IMImobile is a global player in providing content and value added services (VAS) to mobile operators and is a pioneer of the managed services model in this space. Michelle Mills speaks with Vishwanath Alluri, founder and CEO of IMImobile about the exciting prospects for VAS and his company’s evolving business model

“Mobile advertising is a question of when and not if. It is at early stages right now, but advertising will definitely come in to subsidise the content delivery,” Vishwanath Alluri, IMImobile’s CEO states. “But right now, there is not a right advertisement model that is appealing to advertisers. The mobile phone is a personal device, if you are to exploit it you really need to personalise it.”

Alluri believes mobile advertising holds great potential in the coming years – whether through content, banners, targeted SMS or integration with games – however, the online model of advertising that has been extended to mobiles by the likes of Google and Yahoo! is far too broad, Alluri suggests.

The online model is based on IP addresses so that when a user logs on to Google in the UAE, for example, the page comes up in Arabic. However, the usage pattern of a mobile subscriber can be captured more easily than an Internet user and therefore these channels need to be safeguarded if they are to be utilised for targeted advertising campaigns.

Alluri believes IMImobile is in a good position to capitalise on this forecasted future growth with its unique Ad- Ring platform. Touted as the industry’s first fully-integrated mobile advertising platform, Ad-Ring provides an environment in which multi-format ad campaigns can be created and delivered to consumers over SMS, MMS, voice, WAP, ringback tones or video streaming.

Alluri predicts that 3G video will also be one of the growth sectors in coming years facilitating a quality viewing experience on the mobile screen. While he says Apple’s iPhone has “liberated the content industry” in more mature markets because content providers are able to push content at a higher quality than ever before, the device is yet to make much of an impact on India’s content industry because the number of smartphones and GPRS-enabled handsets is negligible.

“iPhone’s impact is relative to the maturity of the market. The pick up is increasing in frequency but GPRS-usage still has issues with ease of use, cost and speed. Even though the majority of handsets sold are now GPRS-enabled, very few subscribers have activated the service,” he says.

IMImobile has come a long way since Alluri founded the company in 1999, from his vision of harnessing India’s intellectual resources to develop an IPR-centric technology company.

The company has now grown to become a global content aggregator boasting relationships with more than 400 content providers and lists Vodafone, Virgin Mobile, Bharti Airtel and Etisalat amongst its operator customers.

Alluri is quick to point out that while the VAS space is dominated by systems integrators that depend on third-party software products, IMImobile owns the intellectual property rights of the platforms it provides, such as WAP portals, which places it in a better position than its competitors who license the software platforms.

“When it comes to troubleshooting and maintenance, it is companies who own the source code that are in a better position to troubleshoot quickly and maintain the service levels,” Alluri contends.

“The mobile data space is fast-evolving and is becoming increasingly software-intensive, which makes the licensed model problematic. Normally by the time operators have finished the procurement process and the licensed software is installed, the market has moved on, thus making the licence model a complex one to operate.” IMImobile’s content includes news, music, ringback tones and games in the local languages of its Indian, African, Middle East and Latin American markets. The company is currently working on an entry strategy for the United States and Europe.

Jordan has one of the highest numbers of licensed communications providers per capita in the Middle East, and such a level of liberalisation has given way to its fair number of positives as well as its drawbacks. Despite its leadership position in the number of providers in the market, Jordan lags behind in the licensing and implementation of 3G services, though a process has finally commenced to rectify the situation

At the end of June a forum on mobile communications and 3G services was held in Amman, where Ahmad Hiasat, chairman of the board of commissioners and CEO of the Telecommunications Regulatory Commission (TRC) confirmed that the regulator is working on creating a suitable environment for the introduction of 3G services in the kingdom.

TRC is planning to grant two licences to permit the use of radio frequencies in the 2GHz band for delivering 3G services.

On June 25, the TRC launched a consultation process in order to permit all interested parties to provide inputs regarding the issue of the introduction of 3G services in the kingdom.

Hiasat pointed out that the TRC’s mission is to create an advanced environment of ICT services that is efficient, competitive and accessible to all, supporting effectively the socioeconomic development of Jordan.

“We believe that the best way to achieve TRC’s vision for the telecommunications sector is through the promotion of pro-competitive policies. Certainly the international experience is that as telecommunications sectors around the world have transformed from a structure of being state-owned and monopoly-controlled to a competitive structure in private ownership, users of telecommunications services have received a better deal in terms of price, quality and service offering,” Hiasat stated.

Competition in the Jordanian telecommunications sector has increased, so has the number of services provided to users. The quality of offerings has improved and the cost has decreased. Accordingly, TRC is committed to the development of new and effective conditions for competition in the sector in order for the TRC to fulfil its vision and meet its legal duties and obligations.

At the end of March, there were estimated to be 100,000 broadband subscribers in Jordan, being serviced by all 10 of the kingdom’s Internet service providers

According to TRC figures, the number of mobile subscribers in Jordan stood at 4.8 million at the end of 2007; representing a penetration rate of around 80 per cent. These subscribers are serviced by three GSM operators and a single iDEN operator, meaning at least one of the GSM operators is set to miss out on a 3G concession.

Interested parties have been given until July 25 to submit comments with respect to the 3G consultation process, upon which the TRC plans to deliberate before making any final statement that would determine how to proceed.

However, early on it should be noted that the TRC is of the opinion that there is potential for further growth in the country’s mobile sector and the possibility for new entrants through granting an additional licence for radio frequencies through a process of a comprehensive bid to take place before the end of 2008, allowing all licensed companies as well as new ones to participate in the process.

However, not all parties agree that the level of competition in Jordan’s telecoms market is a positive development for all players concerned. Inevitably, Orange Jordan, the incumbent integrated communications provider is of the opinion that too much competition runs the risk of distorting the smooth operation of a market almost as much as a monopoly position does.

Orange Jordan’s Ghossein believes there reaches a point where too much liberalisation constrains a market to much the same degree as a monopolistic one

“When it comes to things like new licences, some regulators are keen to auction licences in order to maximise the price they receive for them,” states Mickael Ghossein, CEO of Orange Jordan. “I am not sure this is always the best thing to do, because in some cases the services and value that a new company brings to the market may not equate to the amount paid for the licence.” To put things into context, Jordan has more than 70 licensed operators of various bands of services.

Jordan has licensed five WiMAX operators of which only one is operational, raising questions about the level of positive impact a regulatory policy of lowering the barriers to entry may have on the overall attractiveness and viability of a market.

In the same way that Ghossein has expressed concerns over the number of licensees entering the market, he has been outspoken about the introduction of mobile virtual network operators (MVNO) in Jordan. The kingdom was the first country in the region to open up its telecoms sector commercially to the entrance of MVNOs, though the level of resistance has so far been high from the three incumbent GSM operators.

“In France and in other parts of Europe, the MVNO model is based on having a few licensed network operators and many service providers,” Ghossein commented recently. “France has a population of 70 million, three network operators and five to 10 MVNOs. In this region we have many more licensed operators, so the position of MVNOs would be difficult in terms of penetration.”

Thus while two MVNO licences have been awarded in Jordan, neither player has yet been able to negotiate an agreement with a host network operator.

For its part though, Jordan Telecom has itself been accused of not moving quickly enough to open its network to third parties. The unbundling of the local loop, for example, is a process that third party service providers have accused Orange Jordan of dragging its feet on.

