Capturing the benefit of media and telecom convergence in the GCC (page 1 of 4)

The report found that content will play a key role in their differentiation strategy going forward.

Hilal Halaoui, a Principal with Booz Allen Hamilton said:

"The market for traditional telephony, whether fixed or mobile, is becoming increasingly saturated that it can no longer be a viable exclusive source of growth. On the other hand, convergence of the telecom sector with traditionally unrelated sectors has brought so many opportunities and threats - as telecom operators will have to battle with a wide array of new competitors, including traditional media companies, information technology players, and even industries such as financial services".

"Differentiation has become more challenging, with technology being largely commoditized and accessible to all players in the market. To address this challenge, many operators will leverage telecom-media convergence to develop a unique and sustainable competitive advantage in their markets," added Ghassan Hasbani, a Vice President at Booz Allen Hamilton.

In particular, the study found that there were a number of opportunities for operators in leveraging the potential of telecom-media convergence - a summary of the details follows below.

The Advent of Telecom-Media Convergence

Telecom and media is converging, especially with the proliferation of broadband technologies, both fixed and mobile. Operators are increasingly becoming broadcasters of a wide range of content to their subscribers - such as games, video, news, sports, weather, and music.

While popular in Europe, the convergence trend is not yet evident in the GCC region, although it is expected. There are seven key market and technology factors that will drive its acceleration:

1- Telecom Market Saturation
The telecom market in the GCC is nearly saturated, causing operators to look towards customer retention rather than winning new customers. Another challenge is that operators are finding declining average revenue per user (ARPU). "Providing differentiated content services could significantly drive improvement in ARPU levels for telecom operators," said Mohamad Mourad, a Senior Associate with Booz Allen Hamilton.

2- Telecom Market Liberalization
As all GCC markets are now liberalized, increasing competition requires operators to differentiate their offerings, in order to achieve competitive advantage. Content services provide a solid platform for service differentiation for telecom operators.

3- Telecom End-User Sophistication
Users in the GCC have high purchasing power with the average gross domestic product at $18,000. Such relative affluence has facilitated new technology adoption and created a large segment of highly sophisticated end-users.

Additionally, 33% of the total GCC population is below the age of 18, meaning content services can be geared to the technology-savvy youth segment that will constitute the bulk of users in the mid- to long-term future.

4- Threats from Disruptive Technologies
Disruptive technologies such as Internet protocol (IP) are placing increasing pressure on operators and forcing them to increase the diversity of their service offerings and to simultaneously reduce their tariffs.