By Paul Black
Investments in the telecom sector and other major sectors in the Middle East have been affected by the recent changes to the global economic environment. For example, in view of the economic uncertainties arising from the fluctuations in global oil prices, telecom operators adopted a wait-and-see approach in terms of capital investments in 2016. In fact, operators used the depressed economic situation to their advantage by negotiating better terms with vendors.
The few strategic investments that took place in 2016 were based around organisational transformation and key network infrastructure. This trend is expected to continue into 2017 as telecom operators restrict their investment focus to strategic areas.
The key trends expected in 2017 are highlighted below.
#1 Network investments to be driven by optimisation and convergence
Telecom networks in the Middle East are increasingly beleaguered by data due to rising smartphone and tablet penetration rates and greater consumption of high bandwidth content services. Coupled with the new investments being pledged in the IoT space, this trend is creating new challenges for mobile network operators in the region. In order to accommodate the ever-growing amounts of data traffic, ensure more agile networks, deliver better quality of services, and support high-value enterprise services, mobile network operators (MNOs) will increase investments in carrier-grade virtualisation platforms and software-defined networking (SDN). This approach will help operators differentiate themselves from competitors, elevate their networks to the next level, and prepare for the transition to new technologies (e.g., LTE-A Pro and 5G).
#2 Telcos at the forefront of digital transformation
Businesses in the Middle East are facing new challenges as a result of the plunge of oil prices in the global market and intensifying levels of competition. Their focus has thus shifted to delivering a better customer experience and achieving cost optimisation. However, the traditional processes or workloads of organisations in the region fail to perform in this regard unless they are tied to a combination of mobile, social business, cloud, and analytics technologies, known collectively as 3rd Platform technologies.
From the supply viewpoint, various types of players (e.g., IT service providers, software and hardware vendors, and global telecom companies) each claim to be digital transformation champions. However, operators will need to undertake digital transformation (both internally and externally) before branding themselves as change makers, particularly as they have to compete with the various ICT players and address rapidly changing customer requirements. IDC considers this to be the most compelling trend to be witnessed over the course of 2017.
#3 Heightened interest in cellular-based IoT networks
Some of the GCC operators, such as du and Omantel have made a mark for themselves by launching IoT-specific networks with the aim of capitalising on growing industrial and consumer IoT demand. Low power wide area (LPWA) technologies, such as LoRa and Sigfox, have been adopted in the region due to fewer regulatory hassles and their relative ease of deployment. However, this adoption trend is expected to change as more diverse technology vendors, device manufacturers, and application vendors crowd the IoT landscape and vie for market share. With the availability of 3GPP approved overlay technologies, such as Narrow Band IoT (NB-IoT), IDC believes that the interest of telecom operators will shift to cellular IoT networks, as this will align with their future network investments in areas such as 5G.
#4 Relevance of IoT platforms to be realised sooner
With the explosion of the IoT connected devices, operators will be in need of an IoT platform that is capable of handling the growing number of connections (over diverse access networks) and increasing amounts of data. This platform should also be capable of integrating third-party applications and handling security administration.
Although a number of IoT platform deployments have been postponed to date due to unclear data privacy and data security regulations and/or current economic uncertainties, some deployments will soon be underway. The success of the deployed cloud-based platforms will be measured in terms of their security, particularly concerning data sovereignty, and flexibility.
#5 Telecom regulators prompt telcos to enhance customer experience and increase value .
Telecom regulators in the region have recently taken deliberate measures to enhance the level of competition. Examples include the pursuit of applications for a third mobile licence in Oman and a proposal to upgrade existing telecom licences in Saudi Arabia to unified licences. This goal to enhance competition will push existing operators to revisit their go-to-market strategies, improve their quality of service, and enrich the customer experience. A change in go-to-market strategies could mean higher value for money for existing customers, while enhancements to customer experience management have the potential to improve customer retention and acquisition. Operators will thus look to invest in a fully integrated and modular customer-experience management solutions that enable them to manage and provide a seamless omni-channel experience and feature unified order management, converged product catalogue publishing, and streamlined product lifecycle management capabilities.
#6 Operators to revisit content strategies due to heightened competition from OTTs
The pay TV market in the Middle East has a heavy influence on IPTV providers, such as Etisalat, du, STC, and Ooredoo. The market is increasingly crowded with OTT service providers such as Icflix and Starzplay and global heavyweight contender Netflix. Existing pay TV service providers (e.g., OSN and beIN Sports) and production houses (e.g., MBC and Rotana) are gearing up to revamp or launch on-demand OTT services to sustain or even increase their revenue shares in the pay TV market. Going forward, this competitive trend is expected to compel IPTV providers to position themselves as more comprehensive content providers. These providers will achieve this shift by extending partnerships with multiple OTT players, gaining more exclusive content rights (as witnessed in the U.K. with BT Sport) and making customer interfaces more intuitive (e.g., by borrowing features from OTT platforms). Providers will also have to revamp their existing IPTV platforms in the near future.
Advice for the services provider
Telecom operators across the Middle East are currently facing a variety of internal and external challenges. In order to overcome these challenges, telecom operators should shift their focus to more strategic areas — for example, by making greater investments in digital transformation and network infrastructure. Indeed, telecom operators will need to embrace digital technologies to stay resilient to the market challenges expected to persist into 2017. A number of additional investments will also be required in future-proofing networks and rolling out new IoT solutions in various domains. Overall, telecom operators should enhance quality of service, improve the customer experience, and undertake service innovations to stay relevant amid the constantly growing levels of competition.
About the author
Paul Black is the director of telecoms and IoT, IDC Middle East, Turkey & Africa.