Comms MEA - June 2010 by ITP Business Publishing

JUNE 2010

Critical analysis for telecommunications executives

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Regulatory woes Kuwaiti players call for clearer industry regulation

Cable guys How undersea cables are transforming Africa

Security check

ACCESS EAST AFRICA Altech’s CEO explainss why ﬁxed telecom teechnology has a brighht future in Africa

Kai Wulff, CEO, Altech Stream East Africa

The importance of security in a converged world

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COMMENT 1

COMMENT By Roger Field

Virtual reality

ichard Branson, Britain’s most famous entrepreneur, was most likely sporting his characteristic grin as he jet-skied into Doha as part of the publicity drive for his latest venture, the launch of the Virgin Mobile brand in Qatar last month. The launch certainly merited the fanfare. Virgin Mobile Qatar, which was launched as a “brand licensing partnership” with Qtel, is likely to have a significant impact on the country’s telecoms sector, which remains at an early stage of development, with just two mobile operators, and a second fixed Virgin Mobile launched in Qatar last month in partnership with Qtel. Richard Branson (pictured) attended the opening ceremony in Doha. line operator only planned for the end of the year. The Qatar launch of the Virgin Mobile brand, Add to this the fact that MVNOs and “brand which is an established part of the mobile landscape licensing agreements” such as Virgin Mobile Qatar really in countries including the UK, Canada, South Africa do have the power to change market dynamics, and and India, caused quite a stir, with even some senior it is easy to see why the development merits further members of the Qtel team admitting that they had been scrutiny. Take Friendi Mobile in Oman for example. The kept in the dark about the launch. company has gained some 150,000 customers since But it did not take long for the excitement to give it launched last year, and the company’s CEO, Mikkel way to a more sober appraisal of exactly what had Vinter, thinks the operator could ultimately achieve a happened. And with a degree of ambiguity over the market share approaching 10%. exact definition of what an MVNO is, the decision to After paying $2.1 billion for its licence, it is vital let Virgin Mobile into Qatar – whether under a brand for Vodafone Qatar to gain traction quickly, and facing licencing agreement or as a fully-fledged MVNO – was competition from a powerful brand such as Virgin always going to upset the apple cart. Mobile is unlikely to help. It was certainly no great surprise that Grahame Certainly, if Qatar’s regulations are proven to allow Maher, CEO of Vodafone Qatar, felt cheated by the for such a venture, Qtel’s decision to enter the brand development. As head of the country’s second telco, licencing agreement with Virgin will be vindicated, and which launched its operations in the middle of last year, the operator has a good chance of halting the decline in Maher and his team have worked hard to establish the growth it has experienced since Vodafone Qatar entered company as a credible competitor against the might of the market. If taking legal action fails, Vodafone Qatar incumbent operator Qtel. may have to follow suit and look for a “brand licencing” Despite having gained more than 470,000 partner to help it address segments of the population subscribers since launching, Vodafone Qatar remains that it otherwise misses. at an early stage of development, with profitability But whatever happens in Qatar, the development is some way off, which makes it easy to understand a stark reminder to any telco, whether MNO or MVNO, Maher’s annoyance at a disruptive model appearing in of the risks they can face when entering new markets such a small market, especially when that model could where regulations are open to varying interpretations. potentially be in breach of licencing agreements. roger.field@itp.com

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CONTENTS

THIS CommsMEA | June 2010 www.itp.net

Kuwait holds strong potential for mobile broadband, despite a lack of regulation.

Altech Stream East Africa’s Kai Wulff sees a clear case for fixed infrastructure in Africa.

NEWS • • • • • •

Batelco’s S Tel wins Indian 3G spectrum Jordanian regulator prepares for LTE Financial discrepancies a risk for Etisalat Zain Group’s profits decline 31% in Q1 Nawras launches fixed services Du approves plan to increase capital

PROFILE

Eye on Kuwait A lack of clear telecoms regulation continues to create problems for Kuwait’s telcos, although industry players see huge potential for mobile broadband.

ANALYSIS

Vodafone Qatar to sue ictQatar Qatar’s second mobile operator takes aim at the regulator over its decision to allow Virgin Mobile to launch services in the Gulf state, using the network of incumbent operator Qtel.

OPINION

Converged security With ever more devices connected to the internet, and more people having access to company data, Du’s Walid Kamal stresses the need for action on security.

Du’s Walid Kamal argues the case for converged security.

CommsMEA | November 2007 www.itp.net

CONTENTS

CommsMEA | June 2010 www.itp.net

Avaya’s Simon Woollett discusses the growing potential of unified communications.

31 INTERVIEW

Bridging the broadband divide: Zain’s chief commercial officer assesses the role of HSPA technology.

Subsea cables Mike Last of WIOCC tells CommsMEA about the completion of the EASSy undersea cable, and what it means for operators and end users in East Africa.

RESEARCH

Key data and trends A roundup of regional and global telecoms research, including Arab Advisors’ cellular price survey, and opportunities in cloud computing.

NGNs at a national level can have a huge impact on economies and society, according to experts at Booz & Co.

CommsMEA | November 2007 www.itp.net

FOCUS

Broadband technology Zain’s chief commercial officer explains the development and benefits of HSPA+ at the telco and the possible evolution to LTE tech.

BACKCHAT

Meeting demand Gary Smith, CEO of networking specialist Ciena, tells CommsMEA about the company’s renewed focus on the Middle East and African telecom sector.

NEWS BRIEFS Jordanian regulator prepares for LTE Jordan’s four main telecom operators are expected to submit proposals for LTE licences, after the country’s telecom regulator said it had set out standards and conditions for LTE. The document, which includes information such as prices for LTE spectrum, is expected to be presented soon to Jordan’s main operators, Orange Jordan, Zain, Umniah and Express, according to a report from Telegeography. Fadi Kawar, chief commissioner of the TRC said that the introduction of LTE services would not violate Orange’s status as Jordan’s exclusive 3G provider. The operator, which launched 3G services in March 2010 has exclusive 3G rights until March 2011.

Batelco affiliate S Tel wins 3G spectrum in India launched services in Orissa, Bihar and Himachal Pradesh in December 2009, had already built up a customer base of more than 1.4 million subscribers in four months of operation. Kaliaropoulos added that Batelco’s investment in S Tel was an important part of the group’s expansion strategy in wireless markets and fitted well “with the long term plans to diversify Batelco’s geographical footprint and increase its scale”. STel and Etisalat DB were among nine companies that originally submitted applications to bid for 3G spectrum in India. India’s 3G auction, which closed in May, was largely dominated by bids from Bharti Airtel, Reliance Communications and Aircel, and generated 677 billion rupees (Dh52.81bn) for the government, almost double the amount analysts had forecast.

31%

which abandoned the auction mid way through. Etisalat’s Indian subsidiary, Etisalat DB, withdrew from the auction after bidding surpassed US$2 billion, according to a Kaliaropoulos said 3G services are vital to S Tel’s strategy. senior company official, UAE daily The Bahrain’s Batelco Group National, reported. achieved a victory in India in Batelco group CEO, Peter May when its Indian affiliate S Tel secured 3G spectrum for its Kaliaropoulos said that Batelco operations in Orissa, Bihar and was pleased S Tel had been successful in the auction, which Himachal Pradesh. S Tel, which is 42.7% owned raised a total of $14.6 billion for the Indian government. by Batelco Group, will pay “Securing 3G spectrum in $76 million for the spectrum, these three markets is a critical covering three circles. element of S Tel’s strategy The company will compete to position itself as a leading against operators including company in India’s fastest Bharti Airtel, Idea Cellular, Reliance Telecom and Aircel in growing rural sector and meet anticipated strong demand for its 3G coverage areas. mobile internet services in the The development gives Batelco and edge over Etisalat, next few years,” he said. He added that S Tel, which its Middle East rival in India,

The decline in first quarter profits experienced by Kuwait’s Zain Group.

Saudi rules out ban on BlackBerry Messenger - report

MONTH IN NUMBERS

8% Internet penetration in Africa at the end of 2009, according to figures from the ITU.

AED30 million The sum Etisalat was ordered to pay a UAE national in a patent dispute.

$3.2 billion The growth that the UAE’s TRA expects to see in the country’s ICT sector in 2010

CommsMEA | June 2010 www.itp.net

Saudi Arabia’s telecoms watchdog has ruled out banning the messenger service from BlackBerry, according to a report. The Arab News daily reported late in May that the Kingdom’s Communications and Information Technology Commission (CITC) said there was no reason to do so if only a minority had misused the facility. “We look at the needs of society as well as the regulatory aspects of the

BlackBerry service in a balanced manner. The organisational framework does not permit anyone to exploit the service. Therefore, there is no need for stopping the service,” said deputy governor of CITC for legal matters Daifallah Al-Zahrani. He was addressing participants of a workshop on cyber crime in Dammam. Earlier this year, there were rumours that BlackBerry Messenger (BBM) would be banned in the kingdom

following reports that CITC had asked the device’s Canadian manufacturer Research in Motion (RIM) to allow the regulator to be able to monitor messages sent via the service. The Arab News daily had quoted the Al Watan newspaper as saying that the CITC wanted access to monitor the messages in the BlackBerry Messenger (BBM) network, threatening to shut down the service for noncompliance.

NEWS 7

Etisalat board took $10.2m in bonuses Salary and bonus discrepancies expose telco to “severe financial risk”, report states

Salary and bonus discrepancies expose Etisalat to financial risk, according to the SAI.

A UAE Government report has revealed that the chairman and board members of UAE telco Etisalat paid themselves a total of AED37.5m ($10.2m) in bonuses in 2009, and has noted a string of discrepancies in bonuses and salaries at the country’s largest telecoms operator. The State Audit Institution (SAI) found that Etisalat’s salary system had integral weaknesses and lacked necessary safeguards to prevent exploitation, according to Arabic daily Emarat Al Youm. It said that those safeguards that are in place are not enforced, exposing the company to “severe financial risks”. According to the newspaper the SAI report said one employee

had been able to take advantage of the system to embezzle a total of AED27m, and also noted that former Etisalat employees whose service had been terminated, still owed the company more than AED2.93m as of the end of 2008. The report also highlighted an incident where the telco approved an AED2m ($544,000) loan to an employee who wanted to buy a house, even though the maximum limit for his grade of employment should have limited his loan to AED1m. The loan was in clear violation of Article 722 of the company’s human resources regulations, the newspaper said. According to the SAI’s findings, the telco made an AED1.24bn loss across ten of its

overseas operations in 2009. By the end of that year, the value of loans and debts granted by Etisalat to affiliate companies totalled AED10bn, which constituted 35% of the value of Etisalat’s investment in these companies. The SAI said these were granted without the proper collateral, which put company finances at risk. The newspaper said the SAI report recommended that Etisalat must conduct cost effectiveness measures, and suggested that Etisalat overpaid for a number of its overseas acquisitions, including for Ivory Coast-based Atlantique Telecom, Tanzania’s Zanzibar Telecom (Zantel), Canar Telecommunications Company in Sudan, and Egypt Telecom. According to the newspaper, the SAI urged that any increase in investment must be based on fair value of the assets of the target company, and said that in the future revenues from the new companies should correspond to the prices paid for them. Responding to the report, Etisalat said that all bonuses had been approved by the UAE government.

Zain Group’s profit declines by 31% in first quarter Kuwait based Zain Group reported a 31% decline in its net profit for its Middle East operations in the first quarter of 2010, as a major restructuring of its operations and the sale of most of its African assets continued to weigh on the company. The company reported net income KWD 51.55 (US$ 179.1 million) for the first quarter of 2010, a 31% decline compared

with the KWD 75.7 million dinars ($261 million) it reported in the same period last year. Zain’s revenues increased by 11% in the first quarter of 2010, to reach KWD 329.7 million (US$ 1.146 billion), compared with the same period in 2009. Nabeel Bin Salamah, CEO, Zain Group, said: “With the sale of the Zain Africa assets about to be concluded, the company will re-engineer

itself while at the same time focusing its resources on further increasing market leadership in the Middle East, offering customers the latest technologies and quality mobile services.” The telco recently agreed to sell 15 of its African operators to Bharti Airtel, dramatically reducing the size of the group and leaving it with just two operations in Africa.

BRIEFS Viva seals $270m vendor financing deal Viva, the Kuwaiti mobile operation launched by STC in 2008, has signed a five-year, $270 million vendor financing deal Huawei. Viva, which competes with Zain and Wataniya in Kuwait, said in a statement that the deal would help fund network expansion using the “latest technologies”. Vendor financing deals are becoming increasingly popular as a means for vendors to increase sales and for operators to expand their networks without the need for direct bank loans. In March, UAE operator Du struck a EUR200 million ($269 million) vendor financing agreement with Nokia Siemens Networks, in a deal backed by Finnvera, a Finnish financing company. Qatar inks satellite deal ICT Qatar, the information and communications department of the Qatari government, has signed a deal with French satellite company Eutelsat to launch and operate a satellite to provide broadcast, enterprise communications and government services across the Middle East, North Africa and Central Asia. The new satellite, which is due to be launched in 2012, will provide additional coverage across the Middle East, North Africa and Central Asia to follow-on from Eutelsat’s Eurobird 2 satellite, which is currently operated at 25.5° East.

