The region’s telecoms sector is once again gearing up for the busy events season, with conferences and exhibitions covering just about every aspect of the industry taking place during the winter months. Early in October, directors from some of the region’s heavyweight operators including Etisalat, Batelco, Vodafone Egypt, Du and Nawras attended Telecoms World in Dubai. As is usually the case during panel discussions at telecoms events, the subject of the relationship between telcos and over-the-top players arose.
This was perhaps inevitable, given that Osman Sultan, CEO of UAE telco Du, was part of the panel. Indeed, just one week earlier, Sultan was called for the creation of a pan-regional online platform to offer services such as online shopping, social networking and digital content services. Sultan stated that such a project would need to be a collaborative effort from a number of the region’s operators.
It is not the first time that the region has seen such a battle-cry for competing operators to take on the over-the-top operators. Abdul Malik Jaber, former CEO of Zain Jordan made a similar appeal at the Arab Advisors’ Convergence Conference a couple of years ago. Some of the region’s operators have already placed a tentative foot in the door of the OTT space, with mixed results. In 2010, Du unveiled ‘anayou’ a web platform that offers content, applications and games, including access to a social networking platform, entertainment, sports, messaging and cloud storage.
In other parts of the world, operator initiatives to cross into the OTTs territory have struggled. Vodafone 360 was one of the more high profile failures. The initiative was intended to include music, an app store and social network identity aggregator among its services, but Vodafone decided to bin the project late last year.
Many analysts, and a good few operators, argue that such ventures are little more than a costly distraction away from telcos’ core business of providing voice and data connectivity. It certainly seems a fair claim that any attempt by operators in the region to enter the social networking space will be hugely difficult. The reason for this is obvious. Facebook is already the social network of choice in the region and around the globe. And aside from this, a regional attempt to ape the success of Facebook would make little sense as most people use the service as a means of staying in touch with friends around around the world, not just in one region.
The fact that the marketing departments of most telecom operators in the region have adopted Facebook and Twitter to promote their services is also a testament to the success of the established OTTs in the region.
An online shopping platform for the Middle East could make more sense, as there does appear to be a gap in the market, with the likes of Amazon not present in the region. But even here, there are serious questions around how successful operator-led initiatives might be. It took Amazon many years to start making a profit, and the company’s most successful markets have better developed postal services and distribution networks than many countries in the MEA region.
Even if a number of the region’s telcos did manage to launch a successful digital destination, it is difficult to imagine there being a significant return once the profits were divided up between the main stakeholders.
However, with traditional revenues continuing to decline, it seems likely that operators will continue to seek ways to profit from demand for OTT-type services. According to recent research from Coleman Parks for customer experience solutions provider Amdocs, some 70% of mobile operators believe that over-the-top service providers present an opportunity for partnership, rather than a threat.
Furthermore, 64% of operators acknowledge that OTT players bring innovation to the industry, while only 42% claim they could take on an OTT player by offering a better service.
Whatever the outcome of recent talks in the Middle East, the OTT challenge is one that will continue to dominate the sector for some time to come.