CommsMEA: How should operators adapt their business models to make their LTE investment profitable?
Fabre: Network coverage and time to market offer opportunistic differentiation initially, and can lead to ARPU and market share uplift. However, as the market matures, other ecosystem elements have a stronger bearing on LTE adoption.
Kureshy: Most operators in the Middle East and Africa region have a voice and SMS centric business model. Where LTE has been launched it is often offered as a premium service. This is sometimes done as the LTE coverage is limited to either cities or other selected areas.To make LTE investments profitable, operators need to do several things: deploy LTE in all parts of the networks; charge for all data usage and do not offer unlimited plans; encourage greater use of the LTE network by getting users to experience the lower latency and higher speeds on their smart phones; offer LTE at the same price as 3G services; offer multiple data bundles and make it easy to upgrade to the next bundle.
Yalcin: Mobile operators in the region have been successful to a great extent in transformation to new business models, where the focus has been shifted from traditional voice and SMS business to innovative solutions around mobile broadband and digital media space. Highlighting data-only SIM cards, cooperation with local content providers and mobile application development initiatives have been the primary strategies of operators during this transformation process.
CommsMEA: What strategies have worked in other markets, which could be adapted and applied to LTE deployment in the Middle East?
Kureshy: LTE changes the game in a very important way. It allows users to have an experience that is as good as and in some cases better than users experience on their fixed broadband networks. This enables customers to use LTE for entertainment services such as video streaming, which has not been possible with 3G. Operators who have near 100% coverage of LTE in their networks and allow users to experience LTE via smartphones have seen a better and faster return on their investments that operators who have followed a strategy of ‘toe in the water’ approach.
Omar: LTE has been a big enabler to provide a quality experience for our users. The services that are being driven by the OTT players across the world have given the operators a major opportunity to partner with as many providers as possible to bring those services to the users. Content and video services continue to be the most used in our network accounting to over 50% of data traffic. The key to this growth and adoption of those services on our network is the quality of the experience on our network. Zain Kuwait takes pride in the additional steps it takes to continue to provide a quality customer experience. Since our users have experienced a superior service, they continue to use more and more of the services that are available from the OTT and Zain in their daily life and work style.
CommsMEA: How can LTE increase ARPU, given that there is a natural resistance among subscribers to paying more — even if service quality is significantly improved?
Yalcin: As operators adapted to new business models with LTE, they have established new offerings to generate maximum returns. Utilization of LTE technology at fixed locations through 4G modem and 4G dongle solutions emerged as a substitute for fixed broadband services such as xDSL and Fiber internet (FTTB/H). These kinds of services will be the main driver for the adoption of 4G in the region. On the other hand, higher bandwidth over mobile networks increases QoS for mobile applications and similar value added services, and mobile operators in the region have been developing initiatives to play an active role in mobile app and digital media, either partnering with Over-the-Top players (OTTs) or developing their own OTT services. These innovative solutions and services will also drive the adoption of 4G technology in addition to basic connectivity services.
Kureshy: People are willing to pay for entertainment far more than they are willing to pay for their phone services. LTE enables people to have video entertainment on the move via mobile broadband. Experience shows that people are willing to pay more money entertainment and this leads to increased ARPU. LTE leads to changes in the behaviour of the users in ways that have not been foreseen.
Jarrar: In the US and Europe, firms have adapted their businesses to a data centric workflow where almost all are embracing bundling of voice/ SMS and data in to a single tiered package, where often local voice minutes and SMS are unlimited but the data bundles are fairly strict. Many are also offering family packages with multiple devices on a single account. This has led to people spending significantly more of their share of income on telecoms whilst reducing churn. Moreover, larger operators in such markets are investing in greater entertainment services such as music and film streaming, instant messaging and other services in revenue share or partnership mode with content providers. The services are either bundled into their existing packages or offered standalone. This phenomenon has not fully been embraced by the region yet. However, as the demand for data and the internet increases, people will look to more attractive postpaid data packages and away from prepaid packages.
CommsMEA: What respective strategies work for business and consumer customers?
Kureshy: Selling an increase in productivity and the ability to work remotely (including home working) while maintaining the same experience (and sometimes better experience) for business consumers is leading the take-up of LTE by the business community.While for consumers it is the ability to be connected anywhere and have the ability to have video based entertainment is driving the consumers. People watching their favourite shows while commuting or even while exercising at the gym are driving the take up of LTE services by consumers. Our experience shows that the people who do not have a fixed broadband connection are the heaviest users of LTE. These top consumers of LTE are students, lower income families and house maids!
Fabre: Multimedia and cloud-based apps and services are fundamental to showcasing the high speed and low latency capabilities of LTE in both consumer and enterprise use cases.
CommsMEA: What impact is the increased emphasis on data having on the balance between pre-paid and post-paid tariffs?
Fabre: It is worth noting that there are very few CSPs (EE and AT&T, for example) that currently offer LTE price plans to prepaid customers. In the case of AT&T, prepaid customers can access LTE if they have an LTE smartphone. However, the price plans are the same whether the prepaid customer is using an LTE smartphone or a 3G smartphone.
Kureshy: Operators are offering higher and higher bundles of data to both pre-paid and post-paid customers. The balance between pre-paid and post-paid varies by markets but if operators are to be successful, then they need to charge the same for data, whether it is consumed by a pre-paid customer or a post-paid customer.
CommsMEA: How is this increasingly diverse range of plans helping operators to generate a solid ROI from their LTE architectures?
Wemhoff: Recovery of investment can come from anything that is ‘data intensive’ and at Nawras, we have seen that quotas are more likely to be fully used when customers move to 4G plans. We are therefore using this opportunity to look at usage in more detail in order to be able to match customers to the right data plan for them, giving them higher quotas and more tailored bundles. By providing bundled data plans, customers can get the right balance of voice, data and SMS to suit their own needs — something Nawras has developed for both consumer and business users. There are also shared data plans for small user groups that allow a certain quota of data to be used within, say, a small business group. Such plans allow groups with different user profiles to get maximum benefit from a plan or bundle. In addition, as customer requirements and usage patterns change and evolve over time, there is a need to provide the appropriate tools to allow customers to monitor and adjust their data plans to suit their changing needs.
En: In today’s environment one must look at both network performance and customer satisfaction as a single picture, leveraging real-time insights to inform operator’s overall marketing strategy. We believe that the user experience should be the driver of technology adoption — whether that means optimising existing resources or investing in new network technologies. Operators nowadays are being pressured to not only focus on traditional network KPIs, but also face challenges in providing a better end-user experience. We are for example, seeing a strong uptake of next-generation CEM offerings that allow operators to adapt their focus from traditional network performance KPIs to the end-user experience.
Yalcin: LTE’s strong value proposition in terms of speed and quality justify its provision as a premium service with higher tariff packages. However, handset compatibility issues of LTE solutions, especially because of the limitations on FDD-LTE refarming in 1800MHz, have prevented operators to promote 4G technology in their mobile broadband offerings to some extent. They have rather focused on 4G modem and 4G dongle solutions as a substitute for xDSL and FTTB/H broadband services, which have been the most effective way for recouping LTE-related ROI.