This year is set to become a significant one for Middle East telecoms. Specific areas of interest will be broadband investment, clarification of regulations and cloud computing.
Middle-East telecoms will be characterised by regulatory developments and continued investment in broadband infrastructure, a "cloud computing revolution," and further advances in mobile and other technologies, according to new research by International Data Corporation (IDC), which sees 2010 as a significant year for the region. An increase in local and international mergers and acquisitions is also expected.
IDC expects overall economic recovery in the entire Middle-East region in 2010, with around 3%–4% year-on-year growth. Qatar is expected to record especially healthy year-on-year growth (near 20%) in 2010, primarily from strong natural gas exports. With broadband penetration at just 3%, e-commerce participation in a few markets remains in single digits, which may be due in part to a lack of relevant and local content, both in terms of language and local/regional context.
"The need for cost reduction will require collaboration tools and a host of bandwidth-intensive applications like video conferencing, sales force automation, and mobile Customer Relationship Management (CRM)," according to Senior Analyst Deepika Dudeja Mital, Telecommunications, IDC Middle East, Africa, and Turkey, "again spurring demand for bandwidth and smart access devices."
Mobile operators have seen a surge in traffic used for Internet-based services such as social networking, location-based services, navigation/local search, instant messaging, and other applications. Thus the revival of Middle East mobile handset markets will continue, with a rising share accounted for by smartphones. As a result, the mobile operator environment is consolidating and large, well-funded global operators are seeing advantages to partnering with smartphone makers in product promotions – in turn increasing data traffic on their networks. With more content pushed through mobile services, one of the key developments in 2010 will be the need to alleviate resulting network strains.
Increasing usage of mobile broadband services will remain the dominant trend in the developed Middle Eastern markets. In Saudi Arabia mobile broadband already seems poised to replace DSL as the technology most subscribed to for access to broadband services but both services will co-exist and complement, as DSL and other cable-based broadband access technologies – such as fibre-to-the- home – can still serve better in delivering IPTV and video-streaming services.
eGovernment initiatives will drive growth in mobile payments, as well as additional partnerships between telcos, solution providers, and governments for more innovative solutions in the mobile payment segment.
A number of incumbent operators have been heavily investing in next-generation networks. However, a number of Middle Eastern regulators are continuing to prohibit, or at least limit, the use of PC-based VoIP services such as Skype. IPTV is so far available in the UAE, Bahrain, Jordan, Qatar, and Egypt, and the size of this market makes up just 0.5% share of the overall TV market (both free-to-air and pay TV). IPTV services will also be looking at enhancing their services by providing Digital Video Recorders (DVRs) and Video on Demand (VoD). In 2010, expect to see new service launches in Saudi Arabia.
Telcos are beginning to focus more on Small- and Medium-sized Businesses (SMBs), via bundled, managed ICT services (eg, mobile/fixed-line/Internet connectivity, managed security, or conferencing services). Cost savings and security will likely be main factors for telcos in the SMB segment and, as operators in the region have long been looking at ways to create new growth through value-added or new media services, they will also start to move further into the adjacent industries of media, finance, and IT services as they seek new growth platforms.
"The market will see more innovation in terms of both operations and product offerings due to high mobile penetration and an increased competitive environment," says Senior Research Analyst Satish Meena, Telecommunications, IDC Middle East, Africa, and Turkey, "and this will see telcos evolve from simple connectivity providers into providers of value-added solutions that enhance their customers' lifestyles, such as mobile payment, IPTV, mobile TV, and local content development." Deepika Dudeja Mital adds, "Expect enterprise customers to become keener, more appreciative, and more open with regard to experimenting with various outsourcing setups, including but not limited to managed services and cloud-based services."
Partly a result of cost-cutting efforts, telcos will also continue to go green: Vodafone Qatar launched the first green hybrid mobile base station early this year, which makes use of both solar and wind energy – in line with the commitment of its parent company to reduce carbon emissions by 50% over the 2006–2020 period.
The Middle Eastern market will likely see tariff realignments in wholesale and retail markets, aided by ongoing investments in both national and international telecoms networks across the region. With existing and new companies investing to build their networks to accommodate higher bandwidths, the emerging bandwidth availability should drive down wholesale and retail access prices.
Along with multi-market operators looking to offer multinational managed mobile services, which can simplify and lower the cost of mobile services across multiple countries, several markets have witnessed the formation of new regulatory authorities, have issued new licences in both the mobile and fixed segments, and have introduced regulations on roaming rates.