CommsMEA | June 2010 www.itp.net

NEWS 9

Du approves plan to increase capital to $1.24bn Extra capital will be raised in rights issue within three months says Du CEO Emirates Integrated Telecommunications Company, the UAE-telecoms operator better known as Du, has approved a plan to increase its capital to AED4.57bn ($1.24bn) by selling 571.4million shares at AED1.75 ($0.47) each, the company’s CEO announced in May. The extra capital will be raised through a rights issue, which aims to raise AED1bn ($272m), will be implemented within three months, Du told the Dubai securities exchange. “This morning [May 11] the extraordinary general assembly of shareholders agreed on the proposition of the board of directors to increase the capital from four billion to AED4,571,428, corresponding to issuing 571,428 new shares with a nominal value of AED1 and a subscription price of AED1.75,” Du’s CEO Osman Sultan said during a press call on May 11. Sultan said the price corresponded to “a 33 percent discount on the closing price of [the previous Monday] and

a 38 percent discount on the closing price before the rights issue announcement.” On the Monday referred to by Sultan, Du’s price on the Dubai Financial Market closed at AED2.55. He also confirmed that the extra capital would be used for infrastructural development and would not be used for any expansion of acquisitions outside the UAE. Du CEO Osman Sultan said that the capital would be used for Du also announced infrastructural development in the UAE. in early May that its net for the quarter of AED1.58bn profit before royalty for the first ($430m) showed a 36 percent quarter of 2010 had more than increase compared to Q1 2009 quadrupled, compared to the and a three percent increase same period last year. compared to Q4 last year. The UAE’s second telecom Company chiefs said the operator said profit was revenue figure for the first quarter AED194m ($52.8m) versus of this year was the highest so AED47m ($12.79m) in the first far recorded. The company said quarter of 2009. Compared to the it added 262,000 active mobile previous quarter, net profit was subscribers during the quarter up by fifteen percent, Du said in taking the total at quarter end to a statement. 3,739,000. It added that total revenue

UAE telco market set for $3.2bn growth in 2010 The UAE’s telecom regulator said it was upbeat about growth of the sector, which has doubled in value since 2005 The overall ICT market in UAE is set to grow by about AED12 billion ($3.2 billion) in 2010, representing a growth rate of about 20%, with the smart phone sector set to double this year, according to Mohamed Nasser Al Ghanim, director general of the UAE’s telecoms regulator (TRA). Al Ghanim, who made

the comments at Mecom, a telecoms event held in Abu Dhabi in May, said that the UAE’s AED60 billion telecoms market was set to grow by 20% annually, with smart devices “at the leading edge”. He added that the telecoms market had already grown in value from AED30 billion in 2005 to reach its current value of about AED60 billion. Al Ghanim said that the TRA planned to help further develop the market

by regulating to combat dominance in the sector. “We want the market to thrive and we will only create regulation where there is dominance,” Al Ghanim said. “We want to develop a flexible competitive framework, which encourages the development of new products. However, when new packages are launched, we will ensure that complete transparency is in place to avoid misleading claims,” he added.

BRIEFS Turkcell expands mobile broadband offering Turkey’s biggest mobile operator Turkcell has deployed a next generation IP network based on Cisco’s Carrier Routing System (CRS) platform. Turkcell invested in the network to help manage its 3G traffic and to “build the foundation” for the nextgeneration mobile Internet in Turkey, according to US networking giant, Cisco. Turkcell recently tested enhanced mobile services using Cisco CRS, achieving download speeds of up to 42.2 megabits per second. The operator also tested LTE at speeds of up to 170Mbps. By upgrading its core network with CRS, Turkcell will be able to launch valueadded services such as mobile TV, video on demand (VoD) and media-rich applications. Etisalat Misr upgrades HSPA+ network Egyptian mobile operator Etisalat Misr said it has launched the second phase of its HSPA+ network deployment. The country’s third mobile operator, which is working with Huawei on the project, said the deployment will give subscribers mobile broadband download speeds of up to 42Mbps, compared with 21Mbps speeds under the first phase of the network. The service will be available to customers “in the coming few months on a wide scale”, Etisalat Misr said in a statement.

CommsMEA | June 2010 www.itp.net

NEWS 11

Nawras launches fixed services for business Omantel gets first taste of fixed competition as Nawras launches services for business non-geographical numbering, which allows businesses to keep the same fixed numbers after relocating. Nawras is also offering SIP trunks, giving customers access to more voice channels Khalid Al-Mahmoud said Nawras will focus on quality and after than currently being sales service to compete in the fixed line sector. offered through legacy systems. Spanning most of the country, Omani telco Nawras has three fibre-optic cable rings make launched fixed voice and data up the backbone network for the services for business customers in Oman, giving incumbent operator new fixed services. Corporate customers will be served with Omantel its first taste of fixed their own fibre connection, while competition. WiMAX will connect more The new services include high remote areas with Plug ‘n’ Play speed broadband data and voice wireless to almost all other small services suitable for all sizes of and medium size businesses. business. The news came just weeks Nawras said in a statement after Ross Cormack, CEO of that it hopes to differentiate Nawras, Oman’s second operator, its service though professional said the company planned account management and to invest 150 million Omani “dependable after sales support.” rials ($390 million) in the next Khalid Al-Mahmoud, two years to expand fixed line Nawras’ chief operating officer, services as it seeks to take a slice said that the fixed services of the country’s fixed voice and include new initiatives including

data networks from incumbent Omantel. Cormack said the investment would be made in “infrastructure as well as investment in manpower resources for our planned fixed telephone services”, according to Reuters. Nawras, which won Oman’s second fixed licence back in November 2008, started a preregistration campaign last month to encourage people to sign up for Nawras’ fixed home broadband services, which are expected to launch by the middle of the year. The company encouraged people to pre-register by offering prizes including broadband modems as well as Nawras service vouchers. Nawras’ fixed service network, which is being deployed using a combination of WiMAX and fibre, is expected to cover more than 50% of families by June 2010, and 80% of families by mid-2011, the company said. At present, only 10% of households in Oman subscribe to a fixed broadband service, according to Cormack.

Wataniya Palestine appoints new chief executive Wataniya Palestine, a subsidiary of Qatar’s Qtel Group, has appointed Dr. Bassam Hannoun as its new CEO. Hannoun, who joins Wataniya after heading up Qtel’s Jordanian WiMAX subsidiary wi-tribe, replaces Allan Richardson, who launched Wataniya Palestine as the West Bank’s second mobile operator in November 2009. Hannoun, who has a PhD in telecoms engineering, has commercial and technical

experience of developing 2G, 3G and WiMAX operations in the Middle East and Europe. He joined wi-tribe in 2007 and was instrumental in setting up its infrastructure and launching the firm. Before becoming CEO at wi-tribe Jordan, Hannoun worked as chief sales officer for Orange Jordan. In Europe, Hannoun was responsible for the planning and optimisation of GSM networks across several different countries.

Dr. Nasser Marafih, CEO of Qtel Group and a board member of Wataniya Palestine, said: “We are very thankful for the leadership of Allan Richardson, who led the successful preparation and launch of Wataniya’s mobile service. We are equally pleased with the appointment of Dr. Hannoun, who has the talent and experience to lead Wataniya Palestine to the next level of serving customers in Palestine.”

BRIEFS Türk Telekom expands its reach in Europe Türk Telekom, Turkey’s incumbent telecom operator, has agreed to acquire Invitel International, a cable operator servicing central and south eastern Europe. Türk Telekom is set to make the acquisition from Invitel Holdings for EUR221 million ($273.8 million), with a total cash consideration of about EUR197 million. Invitel International is a provider of wholesale data and capacity services in central and south-eastern Europe. The company owns and operates a 27,000km optical fibre network and has a presence in 16 countries. Paul Doany, CEO, Türk Telekom, told CommsMEA that the acquisition could allow the operator to become an important hub for data services, given Turkey’s geographic position between Europe and the Middle East. “We could potentially become a very important hub here, and not just for the carriage of data.” He said that the acquisition could open up the opportunity to offer services such as cloud computing in the next few years. “Istanbul can become a very important data centre and a hosting hub for these types of services,” he said. The acquisition will allow Türk Telekom to connect data traffic within the central eastern European region, and from Turkey, Middle East and Asian markets to Western Europe and the USA.

CommsMEA | June 2010 www.itp.net

NEWS BRIEFS Algeria continues to block Orascom branch sale Algeria’s government remains intent on preventing Orascom Telecom from selling Djezzy, its Algerian mobile phone unit, to MTN Group. The ongoing problem could mean an end to the proposed deal between Orascom and MTN, which could lead to the creation of the world’s third biggest mobile phone operator. Hachemi Djaaboub, Algeria’s Trade Minister, said that the Algerian state “holds to its right of pre-emption over the sale of Djezzy and will not allow its purchase by the South African firm MTN,” according to APS, Algeria’s official news agency. Algeria initially blocked the deal in April and indicated that it was interested in buying Orascom’s Algerian unit itself. Vodafone mulls exit from Egyptian operation UK mobile operator Vodafone is considering exiting its Egyptian operation Vodafone Egypt, in which it has a 55% stake. The talks occurred after Vodafone was approached by its partner, Telecom Egypt, which owns a 45% stake in the operation, the Financial Times reported. The report added that the talks could indicate a change of direction at Vodafone, with the company’s CEO Vittorio Colao apparently keen to streamline the company, which is increasingly being weighed down by some of its foreign assets. In May, Vodafone wrote down the value of its Indian business by £2.3bn.

CommsMEA | June 2010 www.itp.net

Gulf Bridge International extends reach in Asia Qatar’s Gulf Bridge bolsters international connectivity with key deals in Asia “As one of India’s leading internet communications companies, Sify is well placed to ensure that GBI’s cable system is fully integrated into the rapidly expanding Indian domestic market,” GBI’s deals will expand its reach to south east Asia and beyond. said Hamad Al Mannai, executive Qatar-based cable operator vice chairman of GBI. Gulf Bridge International “Access to the undersea (GBI) struck two deals in May cable system will allow SIFY that expand its reach in India Technologies to serve the and South East Asia. emerging markets in Middle The company entered into East as well as African region, a deal with Sify Technologies which are also amongst the to land its subsea cable system fastest growing economies in in India, and also announced the world,” said Raju Vegesna, a partnership with Pacnet, a CEO and managing director, cable operator headquartered Sify Technologies. in Hong Kong and Singapore. GBI also announced that it The agreement with Sify had entered a partnership with Technologies, which aims to strengthen the communications Pacnet, an Asian cable operator which owns and operates EACinfrastructure between India C2C, a fibre optic submarine and the Middle East, will see cable network spanning 36,800 the Indian company provide km across Asia, as well as EAC a landing station for GBI’s Pacific, a 9,620 km Transsubmarine cable in Mumbai.

Pacific cable connecting Japan and the US. The two companies said that the partnership will extend their international connectivity and provide a greater range of services for customers. GBI’s Hamad Al Mannai, said the deal would enable his company to provide an end to end solution for its customers in the wider region of the Middle East and Asia. Bill Barney, CEO, Pacnet added: “Our partnership with GBI will deliver high-speed connectivity between Asia and the Gulf region. This will allow our customers across Asia to directly connect to and tap the growing economies in the Middle East, while enabling businesses there to access the rapidly growing economies of Asia.” Pacnet, which has headquarters in Hong Kong and Singapore, is one of Asia’s leading independent telecoms service provider, formed from the operational merger of Asia Netcom and Pacific Internet.

Du deal slammed by State Audit Institution The UAE government has criticised the country’s second telecom operator, Du, for signing a 20-year deal with a retailer which has left the telco facing a huge bill. A report by the State Audit Institution (SAI) reveals that Du signed a 20-year deal with Axiom Telecom, which would guarantee the retailer exclusive rights to sell Du services and products. Axiom, it was agreed, would take a

three percent cut of all sales. According to Arabic daily Emarat Al Youm, the SAI report says that the telco later changed the agreement to allow other retailers to sell Du products. In return, it was forced to agree to pay an additional three percent per annum to Axiom for the remainder of the 20-year contract. The auditor said that in 2008 alone, the value of the extra three percent amounted

to AED31m ($8.44m). The newspaper reports that the SAI has now ordered an investigation into who was responsible for agreeing to the 20-year term of the contract, and warned that the initial deal had exposed Du to “huge financial risks”. The SAI report also found that Du relied on external contractors, and the bidding process for the outsourcing of work was deeply flawed.

NEWS 13

Twitter iPhone app could irk developers Micro-blogging site releases application that can be downloaded free from iTunes

The Twitter application for Apple iPhone and iPod Touch could alienate third party developers.

Micro-blogging site Twitter has released the official Twitter application for Apple iPhones that can be downloaded for free from iTunes. Experts however warn that the move risks alienating third-party developers. According to principal analyst Eden Zoller from research firm Ovum, Twitter is walking a fine line at the moment. “...Twitter needs to be very careful not to alienate the developer community as they drive innovation for the service and also traffic. It should be

remembered that applications account for 75% of all tweets,” said Zoller. “Developers do not want to go to the trouble and cost of building an app if Twitter itself is going to make a big play for same area. This is exactly what Twitter appears to be doing with its in-house applications for smartphones, and the Tweetie application it acquired in April stands out as a case in point.” Biz Stone, co-founder of Twitter, said the decision to release their own application

for the iPhone was based on demand. “Comprehensive analysis of the Twitter user experience in the iTunes App Store showed very plainly that people were looking for an app from Twitter-we didn’t have one so they generally got confused and gave up. Obviously, we saw room for improvement,” Stone wrote in a company blog post. Last month Twitter announced there were 100,000 applications for the site - twice the number available just five months earlier in December 2009. One of the key differences that sets Twitter’s own app apart from other existing third-party offerings is the fact that signing up to a Twitter account isn’t required. Unregistered users can still browse trends, read Top Tweets, find popular users, and check out public tweets geographically. The app can work on the Apple’s new iPad tablet device but is optimised for the iPhone and iPod Touch. An iPad-focused version of the app is expected to be released later.

Nokia and Yahoo pair up for integrated services Yahoo and Nokia have formed a strategic alliance that will see Nokia Ovi maps integrated across Yahoo properties on both PCs and mobile devices, with Yahoo will be providing e-mail and messaging services to Nokia customers worldwide. The two companies are working on an ‘ID federation’ across their services, which will see registered Ovi users access selected Yahoo properties using just their Ovi IDs. “Delivering

great user experiences - both online and on your mobile - is what this alliance is about,” said Olli-Pekka Kallasvuo, CEO, Nokia. “We’re enabling millions of Yahoo customers in key markets including North America to discover the unique capabilities that Ovi Maps brings. Similarly, Yahoo’s online expertise will bring exciting mail and messaging enhancements to millions of Ovi Mail customers across almost every country

around the world.” Carol Bartz, CEO, Yahoo, said the combination would bring personalised experiences to more people, “particularly in emerging markets where we are seeing the next generation of Yahoo users”. As part of the alliance, Maps on Yahoo will be branded as ‘powered by Ovi’, while Nokia IM and e-mail services will be branded ‘Ovi Mail / Ovi Chat powered by Yahoo’.

