Complex Made Simple

Regional telcos look to monetise surge in online activity

Convergence in the telecoms and media space has moved away from simply being able to watch television programmes on a mobile device. With long-term evolution (LTE) set for release in the third quarter of this year in the UAE and Saudi Arabia, the technology is now advanced enough to support services like video-on-demand on the mobile platform.

By Triska Hamid

Arabic content online is also growing at a steady pace. Various government initiatives across the region to boost entrepreneurship and innovation online are beginning to take off.

The main problem facing the industry is monetising the surge in online activity. Over the top players like Facebook and Youtube have done well providing their services on the mobile networks without investing in the infrastructure.

And this adds to the telecoms operators’ biggest frustration, their inability to properly monetise the content that is being consumed via their networks.

This issue was addressed at the 8th Arab Advisors Media and Telecoms Convergence Conference in Amman, Jordan last week.

Jordan was an appropriate place to gather the region’s media leaders. The information communications and technology (ICT) sector in the country contributes 14% to GDP, the highest in the region and Jordan contributes about 75% of all Arabic content online.

In the opening keynote speech at the conference, Princess Sumaya bint El Hasan highlighted the importance of new converged tools in helping Arabic speakers come together. She referred to a “United State of Arabia in the virtual world” to help the region develop.

This vision may not be too far off. About 1.5 million new users are coming online every month in the Middle East primarily through mobile broadband and fixed-line internet. Video streaming accounts for more than 70% of online traffic in the region. Youtube is the most popular video-streaming website in the Middle East with Saudi Arabians watching more videos on the mobile platform than anywhere else in the world.

Two-tier pricing system

These users in the region now expect to carry content and access it wherever they go. This puts a strain on the mobile networks, which many of the telecoms operators say will not be able to cope within the next few years.

One of the solutions suggested by a few of the speakers was to segment the internet and apply a two-tier pricing system according to user habits. Ghassan Hasbani,chief executive of Saudi Telecom Company (STC) International pointed out that people fly either business class or economy and the internet should be the same.

So users who consume large amounts of data, stream a lot of videos and transfer a lot of files should be charged more for the service.

Ericsson’s head of marketing and government relations Jeremy Foster argued for this point and said that the internet should be treated as a natural resource if it is to survive the 50 billion devices expected to be connected by 2020 across the world.

Other speakers warned that creating a two-tiered internet would compromise internet neutrality which can hinder progress and innovation. According to Santino Saguto, partner at media consultancy Value Partners the telecoms operators have the capability to upgrade their networks and make them efficient enough to cope for data demands without having to charge the user for access to content.

Majied Qasem, managing director at D1G argued in a debate session that users already pay to access the internet and to charge them again, “double-dipping” is unfair.

How the operators will respond to the rise in internet and mobile broadband users and the surge in data consumption remains to be seen. They face a struggle, particularly since they are dealing with a new generation of users, previously known as the “Napster generation”, capable of undermining paywalls and access restrictions.