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Middle East on cusp of rapid mobile broadband growth
Published Oct 10, 2010
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The majority of mobile broadband services in the Middle East are of comparable prices to the fixed alternatives. Additionally, there are few bundled fixed and mobile broadband services available. In price-sensitive markets this leads to large-screen mobile broadband becoming a substitute for a fixed line.
Most small-screen mobile broadband users have relatively high-end handsets and for most it is not their primary internet connection. This means that the existing levels of small-screen usage are complementary to a large-screen mobile broadband connection, be that fixed or mobile.
"This explains why the Middle East region is on the cusp of rapid growth in mobile broadband services," Angel Dobardziev, practice leader, emerging markets for Ovum, explains.
"Most operators are still exploring different approaches in positioning, targeting, marketing, and pricing these services and are making steady early steps to position themselves to capitalise on the growth in broadband access and services."
Mobile broadband acting as fixed line substitute
Mobile broadband is usually priced comparably to fixed-line alternatives, and therefore can act as a substitute. Small-screen devices are complementary to a large-screen broadband connection (either fixed or mobile), but there have been few explicit bundles to encourage this.
Tariff structures are simple, and often do not discriminate between large and small-screen devices. A typical structure includes simply tiered prices for data without a restriction on how it is consumed. Unlimited tariffs are a relatively new concept and still rarely seen, although recent network upgrades and the emergence of larger data bundles suggest that this will change soon.
The majority of tariffs are prepaid, and few operators offer pay-as-you-go tariffs. Where pay-as-you-go is available, options are limited. As consumer growth starts to slow there is likely to be an increase in pay-as-you-go tariffs to help slow the decline.
Both large and small-screen services are being targeted in the Middle East. Many operators don't draw a distinction when publicising tariffs. As a result, users sign up to a certain data allowance and time limit, but it is up to them what sort of device they chose to use it on. This is often done in such a way that the service is simply bolted on to a mobile phone or dongle rental with an appropriate data tariff (which may be prepaid or post-paid.)
In much of the area, iPhone and Blackberry adoption has quickly accelerated, and it is not unusual for operators to have dedicated areas on their websites and specific advertising campaigns for these products.
In addition, many operators are focusing on hybrid HSPA/Wi-Fi services, which act as modems to provide shared Wi-Fi coverage to a number of devices. In October 2009, Etisalat launched its service, and Qtel launched a similar service in April 2010.
Mobile broadband customers offered free access to Wi-Fi
These services are aimed at making mobile broadband more convenient, and inevitably blur the lines between the two services, making the large-screen versus small-screen question less relevant, as either can be run from the same service. In March 2009, STC also began offering its mobile broadband customers free access to its Wi-Fi hotspots, which had a similar effect.
In the Middle East, prepaid offerings are not as well developed as they are in many other areas around the world. In Jordan and Saudi Arabia, for example, only three of the players offered pay-as-you-go options: Zain in Saudi Arabia offers a daily bundle for SR9 ($2.40) with an 80MB limit; Mobily's default is to allow data usage on all handsets at a rate of SR2/MB ($0.53/MB); Orange in Jordan offers one flat-rate offer of JD0.2/MB ($0.28).
Telecom regulators encourage investment
Regulators in the region have been encouraging mobile broadband investment. The Qatari regulator, ictQatar, said that it will endeavor to boost broadband speeds in the country, and intends to ensure minimum speeds of 50Mbps. We have already seen the extent that some players have gone to position themselves for broadband, with Qtel being a prime example. These movements are typical for the majority of operators in the region. In its 2009 financial report, Etisalat highlighted fiber-to-the-home (FTTH) and high-speed mobile broadband as areas of capex investment, and during 2009 it increased capex by 74% (to Dhs6.8bn, around $1.9bn), predominantly to fund these investments.
Posted by
VMD - [Virtual Marketing Department]
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