Broadband ROI

Investment in broadband infrastructure is taking place at a breathtaking pace across the world, and market commentators continue to forecast the exponential growth at which data traffic is set to increase. Despite these attractive industry dynamics, service providers continue to struggle to devise business models that adequately monetise the opportunity beyond charging for access, and the answer appears to still be some way off

STC International’s Hasbani believes that the segmentation efforts that network operators are currently undertaking need to be extended even further in order to maximise on the broadband opportunity

Investment in the telco segment in the UAE in 2010 amounted to AED7.8 billion (US$2.12 billion), with fibre-to-the-home (FTTH) passing 60 per cent of homes, and 14 per cent growth in broadband subscribers.

“I don’t think there is a single answer to how operators will look to push up revenues from the broadband opportunity beyond what is charged for access,” says Ross Cormack, CEO of Oman telco Nawras. “The answer does lie in segmenting customers, providing them services and applications they actually want, understanding their requirements; and to a large degree I think network operators are already doing this.”

The fact of the matter remains that data as a percentage of mobile network operators’ overall revenues is a relatively insignificant proportion, and not many services have come along to boost it significantly. Telcos have been looking at triple and quadruple play as one strategy to effect the growth in data revenues, and nascent areas such as mobile advertising, m-commerce and m-health hold promise, but have not yet proven to be winning propositions.

According to Juan Jose de la Torres, Etisalat’s group strategy and planning director, integration is an important element of broadband development. Etisalat is along the path of a multi-play development, which goes beyond triple or quadruple play, and de la Torres believes this is where significant gains for telcos will be achieved.

“68 per cent of households in the UAE are passed by fibre,” de la Torres says. “The UAE is the only country in the world that is committed to 100 per cent FTTH deployment, and we see advantages in having this level of connectivity,” he adds.

De la Torres describes fibre as a revolution to Etisalat, not an evolution, and within that suggests there are new business models and revenue streams to be generated.

“High-speed multitasking is at the core of the home broadband opportunity,” says de la Torres. “Home management, online connectivity, and entertainment are key. Entertainment is going to be one of the key drivers of broadband uptake.”

STC International’s CEO, Ghassan Hasbani is of the opinion that the segmentation efforts that network operators are currently undertaking need to be extended even further in order to maximise on the broadband opportunity.

“There needs to be behavioural segmentation taking place,” Hasbani says. “Given the rise in social media and user-generated content, there needs to be an emphasis and differentiation based on communities rather than segments,” he adds.

In its own right STC is looking to increase its participation in the services and applications that are driving broadband demand. In 2009 a company called Intigral was established by STC in partnership with All Asia Networks, and Saudi Research and Marketing Group, with the aim of enhancing the digital experience of consumers irrespective of their access channel.

Thus Intigral is looking to act as a hub between telecom companies, media content producers, and end-users, in an attempt to simplify the complex digital media landscape.

“There is a mega-convergence drive comprising of broadband and mobility, multimedia content and electronic transactions,” Hasbani says. “There are forecast to be 1.5 trillion instances of session activations in 2014, but here remains pressure on pricing and ARPU, and herein lies the situation that needs to be rectified.”