With voice revenues declining and data use exploding, operators are finding it difficult to monetise data revenues. Another crucial issue is whether updating current infrastructure will burn a hole in operators’ pockets, or allow them to generate a decent ROI. Moreover, operators must figure out a sound strategy to cope with the ongoing growth of OTT players. CEOs from the region’s operators give their views.
Rashid Abdulla, CEO, Batelco Bahrain
Ross Cormack, CEO, Nawras
Ihab Hinnawi, CEO, Umniah
Mikkel Vinter, CEO, Virgin Mobile MEA
CommsMEA: Has your view of how operators can add value changed significantly over the last few years?
Ross Cormack: In the broadest sense it hasn’t changed because what we said we were going to do 20 years ago was to give users the ability to read newspapers off their phone in their pockets and message each other all around the place and so forth. So what we’ve actually succeeded in doing in the telecoms industry together with the OTT industries is, collectively, we have finally done what we said we were going to do 20 years ago.
Much more narrowly, yes my view has changed. The whole idea of partnering which we did pioneer very successfully in the SMS business is that we learned we didn’t have to do it ourselves but handed the control over for those services outside. Right now we are at a point of inflection which is very exciting. I think we’ve had the opportunity to really grab the tiger by the tail, because we are providing a lot of services together that people want. Telcos are suddenly saying how do we monetise it? On the other hand we’ve heard some other very encouraging bits of information about people saying from their own experiences. Our experience was we’ve lost a lot of SMS business over the course of this year, 16% of SMS disappeared, so we did all our DPI analysis and found that all of this business has gone to WhatsApp.
It was people preferring the customer experience of WhatsApp to the customer experience of SMS. It is an exclusive arrangement to introduce new services. What we’re doing at the moment is selling a little bundle of data where you can use WhatsApp for a week and we’ve also introduced a slight variance in the format where if customers use 500 baisa of any type of data in the day, then you get free WhatsApp usage for the rest of the day. It’s all about customer experience and you have to go back to what people want and how they prefer to pay.
CommsMEA: From Batelco’s perspective are you open to these sort of arrangements and do you have any such deals currently?
Rashid Abdulla: Looking to the bottom line for the next few years it seems to me that the more we invest the more we lose. The more we put in infrastructure development the more we cannibalise traditional business like SMS, and I think this is going to be here to stay for a few years and unfortunately we are going to have to be patient. We have a lot of hopes for the OTTs of the future. We do not think for certain services the region is not ready or the technology is not ready yet, but I think there is no doubt that the content and M2M, along with cloud computing, will pick up and become significant to our bottom line eventually. At the moment it does not even represent 2% of our bottom line. Now we are at the stage where we all know that minutes and charges for minutes to destinations like we are used to, is now changing to bytes. That is a transformation. Many telcos have been investing a lot into mobile infrastructure, but at the same time this has been cannibalising other traditional services. One day the OTTs will pick up and compensate, but for now what other choice is there other than become an enabler for the full industry?
CommsMEA: Should operators be considering ways to monetise data, and could they just charge more for it?
Rashid Abdulla: Obviously this is dependent on the competitiveness of the environment. Bahrain is highly competitive with three mobile operators, the market is mature so you are not talking about any more customers; you are talking about usage. It is about whoever gives more usage. Yes we are optimistic that the broadband penetration is nowhere near that of developed countries, but if you consider whether we should revenue share with these global content providers, I personally believe without them we would not have data. Without them our pipes would not be filled. But one thing that is important is to what extent can you provide this quality data and I think it’s time for us to be thinking about charging for quality data rather than raw data. I do not think that if someone wants to watch YouTube in HD quality they should be charged different from those watching YouTube in standard definition. We should not think about charging the buyer. Do you want a premium quality service for your pipes? That is what we should charge. If we start resisting or blocking sites that provide content I think operators will lose a lot of access to such data, unless it has its own, and as mentioned before we are not capable of creating data, so we have to depend on others’ data to fill our pipes.
This is something we need to discuss with our regulator as well and I don’t think the regulator has reached the stage where there are regulations in terms of quality. There are regulations for per minute charges and per byte charges and destination charges, but I don’t see any regulation at the moment of differentiating between the quality per bytes.