I was quite surprised when I attended the now traditional Arab Advisors telecommunications conference this year. Not by the topics. Not by the content of the presentations. What was most surprising to me was the “mood” expressed publicly or in private by many of the senior managers present: for the first time in nearly ten years, I could not sense a clear direction about where the industry is going and what the industry needs to do. That was a first.
Philippe Vogeleer is an executive with Vodafone Group. He works on long-term development in the Middle East and Africa region
Let’s go back in time. 15 years ago, the Arab world was late in terms of telecom development compared to other regions. The challenge was clearly how to give the population access to voice telephony. This led to the (partial) liberalisation of the telecom markets of the region; then the creation of local champions; then their expansion with public and/or private funds; then full mobile penetration; then value-added services; then better devices; then more services; then the increase of operational costs with the offering of advanced services; and finally the reductions of margins that many operators are announcing currently.
We have witnessed the proliferation of strategic plans promising that each of the main telecom groups in the region would emerge as amongst the largest in the world. There’s nothing wrong with this aspiration. This fantastic ambition and commitment of resources led to significant successes in mobile, with penetration rates in some Arab countries growing to be on par or higher than the ones seen in some developed markets. We also saw some successes in fibre-optic deployments. However, the future is in data and the region still has data penetration levels that are well below what is seen in other parts of the world, with an average 14 per cent broadband penetration.
Looking ahead, while regulators consider ways to lower end-user prices, arguably without enough consideration for the extent of financing required to deploy high speed networks; and operators seem to be wondering how to carry terabytes of data at high speed while still making profit; the world is changing very quickly. Not only politically in some Arab countries, but more profoundly everywhere in the world, with young people in emerging markets gaining access to all sorts of information for the first time in their lives.
It has been calculated that global data traffic currently amounts to five exabytes of data per year, or 5,000,000 terabytes, or 5,000,000,000 gigabytes. It has also been estimated that this number will increase within five years to 130 exabytes of data per year, a huge increase in just five years, and operators in the Middle East do not appear ready for the data surge.
Beyond this lack of preparation, what is more obvious is the missed opportunity that it represents. On the same basis as the impact of mobile voice penetration has been calculated at an increase of 0.6-1.2 percentage points of GDP growth for every 10 percentage points of mobile penetration; the impact of a 10 per cent rise in broadband data transmission has been calculated as having a 1.2-1.4 percentage point increase on GDP growth.
Such a rise in GDP would represent opportunities for innovative entrepreneurs and millions of new jobs, which would be welcome in a region where over 50 per cent of the population is below the age of 25 years and where the overall unemployment rate is estimated at 26 per cent.
I believe this region needs to go back to having more ICT ambition if it does not want to fall behind and stay behind. It is time for the industry/ region to take objective stock of its achievements and, like it did 15 years ago, set long term policy objectives, and identify what is required to make sure that broadband objectives and customer needs are met. The region needs a new long-term development vision. Not in theory. Not in terms of telecom services, but in terms of activities enabled by telecom. No need to decide that we want to have the “best” possible services at the “most” reasonable cost, or that we want to offer “better” services.
Without metrics, that would just be telecom jargon, which would not trigger the type of long-term investments that are required in our industry. The region needs to consider how it can create the million jobs that are needed for its youth, and to enable economic activity through telecom. It then needs to engage with all constituents of society about concrete targets, for instance in terms of data speed per person per area. The industry then needs to create scenarios, and assess how much would each of these scenarios cost; and through a process of further engagement with society select the most suitable scenarios, and define how they should be funded and duly executed.
Difficult choices will have to be made such as between services offered in different parts of each country; or between services offered to clients paying more and clients paying less; or allowing telecom operators to keep extra profits, for instance in exchange of them committing to invest and/or support long term goals.
Challenges are present with respect to growing economies and driving up employment rates in emerging markets, though positive examples do exist. The South African authorities have, for instance, initiated a dialogue with the public over the achievements and pitfalls of liberation in the past 15 years since it was introduced. They have been interested in discussing what South Africa would look like in 2030, and how ICT can be used to support this transformation. Such long-term dialogue with all stakeholders is commendable.
I thank you if you have read this opinion piece this far. If you have, and it has contained matters you can relate to, please talk about it whenever and wherever you can, so that we start focusing on what we need to do tomorrow to create the future that this region strives towards. If you are still not convinced that this needs to happen, please read the following conclusions of an independent study published at the end of 2011 about sub-Saharan Africa:
“Releasing digital dividend spectrum to stakeholders willing and capable of achieving broadband development is likely to represent the creation of up to 27 million additional jobs over a five- to 10-year period. That would bring up to 40 million additional people out of poverty in that region, and allow the middle-class to grow dramatically.”
The above summary is just as pertinent for the Middle East as it is for Africa. It is up to us to decide whether we want to continue defining telecom in terms of the expansion of the things we are currently doing; or whether we want to redefine what we need to achieve, and then give ourselves the best chances to achieve it.
Philippe Vogeleer is an executive with Vodafone Group. He works on long-term development in the Middle East and Africa region. He is based in London. Prior to his current role Philippe spent seven years in the Middle East. The comments expressed in this article are Philippe Vogeleer’s alone. For further exchange of views, Philippe can be contacted at email@example.com