Interview: Safdar Imam Hyder, senior costing specialist at Omantel, Oman: “US operators are doing it better and Omantel should learn its pricing lessons from them.”
Safdar Imam Hyder, senior costing specialist at Omantel is appearing on Day Two of the of the LTE World Summit, the premier 4G event for the telecoms industry, taking place on the 24th-26th June 2013 at the Amsterdam RAI, Netherlands. Ahead of the show Hyder tells us how device launches are boosting excitement for LTE in the region amongst consumers, how LTE is a revenue opportunity for operators and why RCS services are critical for operators to be able to compete with OTT.
What major developments have there been with regards to the LTE industry in your region this past year?
We are witnessing a broadband explosion in the MENA region, especially in the GCC where broadband revenue has been growing steadily at a double digit rate over the last three years. Telecoms revenue in the Middle East and North Africa (MENA) is expected to grow by 27 per cent between 2012 and 2017 according to Analysys Mason, mainly due to data on 3G and 4G networks rolling out faster and faster.
Since the first launch of LTE in Saudi Arabia in September 2011, LTE has been launched in all the GCC countries such as UAE, Qatar, Oman, Kuwait and Bahrain. Here in Oman, LTE deployment is in full swing with both the tier one operators Omantel and Nawras launching – Omantel using both TDD and FDD and Nawras using FDD. Roll-outs have been accelerated in 2013 after the TRA issued spectrum licenses to both the operators at 1.8GHz.
The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24th-26th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a brochure for the event.
Omantel, a pioneer LTE service provider in the Sultanate of Oman, has announced the launch of the second phase of its FDD 4G LTE network with coverage extended to new areas. With the latest LTE devices launches from Samsung, BlackBerry and Huawei, LTE fever is catching up fast with the general users in the Omani market, especially with the youth in the gaming and video applications. Expectations are high for launches of newer devices and Omantel is progressing well on expanding LTE 4G coverage to almost all major cities of Oman by the third Q313, with its vendor, Huawei.
Pricing for LTE is a controversial subject. Are operators getting it right?
I see LTE as an opportunity to boost ARPU for operators, but it all depends on pricing. Ever since the advent of the technology, billing and charging systems have been riding a wave of change. If Omantel is able to adapt to the new ecosystem we can lead our market to a new era of data connectivity and technological advancement; what is known as the “smart society”. This country has all potential parameters for developing as an e-society with one of the highest ratio of utilised bandwidth per user.
The biggest challenge that operators here are now facing is to get their charging models right. Having learned from their 3G experiences, we know that unlimited offers are a risky proposition in LTE era. In a recent survey, out of 65 operators polled, only three per cent are offering unlimited plans. The combination of new billing options and reluctance to offer unlimited plans is bringing about a new wave of pricing innovation.
Most of the pricing alternatives currently used for LTE are conventional in concept except those of shared plans. Simply, already implemented pricing schemes are being perfected and developed. However, LTE pricing is still in its infancy, evolving differently in various regions. As LTE pioneers European operators are wary of unlimited pricing and have opted for LTE rental premiums in the range of 50-80 per cent, with unit costs per megabyte of almost half compared to rest of the world.
US operators, after an initial fumble in the race to launch 4G networks, are developing new pricing models. They are choosing to be technology-agnostic and have opted to price the new generation telecoms access (mostly data) according to the number/type of connected devices and the data volume consumed. This provides users with an affordable way to use data either stationary or on-the-go and for operators to increase revenue per customer. In my opinion US operators are doing it better and Omantel should learn its pricing lessons from them.
Do you think that LTE offers great opportunities for monetisation or does it present challenges?
I think LTE or any high-speed mobile data network offers great opportunities for monetisation. This is because mankind is undergoing an amazing ‘mobile revolution’. Every day we see new upcoming developments in fields like mobile video, social media applications, mobile marketing, mobile health, mobile money and M2M, and all are made easier via LTE. Both the clients and consumers side have great business need for LTE and there is immense potential in that. But the challenges are fierce and unequal competition with OTT providers, whom are more focused and faster at executing on services and product development. As such, mobile operators are in great danger of becoming simply utility service providers with low-value dumb data pipes for third parties.
Do you believe that RCS services can genuinely help the industry compete with OTT?
Internet penetration is growing massively in Oman with more than two million users. OTT services such as Viber, PalTalk, Google Talk, MSN Messenger, and Yahoo Messenger have already been unblocked in Oman by a memo issued by the Oman TRA to all operators in April 2012 and are now easily accessible on desktop and mobile devices. Skype might also follow the suit.
RCS does provide a competitive advantage to MNOs by introducing IP-based communications services to their own platform and enabling them to compete with OTT service providers. Realising the importance of multi-service IP network in the lives of the people and the economy in general, regulators all over the world are aggressively protecting or promoting OTTs. As these OTT players eat into traditional telco revenues, technologies such as RCS provides a solid foundation for crafting a compelling user interface, building a brand around services and incorporating differentiating features that most operators traditionally do not seem to be good at.
According to Jeremy Green, a principal analyst in Ovum’s Telco Strategy Practice, by 2020 VoIP alone will have cost the global telecoms industry $479bn in lost revenues. Therefore the importance of adopting RCS is all the more critical.