019, and a UAE subscriber base of 12.4 million (more than the entire population of the UAE, due to some people and businesses having multiple subscriptions), cables are a key part of the company’s plans to remain profitable. More cable systems are under construction, too. Telcos and other parties met in December 2018 in Dubai to sign a construction and maintenance agreement for the Africa-1 cable system. Expected to be up and working by early 2021, the 20,000-kilometre cable system will connect the Middle East with Europe, Pakistan and South Africa. Telcos involved in the cable system’s construction include Etisalat, STC and Sudan’s Sudatel.

Cengiz Oztelcan, CEO of cable company Gulf Bridge International, sees undersea cables as a great opportunity for telcos to lay the foundation for future growth in preparing for increasing data demands now – and having diverse ways to transmit and store that data. “The digital future of the Middle East depends on reliable, scalable and diverse subsea cable systems.”

6G – and beyond

Despite the challenges, Middle East telcos seem to have a “build it, and they will come” attitude towards not only 5G, but really any technology. Then again, when organisations such as Etisalat and du parent company Emirates Integrated Telecom Company (EITC) are essentially government operated (the same goes for STC in Saudi Arabia, Batelco in Bahrain, Omantel in Oman, Zain in Kuwait, Telecom Egypt, and others – in each case, their respective nation’s government is the majority shareholder), they can afford to have such an approach because governments will not allow them to fail, lest infrastructure crumble and they lose a technological edge against regional and international rivals.

As ever, the question is what comes next. Could the role of telecommunications companies – and what it is they do – continue to evolve?

One person who thinks so is Houlin Zhao. The secretary general of the United Nations body that deals with issues surrounding information and communications technologies known as the International Telecommunication Union (ITU), he’s long been telling telcos – including in the Middle East – to think beyond 5G.

While 5G “may create a lot of jobs,” Zhao told media in Dubai at a high-level summit in April, it’s important to remember that, in just a few years, 5G could be replaced by 6G – just like 4G now is being replaced and just like 3G was by 4G. As UN secretary-general António Guterres told delegates at the ITU’s biennial plenipotentiary conference in Dubai at the end of 2018: “We face a crucial challenge: harnessing the benefits of new technologies for all, while safeguarding against the risks from their misuse. Together, we can nurture a digital future that is safe and beneficial for all.”

The question will be if telcos will subscribe to that – or if the pursuit of profits will trump any other motive. As with anything, time will tell – just like time will tell just what the uptake of 5G from the general public really will be. And on the subject of 6G: in September, Huawei CEO Ren Zhengfei said his company had already been working on 6G technology for “a long time”.

The Huawei factor

One can’t have a discussion about telecommunications anywhere – including the Middle East – these days without talking about the “H” word: Huawei.

The Chinese telco has been embroiled in a global controversy for some time amid concerns over spying and alleged links to the Chinese government and military (allegations which Huawei has continued to vehemently deny). But things came to a head in December 2018, when CFO Meng Wanzhou – the daughter of founder Ren Zhengfei – was arrested in Canada at the request of the United States government on multiple charges. Among those charges: allegedly violating sanctions against Iran. This wasn’t the first recent example in which Huawei had been alleged to be doing business with controversial clients. For instance, a Washington Post report claimed in July that Huawei helped build North Korea’s wireless network that it uses to monitor citizens – and that late North Korean leader Kim Jong Il (the father of current Supreme Leader Kim Jong Un) even made a secret visit to Huawei headquarters in Shenzhen in 2006.

But that it had allegedly done business with Iran seemed like it could threaten Huawei’s GCC business deals, including numerous big 5G contracts in the UAE, Saudi Arabia, Bahrain and Kuwait. To counter some of this, Huawei has embarked on an aggressive public relations strategy. It has spent significant capital to have a major presence at every regional technology show – Gitex, AI Everything held this past May, the SAMENA Leaders’ Summit held in Dubai in April, and other events.

Huawei’s strategy has also paid off on a larger scale: no major partners in the region have pulled out of 5G deals with them thus far. In fact, Huawei has only deepened its involvement with GCC businesses and governments. For instance, at Gitex in October, Dubai Municipality signed a memorandum of understanding (MoU) to partner with the Chinese telco. As per the agreement, Huawei will assist with various initiatives of Smart Dubai. The two will also work together to develop new “smart initiatives, developing innovative solutions to implement the latest technological advances” and establish a “centre for the future” that will offer UAE citizens the opportunity to experience various technologies such as AI.

Huawei is also still aggressively targeting the general public – its 5G phones are now available in the UAE and other Gulf nations. But with Google locking Huawei out of Android devices and services such as the Google Play Store, Gmail and YouTube – among others – there’s a question as to what the future of its smartphones and really its entire consumer business outside of China could be.