BRIEFS Nokia 5235 brings new music experience to UAE Nokia released the 5235 ‘Comes with Music’ edition handset in the Middle East in May, offering unlimited access to millions of tracks for a year. Nokia 5235 Comes with Music is a 3.2” touchscreen device with a 2 megapixel camera and, with the support of up to 16 GB of additional memory, can store up to 3,400 tracks. The new device, which is estimated to retail for AED 1,000 in the UAE, follows the launch of the Nokia X6 Comes with Music edition in February that costs more than AED 2,000. All Comes with Music edition phones come with 12 months of unlimited access to music tracks available through Ovi Music. HTC Smart targets price sensitive consumer The new HTC Smart is now available in the Middle East for the budget-friendly price of AED 899. The 2.8” touchscreen phone with QVGA resolution comes with a 3.0 megapixel camera, 256MB RAM with a microSD slot for memory expansion and a variety of widgets for quick access to contacts, photos, music and more. A standout feature of the smartphone includes the HTC Friend Stream application that aggregates all social communication including Facebook and Twitter into a single organised flow of updates. HTC Smart operates Qualcomm’s Brew Mobile Platform.

CommsMEA | June 2010 www.itp.net

www.comptel.com

Take Charge of Your Services!

Policy Control and Charging

NEWS

ANALYSIS 15

VODAFONE QATAR PLANS LEGAL ACTION OVER VIRGIN “MVNO” By Roger Field

Vodafone Qatar chief plans legal action over deal between Qtel and Virgin Mobile Vodafone Qatar is considering taking legal action against ictQatar following the launch of Virgin Mobile Qatar in May. Virgin Mobile, one of the world’s leading mobile virtual network operators (MVNO), launched services in Qatar on May 13, using the network of incumbent operator Qtel. But the launch of Virgin Mobile Qatar, which is described as being a “brand licensing partnership” with Qtel, caused consternation among directors at Vodafone Qatar, the country’s second mobile operator, which started operations in July 2009. Grahame Maher, CEO, Vodafone Qatar, told CommsMEA that he considered Virgin Mobile Qatar to be an MVNO, and that the venture was a breach of the terms of Vodafone Qatar’s licence, which stipulated that the market would remain free of additional mobile operators for a set period. “What we think is that [Virgin Mobile Qatar] is an MVNO, or a service provider, call it what you like, and it is against the regulatory agreements and structure in Qatar, and is against the conditions that were in our licence when we agreed a $2.1 billion licence fee. “On that basis we will be pursuing legal action against ICT Qatar and also Qtel and Virgin,” Maher said. “Around the world Vodafone has MVNOs and service providers that are owned, but they still have to be licenced and approved regardless of the ownership.” Virgin Mobile Qatar already appears to have caused some confusion in the region, with various newspapers referring to the operation as an MVNO. The claim has been rejected by Qtel and Qatar’s telecom regulator, ictQatar, which posted a defensive statement on its website explaining that the country has only two licenced telecom operators. ictQATAR stated on May 13 that “there is not a third telecommunications service provider licensed to provide fixed or mobile

networks and services” in Qatar. “Recent media reports of a third mobile operator launching services in Qatar are not accurate,” said William Fagan, assistant secretary general and executive director of the regulatory authority at ictQATAR. “ictQATAR does not want the public in Qatar to be misled in any way about who is actually providing these services. To Maher considers Virgin Mobile Qatar to be unfair competition. be clear, there is no third licensed mobile phone service without owning any licensed operator. There is also no licensed mobile frequency of radio spectrum”. virtual network operator.” However, he added that an MVNO is Fagan added that ictQATAR “does not also a company that works independently object to licensed telecommunications of the host operator and which can largely operators using innovative practices to set its own tariff structure. “The twist here provide different products and services to is that Virgin Mobile Qatar apparently is the public”, suggesting this was how the wholly owned by Qtel, which licensed the organisation viewed Virgin Mobile Qatar. Virgin brand for an undisclosed sum. But the statement did little to clarify the “So, there is no independence at all from definition of an MVNO, and Fagan failed Qtel, and it is merely a licence agreement to respond to questions from CommsMEA for a sub brand to target the youth segment, on the subject. Furthermore, developments unlike an independent MVNO. So, in Qatar at the end of May indicated that technically, the reasoning that it is not an ictQatar also had some reservations about MVNO appears correct,” he said. the status of Virgin Mobile Qatar. Sallaba added that it would be interesting According to Maher, the regulator forced to see the reaction of other companies keen some of Virgin Mobile Qatar’s retail outlets to launch MVNOs in the region. in Doha to close, although he said they “I am sure there will be much scrutiny of were soon re-opened. “They were forced to the venture going forward as well as perusal stop by the regulator. The reason was that of the regulatory framework currently in they had not got approval for the service place,” he said. and we do not know what has been agreed. ictQatar and Virgin Mobile Qatar Whatever the agreement, it is still a new were unavailable for comment at the time competitor and therefore against the terms CommsMEA went to press. of our licence,” Maher said. Milan Sallaba, an independent telecom VIRGIN MOBILE QATAR consultant based in Dubai, said that at face value, most Virgin Mobile Qatar, which is described as being a “brand people would refer to the licensing partnership” with Qtel, intends to focus on the “brand licensing agreement” youth segment and will lure subscribers with a simple tariff between Virgin Mobile and structure built around the concept that “the more you talk, Qtel as an MVNO, in that the less you pay”. The deal appears to be an attempt by Qtel it “appears to essentially be to address increasing competition from Vodafone Qatar, a company (Virgin Mobile) which had attracted some 464,962 subscribers at the end of which provides a mobile March, after launching services last year.

www.itp.net June 2010 | CommsMEA

OPINION

Sour grapes over Apple sales iStyle’s plea for customers to hold off iPad purchases sounds a tiny bit desperate

pple reseller iStyle’s plea for Middle East customers to be patient and wait for the official launch of the iPad in the region looks to me like an act of desperation than a well-meant request on its part. iStyle belongs to the same group as ABM, Apple’s exclusive partner for the Middle East, so until the iPad officially arrives in the Middle East you aren’t going to see it in its stores. I’m sure iStyle bosses must be tearing their hair out as they watch other retailers in the market cashing in on the biggest hit of the year while they’re forced to sit tight until they can formally take stock of the product. The simple fact of the matter is that Middle East customers want access to the device as quickly as any other part of the world. iStyle’s apparent frustration at not being able to exploit that demand - while other retailers find ways of importing the product from alternative sources - just makes them look like the boy found crying in the corner because his lunch has been stolen by the bigger kids. As one UAE-based retailer said in May: “Everyone is more or less selling the iPad after importing through their own channel. Sales have been quite strong here.” iStyle’s response to seeing

CommsMEA | June 2010 www.itp.net

By Andrew Seymour customers snap up iPads from other retailers has been to warn them that it will not provide any support or technical assistance they may require. According to a statement issued by the company last week, it is unable to service any iPads sold to consumers on the grey market. I have an issue with that reference to the ‘grey market’ though, and it’s this: For a grey market to even prevail suggests the existence of a legitimate channel in the first place. But that is not the case with iStyle as its stands right now because it is not even selling the iPad yet! To compound matters further, the retailer can’t even tell customers the date of the official launch. iStyle might feel aggrieved at not having the iPad on its shelves, but you have to question whether making ultimatums to customers is really a sensible way to go about things. If it wants to pick fights with anyone then surely it should be Apple. After all, Apple controls who the product is supplied to globally, so if goods are coming into the region when they shouldn’t be then something needs tightening up elsewhere. Such shenanigans don’t surprise me though. I’ve always found the Apple channel to be

an odd one to understand here, what with the eclectic mix of independent retailers and those that share common ownership with ABM. At the same time, it’s been interesting to observe that while other mainstream IT vendors have embraced the growth of the regional IT market by abandoning the single distributor model in recent years, Apple has always kept faith in the same structure. Just to digress for a second, I approached ABM, as Apple’s representative in the region, to try and get some details about its channel strategy and market development plans towards the end of last year. After a couple of months of going backwards and forwards I was bizarrely informed by the company’s PR agency that if an interview was to take place then management wouldn’t be able to talk about anything Apple-related. Isn’t that like getting five minutes with Bernie Ecclestone and being told you can’t speak about Formula One? Returning to the topic in

hand, the current iStyle-iPad debacle undoubtedly illustrates the way in which market dynamics in the Middle East continue to be shaped by product flow. It also raises questions over retailer policies on warranty and support, which remain important factors in fostering customer loyalty. iStyle, for instance, currently claims that it will only be able to assist customers with iPads purchased through its own stores, once they are available of course. If the customer doesn’t have a warranty that is valid in this region I can understand that stance, but does that mean it is prepared to turn away customers that have purchased an iPad elsewhere and simply approach it for advice or nontechnical guidance? It seems we are unlikely to find out the answer to that anytime soon. In the meantime, customers must decide whether it is worth relinquishing iStyle’s after-sales care (which they may or may not need) for the sake of getting their hands on a device without delay.

WORLD NEWS USA Verizon Wireless aims to connect rural USA Verizon Wireless is in talks with rural wireless operators in a bid to speed up the expansion of its 4G network to consumers in remote areas, according to a report from The Wall Street Journal. Lowell McAdam, CEO, Verizon Wireless, said the move would help it expand its new 4G network, which it is planning to launch in 25-30 cities by the end of 2010, more quickly, the report said. Verizon Wireless, which is a joint venture between Verizon Communications Inc and the UK’s Vodafone Group, paid $4.7 billion for nationwide 700 MHz spectrum back in 2008.

Canada Mobilicity launches HSPA network in Toronto Canadian operator Mobilicity, which was previously branded as DAVE Wireless, launched an HSPA network in the Greater Toronto area in mid-May. The company, which hired Ericsson to deploy the network last year, also opened its own retail outlets in May, while third-party dealers and its online store also went live. The company announced a simple tariff structure including a flat monthly fee with unlimited use. “Canadians deserve easy and affordable wireless services” said John Bitove, chairman, Mobilicity. “Mobilicity applied the same unlimited local usage principle of landline calling on mobile communications.”

Ireland Imagine prepares for Irish WiMAX rollout Irish operator Imagine Communications is set to roll out Ireland’s first nationwide WiMAX network, the company said in May. The company is collaborating with Motorola and Intel for the deployment, which is thought to be worth about EUR100 million ($123 million), according to TMCnet. According to Brian O’Donohoe, Imagine’s director of commercial operations, the rapid deployment of the WiMAX network will give a dramatic improvement in the Republic of Ireland’s ranking on the European broadband league table. In May, it was revealed that Ireland had slipped from 26th place in September 2008 to 29th place by May 2010, a situation that Imagine is keen to reverse.

CommsMEA | June 2010 www.itp.net

WORLD NEWS 19 UK O2 UK, the UK’s largest mobile network operator by subscribers, has been awarded a licence by the country’s telecoms regulator Ofcom to trial LTE services in the 800MHz band, according to online technology resource, Light Reading. The operator had already started trialing LTE in the 2.6GHz band using technology from Huawei as part of a broader LTE trial in conjunction with its parent company Telefonica. Last December, O2 said it had achieved speeds of up to 150-Mbps with Huawei. The operator also said it had tested a number of services that it planned to make use of LTE networks, including high definition video streaming and mobile gaming.

GettyImages

O2 continues LTE trials in the UK

Russia MTS outsources operations to NSN With managed services agreements growing in popularity, Russian operator Mobile TeleSystems, better known as MTS, has outsourced its network operations to Nokia Siemens Networks. The company said it aims to reduce its opex and simplify its overall operations model. MTS will outsource the operation and maintenance of its entire mobile network across central Russia to Nokia Siemens Networks as part of a five-year managed services deal. The deal will see MTS transfer about 250 employees to NSN. “Entering into a managed service agreement with NSN will allow MTS to substantially optimise network operations and increase efficiency while keeping service experience high for our customer base,” said Aleksander Popovsky, director of MTS Russia.

MONTH IN NUMBERS

India India concludes 3G auction The Indian government’s department of telecommunications announced the results of the country’s 3G auction in May amid criticism that the process had led to unjustifiably high prices for the licences. The final prices meant that the 34-day auction raised more than double the amount the Indian government had originally expected. Seven of the nine bidding companies gained 3G licences, although no company gained full pan-India spectrum. The country’s leading mobile operators, Bharti Airtel, Reliance Communications and Aircel acquired spectrum in 13 circles, at a cost of $2.66 billion, $1.83 billion and $1.38 billion respectively. Idea Cellular gained eleven circles for $1.22 billion.

$2.66 BILLION The sum paid for Bharti Airtel for 3G licences for 13 circles in India

34 250

The number of days the Indian 3G auction process took

The number of staff Russia’s MTS will transfer to NSN as part of a managed services agreement

www.itp.net June 2010 | CommsMEA

INTERVIEW

KAI WULFF

ACCESS EAST AFRICA

Kai Wulff is the CEO of Altech’s recently-formed Altech Stream East Africa, a group that includes broadband business Kenya Data Networks, Swift Global, Infocom Uganda, and Altech Stream Rwanda. He tells CommsMEA about the impact of submarine cables landing on the east coast of Africa, and the potential for increasing broadband penetration across the continent.

here is only one way to drive internet penetration in Africa above 10%, according to the boss of one of East Africa’s key telcos. Kai Wulff, CEO of Altech’s East Africa-based divisions, says that the continent will only burst through the double digit barrier when Africans can see that an internet connection can result in a tangible benefit. “It has nothing to do with the cost of the device or the initial investment, it depends on how relevant it is to the life

CommsMEA | June 2010 www.itp.net

of somebody,” Wulff says. “It must be a direct benefit – if internet providers can demonstrate that we will exceed 10% penetration.” According to the latest figures from the International Telecommunication Union (ITU), at the end of last year internet penetration in Africa stood at just over 8%, considerably lower than the world average of 27%. Wulff suggests that the actual figure may be even lower. “If you count somebody

who goes twice a week to an internet café, then you are right to estimate 10%. But the reality, the proportion of real internet subscribers and people who use it for useful things, you might see at only 2% to 3% penetration.” In Kenya, there has been a steady increase in the amount of mobile subscribers, up 19% from 16.2 million in 2008 to 19.3 million in 2009, according to figures released by the Communications Commission of Kenya (CCK) in March.

