Feature: telcos in 2020
It’s hard to imagine, but 2020 is just around the corner. What might the telecommunications industry look like then in the Middle East and Africa?
2020 is just around the corner. Just what might the telco industry look like then in the Middle East and Africa?
There was a time when 2020 seemed as far off as the idea of flying cars, or turning on a computer or pressing a button on your mobile phone and being able to access information from literally anywhere in the world. But just like those innovations (including flying cars, as anyone who visited Etisalat’s stand at this year’s GITEX in Dubai can attest), 2020 is just around the corner.
But with technology changing at an everfaster pace, 12 months is also a long time off. Yet Christian Bartosch, associate director at The Boston Consulting Group Middle East, says there are a few things we can expect from telcos in 2020.
A big trend, Bartosch says, will be more services moving to the cloud. “This will go beyond control applications to include data-heavy applications, such as next generation packet core for 5G. We will see the first pilot for delivering videos to moving subscribers via predictive content buffering at the network edge to enhance customer experience and reduce load on the network. Such network capabilities will be essential to support augmented and virtual reality use cases.”
Translation: more augmented and virtual reality, more videos being viewed on mobile devices, and greater demands on network capacity – which Bartosch says the cloud will be able to help mitigate.
“Public services will leverage the new network capabilities by implementing augmented reality and virtual reality to create more immersive experiences,” he says.
“This in essence, will reduce the need to visit public offices even further.”
Dollars in IoT and data
It’s common knowledge business models for telcos to make money must adapt to changing technologies. Tareq Masarweh, senior consultant for Europe, the Middle East and Africa at Ovum, says 5G especially could change things in the GCC region – if the customer demand is there to justify the expense in building the necessary infrastructure.
“From a business perspective, 5G is the only mobile broadband technology that came before its actual need,” he says. But with enough regional telcos – such as Etisalat, du, STC, Zain, and more – already building 5G infrastructure, and others announcing plans for 5G rollout, he’s confident the sheer investment will create the customer demand, as it represents a great leap forward in terms of speed and overall technological capability.
Then there’s smart cities. “Another key component of most digital strategies in the Middle East are smart-city projects that are under way, especially in the GCC,” says Masarweh.
He adds: “Smart metering, public sector initiatives, road and safety, smart parking are few among many technologies that will spread from the GCC to the rest of the region in the coming years.”
But with more smart cities projects, Masarweh also highlights the challenges increasing data consumption – from everything from more Internet of Things (IoT) devices, to more data being collected, to consumers viewing more, higher-resolution videos – will create. But, he adds, it will also mean business opportunities.
“The growth in data consumption will continue to be the most significant market opportunity for service providers in MEA until 2020, and potentially beyond. The availability of affordable smartphones, data plans, and most importantly, relevant digital services, will be among the factors that determine progress.”
Nabil Ben Soussia, managing director for IEC Telecom Middle East and Kazakhstan, believes IoT and data will be a big business opportunity for telcos in 2020. “It will be very important in all aspects of life; it will bring real [time] data from everywhere, from all sensors, smart algorithms and AI to analyse and propose optimisation,” he says.
The forecasts support his view: according to Statista, IoT could be worth as much as US$8.9 trillion worldwide by 2020. Erik Dudman Nielsen, CEO of Virgin Mobile Middle East and Africa, is one of many people who say it’s simply too huge a financial opportunity for telcos to pass up.
But the telco of 2020 will be about more than technology, Dudman Nielsen says. A key driver of growth, he believes, will be customer experience. “In order to keep up in this experience economy, telcos must now put the customer in the centre of everything they do and build their brand through building compelling digital propositions that meet customer needs and simplify and improve the experience and relationship that customers have with their brand,” he says.
He adds this also means telcos may need to think long and hard about what areas to focus on – but not too long, since the pace of innova-
It is about being current to the needs of your customers, not the industry or product.”
Erik Dudman Nielsen, Virgin Mobile Middle East and Africa CEO
tion is faster than ever before. “The critical success factor for mobile operators will be in deciding what their role should be, a wholesale model? Or a digital navigator moving the traditional mindset to an agile digital business model, which puts the customer at the centre of everything they do,” he says.
“In either case operators will need to decide whether they offer additional products that add incremental revenue streams or whether they focus on their core business.”
He adds: “With digital brands, speed is crucial, and unfortunately a key challenge facing many traditional telcos is the ability to move fast as there are challenges with legacy technology infrastructure which can make digital development difficult for their core business. This issue, combined with complicated product, pricing and plan portfolios, can often reduce the ability of telcos to be agile and meet shifting customer expectations.
“Mobile telecom companies face increasingly uncertain times as digitalisation reshapes consumer demand. The GCC region has some of the top countries in the world for digital adoption, with more than 100% smartphone penetration and more than 70% social media adoption – even higher than the United States – so there is a definite demand for more digital propositions in the region.”
In the end, Dudman Nielsen says, the successful telco of 2020 will be one that’s innovative and doesn’t just embrace disruption, but creates it. “In the MENA region, young people are the fastest growing segment, with some 60% of the population aged under 25 years old, making this one of the most youthful regions in the world,” he says.
“This digitally-savvy, young population have soaring demands of the brands they interact with. [They] now measure their digital experiences against true digital disruptors such as Netflix, Uber and Airbnb. These are brands that operate with digital innovation at their core, and brands that have a relentless focus on the customer, not the company.”
Dudman Nielsen says it all comes down to a simple thing if telcos want to not only survive, but thrive in 2020 and beyond. “It is about being current to the needs of your customers, not the industry or product.”