Phone owners are making fewer calls, preferring instead to use their devices to watch videos, listen to music or for other mobile applications, according to a report on tech trends from International Data Corporation.
These services, known as over-the-top (OTT) will continue to erode traditional revenue streams for the telecoms companies that are being forced to adapt their operations.
“As markets continue to evolve, more customers are eschewing core telecommunications services in favour of rich OTT services,” said Paul Black, the director of telecoms and media at IDC Middle East, Africa and Turkey. “This is forcing regional operators to reevaluate their business models, data offerings, tariff packages and even network roll-out plans.
“While traditional services are still offered, operators are expanding their role in the digital value chain by promoting local content generation and application development.”
Telecom companies across the UAE and the rest of the GCC have already invested heavily in long-term evolution (LTE) networks also known as fourth-generation (4G) or the deluge of data usage.
LTE enables super-speed mobile broadband, enabling quick and seamless of streaming of high-definition videos.
"It is a challenge, it needs a change in mentality for the telcos. Usually our pace is fairly slow, but in the case of OTTs, they are much more versatile and quick. Their trial and error cycle is very short. Operators like us need to go through changes," said Samer Geissah, the vice-president of home and multimedia services at du.
The Dubai operator recorded a 10.73 per cent year on year revenue growth to Dh2.63 billion in January-March 2013 as data revenue rose 32.77 per cent to Dh550 million.
“We have an innovations team and we have a digital team looking at opportunities and non-traditional telco services whether it is acquisitions or collaborations. These things are being assessed right now and we should see some results soon.”
African operators, however, have taken a more cautious approach given the lower levels of smartphone penetration and resources.
“The growing popularity of data-hungry applications and services, particularly video, will contribute to an exponential increase in data traffic and make network investment economics difficult to justify,” said Mr Black.
As cheaper smartphones from China flood in, the African markets are also expected to shift to heavier usage. The challenge for telecoms players and app developers is to profit from this effectively.
A few telecoms operators, including Etisalat and Saudi Telecoms Company, have launched their own apps stores with limited success, shunned in favour of Google's Playstore and Apple's iTunes.
“Monetising digital opportunities and ensuring long-term end-user engagement will remain a challenge in 2014 and beyond for digital media players as well as for telecommunications operators as they continue to explore new revenue streams to justify large infrastructure investments,” said Mr Black.
thamid@thenational.ae
