DUBAI (Reuters) - Middle East telecommunications firms are talking about the thought of developing a pan-Arab online platform that will earn them more revenue using their systems by challenging Facebook along with other Internet behemoths from the West.
The ambitious project faces technical and financial obstacles and could not be implemented on the massive. But advocates argue the most popular language and culture shared through the world's a lot more than 350 million Arabic loudspeakers, as well as the webs of affiliated companies which Gulf operators own over the Middle East and North Africa, might make the project viable.
"Just one operator, even one out of multiple geographies with hundreds of countless customers, can't create this platform by itself,Inch stated Osman Sultan, leader of du, the 2nd greatest operator within the U . s . Arab Emirates.
"It might be limited to the clients of the operator and wouldn't have adequate scale to achieve success. But a unified platform spanning the Arab world would," he told Reuters.
Sultan stated he'd suggested the concept to any or all major operators within the Arab world in the last 12 several weeks.
Behind the proposal is really a frustration shared by telecommunications firms globally: because they spend heavily to construct systems, data traffic around the systems is growing quickly, however the firms basically only earn money from charging for use of their systems - a minimal-margin business.
The lion's share of recent revenue from visitors are being taken by so-known as "over-the-top" (OTT) Internet companies for example Facebook, Google, Apple and Twitter. The telecommunications firms have unsuccessfully pressed them for bigger contributions to the price of building the systems.
"OTT gamers...we can not share their gain plus they will not share our discomfort," stated Sultan. "Network traffic doubles every eight to nine several weeks, but revenue is going to a plateau, so we have to claim area of the new revenues alongside OTT gamers."
Very Hard
The suggested Arab online platform would feature social networking an internet-based looking for products or services, including digital content for example music, video and programs, Sultan stated.
He rejected to provide particulars, saying areas of the talks were private, and many other Arab telecommunications operators approached by Reuters rejected to comment or didn't react to demands for comment
But Sheikh Mohamed Al Khalifa, leader of Bahrain Telecommunications Co, welcomed the concept.
"Telcos are starting to turn to the deployment of OTT services for example streamed TV and video-on-demand," he stated. "Such diversification (into) adjacent industries is becoming necessary. You will find gains to make by working together inside our industry in the centre East."
Sceptics point that efforts by telecommunications firms elsewhere on the planet to setup online endeavors have frequently unsuccessful when dealing with the technical savvy and marketing muscle from the established Internet titans.
"Essentially, it's tough to complete against OTT gamers - operators don't have the agility and also the core expertise along with the brand appeal," stated Guillermo Escofet, a senior analyst at Informa Telecom and Media working in london.
"They are utilized to running systems, not media companies. Also, operators intuitively attempt to differentiate themselves from one another - it's against their DNA to operate together."
London-listed Vodafone is just one of numerous operators which have struggled creating Internet services. The Vodafone 360 service, according to customers' phone address books, was released in Europe in '09, letting clients import contacts from internet sites and employ a web-based application store. This Year, Vodafone stated it had been winding lower the service.
"Operators have unsuccessful totally when they have attempted to maneuver in the value chain, aside from in a few business-to-business services," stated Pedro Oliveira, someone at global management consultants Oliver Wyman. "Some have attempted to maneuver into content and programs, however the war sheds already."
The large Western Internet firms happen to be popular round the Middle East. Facebook, that provides an Arabic interface, had 45.two million customers within the Arab world by June 30, up a lot more than 50 % from last year, based on the Arab Social Networking Report, created through the Dubai School of presidency.
Despite pockets of innovation in the area, for example gaming industries in Saudi Arabia and Jordan, and endeavors developing programs for wise phones in Egypt, the center East has to date not compare to developing online items to rival the very best Western Internet companies.
Achievable
However, advocates from the telecommunications firms' online plan argue it's more achievable within the Arab world than elsewhere.
No more than 1 % from the world's websites have been in Arabic, based on market research by experts W3techs. Internet transmission lags regions for example Europe, The United States and east Asia, with no more than 86 million from the believed 360 million native Arabic loudspeakers online at finish-2011, Miniwatts Marketing Group stated.
Such figures may mean Western Internet firms are not so established in the centre East they can't be challenged. The brand new online platform would satisfy hunger one of the region's youthful population for additional Arabic-language content, stated Sultan.
Another factor may be the impressive physical achieve of Gulf telecommunications firms if your couple of of these can agree with presenting the internet platform, they might have the ability to roll it rapidly across greater than a dozen nations.
Combined, Qatar Telecom, Saudi Telecom, Kuwait's Zain and also the UAE's Etisalat cover 16 from the 22 Arab League nations. Another six nations would be the littlest four in economic terms - Mauritania, Somalia, Djibouti and Comoros - plus war-ravaged Libya and Syria.
The Arab telecommunications operators' extensive distribution systems and point-of-purchase advertising may help them win clients from OTT gamers.
Most Middle Eastern cell phone customers take presctiption pre-compensated contracts typically capped track of scratch cards. They are offered everywhere from gas stations to local stores, so vouchers for that online platform would probably be folded out alongside them.
"The achieve we must customers and also the understanding we've of consumer behavior is huge," Sultan stated.
Thomas Kuruvilla, controlling director of consultants Arthur D. Little Middle East, stated an alliance of regional telecommunications firms could form a residential area of internet sites which was appealing to local populations.
When the firms can cooperate on content and internet sites, "it'll surely get more niche marketers and therefore greater revenue potential," he stated.
However, even when the region's greatest telecommunications firms succeed using the online platform, it will likely be a hardship on more compact operators to create much cash from this, stated Oliveira.
This might consign more compact firms to becoming simply low-margin pipes for that data services from the large ones.
Within the Gulf, Saudi Arabia, Bahrain and Kuwait have multiple telecommunications firms supplying Access to the internet, and a number of them might be probably the most susceptible to becoming "dumb pipes". Such companies might cut access costs for their systems in order to win share of the market, Oliveira stated.
"If a person operator takes this method, then others within the same market might be instructed to follow because they lose revenue and share of the market and find it difficult to continue trading within their network," he stated. "It is a race towards the bottom."
(Editing by Andrew Torchia)
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