Tuesday, February 08, 2005
Mobile Revolution in the Arab World
[via: http://www.roshan.af/news/arabtelecom.pdf]
Mobile phones take region by storm Visit people in the Middle East, and it is a near certainty that even those with relatively modest earnings will have a mobile phone — and that it will be the most expensive model they can afford. In many parts of the
Gulf, they will have more than one phone — some senior executives will have up to four — and they will be in almost constant use.
The use of mobile phones is most widespread in the Gulf states — in Saudi Arabia alone, the market is increasing by 200,000 a month — but the numbers are growing rapidly in every part of the region, from Palestine to Afghanistan.
By the end of the year, there are expected to be 52 million subscribers across the Middle East and Africa, with the United Arab Emirates and Kuwait having the highest penetration of about 80 percent.
The key to this rapid growth has been the transformation of the telecommunications market by the introduction of competition into markets that were in the past controlled by state-owned monoliths, whose service was poor and costs were high by international standards.
These nationalized companies still own the land lines and, in many countries, were responsible for the introduction of the first mobile markets. But in the past couple of years, governments have begun to introduce competition into the mobile sector, with the result that prices have fallen steeply and the range of services increased, which in turn stimulates demand.
‘‘The largest companies in the region are now offering world-class services,’’ says Karim Khoja, chief executive of Roshan, one of the two mobilephone operators in Afghanistan. ‘‘As liberalization and thus more competition take place, the result willbe even better services and lower prices.’’ Greater competition There is no doubt that competition is getting more intense. According to the consulting company the Arab Advisors Group, the toughest market is in Palestine, where the market is also covered by four Israeli operators, followed by Jordan and Morocco,
while the least competitive country is the UAE.
The company concluded that competition was most intense in those states where there were a number of participants, followed by those with duopolies and finally those with monopolies. ‘‘There is a clear indication that competition, or the threat of it,
has a major effect on the availability of packages that cater to different customer segments,’’ says the Arab Advisors Group.
However, the consulting group also notes that ownership was a less critical factor than the number of participants in the market. ‘‘There is no solid correlation between the level of privatization and the intensity of competition,’’ says the company’s recent report, ‘‘Competition Levels in Arab Cellular Markets
and Privatization Levels in Arab Cellular and Fixed Markets.’’
The key test now will be the extent to which the competition in the Gulf — which is about to be introduced in a number of countries, including Bahrain, Saudi Arabia and the UAE — has an impact on the quality of service. In many cases, new entrants have a particular
advantage because of the resentment, justified or
not, felt about the companies that had previously
held monopolies. New players are also helped by the
regulators. Gabriel Chahine, a principal at the consulting
company Booz, Allen, Hamilton, says:
‘‘What we are observing in recent Middle East liberalization
initiatives are attempts by the regulators
to facilitate the entry of alternative mobile-service
providers.’’
However, in Riyadh, Khaled Al Molhem—president
of Saudi Telecommunications (STC), which
has until now had a monopoly on both land and
mobile lines — says that he relishes that challenge of
competition from a consortium headed by the UAE
company, Etisalat. In addition, there is no doubt that
the speed at which the market is growing means
there will be plenty of scope for more than one
operator.
Giant steps in Bahrain
Bahrain has also taken giant steps toward liberalizing
its market, and the intensity of the competition
was demonstrated by MTC-Vodafone, which
is the challenger to the former monopoly, Batelco.
MTC-Vodafone launched its service at the end of
last year; it declared that it intended to leverage its
technological edge, offering new products for
Bahrain, including high-quality voice transmission
and high-speed data transfer.
Customers can now have a much wider choice of
packages, both prepaid and postpaid, and there is the
start of a trend to bill in 12-second rather than oneminute
segments. But it will be some time before the
price of handsets falls.
While in the West, handsets are virtually given
away, there is a very different culture in the Middle
East, where customers are prepared to pay for the
most sophisticated mobile phone they can afford
because it is seen as a status symbol.
According to Hakam Kanafani, chief executive of
Jawwal, the Palestinian cell-phone provider: ‘‘The
concept of giving telephones to customers in the
Middle East does not exist because no matter how
low your income is, the local purchasers believe that,
if they pay enough, their status will improve. Customers
are prepared to pay to have what they think is
the best technology they can afford.’’