KAI WULFF

INTERVIEW 21

“I gave a speech to Bill Gates and a few other people where I put an empty Coke can on the desk, and I said to them if you can tell me what that is I will stop my speech. Everyone said, ‘It’s an empty Coke can’. I said, ‘No, it is a raw material.’ And we have to see the same in every business case in Kenya.” Kai Wulff, Altech

While mobile penetration is rising steadily, internet usage has not enjoyed the same rate of growth, perhaps at the expense of the steadily increasing amount of mobiles latching on to networks throughout Africa. There were almost two million internet subscribers in Kenya, with the vast majority mobile subscribers; 8,349 were fixed internet users, a base that declined on the previous year by 1%. The cost of using a mobile in Kenya has declined significantly, which the CCK said was a result of stiff competition from the four mobile operators. According to the ITU’s price basket comparison, Kenya’s mobile cellular subbasket as a percentage of gross national income (GNI) per capita 2009 stood at 12%, down from 24% in 2008. Meanwhile, a basket of fixed broadband services stood at 62% of GNI per capita 2009, down from about 296%. The reductions propelled Kenya to the top of the ITU’s list of ten economies with the greatest decrease in ICT prices (see table below), ahead of nearby countries Madagascar and Zambia.

UNDERSEA ACCESS Wulff says the drop in prices can be attributed to one factor in particular: submarine cables. Before they landed on the coast of east Africa the great swathes of the continent were reliant on VSat terminals for access to the internet, a

ahead of the rest of the world in terms of costly setup that kept the internet out of marketing and product range, because the reach of many, and that still exists in some cheapest product you can buy from me landlocked countries. doesn’t cost you anything. That is pretty “We brought in two submarine cables, good, but it still does not give you more so the cost per megabit duplex dropped than 10% penetration, even if I give it for from $5,000 to a purchase price now of free. It is not an elastic demand and you approximately $68,” says Wulff. still have to create relevance, even if you KDN is the the anchor tenant for give it for free.” Seacom in Kenya with an initial purchase of 10Gb, and it also has a 10% stake in the Teams cable giving it access to 140Gbps. DIGITAL VILLAGE With ready access to international Wulff returns to his theme of capacity and the option to increase it demonstrating a “tangible benefit” in further when the need arises, Wulff says order to drive up penetration. One of the KDN has been able to reduce prices, programmes KDN is involved in is the describing KDN as “the guys who government and private enterprise-led destroyed the market prices”. ‘Digital Village’ initiative, which he gives “Because we are an infrastructure company, I TEN ECONOMIES WITH THE GREATEST want the water to be as cheap DECREASE IN ICT PRICE BASKET VALUEA as possible so more people buy pipes from me,” he says. Country 2009 2008 08-09 value change “That is why we dropped Kenya 29.8 48.0 -18.2 the prices from day one and we said we’d give the full Madagascar 55.5 71.7 -16.2 benefit of a submarine price Zambia 37.4 53.4 -16.0 drop to the market, and Bhutan 3.2 15.2 -12.0 people hate us for it, to be Mozambique 56.1 68.0 -11.9 honest, including even our Azerbaijan 5.8 16.0 -10.2 share holders. “In terms of access, the Uganda 50.3 60.4 -10.1 cheapest service you can Togo 58.5 67.9 -9.4 now buy from me is free, Ghana 31.4 40.5 -9.1 because it is advertising Angola 21.4 30.6 -9.1 financed,” Wulff says. “I (Source: ITU) think we are a little bit

www.itp.net June 2010 | CommsMEA

INTERVIEW

KAI WULFF

Kai Wulff, CEO, Altech, says it is vital to show people in Africa how the internet can benefit them in their everyday lives.

as an example of the different way of working in Africa. “I gave a speech to Bill Gates and a few other people where I put an empty Coke can on the desk, and I said them if you can tell me what that is I will stop my speech. Everyone said, ‘it is an empty coke can’. I said, ‘no, it is a raw material.’ And we have to see the same in every business case in Kenya,” he says. KDN tries to demonstrate how the internet can be relevant to the lives of Kenyans by drawing up a business case to show people how they can make money from the web, packaged with a financing arrangement. An important aspect is that no individual controls the intellectual property of each of the business cases, so that others can replicate the business case. The example Wulff gives is a village with some solar power and a receiving antenna with WiFi redistribution of the capacity, together with some kind of financing scheme to allow people to buy cheap end user devices. “We started [Digital Villages scheme] three years ago,” he says. “It is always hard to explain to your shareholders why you want to use a business case that only returns your money in three years…but we have done several and they are working well. We have one in a slum here, he had one when he started and now has 46. He has financed the 45 computers himself by the money he makes through the Digital Villages programme.”

CommsMEA | June 2010 www.itp.net

The programme ranges from equipping schools with several computers, to a solar cell on top and two laptops and a WiFi retransmitter. Most of the users access the network with refurbished laptops over a WiFi connection. “It is the cheapest technology to reach them,” Wulff explains. “There is no interference that far out, you are the only one broadcasting. “With a CPE you can get about 4-5 km line of sight, if you have a nano station you will get six or seven kilometres. It’s not WiMAX range where you get 30km but for the amount of money we can put a lot of WiFi transmitters out there.” Another advantage over WiMAX is that with the 4G technology users need a radio, you need a computer and you need power. “We are the biggest WiMAX operator in Africa, so we have 100s of base stations, so I have nothing against the business case. It is just a fact that you need things people can afford and can power the CPE at the other end.”

BACKHAUL BONANZA “We bill about 7,000 blue chip corporate customers, but we don’t bill Butterfly customers because they use a prepaid scratch card service and we deal with that at arm’s length, so we would be sitting there at 60,000 subscribers maybe but it is

hard to say precisely because some months they buy, and some months they don’t buy,” he adds. Wulff says that KDN accounts for approximately 80-90% of Kenya’s international internet capacity, carrying traffic for the country’s big operators and as the link to Seacom. “In terms of subscribers, if you count the ever-changing 3G subscribers and not their backhaul then we might have 10-15%, because 3G is these large numbers but not really large in capacity. “Out of the 3G backhaul we do about 80-90%. Maybe the billing is with (mobile operator) Safaricom, but the transport of the network is with KDM.” Providing these links is what Wulff initially set out to do, but when he began installing fibre in Kenya, it prompted some people to question his sanity. “When I laid fibre here the first time people said I was crazy. Now I tell people that I want to sell a service where I

THE COST OF CONNECTING IN KENYA Operator

256k

512k

1Mb

Orange /Telkom

$38

$64

$90

Zuku

$19

$32

$58

Access Kenya

$51

$77

$115

(Per month excluding installation and equipment. Source: Operator websites)

KAI WULFF

INTERVIEW 23

“You are not really more efficient because you have found the magic bullet how to do fibre. It is simply that you were bold enough to do fibre when nobody wanted to do it, and by the time the competition wanted to come in you have so many kilometres of fibre that your project team and everybody is 100% efficient.” Kai Wulff, Altech

actually pay people to take the service, with a business case, they call me even crazier but, I think it will make money.” KDN works with a host of operators across the region, including Etisalat, PCCW, Bharti Airtel, Zain and Qtel, providing access in and out of Kenya. It also provides hosting services in a data centre, back up for data for operators and fibre backhaul from Kenya. “100% of Seacom goes through our network and roughly 60%-70% of the Teams traffic goes through our network. If you take people who are adding us and the redundancy you are close to 80%-90% and with Teams and Seacom you would have 95% market share because the rest is on Vsat.” On its website, KDN claims to backhaul 75% of Kenya’s mobile traffic, a figure that Wulff describes as pure “marketing”. “I would say it is more, but it doesn’t really matter,” he says. It is not the amount of traffic that passes through KDN’s pipes that is of interest, Wulff says, but the market share in terms of infrastructure that has been deployed and access to customers. “We want to maintain a 50+1% market share wherever we go as an infrastructure provider, because then you are relevant, you are the bully in the market and you have the lowest operational cost because fibre is a game of size. As long as we keep investing the same amount of money as all of our competitors combined I think we will continue to be fine. It is all about

divide and rule.” He says the business case is simple: roll out fibre cheaper than anybody else and we maintain it better and cheaper than anybody else. “There is no magic trick – if you roll out 1000 km of fibre, your project overheads are maybe 15%. If you roll out 10,000 km of fibre, then your project overheads are maybe 3-4%. If you maintain it -100km or 1000km - it is not a factor of ten, it is maybe a factor of two between 100km and 1000 km. To monitor a fibre network you need two fibre nodes anyway, irrespective of if you have 10km or 10,000km of fibre. The software to monitor the network and the incremental cost of adding more boxes is very little, compared to the millions of dollars you have to spend on some carrier-grade monitoring systems and umbrella management systems, so it is just a matter of size,” he says. “You are not really more efficient because you have found the magic bullet of how to do fibre. It is simply that you were bold enough to do fibre when nobody wanted to do it, and by the time the competition wanted to come in you have so many kilometres of fibre that your project team and everybody is 100% efficient and your overheads are low.” KDN estimates that it installs 10 km of fibre every day, a figure that Wulff says could actually be higher. When asked if KDN will spend more on capital investment than last year, he declines to comment, other than to say KDN’s “vision

is to maintain absolute market leadership in terms of deployed infrastructure and you have to keep it that way”. According to the firm’s last set of results, capital expenditure was $20 million, part of which went towards the construction of a 1,500 km fibre optic cable from Mombasa to Kampala in Uganda to run the capacity bought later in the year from Seacom. Pushing into neighbouring, landlocked countries will provide KDN with another opportunity. The company has already moved into Rwanda, where it now has microwave, and Wulff says a fibre network is now 99% completed. “We have some issues with the government in Rwanda for the approval process, but Rwanda will be on submarine fibre this month [May] hopefully,” he says. Wulff adds that Tanzania is also connected by submarine fibre. KDN will also be connecting Burundi and Zambia after it has “switched on” Rwanda. Wulff adds that Malawi will also be connected by the end of the year and plans are underway to connect Mozambique, Southern Sudan and Somalia. “If we can push our way from Kenya to SA and do back connections to all landing stations and at the same time run a similar business case in west Africa, encompassing Nigeria all way down to Angola, and cross connect back ends of fibre to landing stations, in the next three or four years, you have a fibre backbone that is not much worse than in Europe or US,” he says.

www.itp.net June 2010 | CommsMEA

ADVERTORIAL

QUALCOMM

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Constant evolution in the telecommunications industry – from intelligent new devices and ubiquitous connectivity, to the increase in data services – has demanded that operators balance their own innovation with close attention to the changing habits of consumers. Jay Srage, Vice President for Business Development for Qualcomm in the Middle East, North Africa and Central Asia, puts this balancing act into context, exploring the benefits of 3G for the region’s operators and end users alike. Connected devices Consumers today view their mobile device as a “communication platform” and no longer a traditional voiceonly phone. As the communications industry has evolved, so has the choice of devices, giving consumers access to rich functionality across images, video and music, banking, shopping, navigation and social networking on a multitude of products, from smartphones and smartbooks* to new e-books and other newly launched 3G tablets. It is clear that we are no longer debating whether the industry is moving towards one “super device” or a series of specialised devices for each function. Instead, gadget-hungry users and operators are looking to the market for an optimal combination of both. Smartphones have grown in capability and processing power, providing higher display resolution and faster access in ever smaller and lighter form factors. At the same time, the “Internet-effect” is driving an expectation that all machines can be connected to provide access to any service or information, anywhere, at any time. The A to Z of life – from banking to healthcare, education to retail, sports, news and travel – should ideally be manageable through the users’

CommsMEA | June 2010 www.itp.net

choice of device, or devices.

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QUALCOMM

compelling online services to more than 1.3 billion people globally by 2012. Furthermore, mobile broadband is dominating growth in global broadband subscriptions and is expected to overtake new fixed line subscriptions by 2011. It is predicted that 70 percent of broadband subscriptions will be mobile by 2014, principally fuelled by high speed networks and availability of embedded devices.

New dawn, new device Recent breakthroughs in 3G enabling technologies are not just taking user experiences to new heights, they are also inspiring whole new categories of connected devices and opening doors for new variations of wireless business models. Consider the Kindle e-reader device from Amazon, which is playing its part in a revolution of the publishing industry, or the new Zeebo gaming platform, a 3G wireless home entertainment and gaming console that brings affordable 3D games to consumers’ homes. Wireless capabilities are also being added to previously unconnected devices. The healthcare industry, for instance, is experiencing some of the greatest leaps in history. eHealth devices are enabling doctors to connect with patients’ diagnostic equipment remotely, providing accurate, real-time health monitoring without the waiting room queues. To date, 18 notebook manufacturers have launched 3G embedded broadband solutions, which are currently being sold by more than 30 operators worldwide. Contributing to this momentum, Qualcomm has introduced its global mobile internet solution, known as Gobi™, which enables any type of device to achieve ubiquitous, seamless and location-based 3G connectivity to the Internet. Currently, almost 100 models of Gobi™-based laptops have been launched by 13 different vendors including Dell, HP, Sony, Lenovo and Acer. Qualcomm has also developed the new Snapdragon™ platform, which features the first processor for smart devices that breaks the 1GHz barrier and delivers 3G connectivity with ultra-low power consumption – a powerful combination. With the commercial availability of Snapdragon, two new categories of wireless devices are emerging: “smarter” smartphones and smartbooks, both providing always-on connectivity, powerful mobile computing, all day battery life and integrated GPS functionality that dramatically enhances user experience. The mobile Internet experience is no longer a slow and frustrating second place to fixed-line connectivity.

