Middle East subscribers reluctant to take 4G plunge

4G subscription numbers in the region lag behind those in the US and Europe.

Mobile users are failing to take up faster mobile broadband speeds because of a lack of understanding, high costs and a limited number of suitable devices.

While many of the region's mobile operators have invested millions in long term evolution (LTE) the high-speed mobile broadband network more commonly referred to as 4G, subscription numbers lag behind those in the United States and some European countries. LTE is three to six times faster than current third generation (3G) networks, making applications such as streaming HD video easier.

Statistics from Informa Telecoms and Media show that there are just over 50,000 LTE subscribers across the Middle East and North Africa region. Etisalat, STC and Mobily all launched LTE services back in 2011, but a lack of devices and suitable applications have hindered the progress of the technology.

"LTE is a new technology. It is still in the developing stages. The operators are not focusing on developing applications because they are focusing on issues and problems of how to implement LTE itself," said Mohammed Abdel Qadir M Ali, senior manager of mobile network core planning at Etisalat. "The applications will come at a later stage."

One of these problems is that users cannot make voice calls over most LTE networks, so they still have to make use of 3G networks. Etisalat became the region's first operator to successfully test voice over its LTE network this week with the telecoms vendor Huawei.

Use of LTE services and applications in e-government, healthcare and education sectors are evident in North America, which has about 50 per cent of the world's LTE subscriptions.

Huawei says expansion of LTE services will be driven by operators' ability to open up their networks to third parties to develop applications that can be used on the LTE networks. "LTE still has a lot to go through in this region. The issue is more related to broadband in general," said Ihab Ghattas, an assistant president of the Middle East region at Huwaei.

"In North America and Europe and the Far East there are initiatives by the government and semi-government entities that embrace the concept of broadband, whether mobile or fixed. These initiatives generate demand for bandwidth and with that demand the operator is encouraged to deliver the services."

Ericsson says that for every 1 per cent of mobile broadband penetration in a country, GDP grows by 0.1 per cent. Doubling the speed of mobile broadband raises GDP growth to 0.3 per cent and quadrupling the speed increases GDP growth by 0.6 per cent.

"Subscriber numbers are still low in this region, but I think it will be changing quite quickly. There are more LTE-enabled smartphones and at the moment we are seeing a wave of high-end smartphones that are LTE enabled becoming available," said Matthew Reed, the principal analyst at Informa Telecoms and Media. "This will give momentum to LTE use, but we also need more affordable devices and data plans. Some operators are charging premium of some kind, while others only offer LTE on more expensive data plans, the expense involved slows things down."

In the US, revenues from data have surpassed that of voice. US operators are now offering unlimited voice and SMS packages and users are now only paying for data.

"The ambition is that this shift will happen [here] and operators are hoping this change will happen. It is very clear that the opportunity is there, but the traditional business of voice and SMS is stronger today," said Andreas Krenn, the head of marketing and government and industry relations of the Middle East at Ericsson.

Ericsson says data volumes will be 1,000 times higher and user data rates will be up to 100 times faster than today by 2020. Operators will therefore need to prepare their networks to handle the 50 billion connected devices that Ericsson is predicting.