Specifically, Orange Jordan was supposed to have started opening up its network in 2006, but has still not done so. The incumbent’s management believes what is required to happen is for there to be bit-stream unbundling ahead of local loop unbundling, in what the telco describes as an international norm.

Orange Internet succeeded in raising its subscriber base by 70.2 per cent during 2007 to reach 65,700 users as compared to 38,600 subscribers at year-end 2006. Orange Internet generated revenues of JOD13.4 million (US$18.9 million) during the year pointing to a noteworthy 28.8 per cent growth year-on-year, and representing 3.4 per cent of the group’s total post-intercompany revenues.

Orange Internet maintains its grip on more than 50 per cent of the Internet services market (according to Orange estimates) with continuous growth foreseen in the near future as the high-end leased lines and ADSL subscriber bases continue to boast rapid growth.

EBITDA for Orange Internet reached JOD2 million in 2007, down from JOD 2.7 million achieved in 2006 while EBITDA margin came at 14.9 per cent in 2007, down from 26 per cent in 2006. The increase in cost of service is mainly attributed to efforts aimed at improving the quality of services offered and the rebranding campaign.

At the end of March, Orange estimates there were 100,000 broadband subscribers in Jordan, being serviced by all 10 of the kingdom’s Internet service providers. It is estimated that the number will reach 200,000 by the end of the year with Orange continuing to enjoy a significant market share.

There are an estimated 500,000 personal computers in Jordan with 140,000 dial-up customers in the process of being migrated to broadband. While much of the telecoms landscape is occupied by Orange Jordan, the other players in the market are in the main part successfully carving niches for their respective businesses. GSM operator Umniah is also the operator of a WiMAX network, which is branded Umax, and offers broadband prices that are typically 10 per cent lower than prices offered on wireline ADSL.

The relatively high price of customer premises equipment (CPE) has led Umniah to heavily subsidise the installations. “The [access technology] is going to go for nothing in the future, and operators will have to focus on services,” commented Talal Ghaith, Umniah’s manager of the corporate segment. “We believe demand will come from broadband devices with voice capabilities, rather than voice devices with broadband capabilities.”

The GSM market leader, Zain Jordan welcomes a new CEO in the guise of Ahmad Al Shatti, who has held management roles at the Zain Group level. At the end of 2007, Zain estimated a market share of 43 per cent. Umniah and Orange enjoyed a 20 per cent and 33 per cent market share, respectively, at the end of 2007; with iDEN provider Xpress holding the remainder. Zain in Jordan counted more than 1.8 million active customers at the end of 2007, and has increased that to two million during the first few months of this year.

According to the TRC, the number of mobile subscribers in Jordan stood at 4.8 million at the end of 2007; representing a penetration rate of around 80 per cent. These subscribers are serviced by three GSM players and a single iDEN operator, meaning at least one of the GSM operators is set to miss out on a 3G concession

Revenues for the year reached JOD338 million, a decrease of two per cent year-on-year. EBITDA decreased by 13 per cent compared to 2006, while net income in 2007 reached JOD84.4 million, a decrease of 12 per cent compared to the previous year. The operator reported an ARPU of JOD13.45 for 2007, and despite competitive pressure from other operators, Zain continues to maintain its number one market position even with a loss in market share of 10 per cent during 2007.

Zain has thus very clearly shifted the focus of its activities in Jordan from customer acquisition to customer retention. The new Zain brand was well received and gained significant attention from customers and the media, despite the simultaneous re-branding of Orange Jordan. During the course of 2007, Zain introduced several new services including BlackBerry, ring back tones and user generated content.

The introduction of promotions and loyalty campaigns has been a marketing tool used with increasing regularity in order to stem churn. For example, at the end of March, Zain introduced its Zain 5 promotion in Jordan, which allows prepaid subscribers to call five Zain numbers of their choice at no cost. Subscribers are not required to pre-register, and has proved to be popular amongst subscribers.

From a network operator perspective, the campaign helps retain on-network calls and builds a community of users that benefit from remaining on the same network.

Executive summary of 3G consultation process

This document “Consultation regarding licensing the use of 3G communications technologies radio frequencies in Jordan” addresses a number of policy, as well as technical, commercial, economic and regulatory issues relating to the introduction of 3G mobile services in Jordan.

3G represents the next major step in the evolution of mobile communications, with an emphasis on data rather than on voice services. This reflects similar trends at the international level in fixed telecommunications, where the rise of the Internet has seen data overtake voice traffic.

The positioning of 3G in the wider telecommunications sector in Jordan can best be encapsulated in terms of bandwidth and mobility capability, as follows:

Current 2G (GSM and iDEN) mobile networks are capable of providing high mobility, narrowband services; current fixed networks are capable of providing low mobility, wide-band services; 3G mobile networks will be able to provide high mobility, wide-band services.

TRC believes that the grant of general radio spectrum licences for radiocommunication systems related to the integrated licensing regime which authorises the use of radio frequencies in the 2GHz band, (hereinafter “3G spectrum licences”) is an important step towards achieving the policy objectives of creating the conditions for effective competition in the mobile sub-sector by creating market entry possibilities.

TRC is cognisant that the incumbent mobile operators may have an advantage over new entrants in so far as the incumbents benefit from the existing operations and installed infrastructure and ultimately they are well positioned to achieve the policy objective calling for the rapid introduction of new services.

However, in awarding the 3G spectrum licences in Jordan, TRC is seeking, in line with its mandate under the Telecommunications Law and in compliance with the ICT Sector Policy 2007, to create new market entry possibilities and reduce barriers to entry and thus maximise competition in the mobile sub-sector. Government policy requires TRC to examine whether it is desirable to make spectrum capacity available for advanced mobile networks including 3G and 4G. At this time TRC is focussing on the introduction of 3G technologies only.

Accordingly, and in support of those policy objectives, TRC intends to offer the 3G spectrum licences in accordance with the following principles:

• Any qualified person including the incumbent operators and new entrants, shall be able to apply, on a transparent and equal basis without favouritism, to gain one of the offered 3G spectrum licences,
• No 3G spectrum licences will be reserved for any new entrant or any incumbent operator.
• TRC anticipates that the demand for 3G spectrum (radio frequencies in the 2.1GHz band) is likely to exceed the available supply. Thus, TRC requires a transparent and objective mechanism for determining who will be authorised to use the 3G spectrum in Jordan. To that end, TRC envisages granting the 3G spectrum licences by a competitive process.

It must be stressed that before making any final regulatory decision in this regard, TRC seeks the views and input of all interested parties on the grant of 3G spectrum licences in Jordan. All responses to this call for comments, which has a deadline of noon on July 25, 2008 will be given due consideration by TRC in its decision making process.

Source: Jordan TRC

MECOM was the platform upon which the GETMO Middle content delivery system was announced

One of the most exciting announcements made at MECOM 2008, epitomised the importance of convergence in the telecoms industry and beyond. Arvato Middle East Sales (AMES) and Abu Dhabi Media Company, a diversified media corporation, detailed plans to form a joint venture initiative aimed at bringing digital media solutions to the Middle East and north African regions.

The joint venture will launch a series of digital entertainment services under the GETMO brand name. GETMO Arabia will be a 50:50 joint venture firm based in Abu Dhabi and will deliver digital entertainment in the region by leveraging the significant local content archive of Abu Dhabi Media Company, the global content archive of AMES and the converged digital distribution platform GETMO.