Social networking services With mobile broadband connectivity becoming more commonplace, a fast-growing trend is social networking on mobile devices. From Facebook to Twitter, WatWet and FourSquare, it is impossible to ignore the increasingly important role these networks play in the daily lives of users across countries and generations. In fact, results of a recent study conducted by O’Reilly Research estimated that 8.3

ADVERTORIAL 25

percent of active Facebook users come from the Middle East and North Africa. The data speeds provided by 3G technologies have accelerated the transition of social media from the PC to the mobile device, and enabled a host of new location-based applications. In 2008, there were approximately 92.5 million people worldwide accessing social networks via their mobile phones. According to research firm Informa, this number is forecasted grow to 698.1 million by 2013. In line with this growth, they predict revenue from mobile social networking services will reach US$ 4.5 billion by 2013, up from US$ 1.1 billion in 2008.

The future at our fingertips There are a number of changes on the horizon that will take us beyond multimedia and social networking as we know it in the Middle East today. Let’s look at Jordan for example. Just last year, the Jordan Telecom Group was awarded the first license to provide 3G services in the Kingdom. This marked a communications milestone for the country and opened doors for innovation by the operator and its subscribers. Earlier this year, Orange Jordan launched its 3G network, and it confidently expects the service to be adopted by 2 million Jordanians, approximately 70 percent of the population in urban areas, by the summer. Behind the enthusiastic uptake in Jordan is a commitment by Jordan Technology Group to provide access to a host of new services that demonstrate the capability, connectivity and value offered by 3G technology for both business and consumer users. The Group has quickly launched a range of previously inaccessible services, including video calling, mobile broadband, and live TV from one of the region’s broadcasters, MBC. This is only the beginning of what is in store for the Kingdom’s mobile users. With industry listening to users’ needs, watching trends and addressing areas where mobile connectivity can benefit society, we foresee a proliferation of innovative services that will accelerate the availability, adoption and application of embedded connected devices such as smartphones, smartbooks, e-books and wireless health sensory devices. We will soon enter an era where traditional products such as TVs, cameras, “white goods” and even cars will truly embrace mobile broadband connectivity to deliver a new level of user experience. Whilst many wonder what technology can do next, society is just in the early stages of fully leveraging 3G technology and its wealth of benefits. Qualcomm sees huge potential in the Middle East region and beyond as operators – armed with network technology, a catalogue of rich connected devices, and an enthusiastic tech-savvy audience – discover new business models and strategies to address vertical markets such as health, education and media; eventually achieving true convergence of services and connectivity.

www.itp.net June 2010 | CommsMEA

COUNTRY PROFILE

KUWAIT

BREAKING THE DUOPOLY Mobile broadband and a lack of regulation are the defining characteristics of Kuwait’s telecoms sector. By Roger Field

t was probably not surprising that many industry insiders had their doubts when STC paid some $900 million to enter Kuwait as the country’s third mobile operator back in 2007. The KSA incumbent paid the fee for a 26% stake in the operation, valuing the licence at around US$3.5 billion, just a matter of months before problems in the US gave rise to the global financial crisis. But while the state of the global economy might have put an end to telcos acquiring such expensive licences, STC has surprised analysts and its rival operators in Kuwait, where its local operation, Viva, has already managed to secure itself a market share of about 16%. Ghassan Hasbani, CEO of international operations at STC, says that Viva’s network now has full population coverage and a “quite extensive” 3G capacity, and is also launching an HSPA network. “We now have a proven record of customer attraction, we have attracted a very good share of the market, today we are above 16% market share approximately,” Hasbani says. “It is just over a year and it is quite an achievement.” While being the third operator might make it almost impossible to lure many of the country’s higher ARPU customers away from market leader Zain, it does

CommsMEA | June 2010 www.itp.net

have some advantages. One is the fact that Viva’s network infrastructure, which was mainly deployed by Huawei, uses the latest technology, gives good quality and is easily upgradeable. But it is mobile broadband that is attracting the most attantion from Kuwait’s operators, who view wireless data as the best means of growing their businesses amid falling voice ARPU. “Kuwait is a good broadband market given that the fixed broadband penetration is not very high, and we are seeing a similar story to when fixed voice penetration was low and mobile came in across the region,” Hasbani says. “We foresee a significant growth in data traffic in Kuwait,” he says, adding that the behaviour of data consumers is influenced by trends such as social networking. “The proportion of non voice usage is becoming a significant portion of traffic significant enough to really start planning for,” he says. Aside from mobile broadband, which is experiencing solid growth in most Gulf markets, Hasbani also points to the general economy in Kuwait as a driver of growth. “The main opportunities will come from the growth of the Kuwaiti market itself, the Kuwaiti economy,” he says. Indeed, even according to projections made following the

credit crunch in 2008, the Kuwaiti economy was expected to grow at about 4% of GDP a year for the next five years. “The growth of the economy is important and the large youth population that is entering the target markets for telecommunications is also a source of growth,” Hasbani adds. In terms of challenges, Hasbani agrees that the absence of a proper regulator is a hindrance. “There is no clear independent regulatory authority that is regulating the market, so today it is self regulating in cooperation with the ministry,” he says. The major problem that arises from this is a lack of will to drive new initiatives in the market or even to enforce and drive through regulations that are supposed to be enacted. For example, Hasbani points out that the operators have been given guidelines and promises such as the introduction of mobile number portability within licence agreements, that are yet to be executed “It was part of the licencing mandate but hasn’t been executed yet, we are expecting it to happen sometime this year,” he says. “This will help the market to grow to the next level and create a dynamic to serve the consumer and create more competition in the market.” Another challenge is a lack of

KUWAIT

COUNTRY PROFILE 27

“The growth of the economy is important and the large youth population that is entering the target markets for telecommunications is also a source of growth.” Ghassan Hasbani

competition on international connectivity, which has left Kuwait with international connectivity charges which rank high compared with international norms. For Hasbani, Viva has been successful in gaining market share in an already heavily penetrated market because it successfully marketed itself as offering customers a “transparent and simple” service. One immediate change that the launch of Viva had on the market was to lead the existing operators, Zain and Wataniya, to stop call receive charges, which had long been an unpopular anomaly of the Kuwaiti market. “Viva has been attracting people who want simplicity and transparency in their service offering with no complication on

OPERATOR-WISE 3G SUBS - KUWAIT Annual Total Subscriptions (000’s)

Kuwait Telecom Company

1,770

Wataniya Telecom Zain Kuwait

1,358

384 174 Dec 09 Source: Source WCIS

tariffs and no hidden price points. “Also Viva has been quite innovative in the way it approached the market, simple but effective services for broadband and voice packages that are easily reached and easily understood,” Hasbani says.

THREE’S COMPANY Antonio Carvalho, a partner with Dubai based consulting firm Delta Partners, agrees that the entry of Viva into Kuwait changed the market significantly. “In particularly it broke up what I would call the duopoly that existed around that time in several ways.” He also confirms Hasbani’s estimate of Viva’s market share, giving a figure of just above 15%. “It is quite a relevant share and remarkable in a market that was already more than 100% penetrated at the beginning of 2009,” he says 2,218 While the launch of the third operator did not lead to a price war as has happened in other 1,620 markets that gain a third operator, it did lead to a decline in prices and ARPU for the existing operators. 597 “Until the recent launch of Viva, you 306 would pay for receiving Dec 10 a call, and calls made, and this represented a

Ghassan Hasbani, CEO of international operations at STC.

way for Viva to play a role of honesty and transparency in the market by destroying this,” Carvalho says. “It is quite a small country so it is quite easy to understand each other’s tactics, so Zain and Wataniya realized that would be one of the angles of attack of Viva and around the time of its launch they erased this feature.” Despite the lack of a price war, the effect of transparent pricing led to a dramatic fall in ARPU, partly owing to the fact that the market had been so overpriced before Viva’s entry. “If you look at 2009, from a penetration perspective the market continued to grow, but from a value perspective, it shrank slightly,” Carvalho says. Indeed, in 2008-2009, the market was at between $2.2 billion to $2.3 billion, while in 2009, it was worth $2.1, and may only reach the heights of the 2008 level later this year. But the declining value of the market was not only due to falling tariffs. The high market penetration also meant that more of the growth was coming from low ARPU subscribers such as service industry workers and house maids. “The types of clients you get are less valuable moving into the bottom of the pyramid,” Carvalho adds.

DUAL SIM The high penetration rates also led to an increase in the dual sim effect, with many of the country’s wealthier residents holding

www.itp.net June 2010 | CommsMEA

COUNTRY PROFILE

KUWAIT

“Going forward, the major opportunity lies with which of the operators will provide an end to end solution of a converged network.” Delta Partners’ Antonio Carvalho says Viva helped shake up the market.

two sim cards, which also served to disperse revenues further. According to Carvalho, the ARPU in Kuwait decreased from $62 in 2008 and was most likely just above $40 at the end of 2009. “It was $45 in Q308, so you can see there was a dramatic change,” he says. However, Zain’s ARPU remains above this country average, at about $56-$57, while Viva’s ARPU is most likely just above $30. In terms of market share, Zain is on about 48%, Wataniya 38% and Viva 13%, according to Carvalho. The different ARPUs that the three operators command is a reflection of the different segments of the population they cater to, with Carvalho describing Zain as the “emotional leader” that attracts and retains customers who are least price conscious. It is also the operator that is most associated with being at the cutting edge of technology. “Zain is very much the Kuwaiti player, very much deploying the most innovative products and services, the first one to really deploy 3G,” he adds. “The majority of wealthier clients in Kuwait are not price sensitive at all and are more sensitive to their initial number. They are practically all with Zain. “Then we have Wataniya, which belongs to Qatar, and Viva belongs to Saudi. There is a distinction, but it is more functional positioning than emotional,” he adds. However, the “emotional” attachment of long term, wealthy Zain subscribers to

CommsMEA | June 2010 www.itp.net

Tarek Aziz their operator does make it difficult for Wataniya and Viva to poach older, wealthier customers. “The challenge is still how to break into the most valuable clients,” according to, Carvalho.

MOBILE BROADBAND

HSPA+ networks, and that Nokia Siemens Networks provided Zain and Wataniya with technology giving speeds up to 21Mbps. “This has provided perfect substitute for fixed line,” he adds. “It is available far more quickly than fixed and has grown out of all proportion. If you take the three mobile operators together they are bigger than any

In this light, the main area for expansion for the three mobile operators is mobile broadband, and FIXED FOCUS the potential of 3G and HSPA in the country is increased by the limited While Kuwait’s telecoms sector is renowned for its lack of a fixed infrastructure and regulator, Nokia Siemens Networks’ Khalid Aziz says that the situation has shown some signs of improvement. He points services. out that in the past couple of years there were seven different The mobile operators administrations in the Ministry of Communications, and the also have the benefit level of bureaucracy that ensued had the effect of slowing of being in a small down various infrastructure projects. But now the situation country, which makes has stabilised somewhat. it easier to deploy the “The focus is now to catch up with the projects that were necessary infrastructure left on the side for a while. We are certainly seeing them happen now, the new tenders are getting in line with the for data. expected projections,” he says. This is a situation Among these projects is a fixed line project that was that Khalid Aziz, Nokia initiated about two years ago, Aziz says. Nokia Siemens Siemens Networks’ Networks is keeping a close eye on the situation and is keen country director for to work on the project. Kuwait and Iraq is “NSN was a prime vendor to deploy the NGN fibre network. familiar with. He says We have pioneered this in the country where we are taking lead… the first phase was rather limited, more a test and run that the Kuwaiti market kind of trial,” he says. is still considered to “Now what we are expecting is that the nationwide roll out be at “the edge of is due to be tendered out by the Ministry and that is one of technology leadership” the major investments that the government and the Ministry as well as high end is due to make in the coming 12 months in order to revamp growth and ARPU. the infrastructure in the country.” He points out that all three players have

KUWAIT

COUNTRY PROFILE 29

“If you look at 2009, from a penetration perspective the market continued to grow, but from a value perspective, it shrank slightly.” Antonio Carvalho

of the existing ISPs in the country combined. This is a major shift in the market.” Despite this reputation for leading with technology, Kuwait’s operators are at risk of falling behind some neighbouring markets when it comes to deploying LTE, and this is also partly due to the lack of a proper regulator in the country. “The latest technology is still held back,” Aziz says. “In Western markets we are already seeing LTE trials and roll outs taking place but in Kuwait the operators are still being held back by not knowing which frequencies they are going to be operating on, and they are not running very extensive LTE tests.” He added that it remains to be seen how the government will act to encourage continued investment in new technology such as LTE.

WIMAX WOES The lack of guidance on LTE from Kuwaiti authorities is perhaps not surprising given its track record with existing 4G technology WiMAX. Indeed, the way WiMAX was licenced in Kuwait has been widely criticized. Most industry insiders agree that too many licences were issued around 2007, which led to several WiMAX players serving a small market. “About 4-6 WiMAX licences were awarded to different operators,” Aziz says. “From the way we see the market this is not very healthy because it deprives any of them

the ability to build the scale of consumers to provide a reasonable service.” He adds that these operators are only able to deliver services to a certain segment of the population, such as the oil and gas sector, banking, or real estate projects. Carvalho agrees that a lack of regulation played a big role in the problems that WiMAX operators face in Kuwait. “Today you see the WiMAX players lack the capacity to fully serve the market.” He suggests that the authorities may have believed they were doing the right thing by awarding more licences in a bid to create greater competition, although this can be a very misguided strategy when done in the wrong way. “Competition does not just mean more players in the market. You need to take the long term perspective and see how the market should evolve, what would be a healthy competition in two, three, five or 10 years down the road,” he says. The problem faced by the WiMAX players was compounded by the aggressive broadband strategies adopted by the mobile operators, which responded to the perceived threat from WiMAX by investing more in mobile broadband, subsidising dongles and launching bundles.

