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Middle East Telcos Must Diversify Service Offerings as Revenues from Voice Service Steadily Decline
Published Sep 12, 2013
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Voice revenues, traditionally the largest source of profits, for telecom providers in the Middle East are declining as customers have started utilizing smartphone applications to meet their communications needs, reports Prologix. The company, a leading IT solutions provider and distributor in the telecommunications segment, works closely with a number of major telcos in the region and states that these operators are all witnessing growing demand for data, cloud and managed services whereas their traditional voice and SMS revenue streams are steadily shrinking.
This reflects a global trend which is captured in a recent report by Infonetics Research which predicts that telecom voice will account for only 50% of mobile service revenue by 2017. Mr. Sarwan Singh, Director Sales and Operation, Prologix LLC highlights the causes for this shift in consumer mentality saying, “In Q2 this year, smartphone sales in the Middle East and Africa (MEA) surpassed feature phone sales for the first time. With these devices, consumers now have easy access to a multitude of internet based communications applications. Even businesses are employing technologies such as VoIP and IP telephony to reduce operational expenses. All of this is driving business away from voice services and forcing telcos to look at new offerings.”
But Mr. Singh is quick to point out that this shift is actually a 'blessing in disguise' for operators. Over the last two years, regional telcos have all seen increase in data consumption, especially in mature telcom markets such as Saudi Arabia and the United Arab Emirates. In fact, leading KSA operator, Saudi Telecom, in Q1 2013 reported a 74% increase in data revenue over the same period last year. The popularity of data packages and value added services present a huge opportunity for service providers.
While home user needs will be best met by better priced data packages and faster mobile internet, it is in the enterprise space that telcos can truly diversify their offerings. Cloud-based managed services, Infrastructure-as-a-Service (IaaS) and point-to-point IP connectivity for remote office locations are all examples of new services that operators can offer customers. Furthermore, telcos have a unique advantage that makes them best positioned to provide these services.
“Across the Middle East, the local loop is not unbundled and operators still own the last mile. This means they can ensure seamless connectivity, low latency and high availability of services which third-party providers would find difficult,” explains Mr. Singh. Not only this, cloud services which will soon represent a major investment for enterprises and SMBs alike will be better received if provided by regional telcos who are capable of offering local termination and storage of data. This is especially true in light of the recent 'PRISM' surveillance program which raised concerns regarding data stored in overseas locations.
And while Mr. Singh notes that service providers in the region do in fact regularly upgrade network components such as base stations, network switches, core switches, backhaul and fiber-optic networks, smarter investment is required if true progress is to be made. “Currently, the main investments should focus on customer experience management. Operators need to deploy test and measurement probes that give them complete visibility into their 2G, 3G and LTE networks so they can easily identify bottlenecks across these heterogeneous networks. This information can then be used to chart investment roadmaps and build high-performance infrastructures.”
Posted by
VMD - [Virtual Marketing Department]
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