The announcement of the formation of GETMO Arabia came after the signing of a memorandum of understanding between the Abu Dhabi Media Company and the Bertelsmann Group where a number of strategic initiatives were agreed. The announcement was accompanied by a showcase demonstration of digital media services that will be deployed. GETMO Arabia will offer its partners the ability to provide their customers with a combination of music, movies, games and infotainment services. These services will be available at any time on any device ranging from mobile phones and PCs connected with broadband to set-top boxes.

“GETMO unfetters content from devices,” commented Ricky Ghai, executive director of digital at Abu Dhabi Media Company. “With Apple’s model, one is required to own an Apple device in order to access the content, but in the case of GETMO, no such restrictions exist.” GETMO Arabia will offer services direct to consumers, allowing them to download music, video, movies, games and ringtones in English, Arabic and Asian languages to their mobile phones and home computers.

GETMO will also combine its offering with affiliate programmes, sponsorships or advertising campaigns of partner companies. “Content development, aggregation and delivery are becoming an important part of value creation in a changing media world,” stated Ghai. “So much so that it is transcending the media sector and that is part of the reason we were at a show like MECOM, where many of the exhibitors are network and telecoms providers.” Abu Dhabi Media Company is state-owned, having launched last June with an estimated capital of AED100 million (US$27 million).

Coming to a small screen near you
In a quest to raise consumer spending and develop innovative content services, telecoms operators should focus on their core business and partner with media firms, according to the head of new media at MBC Group, Ammar Bakkar. Bakkar believes that creating content requires a completely different mindset and investment strategy, compared to developing and marketing basic voice and data services.

“Partnerships with media companies seem more productive because they have already established their brand in the content association with people,” Bakkar said. “Users know media companies as the channel to receive premium content. Developing a new brand by operators will be a very difficult situation, so a partnership in my opinion is the solution.”

The Arabic language broadcaster is currently producing a 30-episode comedy series specifically for mobile handsets, which even for an established multimedia company brings new challenges.

“The experience wasn’t easy,” Bakkar admitted. “We found out that writing for mobile was different because you have to enjoy the comedy in only four minutes, you need to zoom in all the time, and also use different types of cuts to make the file light.”

Outsourcing gains
If the irrefutable march of convergence in the telecoms space was one recurring theme of MECOM 2008, another was the question of managed and outsourced services. It is a concept that has existed in one form or another for many years, but in the telecoms space in the Middle East, it has truly reached its true definition as heightened competition forces service providers and corporations in general to focus on their core businesses.

“In the provision of IT solutions, in many instances, there currently exists the problem of choice and subsequently an integration nightmare,” commented Akshay Lamba, former telecoms lead at KPMG. “What is required is the establishment of a strategic partnership relationship with as few trusted solutions partners as possible, rather than with a series of vendors.”

Akshay proposed three realms of outsourcing, namely – core processes, non-core processes and go-to-market initiatives. He identified that the greatest impact comes from a strategic partner that can be aligned with a business objective and is able to deliver core processes for an organisation at a higher efficiency platform.

Lamba is also a big believer in the availability of localised support and resources, which is to say IT solutions providers that have invested in building thought leadership and resources in the local market place on which their enterprise clients can depend. “There is a real opportunity for large local firms to deliver thought leadership and subsequently build credibility with their key customers,” Lamba claimed. “And this goes back to the building of a lasting relationship, a partnership in which both organisations are driven to reach a common goal and bring out the greatest efficiencies in each other.”

With a background of having envisaged and delivered such strategic partnerships in the telecoms and banking arena in markets across the globe, Lamba is in little doubt that innovative business and financial models are the keys to success in the space of long term strategic IT partnerships. He stressed that at the end of the day these partnerships are based on a strong foundation of mutually beneficial commercial models and the technology stack plays the role of enabler and accelerator for the business.

Turning orange with envy
“Growth is possible for incumbent operators,” stated Philippe Vogeleer, chief strategy officer for Orange Jordan. “Yes indeed, new shiny companies can achieve significant results, but so can we.”

Left: Ricky Ghai, Abu Dhabi Media Company, Right: Philippe Vogeleer, Orange Jordan

Never one to shy away from speaking his mind, Vogeleer disagreed with the proposition that it is impossible for those with a state or ministerial background to transform a company into a nimble, commercially minded organisation.

“Everybody says you should go greenfield, take new assets only and the like. But because the incumbents you are talking about are ready to change, you can make pretty significant leaders out of former monopolies,” Vogeleer asserted.

Growth is not only evident with Orange Jordan, which has used its brand as a tool to improve its image in the market, but with others incumbents such as Etisalat. “We had four brands, four different images served by four different types of people. Typically the average age of our mobile service was 27, while the average age in our fixed business was 47. These people had very different life experiences, and therefore had a very different way of treating and serving clients,” Vogeleer explained, describing the company’s three-year rebranding strategy, which commenced in the spring of 2007.

Vogeleer insisted that Orange’s piecemeal rebranding process has suited the Jordanian market as it has created a single identity from the four separate brands that the population was familiar with. While some branding experts suggest a “big bang” approach to rebranding, Orange Jordan’s management remains satisfied with its decision to spend more time in communicating the benefits of the new brand and vision.

“We thought our approach was better because we were already in Jordan, we were the largest communications provider and everyone knew us, so why would we want to kill some of our assets?,” Vogeleer contended. “We decided what we needed to do was to progressively communicate our new message, so that people would gradually see the brand – and gradually absorb the assets of the other brands we had. As far as I know, this has been one of the longest re-branding programmes ever undertaken, but one of the most successful as well.”

Going where the growth is
Wael El-Kabbany, vice president of business development for Middle East and Africa at BT says that with a 60 per cent growth rate in the region last year, the MEA has emerged as a key location for the UK telco. El-Kabbany describes BT as being in a ‘pull phase’, where its network solutions are coming very much in line with the aspirations of local companies and major enterprises planning to go international.

“This year at MECOM our value-added-proposition was business continuity. All of our clients have critical connectivity or communication requirements, and what we are trying to demonstrate is how to keep that platform up and running with minimum disruptions,” El-Kabbany stated.

Operating in 170 countries, BT is in a good position to assist national businesses extend their reach beyond their own borders, by providing the right network and infrastructure backbone. “The message we hear all the time from the local market is ‘we are expanding’, ‘we are going regional or global’,” El-Kabbany said. “But for a company to go regional or global, it has to change a lot of the ways it does business. It has to rely a lot more on global suppliers.”

Prior to MECOM, BT’s global advisory board met in Dubai for its annual board meeting, a destination chosen in preference to 169 other markets. “We are going where our growth is coming from and it proves our commitment to the region in which we are operating,” El-Kabbany commented.

Europe and the US remain the telco’s anchor markets where most of its existing revenue and profitability is generated, though it is keeping a close watch on the MEA region as many of its multinational clients set up local offices. “Remember, we are in a service industry so we go where are our customers go, and most of those customers are coming to the Middle East,” stated El-Kabbany. BT also does business with over 95 per cent of the telcos in Africa and carries a quarter of all of Africa’s telecoms traffic between African countries as well as the rest of the world.

Securing BlackBerry

As enterprise solutions become more widespread and remote access to corporate networks is established as a standard by large corporations, Khaled Kefel, director of sales for the Middle East, Research In Motion (RIM), has been evangelising the importance of ensuring data security in a mobile environment and the implications for users of BlackBerrys in particular.