FUTURE POTENTIAL While Khalid Aziz sees some issues with spectrum allocation for LTE, he has no doubts that the future for mobile operators lies with mobile broadband, and the

convergence of technologies that increased use of mobile data will inevitably lead to. “The major opportunity lies in the convergence in its true sense,” he says. He adds that Nokia Siemens Networks has been working with both leading operators as well as the Ministry of Communications to look at ways of encouraging a “convergent ecosystem”. He moots a convergent environment where fixed and mobile alternatives are available at the same time. “I think that is one of the things that the mobile broadband has started to enable, which has been starting to replace the traditional fixed ISP model of using the internet at home.” To help make this a reality, Nokia Siemens Networks has been working closely with the operators to develop a femtocell concept, which will allow for ADSL connectivity on wireless networks for end users. “Going forward, the major opportunity lies with whichever of the operators will provide an end to end solution of a converged network, so you as a subscriber do not have to go to different companies for different fixed billing or different broadband and mobile services, for example,” he says. “The other opportunity lies in value added services. We do have a plethora of services available in the country now, but there are far more to go like mobile TV and mobile banking apps. “Still there is a mile to be done on that side,” he adds.

www.itp.net June 2010 | CommsMEA

WIOCC

INTERVIEW 31

WELL CONNECTED With the completion of the EASSy submarine cable, operators are set to benefit from increased data capacity between East Africa and the rest of the world.

onstruction of EASSy, a cable system connecting East Africa to Europe and the US, was completed last month, further strengthening Africa’s connectivity with the rest of the world. Mike Last, business development director at WIOCC, the largest shareholder in EASSy, explains the company’s plans for the cable and what it means for East Africa.

CommsMEA: When was the cable completed exactly? Mike Last: The cable is installed and we are now testing it, prior to launch. Cable installation started in Maputo, Mozambique in December 2009 and was completed ahead of schedule, with the ‘final splice’ – joining the two cable segments – taking place on April 19th. We are currently engaged in system testing, which is the final stage before launch. As a result, we are right on schedule to carry the first customer traffic across the system in July 2010.

CommsMEA: What capacity will EASSy have and what will telecom operators be able to benefit? Mike Last: EASSy is a 2 fibre-pair system with a maximum capacity of 1.4Tbps, making it the largest system serving subSaharan Africa. This gives us economy-ofscale advantages compared with any other system and this, together with our low cost

WIOCC’s Mike Last sees huge growth in demand for broadband capacity.

base, means we can offer customers a degree Burundi, Djibouti, Kenya, Lesotho, Libya, Mozambique, Nigeria, Seychelles, Somalia, of pricing flexibility that simply hasn’t been Tanzania, Uganda and Zimbabwe, will available before. The EASSy cable itself runs for 10,000km comprise the majority of our business. Most are rolling out fibre-optic networks from South Africa to Port Sudan, with and many are developing high-bandwidth landings in Mozambique, Madagascar, applications which will drive significant and the Comores, Tanzania, Kenya, Sudan growing amounts traffic onto our network. and Djibouti. In addition to this coastal The most mature internet markets of connectivity, we have access to the most South Africa, Sudan, Kenya, Uganda and extensive terrestrial fibre-optic network in Zimbabwe will be the main generators Africa – owned by our shareholders and of international traffic, so ISPs in these selected partners – enabling us to reach markets will also comprise a significant part customers in locations across 21 countries of WIOCC’s business. throughout the eastern half of Africa. With the continued rapid growth in We have also set up agreements with a Internet uptake in Sudan, Kenya and variety of international operators to extend Uganda in particular, these countries connectivity to key internet exchanges and will become increasingly important for commercial centres worldwide. All of this not only gives our customers WIOCC IN NUMBERS enormous reach, but also the reassurance that comes with a system that has been designed and built for Maximum capacity of EASSy. resilience with protection switching and diverse routing being implemented end-toend across the system. The distance the cable runs between South Africa and Djibouti.

1.4TBPS

10,000KM

CommsMEA: Where does WIOCC expect to get most of its business from? Mike Last: Our 14 shareholders, from Botswana,

60%

Year on year growth of international Internet bandwidth traffic – most of which is carried on submarine capacity.

www.itp.net June 2010 | CommsMEA

INTERVIEW WIOCC

“The consumer and business applications and devices that drive demand for Internet bandwidth already exist – 100 million YouTube videos are watched every day, with 20 hours of new video uploaded every minute.” Completion of the EASSy cable is the latest of several subsea cable projects to be completed in the past few years.

us over time. Internet markets that are currently less developed, such as Tanzania, Ethiopia and Madagascar, will experience incremental growth with the arrival of submarine connectivity, and the smallest Internet markets such as Djibouti, Comoros, Swaziland and Burundi – will see the most rapid growth. That’s inside Africa, but we also service the requirements of international operators. We are actively engaged in discussions with carriers and other service providers in North America, Europe, the Middle East, India and Asia about improving their African connectivity.

CommsMEA: How much competition do you see in the cables sector? Mike Last: With more than 3.8Gbps of bandwidth now available on the east coast, I don’t expect to see any further cable builds on this side of Africa for the next few years. We do expect to see a continuing migration of traffic away from satellite as service providers terminate expensive longterm contracts and turn down or switch off backup capacity, which is no longer necessary with the sub-sea cables available.

CommsMEA: What capacity demand do you see in the coming years? Mike Last: Any industry experts are predicting that the internet explosion in Africa could be even more profound over the next five years than the explosion in mobile usage that precedes it.

CommsMEA | June 2010 www.itp.net

Our own analysis certainly supports this, with demand certainly expected to be robust and ongoing. Even in mature markets, international Internet bandwidth traffic – most of which is carried on submarine capacity – is growing by 60% a year, while demand from private networks is growing at 45% a year. Much of this growth is driven by a shift towards video and on-demand applications, supplementing the existing high demand for peer-to-peer file sharing and networking. In Africa, we expect growth to be considerably higher than this. The arrival of affordable, high-speed, international connectivity is fuelling appetites for lower cost, higher-speed, more accessible internet access, which will continue to drive high rates of growth and ongoing traffic demand.

CommsMEA: How can operators best benefit from EASSy? Mike Last: In this region, carriers have traditionally had to rely on satellites for their international connectivity. The arrival of undersea cables is now offering them significant advantages, specifically less delay, greater scalability and lower cost. Fibre-optic systems are typically deployed to minimise route distance, with submarine cables typically following the most direct coastal route between major coastal locations, resulting in much lower delays delivering better performance for timesensitive business, scientific, academic and consumer applications.

Mike Last

On the cost side, with the build cost directly related to distance, fibre is much more cost-effective than satellite, where demand is high or growing fast and for meeting long-term needs, rather than lowdemand, short-term requirements.

CommsMEA: What kind of applications do you expect to see end users make use, when the additional capacity comes online? Mike Last: The consumer and business applications and devices that drive demand for Internet bandwidth already exist – 100 million YouTube videos are watched every day, with 20 hours of new video uploaded every minute of the day and night; Skype is responsible for 8% of international voice traffic and a growing amount of video, with up to 20 millions users online at a time. Facebook is the world’s largest social network with over 400 million users and generates around 1% of total internet traffic. Virtual private networks have become the de facto standard for business communications; and iPhone and Blackberry are the preferred access devices for executives the world over despite generating up to 8 times as much traffic as a laptop accessing the same bandwidth. Consumers and business users in east, central and southern African are just waiting for the opportunity to turn on the tap, and academic and scientific institutions and other organisations are also ready to take advantage of this new capability.

OPINION SECURITY

CONVERGED SECURITY Kamal: Operators must adopt a converged approach to security.

one are the days when a phone was just a phone. A mobile handset can now function as a camera, a portable TV and a laptop computer, among other applications. In fact, the International Telecommunication Union reports that mobile phones are quickly becoming the world’s preferred way to go online. As an increasing amount of state-of-the-art technologies are coming together onto a single device, consumers are able to enjoy a much more convenient, ‘convergent’ communication experience. However, while these technologies are increasing the effectiveness of the work of telecom operators and driving societal interconnectedness, they are exposing us to new risks as well. Incidents are felt by more and more people, and cause an increasing amount of widespread damage. Experts estimate that a total of US$1 billion has been stolen from financial institutions and corporations in the Middle East by organised cyber criminals employing online transactions. Because of the increased security risks imposed by these convergent technologies and the ever-advanced forms of cyber malware, telecom providers need to have an entirely reliable and efficient security system. However, at the moment,

CommsMEA | June 2010 www.itp.net

With an ever increasing number of converged communications devices, operators must develop a converged approach to security, says Walid Kamal, vice president, technology, security and risk management, Du. operators tend to take a fragmented and isolated approach to protecting their telecommunication infrastructure. For example, operators will tend to implement one security system on their network, and a different one for their various applications, leaving the gateway between the two unprotected and exposed. Because of this, operators are hampered by a number of critical shortcomings: exposure to risks, lack of an enterprise-wide view of risks, lack of accountability in dealing with those risks, and duplicative responses and investments. So how can we attain an overall view of these risks and thereby protect against these dangers? Quite simply, a convergent market requires convergent security, which provides end-to-end information handling, assessment and protection, as well as an effective security incident response capability. This can be achieved through a centralised management and monitoring system, meaning that all the layers across a network are secured via a unified approach, rather than securing each layer individually. And the drivers for embracing a centralised security module are not only limited to better, more efficient network protection. By maximising defence against attacks with a multi-dimensional view that enables events to be correlated from

all the layers of security, the convergent strategy can not only meet the needs of a telecom provider, but enable them to operate far more efficiently. Furthermore, by cutting out security risks and providing an effective incident response mechanism, the module will ensure the service continuity of the telecom operator, while ensuring the confidentiality and integrity of customers’ information assets, as well as complying with regulatory requirements. And, of course, in terms of technological enablement, the converged and cohesive module will protect any technology assets by strengthening all parts of an infrastructure against attacks. So having clarified the motivation for embracing this security strategy, the next step is to understand how to initiate the converged security framework. First and foremost, in order to set up an effective centralised security module, there are a few basic ingredients which need to be present. This includes a people, process and technology approach. A good security strategy can only be implemented with the presence of an expectative leadership. Using this strategic base, an efficient governance model, framework and processes can then be designed to ensure the optimum functionality of the security module,

SECURITY

OPINION 35

“By maximising defence against attacks with a multi-dimensional view that enables events to be correlated from all the layers of security, the convergent strategy can not only meet the needs of a telecom provider, but enable them to operate far more efficiently.” which in turn provides an assurance of the confidentiality, integrity and availability of information through effective risk and incident management. And in order to consolidate an effective strategy and operational structure, the necessary technologies must be implemented to support the operation of the system. Once the vital ingredients – people, process and technology – are set in place, the module can commence operations. The process can be tailored to meet the specific needs of individual telecom providers, but as a general rule we will follow a targeted six-step centralised security lifecycle which includes: 1. A look at the operator’s aims and objectives, consideration of individual corporate customs and policies and acknowledgement of the standard industry regulatory requirements. 2. An assessment of security functions within the organisation, definition of the information security governance framework and creation of an interaction model for an understanding of the module’s compatibility with the legacy systems along with a risk assessment of the information and associated systems, applications and infrastructure. 3. The planning, design and

implementation of the new centralised security architecture blueprint 4. The operation of the centralised module, including monitoring and incident management 5. Auditing and assuring effective implementation of the centralised module and ensuring continuous compliance with regulatory and business requirements. 6. With a centralised security module up and running, operators can then enjoy a number of benefits, which will not only facilitate and enhance their operations, but secure the continuity of these operations for the future. These advantages include: - A stronger, end-to-end, unified security system which is less vulnerable to attack - A more complete view of what’s happening on the network through a centralised monitoring system, enabling companies to be more proactive when taking precautions and therefore implement more advanced security on their infrastructure. - Quicker and more efficient identification of and response to security incidents and attacks through the centralised monitoring system. - Improved analysis of risks and incidents

through an auditing system that provides daily security reports, enabling operators to better understand any security risks and incidents. - Content filtering, web filtering and URL filtering, enabling control and monitoring of corporate users’ internet behaviours. - Cost reductions, due to the greater time and energy efficiency of a fully converged platform. - A more flexible and scalable system, as the centralised module’s grid-like system allows services and technologies to be either added or removed with greater ease. Finally, by implementing end-to-end security – from A to Z – all areas of an infrastructure are secured as a unit, rather than as fragmented sectors, shielding the gateway between each domain and therefore closing the doors to potential threats. After all, as an operator, if you are not protecting your infrastructure effectively, it is not only detrimental to your organisation, but it also exposes your end-consumers to risks through the products and services you provide them with. When it comes down to it, the only way to keep up with today’s convergent technology market, in terms of security and risk management, is to match those endto-end technologies with a centralised and converged security module.

www.itp.net June 2010 | CommsMEA

ADVERTORIAL

ZTE

Enriching communication

Rich Communication Suites: A Significant Convergence Initiative It is almost easier to say what Rich Communication Suites (RCS) is not rather than to say what it is: It is commonly referred to an ‘initiative’ or ‘industry effort’ rather than a formal or technical standard. The GSMA’s RCS initiative declared that RCS itself is neither a set of applications nor a set of services, but rather an enabling framework for services. Furthermore, although the RCS framework is managed rather like a standard, it is based on existing standards and specifications, for example, in the case of presence, it uses the framework of OMA Presence SIMPLE 1.1. RCS is closely bound up with the IMS architecture, which is sometimes offered as a partial answer to ‘what is IMS good for?’ In ZTE’s opinion, particularly for our IMS, the RCS is intended to be a set of defined IMS-based services which mobile operators implement in a common way, thus making it easier for inter-operability between them and between different vendors’ technology components.

