Parting advice

In what turned out to be one of Abdul Al Jaber’s last presentations as CEO of Zain Jordan and COO of Zain Group, in early June in London he spoke about the changes required in the broadband and content game in order for service operators to finally enjoy the share of the incremental revenues they ought to

Al Jaber believes operator brands are becoming less relevant with respect to end-users’ mobile purchase decisions

Al Jaber was never one to be shy to express his views, and Comm. had already learnt this from the cover feature we produced in the May issue, based on our conversation with him. His presentation at an industry event in London early in June was characteristically to the point, with Al Jaber pointing out some of the issues that have held back broadband uptake in Jordan, and what operators across the Middle East can do to finally start to efficiently and effectively monetise the broadband opportunity.

Al Jaber said he believed regulatory policies in Jordan have played a crucial role in delaying the increase in broadband penetration as a result of factors including the fact that the incumbent telco Jordan Telecom Orange owns the infrastructure of the ADSL service and there is no local loop unbundling.

Due to the dependence on incumbent infrastructure Al Jaber said be believes competitive product designs and promotions were limited as all ISPs were forced to have the same products. He also attributed the delay in the development of broadband in Jordan on the revenue share obligation on mobile broadband providers, including for 3G+ services, while exempting the incumbent operator, which he believes creates a barrier for the fast adoption and widespread access of Internet.

According to Al Jaber, the main factors hindering broadband service adoption include entry barriers such as the large prepaid base in countries such as Jordan; the cost of ownership; quality of service issues; and coverage.

In an example of the pent-up demand for mobile broadband services in Jordan. Al Jaber recalled the introduction of 3G+ services by Zain in March, which saw the telco claiming a total of around 350,000 3G users, with 100,000 subscribers utilising mobile data via dongles within the first two months of launch.

“The monthly targets for March, April and May were achieved in three days,” Al Jaber said. “In our experience we witnessed that as customers experienced better speeds, they consumed more content and thus their average usage increased.”

As Al Jaber explained to Comm. in May, by launching its 3G+ network the operators wasn’t only looking to be a network provider for such services and applications, it was looking to actively participate in the entire value chain with respect the consumption of broadband content by end-users.

“We are not selling connectivity, we are selling services,” Al Jaber said. “Mobile financial services, enterprise solutions, solutions for SMEs; these are the types of services that interest users and generate revenue for the operator,” he added.

Al Jaber also acknowledged how purchase decisions are changing, with the device brand, feel, operating system, and model typically being the single most important purchase decision factor, though the range of content and/or applications available through or on a device is increasing all the time. Operator brands are becoming less relevant with respect to end-users’ mobile purchase decisions, with customers caring more about the devices available and the content accessible.

What service providers need to be cautious about in pursuing broadband gains, Al Jaber advises, is of revenue leakage caused by “free rides” on the network, typically from Internet players. He also advises that service providers integrate their telecom services with content and applications, as well as institute a segmented approach to applications.

“Create service-oriented portals (such as AppExchange) built on verticalised business communities, accessed through a browser and mobile client, and offering integrated infrastructure and applications services,” Al Jaber suggested.

Service operators are now required to develop a multi-sided business model that encompasses traditional customers (subscribers) together with external direct partners (application developers, content providers, etc), with the cloud providers, which are typically vertical industry specialists.

Thus Al Jaber believes the development of large-scale applications ecosystems incorporating the operator cloud, industry clouds (such as the Wholesale Applications Community) or OneAPI), and commercial clouds (mobile cloud providers, enterprise solution clouds, data centre clouds, etc), represent multiple new wholesale application channels for operators.

Al Jaber’s concluding rallying call to operators in the Arab world is that the formation of a common application programming interface (API) for Arab operators would be an opportunity that represents an incremental US$3 billion+ revenue opportunity through 2015, dependant on the market launch date.

The adoption of an industry-wide API-based business model would also help lower barriers to entry for web players by offering a standard entry point to operators’ networks, Al Jaber argues. This in turn creates an opportunity to resell network capabilities; such as location, messaging; and payments to a new market of developers via an industry agreed standard.

An Arabic API would also increase the urgency to get to applications to market, and create market value as a result of the expansion of focus on data revenue by Arab operators.