Khaled Kefel, Research In Motion

He believes that traditional corporate security boundaries need to be expanded in order to match the new mobile communications reality. Research indicates that the average BlackBerry user processes 2,750 emails and 1,444 phone calls while on the move each year, meaning there are vast amounts of confidential and business-critical data passing back and forth over wireless networks.

“Smartphones operate largely outside corporate firewalls while maintaining an almost constant connection to corporate networks. Given these facts, network integrity and data protection are seen by RIM as being of paramount importance,” Kefel stated.

The UAE’s second service provider, du, chose MECOM to announce it was ready to allow its subscribers to utilise BlackBerry devices, having signed a distribution agreement with Alcatel- Lucent to provide integration and service deployment. The BlackBerry solution offered by du will be available on enterprise and consumer postpaid lines and enterprise prepaid lines, with consumer prepaid lines to follow in the near future.

Reaching out to the community

A robust area of discussion during MECOM was with regards the importance of operators engaging the community and recognising the positive contributions that corporates can make in improving the standard of living of local people.

Ross Cormack, CEO, Nawras, revealed some of the operator’s community initiatives, which have included the ‘goodwill convoy’ that took place during the holy month of Ramadan last year. The programme involved a convoy of vehicles visiting a number of community institutions and organisations, as well as other less fortunate people around the sultanate.

“Over a 10-day period our teams drove some 5,000 kilometres in four-wheel-drive vehicles around the countryside, doing all sorts of things for the institutions,” Cormack recalled. “From constructing buildings and providing coaches in some instances; to supplying IT centres and digital communications or whatever was needed at that institution.”

Cormack noted that the campaign was not only a success in terms of assisting the community, but also in terms of developing trust and building morale amongst Nawras employees.

Orange Jordan’s Vogeleer, said his company used its branding exercise as a way of connecting with Jordanian youth and families and creating national pride. “We devised social activities for people. We wanted to convince people that Orange was coming and that it was actually a positive thing for them,” Vogeleer recounted.

These activities included school visits and the creation of an iconic character and clothes that read “All for Jordan”, “Hello Jordan” and “Welcome to Jordan”, which children could own for themselves.

“Kids who could not afford good clothing could actually receive top-notch garments offered by Orange for free and which did not even mention our company name.”

The company also provided buses and Bedouin tents hosting PCs and wireless Internet access, where locals who did not have email addresses could vote for the ‘seven wonders of the world’ campaign and also received the Orange-branded clothing.

“The idea was that everyone would be doing something for the country and we created that sense of unity around the brand.”

Etisalcom’s Al Snan says the entry of third-party VoIP providers is inevitable in every telecoms market and incumbents and regulators ought to prepare for that

The region’s VoIP community assembled at a conference in Dubai last month, which reinforced the impression that there remains no universal strategy among regional regulators as to how best to accommodate the use of web-based and third-party provided VoIP services.

While most regulatory authorities allow VoIP for licensed operators, many restrictions remain, related to private corporate networks, peer-to-peer communications and control over access to Internet ports.

The UAE’s Telecommunications Regulatory Authority (TRA) currently allows Etisalat and du – the licensed incumbents – to provide VoIP services that originate and terminate within the country, but prohibits VoIP-based international phone calls. VoIP services over public Internet are also banned including services, software and hardware that utilises the Internet as a means of voice communication.

The TRA’s Mohammed Al Ramsi, manager for Next Generation Networks, said the regulator plans to modify its policy later this year to allow licensed operators to provide international calls using VoIP. This modification would be the first since VoIP policy was issued in December 2006 and looks to smooth the way for a more keenly awaited wider deregulation of VoIP in the country.

“We are also considering the implementation of VoIP over public Internet but with some requirements, such as emergency services will remain within the existing policy,” Al Ramsi stated. In contrast, Bahrain’s TRA opened up its VoIP market in 2005 and has since issued 33 international service licences (ISLs). While many of these are not operational, the majority of those that are provide VoIP services for international calls.

One such company is Etisalcom, which not only has an ISL concession but was also awarded licences for the provision of national fixed-line, international facilities, Internet services and value added services. It has also been looking to establish itself as a reseller in Oman, allowing it to operate as a mobile virtual network operator of sorts should it be able to reach agreement with a host network.

In Bahrain Etisalcom capitalises on its entirely IPbased infrastructure to offer international calling cards targeted towards the expatriate community, with discounts of up to 80 per cent to some destinations. For example, a BHD1 (US$2.65) call to India with Batelco used to last three or four minutes, while with Etisalcom that same amount now lasts for half an hour.

Etisalcom also launched the first national telephony-over-the- Internet service using Session Internet Protocol (SIP), which provides its own number range under the brand name ‘Etisl’. “You can have a Bahraini number where ever there is an Internet connection,” advises CEO, Rashed Al Snan. “You are not limited by the boundaries of your country – the boundary is the Internet. You can have a local number on your laptop and now on your mobile where there is a 3G network.”

Al Snan believes opportunity exists in the VoIP arena because international calls usually account for as much as 40 per cent of a traditional incumbent’s revenue stream and this can easily be penetrated by newcomers. “All you need is VoIP softswitches, gateways, interconnect and off you go,” he says. The impact of increasing competition on incumbent Batelco is clear with more than 60 per cent of Bahrain’s international minutes now being captured by VoIP carriers.

Al Snan says this is despite Batelco introducing its own low-cost service called ANIS to compete more

effectively with the new entrants in the market. “Sixty per cent of the international minutes go through the VoIP carriers, but VoIP only generates 40 per cent of the revenue,” Al Snan clarifies. “So the dominance remains in the case of the fixed-line services and that’s why many of us in Bahrain are going to introduce fixed-line services.”

Al Snan quotes figures from the Bahrain TRA that show international traffic in the kingdom continues to grow rapidly. From second quarter 2006 to second quarter 2007 traffic grew by 84 per cent, with calls to South Asian countries growing by 166 per cent.

International revenues from first quarter 2007 to second quarter 2007 grew 18 per cent to BHD16 million (US$42 million), with prepaid calling cards representing 39 per cent of total international revenue. Al Snan attributes Etisalcom’s operational efficiency, low overheads and fast product development to its success in providing low-cost calls and ability to compete against Batelco.

Rob Middlehurst, director of market and competition at TRA Bahrain, is satisfied with the country’s current competitive situation and confirms that his job as a regulator is to ensure consumers receive good quality services at a fair price.

TRA Bahrain’s Middlehurst believes his role as a regulator is to safeguard the consumer

“There was a comment about some governments saying we wait (to liberalise the market) where VoIP is banned. This is clearly designed to protect the revenue stream of the incumbents. I don’t want to see that,” Middlehurst states.

“I want to promote competition and I think in Bahrain we’ve demonstrated this quite well. We are open to competition, we want people to come in and we want operators to be successful.” However, Middlehurst says this approach has to be balanced with economically efficient investments. He also says VoIP in a regulatory world is very difficult to manage because there are no clear laws in every country and that even within the Arab Regulators’ Network (AREGNET) there is no common approach.

“The approach that sits within AREGNET is a collective thought and we go back to our countries to see if we can implement that. There is no directive that comes from it,” Middlehurst comments. “Each country has its own jurisdiction, each country has its own rules, each country will implement the way it sees fit,” he adds.