RCS for the end-user: direct benefits RCS is important because it represents an attempt to bring features and functionality offered in the IP world into mobile telecoms services. As such, it turns out to be a more significant enhancer of end-user experience than all the access-oriented convergence initiatives. From the end-users’ perspective, RCS Release 1.0 enables three services as follows: • Enhanced phonebook: It enables users to see the presence state of people in their normal mobile contacts list and the available communications methods to contact them. • Enhanced messaging: It adds IM functionality and conversational models to existing mobile messaging capability • Enriched call: It allows sharing of multimedia content during a call, including sharing of video files and realsightseeing.

Release 2 under the spotlight

Release 2, already under discussion though not yet

CommsMEA | June 2010 www.itp.net

completed, will add a PC client to allow PC-to-mobile and perhaps also PC-to-PC communications. Whether this will require a SIM card to be physically attached to the PC, as in the model used by some existing services such as Unik and Outsmart’s Plug‘n’Talk product, is yet to be decided. RCS: Operators’ key assets: A major concern about RCS for operators is the efforts to encourage the take-up of mobile data services through attractive tariffs and whether this could have side-effects on mobile voice revenues. But in fact at present there does not seem to be that much to worry about. The current experiences of IP based voicing applications as Skype, Google Voice or Google talk demonstrate that RCS can best be understood as something of a pre-emptive strike by the traditional mobile players against this potential future. Mobile operators only hope that they can cash in at best, and at least hold back some at worst. ZTE suggests the following: as RCS stands for a new revenue model, why not think about the potential benefits when mobile voice begins to transmute into an IP data application? RCS services are addressed via the traditional telephone number, and by attaching more advanced services to the mobile number. This plays to the operators’ strengths – the unique relationship that users continue to have with their mobile number, enabling it to function across both traditional and IP services. In that sense, RCS is a more genuine convergence play than many of the fixed–mobile convergence (FMC) services which have hitherto been launched. RCS correctly identifies the operators’ key assets – the telephone number and the authentication infrastructure. Some commentators have suggested that the integration of voice services into other Internet applications such as social networks will be the real battleground, and that the enhanced telephony and messaging services offered by RCS are simply another – albeit slightly wider – silo.

Prospects for Success The current success of Internet telephony, IM and

ZTE

ADVERTORIAL 37

ZTE is striving to put continuous efforts on developing RCS services based on the standard RCS releases announced by the GSM Association, which are supported by more than 50 major telecom companies.” “RCS is important because it represents an attempt to bring features and functionality offered in the IP world into mobile telecoms services.” communications embedded within other applications shows that ZTE RCS is at least merging into the right track. Indeed, nowadays more and more enterprise telephony or desktop software vendors come to show their face in public with the ZTE unified communication strategy.

More than RCS

some similar features. ZTE has been cooperating with many operators in the RCS field. In fairness, we must point out that all of these are primarily business focused services, while RCS is aimed squarely at younger consumer users. On the other hand, ZTE is now taking its pre-RCS service beyond the initial teenage target market, and may be considering business-oriented.

ZTE anticipates RCS to be massmarket successful since for a while operators, as with the three operators in France, had started to work together to deploy interoperable services. ZTE is striving to put continuous efforts on developing RCS services based on the standard RCS releases announced by GSM Association, which are supported by more than 50 major telecom companies. Our services are currently at the stage of between releases of 1.0 and 2.0, and we have the roadmap as the clear perspective to the coming RCS 3.0. Besides standard services, ZTE provides more as the converged Centrex/converged One Number, Tele conferencing, etc: ZTE proudly say that we provide more than just RCS and we support service customization.

Service Application is everything ZTE RCS is far from being only the ‘skin’. Rather than those entertainment and game based RCS applications, there have already been some interesting ZTE RCS initiatives based on business purposes offered with

Figure 1: ZTE RCS Solution ZTE RCS is targeted primarily at younger consumer users, who are both keen and able to handle multiple communications channels at the same time. In developed markets, further integration with PC clients is likely to be important to this segment. Simultaneous SMS and IM conversations are well established patterns of behaviour here, and a well designed PC client for RCS should go a long way to help making ZTE RCS services ‘sticky’.

www.itp.net June 2010 | CommsMEA

INTERVIEW AVAYA

TALKING UP A STORM

Simon Woollett, vice president of Avaya’s Unified Communications Solutions R&D tells Imthishan Giado how the Nortel acquisition has bolstered its research team.

CommsMEA: What are the key trends you expect to see in the unified communications (UC) space? SIMON WOOLLETT (SW): We see more integration coming in, more video, as well as an expectation of integration with third parties and Microsoft coming on-stream.

CommsMEA: How are you working with Microsoft on developing future UC technologies? SW: We’ve been working with them collaboratively, but they keep changing their mind on how people should collaborate with them. We integrate with their OCS product line – they’re interesting because they’ve had several initiatives in the market. Those initiatives have changed over time. We’ve obviously inherited some relationships with the Norton acquisition and we’ll do our best to make them work.

CommsMEA: How has the recentlycompleted acquisition of Nortel affected your development strategy? SW: It’s actually been very good. There was a lot of commonality in the objectives they had and we had. As we were able to do our planning last autumn and they were into more detailed engineering work, these things actually blend together quite well. We’re going to use the Avaya Aura reference architecture but many of the Nortel technology components plug into that very well. It’s things like the ACE product and the AS 5300 have got the same

CommsMEA | June 2010 www.itp.net

fundamental principles that we have for Aura and things like SIP and so on. They’re refitted into our environment. I wouldn’t say that we’ve changed anything in terms of our strategy. We’ve been able to benefit from some of their technology components and have been able to offer their customers a roadmap which clearly they didn’t have as a bankrupt company. We’re able to offer them some continuity but there was a lot more synergy in the way these things actually turned out than we originally expected when we started the exercise last summer.

CommsMEA: How much R&D capability did you acquire in terms of human assets from Nortel? SW: We have a very significant number – it was in the range of a 1000 R&D people who joined us out of a total of 6000 enterprise people who joined Avaya at the end of last year, so quite a reasonable number.

CommsMEA: How do expectations differ across the emerging market landscape? SW: In some of the emerging markets, a lot of the focus is on mobility. People are very mobile-phone centric so here in Asia we see a lot of expectation for mobile integration, probably as much as any market. The US has changed and caught up in the last few years. Expectations are lot more global; internet technology has pervaded the globe and we don’t see as

Woollet: It’s early days but we can definitely can see the needs that some people have for a different cloud-based model.

much differentiation as we used to a few years ago.

CommsMEA: UC is often not seen as part of a larger mobile strategy but instead seen as an element in the mobile space. How do you address this perception? SW: We’re trying to address this from an end-user perspective with regards to simplification and unification of the UC experience to the end-user. Other aspects that we’re driving it is really trying to make video a more universal experience. People are focused right now on high-end expensive systems like telepresence. It’s still quite difficult to use video effectively throughout the business. As an organisation, we’re really not overly focused on that sector of the business. We think video conferencing and video in general needs to be a lot more ubiquitous to be useful to people.

CommsMEA: What is the major obstacle towards widespread adoption of video in UC? SW: The cost [is one factor]. Some of the technology is not really matured – there is a lot of existing H323 technology out there – that’s really sort of yesterday’s IP technology. We expect with the take up of SIP technology that it will be more straightforward for people to deploy these things. Our challenge is now to run with that wave and make sure people have got a range of affordable SIP video devices that

AVAYA

INTERVIEW 39

“If some ethin ng co ostss you $100 0 a usser fo or the e fu unctio on, and to actua ally de eplo oy it ta akess thou usand ds off dolllarss of se ervice es cost or imp ple eme entattion n costts or partne ers manyy da ays to o mak ke this solutio on worrk, the en tha at’s an n add dition nal co ost beyo ond the lice ence e cosst th hat so ome people e are en’t williing to o bear..”

Sim mon Woollett

people can use in their enterprises from PC to low-end appliance to the bigger group systems.

CommsMEA: How much role does video play in the overall UC strategy? SW: It’s difficult to say right now. It’s an expectation that people have got. Obviously there are people in their home environments using video for collaboration, long-distance communication. We expect to see more of that in the enterprise environments as it becomes easier for people to deploy the technology and manage the bandwidth in some of these networks – that’s one of the other problems of course. Most organisations, the way that certain technology works, it either hogs the bandwidth in the networks, it’s not very efficient, or there are security risks in P2P technologies like Skype. The sort of thing that we’re trying to do is take the best of the concepts of those technologies and turn it into enterprise-class capabilities that people will feel comfortable about deploying because we can help them manage the bandwidth, make it secure and easy to use. Those are the objectives that we’ve set ourselves and those are the things that we’re working on behind the scenes.

CommsMEA: Has take-up of UC technologies increased among enterprises in recent years? SW: I’m not sure that I would say it’s a

luxury. It depends on how you deploy it. We have all-inclusive packages so if people buy our IP telephony solutions, they can get all-inclusive unified communications solutions. Some of the aspects of the deployment as opposed to licensing costs – those have been problematic. We’re doing a lot of work on packaging, using virtualisation techniques to make those additional servers easier to put in the environment.

CommsMEA: Have you allotted development time to virtualisationbased technologies? SW: We can deploy systems in the 2000user range from bare-metal servers to actually having systems that are drawing dial tone and are able to make calls in under two hours. This process used to take two days and we’re extending that technology all the way across our portfolio.

CommsMEA: What has the learning curve been for developing virtualised applications? SW: For us, in real-time communications, the issue has been a lot about ensuring that we maintain performance. You can’t just treat it like e-mail that’s somewhat latencyinsensitive. You wouldn’t notice if it took another second for your e-mail to arrive, you’d certainly notice if you couldn’t hear the people talking to you. We’ve had to be quite careful in the way we approached it. We got some parts of our product portfolio that can virtualise

very easily. Other parts, we have to be very careful about and measure the performance as we bring these technologies in. We’ve done a lot of testing and we think that we’re breaking the back of those problems.

CommsMEA: How much appetite do CIOs have for things like unified comms? SW: It’s a mix. Where people have a real business to solve such as video or mobile integration, if they can see that it’s not going to be incredibly difficult for them to deploy and think that we’ve got reasonably cost-effective licensing packages – we’ve got people very keen to take it up, people who’ve got mobile workers that they see immense value out of it. The challenge is in the deployment to make sure that it really can be cost effective.

CommsMEA: Do you see cloud computing gaining significant traction? SW: We can definitely can see the needs that some people have to have a different model. We have a vision where people can choose what works best for them. Some smaller companies may actually want to use cloud services. Bigger companies may want to be in control of their own and want to host the cloud inside their enterprise. It’s important that the technologies that we’re providing can do both. We were close to doing some of that on our own with Avaya – we can get a bit more of a headstart with the technology that the Nortel team brought us.

www.itp.net June 2010 | CommsMEA

HSPA+

FOCUS 41

BRIDGING THE BROADBAND GULF HSPA continues to reign supreme as the wireless broadband technology of choice in times of emergency.

he rate of growth of HSPA mobile broadband continues to increase globally. Already heralded as the fastest growing mobile technology of all time, HSPA mobile broadband now boasts more than 214 million connections worldwide with more than 9 million new HSPA connections being added globally every month. As a key HSPA growth region, the Middle East experiences 447,000 new connections per month. The growing popularity of mobile broadband, in both developed and high growth markets, is one of the key drivers behind the regionâ&#x20AC;&#x2122;s growth in global mobile data revenue. The launch and ongoing rise of HSPA+ technology across the Middle East is expected to further transform the Internet market and open endless doors for innovation. HSPA+ is a rising phenomenon in the Middle East, capable of delivering peak download speeds in excess of 21Mbps and providing an even more viable alternative to fixed line broadband.

The Middle East after all has an under-developed fixed line infrastructure but millions of residents and businesses desperate for fast, reliable broadband connectivity. These factors will combine to position the Middle East region as a global leader in terms of mobile broadband adoption per head of population and HSPA+ as an important enabling technology. There are now six commercially live HSPA+ networks across the Middle East region. Zain was one of the first mobile operators to deploy the technology. We started our HSPA+ deployment in Kuwait in order to drive Mobile Broadband network performance and establish clear competitive advantage over existing fixed line players.

DELIVERING HSPA+ The Gulf has become one of the worldâ&#x20AC;&#x2122;s most exciting and rapidly developing regions, embracing the latest developments in technology and engineering. The same is

By Mohammad J. Al-Shehab, CCO, Zain Kuwait true with mobile broadband: in Kuwait, we have launched HSPA+ technology to bring fast and abundant broadband services to homes and businesses. As a multinational mobile group with operations across the Middle East and Africa, Zain serves many countries where telecoms service provision is generally poor. In many of our key operating markets there has been a long-term lack of investment in fixed networks, meaning the quality of services provided to consumer and business customers is lacking, creating an ideal opportunity for mobile voice and data technologies to fill the gaps. Zain launched HSPA+ technology in Kuwait during 2009, in order to provide our customers with a realistic alternative to the underdeveloped fixed-line network, which has failed to meet demand for broadband connectivity. While Kuwait has a competitive mobile space, its fixed-line market has not benefited from the same level of innovation, which has been reflected in the products available

www.itp.net June 2010 | CommsMEA

FOCUS HSPA+

“The growing popularity of Mobile Broadband, in both developed and high growth markets, is one of the key drivers behind the region’s growth in global mobile data revenue.” Al-Shehab

to customers. Our HSPA+ network in Kuwait offers peak speeds of up to 21.6Mbps — meaning that the services delivered are genuinely comparable with fixed-line alternatives. While internet access is the most popular use of our HSPA+ network, it can also support multimedia and video applications. For products and services which were designed for mobile from the outset, including mobile browsing from handsets, existing 3G and HSPA networks provide adequate connection speeds.

