With 4G networks soon to be mainstream in the Middle East, what are the opportunities and challenges inherent to delivering video content over mobile? By Shaun Ebelthite
The UAE’s two telecom operators Etisalat and du found common ground at GITEX Technology Week, with both acknowledging that they need to enhance their efforts to grow revenue from mobile data services including video in the face of OTT players’ dominance.
“From 2008-13 global mobile data traffic grew by 46 times over, but revenue only grew by 2.4,” said Ahmad Julfar, Group CEO of Etisalat, adding that the industry had been slow to adapt to the changing nature of the mobile sector, which is becoming increasingly dominated by video consumption and OTT players.
The main problem, according to Anton Kathrein, the CEO of systems provider Kathrein-Werke, is capacity. “If you look at the average value per customer, it’s stayed relatively flat over the years, but the amount of data being consumed has skyrocketed.
So operators are having to upgrade their network so that they can provide the latest technologies like 4G to increase speed,” says Anton, adding that these upgrades are being done without a commensurate increase in revenue.
Julfar suggested at GITEX that the solution was greater synergies between the two (telcos and OTTs). “Due to the high demand on data, telcos will always be relevant – the OTTs are here to stay and we need to find ways to work with them and grow with them. We need to move from competitive value destruction to co-operative value construction.”
Sotiris Bithos, director of the telecom division at software provider Intracom, told Digital Broadcast that this was the key to the future growth of the industry. “Telcos and Pay TV networks need to find a formula in which they can co-exist with OTT providers, they need to find a balance between themselves and the YouTubes and Netflixes of the world. They need to take advantage of their direct relationship with their subscriber base,” said Bithos.
“People, especially young consumers, don’t want to watch traditional linear TV on their television, they want to watch VOD, catch-up TV and OTT content on their tablet or smartphone, so multiscreen technology is a must have platform for any broadcaster,” said Yousef Saidi, Group COO of Dubai-based Eurosar, which provides broadcast solutions to major regional clients including du, Etisalat and OSN. “It is inevitable that telecoms companies will become increasingly involved in the delivery of video content with the deployment of 4G networks.”
But according to Georges Dabaghi, VP of TV & Media MENA at Ericsson, the only way to make this shift viable is a change in business models. “In the future, telcos need to consider that mobile broadband is the only way to ensure the success of a business model in which they become a content provider themselves via streaming, or ally themselves with one to grow revenue.”
An alliance is the favoured course of Bithos: “Being a video provider is a very difficult task, it takes more than to just have a very fast and well-tuned network and a nice platform that delivers channels and movies to smartphones. It takes managing the entire content relationship.”
Indeed, du CEO Osman Sultan suggested at a GITEX press conference that operators have not yet determined what position they want to play in the evolving digital world. “We exist in silos,” he said.
“We continue to work in the standard business model. We need an ecosystem that will foster innovation. I’m very passionate about creating a business model to allow operators in the Arab world to exist in the world of direct advertising and operator billing. OTTs are doing a great job and are here to stay, but we can gain a piece of the pie if we have these capabilities.”
Global mobile data traffic will grow by 13 times over between now and 2019