Other challenges are that in the traditional TDM world, quality is assured, whereas with IP that is not guaranteed. While IP is feature-rich it can also create problems with respect to interoperability. Middlehurst contends that location is fundamentally important because the TRA in Bahrain does not have jurisdiction outside of the country, though if Bahraini citizens are being targeted via public Internet then the carriers can be regulated and will require a licence.

Regulators often resort to blocking websites found on the public Internet in order to serve their regulatory purposes domestically and Middlehurst believes that developing the right model for regulating VoIP and other Internet-based applications will take time.

“If we rush it, I can guarantee regulators will get it wrong. The impact of that is huge,” Middlehurst advises. “From the consumers’ perspective, what they enjoy could be downgraded. From operators’ perspective, their ability to make profit could also be damaged. A pragmatic approach is the only way forward and there needs to be patience, some sharing of information and collaboration between regulators, operators and vendors to fully understand the implications,” he adds

Statistics

• The global VoIP services market reached US$15.8 billion in 2006, an increase of 66 per cent over 2005, and is on track to triple to US$48.9 billion by 2010
• There were almost 80 million VoIP subscribers worldwide in 2007, led by the Asia Pacific region
• The industry forecast growth in IP-based customer equipment
  compared to the TDM: IP PBXs are expected to grow to 66 per cent in 2011 compared to 40 per cent in 2007 Spending of IP PBXs compared to TDM PBXs are expected to grow from just more than 50 per cent to just below 100 per cent in 2011

Source: Infonetics Research

VoIP regulation in the region

Source: Various regulator’s website

The phenomenal subscription growth across the Middle East over recent years has seen with it an acceleration in network rollout and coverage as operators rush to meet the capacity needs of their growing subscriber base.

Devine Kofiloto is a senior consultant with Teleplan Consulting.

The subsequent increase in voice traffic and the take-up of wireless broadband will see backhaul, transmission and core networks come under further strain. In a region where many of the operators do not have adequate wireline infrastructure in place to backhaul cellular traffic, this bottleneck will become all the more pronounced with the current focus on data centric networks and the move towards converged service offerings.

Perhaps it comes as no surprise that HSDPA deployments in spite of their successful take-up rates in the major Gulf states are still largely confined to the major cities and have yet to see nationwide deployments. In general, operators’ focus has been on upgrading the access portion of their networks in order to drive usage and traffic, offering multiple access technologies such as EDGE, WCDMA, HSDPA (and more recently WiMAX) simultaneously on their networks.

Backhaul has not received as much attention. As data rates continue to improve with higher upload speeds from 3.6Mbps to 7.2Mbps and beyond, we are bound to witness a further acceleration in the take-up and adoption of more data hungry applications. Though the time frame for this anticipated growth in traffic is likely to be in the medium to long term, there is always the risk of underestimation. In contrast to the more mature markets where the wireline alternative will also absorb some of this surge in traffic volume and its subsequent capacity increase, in the Middle East this will largely fall to wireless infrastructure.

Though not likely to apply to greenfield operations, existing backhaul infrastructure is generally comprised of legacy solutions primarily designed to support voice traffic and therefore scale at a very high cost in order to handle bandwidth intensive data traffic.

Across Europe where mobile broadband has become a reality, the issue of bandwidth constraint is already catching up with the continent’s pure play mobile operators. The combination of plug and play USB modems and the availability of monthly flat rate tariffs have seen operators take up head to head competition with fixed-line operators for a share of the broadband market.

Experience so far, especially from Austria and Portugal, shows mobile broadband making significant gains over fixed line counterparts for the share of broadband net adds. Relying mainly on E1 lines for backhaul, the gathering momentum of mobile data is bringing along with it capacity issues. The need to build capacity redundancy, in future, appears to be dictating some mobile operators’ acquisition strategies.

Pure mobile play operator, Vodafone, is now moving to own fibre with its strategy to offload HSPA via DSL. Vodafone’s recent acquisition of Tele2’s wireline assets in Italy and France is evidence of this emerging trend. In Portugal, a market where mobile broadband net adds accounted for more than half the total broadband adds in 2007, Vodafone has gone on to deploy DSL. Investments in wireline will most likely make room for operators to offer their heavy mobile broadband users fixed alternatives so as to address their network problems.

Within the region, the move in this direction might have already begun. Mobily’s acquisition of Bayanat Al-Oula in 2007 can be interpreted as a move to resolve this bandwidth bottleneck through acquisition of a fibre optic backbone with the added bonus of offering an alternative access technology to its customer base. With Bayanat Al-Oula’s WiMAX network, Mobily can now offer broadband to its customers over both HSDPA and WiMAX, with a backbone to handle any consequent upsurge in future traffic volumes.

The alternatives for operators are many, but the challenge is in finding a cost effective solution so as to reduce the delivery cost per Mbit. In the interim, operators can look to solutions that optimise bandwidth and manage networks in congested situations, but in the longer term where do they go from here? Leasing capacity already accounts for almost 30 per cent of operators’ operational expenditure. Increasing leased capacity can only increase this expenditure, making it a less cost effective alternative.

Moreover leased capacity leaves the operator reliant on its wireline counterpart, usually the fixed line incumbent. Microwave links also offer an alternative, though limited spectrum remains an issue.

Investing in their own optical fibre transmissions would be the most reliable approach to support high speed data. However not only is this costly, it can also be difficult and challenging in already built-up areas.

An editorial by Devine Kofiloto, senior consultant with Teleplan Consulting

Amid a dazzling light display and a striking animation, the new logo and brand of ITS was launched in Sharm El Sheikh at the end of May. Managing director and general manager Khaled Faraj Al-Saeid stated that the event marked the milestone of ITS’ internal transformation to emerge as a “company without borders”.

“Today, we are transforming to become a strategic global technology partner,” stated Al-Saeid. “We changed so we could be aligned to the needs and demands of our customers. They too are changing from being regional operations to becoming global entities.”

Al-Saeid believes transformation has been part of the company’s success and reflects on the firm’s origins 27 years ago as a small operation supplying hardware, but which consistently adapted to the needs of the market by developing inhouse software applications, partnering with vendors and platform providers and combining it with enhanced service delivery.

In 1994, cellco MTC (now Zain) introduced GSM to Kuwait, becoming one of the first to do so in the region. ITS saw the opportunity to develop its Telecommunication Advanced Business Solution (TABS) to suit the enhanced requirements of operators launching mobile offerings. ITS developed the software part-time around its core business, and 14 years later, TABS is now its flagship application serving the complex billing requirements of operators including Zain, Etisalat, MTN, Orascom Telecom, Warid Telecom and Saudi Telecom.

ITS has also changed and incorporated other opportunities as it has grown and developed and the business now has three main arms of focus: telecommunications, banking (both conventional and Islamic) and higher education. The company also houses a portfolio of enterprise services, though the telecoms business remains by far the largest, comprising 65 per cent of ITS’ overall revenue.

Mohamed Zaki, assistant general manager, revealed that ITS’ rebranding programme started three years ago to reflect the company’s transformation from a local business to a global entity, with customers spanning the Middle East, north and west Africa, Pakistan and Malaysia.

“We felt that our visual image did not reflect the value that we are building and thought the old brand was a bit ‘soft’,” Zaki admits. “So we started by ensuring that the performance of different departments of the company were improving to reflect our new vision. We are now putting the brand forward to inspire the team to continue with their efforts, to go the extra mile and really deliver world class services to our customers. So the change of our logo marks the stage of improvement that we have achieved.”