FIXED SUBSTITUTION We became quickly aware that with users in Kuwait already dissatisfied with poor fixed broadband services, we would have only one chance to make a good impression with our mobile broadband services by offering high-quality, high-speed connectivity to our user base. But speed alone is not enough to satisfy the demanding Kuwaiti customer base; a clear and competitive pricing strategy is also crucial. We have opted to offer flat-rate bundles for customers, including the use of tiered packages differentiated by connection speed. An important aspect of our flat-rate packages is transparency with regard to “fair use” restrictions, so that customers do not find themselves subject to additional — and unexpected — charges or service limitations.

CommsMEA | June 2010 www.itp.net

The mobile broadband business growth largely depends on the devices as well as prices. Thus, we have been ensuring that our customers are enjoying the best experience through a carefully selected and a wide range of broadband devices like USB modems and routers. We have been very successful in meeting differentiating consumer and business needs through best devices for mobile broadband as well as pricing plans.

BEYOND KUWAIT We are also taking a measured approach to rolling out HSPA+ elsewhere in the group, with our decisions based on a careful market analysis, considering criteria such as the competitive environment, market dynamics (such as availability of suitable spectrum and fibre backhaul), and customer profiles. The need to access and drive backhaul capacity is a priority for Zain when planning the launch of new services, especially because it may not be immediately apparent how much data our customers will consume. Africa may indeed prove a lucrative HSPA+ hunting ground for Zain, because of the lack of existing broadband solutions in many markets. In markets where we already have 3G networks and suitable spectrum allocations, an HSPA+ rollout is a relatively straightforward proposition, being an evolution of our existing operations rather than involving a fresh roll-out of completely

new technologies. We have committed to deploying HSPA+ in the Kingdom of Saudi Arabia, and continue to evaluate the suitability of the technology for other markets. A clear upgrade path to LTE is another clear advantage that HSPA+ offers over competitive technologies. With HSPA, HSPA+ and LTE all forming part of the GSM family of technologies, all mobile operators, and subsequently mobile consumers, can benefit from the vast economies of scale, choice of devices and roaming relationships that the supporting GSM ecosystem delivers. With 86 mobile operators publically committing to LTE technology, it is clear that it will become the de-facto 4G technology. As we have demonstrated however, HSPA+ is capable of delivering impressive performance through a wide range of devices today, enabling us to seize maximum possible market share over the fixed line competition before the spectrum arrives for LTE deployment. Zain has also announced its commitment to LTE, and we are set to make a $25m investment in a network in Bahrain, which is being deployed during 2010 — this will be an LTE showcase for all Zain group operations. We also intend to rollout LTE in Kuwait to follow HSPA+, although this is not an immediate priority.

RESEARCH

CELLULAR CALLING RATES

MOROCCO LAGS BEHIND IN PRICE LEAGUE TABLE North African country has the highest cellular minutes in the region, according to Arab Advisors’ survey.

orocco has the highest average cost of prepaid and postpaid cellular minutes in the Arab World, while Egypt offers the lowest average cellular minute costs for prepaid and postpaid, according to a recent survey of 53 operators in 19 Arab countries, conducted by Jordan-based Arab Advisors Group. Morocco was found to have the highest postpaid average minute cost in the region, followed by Mauritania. As for the prepaid average minute rates, Morocco also has the highest average rate followed by Lebanon. Egypt was at the other end of the scale, having the region’s lowest average prepaid and postpaid minute rates. “Enhanced competition in the Arab cellular markets has caused operators to adopt per-second billing or fractions of a minute,” said Zeena Al Borgan, Arab Advisors Group senior research analyst. “As of March 2010, an array of 15 different billing methods was in use by 52 cellular operators in the 19 covered Arab countries.” Arab Advisors found that 12 of the 19 covered markets it surveyed impose taxes on cellular services, these are: Algeria, Egypt, Iraq, Jordan, Lebanon, Mauritania, Morocco, Palestine, Sudan, Syria, Tunisia and Yemen. It said that Jordan boasts the highest sales tax rates on cellular services in the region followed by Tunisia and Morocco.

CLOUD CHALLENGE Cloud computing has been touted as a potentially huge revenue opportunity for telcos, but researchers at Ovum have warned that operators could face challenges in terms of how they are perceived by IT decision makers. Furtermore, while leading telcos including BT Group and Verizon Business have developed their own cloud computing and infrastructure-as-a-service (IaaS) solutions, Ovum warns that growth of the sector could be slower than expected. However, Ovum’s research also indicates that while cloud computing remains low on the agenda of CIO and IT managers and growth may remain sluggish for a couple of years, operators that enter the field early could gain an advantage and help overcome the credibility issue. “This means that sales uptake for IaaS is likely to be slow for at least the next two or three years,” said Peter Hall, a principal analyst with Ovum. “At the same time, it may take two or three years for telcos to establish credibility in this market, so early market entry will have its benefits.” Telcos that are considering entering the market for IaaS will need to assess whether they can develop these services internally or whether a partnership with an existing player is preferred, according to Hall. They will need to gauge local market interest and competition and determine which vendors, including global telco partners, can help them expedite their cloud computing offer. he adds.

THE NUMBERS

707% Year on year increase in sales of Android based handsets in Q1 2010. 53 The number of operators in 19 Arab countries covered by Arab Avisors’ survey of mobile calling charges.

314.7 MILLION The number of smart phones sold worldwide in Q1 2010 according to research from Gartner.

$2.66 BILLION The sum Bharti Airtel will pay for a 3G licence for 13 circles in India. CommsMEA | June 2010 www.itp.net

SMARTPHONE SALES SURGE IN Q1 Worldwide mobile phone sales totalled 314.7 million units in the first quarter of 2010, a 17% increase from the same period in 2009, according to Gartner. Smartphone sales to end users reached 54.3 million units, an increase of 48.7% from the first quarter of 2009. Among the most successful vendors were those that controlled an integrated set of operating system, hardware and services. “Smartphone sales to end users saw their strongest yearon-year increase since 2006,” said Carolina Milanesi, research vice president at Gartner. “This quarter saw RIM make its debut in the top five mobile devices manufacturers, and saw Apple increase its market share by 1.2%. Android’s momentum continued into the Q1 2010, particularly in the US, where sales of Android-based phones increased 707% year-on-year.

EVENTS CALENDAR

ICT EXHIBITIONS AND EVENTS The MENAP region’s top communications exhibitions and conferences under the spotlight

Com World Series, West and Central Africa

7-9 June, Cairo, Egypt

Arab Advisors’ Convergence Conference

www.terrapinn.com/2010/twna

7-8 June, Amman, Jordan

Telecoms World North Africa is a platform for North African telecom executives. The event is the first edition being held in Cairo, in recognition of North Africa’s rapidly developing telco sector. The event will bring together regional and international operators and regulators and will focus on strategies for growth and investment. Speakers include Elfatih Erwam, MD of Zain Sudan and Hakam Kanafani of Oger Telecom.

www.arabadvisors.com/convergence/ schedule.htm Building on the success of Arab Advisors Group’s Annual Media and Telecoms Convergence Conference held in Amman over the past six years, the seventh edition of the event will bring together the leading lights of the region’s telecoms sector, with keynote addresses from HE Minister of ICT Marwan Juma, and Etisalat’s Mohammad Omran.

Following two years in Nigeria, West and Central Africa Com returns to its former home of Dakar in Senegal. Driven by increased competition from new entrants, Senegal has undergone exceptional grown to become the region’s third largest telecoms market. This dynamism makes it the perfect setting for West and Central Africa’s only dedicated conference and exhibition.

CommunicAsia 2010 15-18 June, Singapore

Wireless Broadband World

Mobile Money Services Africa

communicasia.com

12-15 July, Joburg, South Africa

20 - 22 Jul, Joburg, South Africa

www.terrapinn.com/2010/wirelessza

www.iir-telecoms.com/event/mmsa

Wireless Broadband World Africa 2010 is described by the organisers as the definitive CEO level strategic conference where ideas are generated, and long-lasting relationships are formed. With exciting panels and “warstory” case studies, this C-level event brings together the experts so that delegates can discover their secrets to success and learn from their mistakes.

IIR’s Mobile Money Services Africa gives telecom operators and banks the opportunity to learn from the experiences of existing mobile money deployments such as M-PESA and MTN Mobile Money, and to tap into the revenue potential of mobile money. It will give them an understanding of the challenges they will face planning and deploying a range of services.

Telecoms World NA

Since 1979, CommunicAsia has established itself to be an unparalleled one-stop ICT event platform in Asia. CommunicAsia2010 is an ideal marketplace bringing buyers and sellers together to seek the best returns on investments and to determine the best value and latest convergent technologies and applications. Products being showcased range from the latest technologies in applications, solutions to hardware.

CommsMEA | June 2010 www.itp.net

16-17 June, Dakar, Senegal www.wcafrica.comworldseries.com

The only network that covers all 18 governorates

Asiacell is the ďŹ rst and only telecom operator to extend its coverage to all 18 governorates of Iraq.

10807 coverage Office En 23x27 5cm P indd 1

5/11/10 12:23:09 PM

BACKCHAT

MEETING DEMAND After acquiring Metro Ethernet Networks (MEN) group, the optical and carrier ethernet assets of Nortel, US based networking specialist Ciena is forging ahead with ambitious growth plans in the Middle East. Gary Smith, CEO, Ciena, tells CommsMEA about the company’s plans for the region and why wireless networking technology is set for stellar growth. COMMSMEA: WHAT IS CIENA’S FOCUS IN THE MIDDLE EAST? Gary Smith: As the region continues to grow, broadband is expected to triple in the next few years, and you have also got mobile, mobile broadband, IPTV and broadband activities going on. All of that is creating an enormous demand on the carriers networks, and one of the fundamental things that we are seeing in the region is that a lot of these networks were really designed for voice. So mobile and the data demands are really driving carriers to look at an architecture that is more suited to data, video and mobile, and that is an opportunity for Ciena. You are seeing a lot of the carriers now look to upgrade their networks, not just from a capacity point of view, but from a different services point of view, where you can have bandwidth on demand, and very high rates of bandwidth to the home and to mobile devices. We are seeing it in other parts of the world, and we are seeing it in the Middle East. COMMSMEA: HOW IS THE MIDDLE EAST GOING TO FINANCE BROADBAND UPGRADES? Gary Smith: It is an issue globally, how do carriers fund the expansion that is required for all these new services, and to put extra bandwidth on it. Essentially it has to be based, I believe, on some sort of linkage between the services that are provided and the amount of bandwidth that is consumed. One of the issues that we are struggling with globally is that we are all used to paying one price for infinite access to the Internet, that is just how the Internet has grown up. The challenge to that is we are putting more and more things through that infrastructure, and somebody has to pay for that. At some point there has to be increasing linkage between usage. The revenues have to go more toward being content based, there are different kinds of applications that people will pay for, and I think you are increasingly seeing carriers talk about differentiated services, and content on the network. COMMSMEA: ARE THE MIDDLE EAST CARRIERS WILLING TO INVEST TO ROLL OUT NEXT GENERATION NETWORKS? Gary Smith: In my conversations with them, I think they are very well educated around what is going on in the rest of the world, and I think they see an opportunity to leap frog some of the things that are going on, so whilst I think they are prepared to invest in their infrastructure, they are very cognizant of linking that to services, and services that people will pay

CommsMEA | June 2010 www.itp.net

for. Having established themselves, I think many of the major carriers in the region are certainly prepared to invest in their networks, no question about that, but I think they are looking for next generation architecture that links that spend directly to the services that they can create. Carriers are very receptive to new innovation, and that fits well with Ciena, we are really known for innovating with technology, we see a very receptive market here. COMMSMEA: WHAT IS CIENA DOING TO ADDRESS THE MARKET HERE? Gary Smith: Ciena is globally expanding, particularly into the Middle East market, we have been here now for a couple of years, focused on this region, and we see it as a good long term growth opportunity for Ciena. We have our first customers here, and we are looking to expand that over the next few years. We see it as a great opportunity for us. It’s fair to say we are talking to the ‘usual suspects’. COMMSMEA: WHAT DOES CIENA OFFER TO THESE CARRIERS THAT STAND OUT FROM THE COMPETITION? Gary Smith: Ciena is the market leader in converged optical ethernet, that is our focus, players like Juniper are more into routers. Now with the recent acquisition of Nortel, we are the largest player focused on converged optical ethernet, and that allows us to offer a tremendous amount of value to Middle Eastern carriers, and as they are looking to upgrade their networks, we bring an awful lot to the marketplace. COMMSMEA: HOW DOES OPTICAL ETHERNET MIX WITH OTHER TECHNOLOGIES LIKE WIMAX? Gary Smith: It really enables all of that activity, because all of that needs to be terrestrialised at some point. You have wireless backhaul, which is becoming increasingly the critical path for the expansion of these mobile services, and Ciena has been a pioneer in that space. WiMAX companies like Clearwire in North America, based all of their architecture on Ciena, and they are here in the Middle East as well. It is really allowing things like 4G, LTE and WiMAX, which really requires an enormous amount of bandwidth, and Ciena has been at the forefront of delivering that. If you look at a lot of the wireless backhaul services that have been put in by people like AT&T, that is with Ciena as well.

Uni-RAN

Best Kungfu vs. Best Uni-RAN

Mobile broadband services have become essential revenue generators for today’s telecom operators, and with mobile data services becoming richer and richer, user demand has skyrocketed. This has led to a shift in focus for the entire telecommunications industry. CSL, Hong Kong’s largest mobile operator, is at the forefront of this shift. Over just 11 months, CSL partnered with ZTE to complete the deployment of a GSM/UMTS hybrid network running leading Uni-RAN solutions based on SDR technology. With this network in place, CSL now has the power to evolve smoothly from 2G to 3G and then onto LTE. Most

importantly, our partnership has enabled this forward-thinking operator to lower its TCO significantly and maximize customer value. Now its subscribers in Hong Kong can enjoy a colorful range of high speed data services via the HSPA+ network. As China’s 3G market leader and a leading global provider of telecommunications equipment and network solutions, ZTE delivers innovative, customized products and services to customers in more than 140 countries and regions. Begin at www.zte.com.cn.