NIGEL DU
Mobile phones take region by storm Visit people in the Middle East, and it is a near certainty that even those with relatively modest earnings will have a mobile phone — and that it will be the most expensive model they can afford. In many parts of the
Gulf, they will have more than one phone — some senior executives will have up to four — and they will be in almost constant use.
The use of mobile phones is most widespread in the Gulf states — in Saudi Arabia alone, the market is increasing by 200,000 a month — but the numbers are growing rapidly in every part of the region, from Palestine to Afghanistan.
By the end of the year, there are expected to be 52 million subscribers across the Middle East and Africa, with the United Arab Emirates and Kuwait having the highest penetration of about 80 percent.
The key to this rapid growth has been the transformation of the telecommunications market by the introduction of competition into markets that were in the past controlled by state-owned monoliths, whose service was poor and costs were high by international standards.
These nationalized companies still own the land lines and, in many countries, were responsible for the introduction of the first mobile markets. But in the past couple of years, governments have begun to introduce competition into the mobile sector, with the result that prices have fallen steeply and the range of services increased, which in turn stimulates demand.
‘‘The largest companies in the region are now offering world-class services,’’ says Karim Khoja, chief executive of Roshan, one of the two mobilephone operators in Afghanistan. ‘‘As liberalization and thus more competition take place, the result willbe even better services and lower prices.’’ Greater competition There is no doubt that competition is getting more intense. According to the consulting company the Arab Advisors Group, the toughest market is in Palestine, where the market is also covered by four Israeli operators, followed by Jordan and Morocco,
while the least competitive country is the UAE.
The company concluded that competition was most intense in those states where there were a number of participants, followed by those with duopolies and finally those with monopolies. ‘‘There is a clear indication that competition, or the threat of it,
has a major effect on the availability of packages that cater to different customer segments,’’ says the Arab Advisors Group.
However, the consulting group also notes that ownership was a less critical factor than the number of participants in the market. ‘‘There is no solid correlation between the level of privatization and the intensity of competition,’’ says the company’s recent report, ‘‘Competition Levels in Arab Cellular Markets
and Privatization Levels in Arab Cellular and Fixed Markets.’’
The key test now will be the extent to which the competition in the Gulf — which is about to be introduced in a number of countries, including Bahrain, Saudi Arabia and the UAE — has an impact on the quality of service. In many cases, new entrants have a particular
advantage because of the resentment, justified or
not, felt about the companies that had previously
held monopolies. New players are also helped by the
regulators. Gabriel Chahine, a principal at the consulting
company Booz, Allen, Hamilton, says:
‘‘What we are observing in recent Middle East liberalization
initiatives are attempts by the regulators
to facilitate the entry of alternative mobile-service
providers.’’
However, in Riyadh, Khaled Al Molhem—president
of Saudi Telecommunications (STC), which
has until now had a monopoly on both land and
mobile lines — says that he relishes that challenge of
competition from a consortium headed by the UAE
company, Etisalat. In addition, there is no doubt that
the speed at which the market is growing means
there will be plenty of scope for more than one
operator.
Giant steps in Bahrain
Bahrain has also taken giant steps toward liberalizing
its market, and the intensity of the competition
was demonstrated by MTC-Vodafone, which
is the challenger to the former monopoly, Batelco.
MTC-Vodafone launched its service at the end of
last year; it declared that it intended to leverage its
technological edge, offering new products for
Bahrain, including high-quality voice transmission
and high-speed data transfer.
Customers can now have a much wider choice of
packages, both prepaid and postpaid, and there is the
start of a trend to bill in 12-second rather than oneminute
segments. But it will be some time before the
price of handsets falls.
While in the West, handsets are virtually given
away, there is a very different culture in the Middle
East, where customers are prepared to pay for the
most sophisticated mobile phone they can afford
because it is seen as a status symbol.
According to Hakam Kanafani, chief executive of
Jawwal, the Palestinian cell-phone provider: ‘‘The
concept of giving telephones to customers in the
Middle East does not exist because no matter how
low your income is, the local purchasers believe that,
if they pay enough, their status will improve. Customers
are prepared to pay to have what they think is
the best technology they can afford.’’
NIGEL DU
# posted by Unknown : Tuesday, February 08, 2005