Al-Saeid believes being a company that has developed from the region has been a significant differentiator from competitors, because not only has it been dealing with large players like Etisalat since 1988 and Zain since 1994, but it understands the language and culture of these companies’ individual markets.

“We have built a competency and overcome language barriers and cultural barriers. Among the Arab and Middle East countries it’s more or less a similar culture. But when we came to Africa and Asia, we established our operations over there and recruited people who are from that area, but who also understood the ITS culture and core values of the company,” Al-Saied states.

Zaki suggests that many global companies offering similar services have been unsuccessful in the Middle East because of a lack of local understanding. “There are brilliant technology companies that have tried to come to the region and implement projects, yet they failed miserably because they don’t have the adaptability to change the way they do business in this part of the world. We don’t just provide technology – IT projects always involve people and a lot of interaction has to take place with the users,” he says.

He believes this makes a lot of difference to the outcome and success of the project in general. “That’s why we say, ‘we deliver your technology and we understand your business language’,” Zaki comments.

ITS’ largest telecoms client, Zain Group, is a prime example of the cultural aspect and understanding of the region that has been essential for ITS’ development and highlights the company’s accessibility to the Middle East and Africa.

General manager Khaled Faraj Al-Saeid attributes ITS’ success to its adaptibility

“Other international companies are restricted by their time and resources in the region,” says Khaled Al Baz, group IT operations manager of Zain Group. “But ITS can provide us with assistance at any time if we need support. It makes a huge difference.”

ITS supplies Zain with its own TABS application but also provides servers, data storage and other services through partnerships with EMC, ITS2, Sun Microsystems, Verisign, Cisco and others.

Al Baz says Zain cannot afford any down time with its hardware or software applications and that ITS offers flexibility through the availability of technical support in local offices including in Bahrain, Iraq, Jordan and Sudan.

He also admits that costing is a big factor with ITS’ prices almost 50 per cent lower than competitors, though he admits this is mainly due to the history of Zain’s relationship spanning 14 years.

The Zain Group has operations in 22 countries but not all are currently using the TABS billing system. “We are in the process of introducing the billing systems to our partners in Africa [Celtel]. We need to ensure a smooth transition,” he adds.

Zain Bahrain also upgraded its existing TABS product suite late last year to the latest release with WiMAX billing support in line with the launch of its fixed and nomadic WiMAX service to residential and business customers across the kingdom.

As the offerings from telecoms providers grow, so do the complexities of the billing system and the flexibility required to accommodate each new service into the existing framework.

“For every product you see in the market where an operator launches a new service package, these are created somewhere in the backhaul system. But there are so many other pieces that are involved in this technology, that’s why partnership is important for us, such as for TABS to work we need to partner with Oracle,” Zaki explains.

Zaki says investment from partners is vital, not only financially but through the sharing of product knowledge to ensure that once products are ready, all the initial participants are ahead of the market together.

Going to market with an end-to-end solution is now a significant part of ITS’ business strategy, allowing the company to provide a total package to its clients including hardware, networking, servers, security and databases, as well as the original application software.

One partner that is benefiting significantly from this partnership is the Middle East branch of EMC, the global information infrastructure firm that is ITS’ partner of choice for storage and security applications and whom it has dealt with for the past five years.

According to Samir Achour, EMC’s channel manager for Middle East and north Africa, ITS is EMC’s major direct partner in the region and last year business from ITS contributed 10 per cent of EMC’s regional revenue. EMC’s regional growth stood at 80 per cent between 2006-2007, according to Achour, and therefore ITS grew its storage and information management business similarly.

Achour is also optimistic over the future growth of EMC’s subsidiary companies VMware, which deals with virtualisation; RSA, which deals with security; and Documentum which deals with content management. These are all areas of importance for telcos as their information and network-capacity requirements continue to expand.

ITS’ general manager Al-Saeid is keen to build on the company’s growth and successful partnerships to further enhance its offerings. With the growing convergence between telecommunications and banking in areas such as mobile payments and mobile international remittances, Al-Saeid is confident his company is well positioned to assist both telcos and banks in this transition. ITS currently commands 75 per cent of the market share for Islamic banking solutions and works with conventional banks as well.

“We believe the convergence will affect us positively because it will open up more business opportunities to us. Banks would like a company that deals with telecommunications companies as well, because that’s a delivery channel for them. It will help them by having an organisation that has a good understanding of the banking and telecommunications industries and that will be reflected in our product and our services to them.”

Al-Saeid expects the future direction of the company will reflect the rapid changes in the telecoms industry, keeping abreast with the required products and services and playing an active role in new technologies such as WiMAX. This will include expanding its operations support systems (OSS) business.

“The changes are happening so fast in telecoms – the industry needs more end-to-end solutions. We have found that operators would like to deal with just one party, they don’t want to deal with 15 or 20 solutions providers and we are positioning ourselves to be that one company.”

International Turnkey Systems (ITS)

Established: 1981
Head office: Kuwait
Annual revenue: US$150 million for 2007. Target for fiscal year ending September 2008 is US$250 million.
Number of employees: 2000
Regional offices: 19
Countries: Algeria, Bahrain, Bangladesh, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Syria, UAE, Yemen
Products and activities: Integrated IT solutions, including in-house developed software, for the telecommunications, higher education and banking (conventional and Islamic) sectors.

Sultan Bahabri describes Hits Telecom as a global telecoms 3.0 style company that can benefit from its lack of legacy infrastructure

On July 28, Hits Telecom is set to commercially launch its GSM network in the Brazilian city of Sao Paulo. It is arguably one of the furthest markets that a Gulf-based operator has dared to enter, and what makes the development of even greater interest is the fact that Hits Telecom is a relative novice to the telecoms operator space.

The Hits Telecom family already has a foothold in a number of African countries including Tanzania, Liberia, Equatorial Guinea and the Democratic Republic of Congo, though the company’s wider aspirations reach far beyond the Middle East and Africa.

Hits America, Hits Telecom’s operational company in that region of the world, is already looking for an additional three mobile licences in Brazil, with distribution being one of the key pillars to the operator’s further development.

Given the high levels of liquidity in the wider economies of the Gulf and specifically in the telecoms sector, it would be fair to question what kind of chance Hits Telecom has in acquiring prime telecoms real estate in the face of more experienced operators with deeper pockets competing for similar opportunities.

“The numbers we have forecast are achievable,” Sultan Bahabri, Hits Telecom’s chairman told Comm. “It is an ambitious task, though it is not hard to add 50 million subscribers at the premiums that are being paid at the moment.

The challenge is to add those 50 million subscribers at a fraction of the cost that is paid today.” Bahabri describes Hits Telecom as a ‘global 3.0’ type of company, representing a new breed of telecoms provider that is trying to achieve a global presence without legacy and is developing strategies in seven global markets currently.

Spain and China are also areas of interest for the company and Bahabri explains that discussions are at an advanced stage in both markets that could result in Hits Telecom entering both of them.

“We are looking to sign a deal in China that is involved in the laying of fibre across the country,” Bahabri reveals. “There is also an investment in Spain that is set to be announced.”

In terms of his company’s appetite to succeed in the face of strong international competitors, Bahabri believes that in some cases success can be a hindrance to further success and as such he sees an opportunity for nimble companies such as his, with little to lose reputation-wise and much to gain, as being well primed for future success.

Hits Telecom constructed a market review of global opportunities in cooperation with McKinsey & Company, a global management consulting firm, developing a go-to-market model, which its says leverages as many synergies in individual markets as possible. The companies analysed 35 operators in 38 countries and projected the opportunities they identified would enjoy double digit growth in the coming five years, at least.

Hits Africa’s Lahham says the assessment of a country’s economic strength and stability, as well as its telecoms penetration rate is of paramount importance prior to investment

In Tanzania, for example, Hits Africa possesses licences to offer services utilising both GSM as well as WiMAX technology. “We intend to launch first with a GSM network in the initial stages and at a later time we will rollout a WiMAX network for data services,” stated Talaat El Lahham, CEO of Hits Africa. “We are looking to launch the GSM network before the end of this year. We have already selected the vendor for the network deployment – Huawei – and we have completed all the network planning,” Lahham added.

The fact that mobile market penetration is 20 per cent or less in a number of the African markets in which Hits Africa already has operations or is set to enter leaves Bahabri confident that the impact of being the first entrant or a fourth entrant is limited. In the fourth quarter of 2008, for example, Hits Africa acquired a 65 per cent stake in a company licensed in the DRC, Congo Kinshasa. Mobile penetration is estimated at under 10 per cent and Hits Africa forecasts the market has an addressable penetration in the high 30s in terms of percentages.

There are currently four operators in DRC, but given its population of around 65 million inhabitants, Hits Africa believes the potential for a positive return on investment remains high. “We have undertaken deep market analysis and we were confronted with an interesting answer we were not expecting. Some operators offer what the market does not demand or require and in the DRC, the handset is a barrier to use,” asserts Bahabri.

“We are tapping into the lower third of the economic pyramid and have devised our own handset strategy.” Thus while Hits Africa is looking to combine offering subscribers what they want at compelling price points, Bahabri emphasises that it is not the company’s intention to become a price leader and undercut competitors as a core strategy. “We are not going to be engaged in a price war.

Simplicity of the offering and affordability in terms of the offer of better plans will be our focus,” Bahabri explains.

Bahabri claims Hits Telecom’s management has checked ego and emotion when it comes to selecting and making investments and that going forward many of the perceived wisdoms of this period will not necessarily apply at that time. In terms of its presence in Africa, Hits is looking to develop a converged network strategy, combining elements from both mobile as well as fixed-line access.

“There will be a lot of disintegration and distressed telecoms operators in the future,” Bahabri contends. “We are looking at this business with fresh eyes, and the quality of human capital is a key element here. Our core DNA is based on our human capital, group knowledge, a lean operating model, partnerships, as well as investment in futureready technology.”

Hits Telecom’s Mission

Hits Telecom is listed on the Kuwait Stock Exchange. Its major shareholders are Al Madina for Finance and Investment of Kuwait and Ebram Investments of Saudi Arabia. Hits Telecom’s capitalisation exceeds US$1 billion, with the company currently raising US$600 million for business development initiatives.

• Accessibility
• Affordability
• Simplicity
• Quality
• Innovation
• Human Capital
• Knowledge
• Future Ready
• Lean Operations
• Partnership
• Agility

Goal
15 million+ in Asia
12.5 million+ in Africa
12.5 million+ in Latin America
10 million+ in Europe
Total 50 million+ subscribers

Selected success factors

Affordable

• Pricing that is perceived a good value for money
• Community service telephony initiatives that provide communication services to those who cannot afford a traditional service

Simple

• Simple service that simplify lives
• Straightforward bundles and prices that are easy to understand
• Straightforward communication to inform consumers about the available services

Accessible

• Opening up access to communities that couldn’t otherwise have access to the service
• Ensuring SIM and recharge products are readily and easily available in the market

Innovation

• Innovation focused on simplification of services
• Seamless integration of available technologies
• Choice of technology driven by evolving customer needs and markets

Source: Hits Telecom

Dubai Internet City is able to process applications for licensing new companies in the hub in a matter of a few days

Turning off Dubai’s busy Sheikh Zayed Road and encountering the first round-about within the Dubai Internet City (DIC) compound, one would be mistaken for believing the physical infrastructure has been in place for at least a decade. This is not in fact the case, and like much of the bustling city in which it exists, DIC’s expansion in a few short years has been nothing short of tremendous.

Seven-and-a-half years on, the ICT hub now comprises 1,200 companies, many of which rank within the Fortune 500 list of global corporations. The growth in the number of companies being attracted to establish a representation in the DIC has remained strong over the period of its existence, averaging 25 per cent growth annually and there appears to be no reason this robust expansion will be curtailed anytime soon.

In 2007, for example, DIC attracted 112 new companies to the cluster, including telecoms and Internet giants BT and Google, respectively.

“Partnership is a key component of the relationship that is established between the DIC and representative companies hosted within the cluster,” comments Malek Al Malek, DIC’s executive director. “What has made us successful is a combination of the infrastructure we have in place as well as the guidance we offer in helping organisations establish their presence in the freezone, the country and beyond.”

Al Malek’s own path to the leadership position at DIC mirrors the development path of the cluster itself, with his having joined DIC in 2002, shortly after its establishment, as partner relations manager. He was elevated to the position of director of partner relations in 2005, and given his long exposure to the process of establishing and fostering strong working relationships with the cluster’s many tenants, Al Malek is well positioned to perpetuate the success the DIC has so far enjoyed.

“The rejection rate for applicants wanting to establish an office in DIC is very low,” Al Malek reveals. “This is not because we have low standards. It is in fact the opposite. We have very high standards in place, but we also offer applicants and potential applicants such detailed advice and guidance that should they meet the criteria as detailed in the application process, acceptance of the application is virtually assured.”

Given the presence of leading global ICT companies such as Microsoft, IBM, HP, Intel and Siemens, it is clear that the pedigree of the organisations present in DIC is of such a calibre as to inspire other, smaller companies to look to participate in the support and facilities offered by the cluster as well. DIC thus has a programme in place catering to the needs of such organisations, and is facilitated through firststeps@DIC

Dubai Internet City participated at MECOM 2008, where it reinforced its commitment to remaining a pre-eminent ICT cluster

The UAE’s chart-topping mobile penetration rate, which has been estimated at in excess of 120 per cent in certain quarters, has drawn a lot of attention to the level of growth and dynamism found in the communications sector. While not as frequently reported, but also worthy of mention, is the scope and development of the Internet in the country and the establishment of Internet Protocol as the basis of Next Generation Networks.

A survey by Amman-based Arab Advisors Group late last year revealed substantial adoption of e-commerce in the affluent and booming UAE economy. Fifty one-point-two per cent of Internet users interviewed in the UAE reported purchasing products and services online and through their mobile handsets over the 12 months to end-August 2007. Based on the survey findings, the Arab Advisors Group estimated e-commerce users in the UAE exceeded 1.16 million consumers who spent over AED4.2 billion (US$1.15 billion) in the 12 months to end-August.

“The booming economy of the UAE, its burgeoning population and wide adoption of the Internet, provide an ideal context for a thriving e-commerce scene. Our survey of Internet users in the UAE revealed a massive size for B2C e-commerce in the country.

This presents opportunities for global and regionale-commerce players to tap into this growing market,” commented Jawad Abbassi, founder and general manager of Arab Advisors Group.

“The majority of UAE e-commerce users make their payments through credit cards: 83.8 per cent of e-commerce users reported using credit cards as their e-commerce method of payment. Following credit cards, 31.7 per cent of e-commerce users reported using bank account transfers for their payments,” stated Hussam Barhoush, Arab Advisors research analyst.

Like the city in which it is based, Dubai Internet City has mushroomed in the
last seven years, adding 112 new companies in 2007 alone

Given the level of human and intellectual capital that resides within many of the companies that operate out of DIC, the UAE government has a clear policy in ensuring a level of skills and knowledge transfer occurs and that the economy of the country benefits from the presence of hi-tech organisations in the cluster.

“We have a mandate of creating a knowledge-based society in the UAE,” says Al Malek. “Engaging with companies based in DIC fosters this goal and again we come back to this word ‘partnership’ in terms of fostering the platform for the creation of the knowledge-based
society in the UAE.”

Given the identification of the Internet by governments across emerging markets as a key tool in helping narrow the digital divide, the establishment of smart cities and technology freezones have been on the rise.

In the Middle East and north Africa region, this is particularly true, with facilities such as Cairo’s Smart Village (see box: Smart Villages Company) attracting an admiral list of ICT and financial institution tenants including the country’s three mobile operators – Mobinil, Vodafone and Etisalat, a number of strategic government ministries, Microsoft Egypt, Arab Bank and EFG Hermes.

However, Al Malek does not consider the establishment of technology hubs in other parts of the region as a competitive threat to DIC, believing instead that Dubai enjoys a number of advantages that are likely to ensure its ongoing strategic importance.

“Dubai’s geographic importance is clearly an advantage, standing as it does at the crossroads of a number of geographic regions,” Al Malek says. “Combined with that is the level of communications infrastructure that is available in DIC, which was originally deployed by TECOM as the communications provider in Dubai’s freezones and which is now owned and operated by the country’s second licensed operator, du.”

Recent media reports in the UAE have suggested the move earlier this year by du to begin blocking third-party provided VoIP services may have a negative impact on the operational activities of companies in DIC and other economic clusters. The move is in line with the Telecommunications Regulatory Authority’s policy to restrict thirdparty provision of VoIP services in the UAE, and in April du came further in line with the regulator’s guidelines by blocking access to Internet sites the operator deemed to be in violation of the country’s laws or cultural norms.

Al Malek does not believe these developments have, or at any time, will constitute a hindrance to the business activities of companies operating in DIC. Driving efficiencies remains the order of the day in DIC, with approvals of companies’ applications achievable in a matter of days, and the process from making the initial application to becoming a DIC-based company through to moving into premises, is able to be completed in a matter of weeks.

About Dubai Internet City

Dubai Internet City (DIC) is a strategic base for companies targeting emerging markets in a vast region extending from the Middle East to the Indian subcontinent and Africa to the CIS countries, covering two billion people with a GDP of US$6.7 trillion.

DIC offers both 100 per cent tax exemption and 100 per cent business ownership. firststeps@DIC is a unique facility within Dubai Internet City that allows companies to lease short term office space while exploring business and market opportunities. Specifically designed for ICT companies that wish to operate from Dubai to conduct feasibility studies, evaluate future potential, collaborate on joint ventures and/or scout for new business in the region, this facility eliminates the need for long term investment in large office spaces, until they are fully ready to do so.

Acting as an exclusive business centre, firststeps@ DIC has a business oriented environment that allows new companies to create opportunities and also, to collaborate with others in the community. Many established companies and entrepreneurial ventures from around the world have leveraged firststeps@DIC to establish a foothold in the market, and then gone on to establish larger permanent offices.

Options

Companies can choose to lease space either for two to three months or for a year, during which period they can test the viability of their business plans before scaling up to fully-fledged operations.

With trade licence:

• One year
• Fully operational as branch or foreign company or FZ-LLC
• Scouting/ market analysis

Without trade licence:

• Two to three months
• Scouting/ market analysis

Benefits

firststeps@DIC offers ready-to-go, fully serviced offices with the latest infrastructure and a package of services including all administrative procedures involved in starting up. Companies can also take advantage of office support services including access to reception and office services, IP telephony and messaging services, collection and distribution of incoming mail, and meeting and conference facilities with presentation equipment.

All licensing and visa formalities are looked after by the firststeps@DIC team, who can also assist with relocation and settling-in support, including hotel or residential arrangements and translation services. firststeps@DIC also introduces new companies to networking within the community, placing them in an ideal position to tap into a host of potential business and business development opportunities.

Facilities

Companies joining firststeps@ DIC are offered choices in the size and location of private office spaces known as executive offices, each with access to the following facilities:

• Intelligent workspace, fully integrated high-end office solutions, Internet connectivity, IP telephony, network printers straight to the desktop, and office support
• Central reception area, collection and distribution of mail, meeting and conference rooms, and central equipment room
• Pantry with refreshments
• Regional research

Services at glance

• 24 hour security, and accommodation assistance
• Additional fax/modem/ analogue line, airport pickup, business address, business catering, business cards, call answering services
• Car rentals, central reception and waiting area
• Courier service, daily office cleaning
• Fax transmission (international), hotel booking and travel arrangements
• Internet connection, IP phone installation and maintenance
• Leisure and entertainment guide, and newspapers
• Office supplies and stationery, and parking spaces
• Photocopying, and postal service
• Programming, secretarial services, temporary driving licence, trade licence, and visit/residence visa

Optional services

• Meeting rooms, flip charts
• Projector, fax transmission mobile phone connections, and computer rentals.

Smart Villages Company

Smart Villages Company was founded in 2001 to lead and foster a branded chain of technology and business parks on the local and regional level.

Smart Village Cairo launched in 2003 as the first fully operational Technology and Business Park in Egypt. It accommodates multinational and local telecommunications and information technology companies, financial institutions and banks, together with governmental authorities on three million square metres in the west of Cairo. The mix of business services boosts the competitiveness and profitability of enterprises taking advantage of a fibre optic network, multi-source power supply, district cooling and heating redundant network plant.

Further amenities include: property management and maintenance, event management, and transportation services on a 24/7 basis. Complementary community and business services are available in the Smart Village Conference Hall, Smart Village Club, Smart Nursery, Smart School, postal and parcel services, travel agency, signboards production, copy centre, graphic and printing agency and the upcoming Smart Village Business Hotel. Currently, 12,000 professionals run the operations of more than 100 companies and are expected to reach 80,000 by the end of 2014. Since 2006, further ventures have been under development including Smart Village Cairo Financial District, Smart Village Damietta Business and Logistics Park and Smart Villages Company Consultancy Services, which offers advice on the local incentives to franchise the smart village model in different countries.

Source: Smart Village Company

“We are preparing to launch IPTV soon in Jordan, and one of the things we are looking at is how to price it in the face of free content availability,” commented Orange Jordan CEO Mickael Ghossein recently.

As of March 2008, there were around 100,000 ADSL subscribers in Jordan.

Atlantique holds majority stakes in seven telecoms operators in the Ivory Coast, Benin, Burkina Faso, Gabon, Niger, Togo and the Central African Republic. Etisalat operates Atlantique through a 10-year management contract that expires in April 2015.

Speaking earlier this month, Etisalat chairman, Mohammad Omran, said he expected African investments to contribute no less than 25 per cent to group revenue in three to four years.