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29 March 2024

Mobile broadband to see 50m users by 2013

There were 7m mobile broadband subscribers in the region in 2008. (SUPPLIED)

Published
By Nancy Sudheer

The Middle East mobile broadband market is expected to touch 50 million subscribers by 2013 from seven million in 2008 as technologies such as 3.5G gain popularity this year.

The region has 133 million mobile subscriptions at the end of the third quarter of 2008. The top five mobile markets in the region are Iran with 43 million mobile subscriptions, Saudi Arabia with 27 million, Iraq 16 million, the UAE and Afghanistan at nine and eight million respectively, according to Informa Telecom research.

The top mobile broadband operator in the region in the third quarter of 2008 was Saudi Arabia-based Etihad Etisalat with close to three million HSPA (high-speed packet access) subscriptions out of 11 million total subscriptions for a mobile broadband/mobile penetration of 27 per cent with the remaining eight million subscriptions being GSM.

Mike Roberts, Principal Analyst at Informa Telecoms & Media, said: "The Middle East is a very diverse region and mobile broadband services have not been launched in many major markets including Iran, Iraq and Afghanistan. The result is that 2G will be the top mobile generation throughout the forecast period, with 137 million subscribers in 2008 declining to 135 million in 2013, leading its share of total mobile subscribers to drop from 82 to 55 per cent. 3.5G will gain second position in 2009 and will account for 19 per cent of mobile subscriber in the region in 2013, up from four per cent in 2008."

"There were seven million mobile broadband subscribers in the region in 2008, and this will increase at a CAGR (compound annual growth rate) of 47 per cent to 50 million in 2013. The segment will account for 20 per cent of mobile subscribers in 2013, up from four per cent in 2008," said Roberts.

Informa's report also brought to light that the total global broadband market will pass the milestone of one billion subscribers in 2011, driven by growth in mobile broadband. By the end of 2013, there will be 2.2 billion broadband subscribers worldwide.

Mobile broadband has rapidly become a major part of the mobile market, with 186 million mobile broadband subscribers worldwide at the end of 2008, up 84 per cent from 101 million at the end of 2007. This represents more than 100 per cent increase from fewer than 50 million subscribers globally at the end of 2006.

Revenues from mobile broad band services are generating significant revenues making the segment one of the key ways operators can offset declining voice revenues. Informa Telecoms estimated that operator data revenues from mobile broadband services reached $31 billion (Dh113.8bn) globally in 2008, and will increase at a CAGR of 43 per cent to $187bn in 2013.

Zoran Vasiljev, Partner at research firm Value Partners, agreed. He said: "Mobile broadband is the future of telecom, not just in the Middle East but as the whole. We have already seen strong indications that mobile broadband is to benefit from the same explosive growth that is being enjoyed in the West. Just looking around we see people texting, doing their email, surfing the web and even downloading music on their wireless devices."

"In the MEA region, there is no doubt that mobile broadband adoption will grow faster than the global average. We have observed that in some of the regional markets, mobile broadband services are attracting the majority of net additions. Very soon, mobile broadband will become the preferred option to access the internet, and I would estimate that by 2015 the total number of subscribers will reach 50 million."

Telecom operators globally and locally are looking at alternate sources of revenue and with high internet penetration mobile broadband technologies will set the pace for the future. Mobile broadband will also exceed the growth of fixed line services.

Vasiljev said: "Mobile broadband has been a true success story over the past two to three years, and mobile data and wireless subscriptions will overtake fixed line data subscriptions in both numbers of customers and in revenue. The ever-growing and unmet demand for access coupled with lack of fixed infrastructure investments (improvements) have contributed to this trend and I do not see this changing or reversing. Demand for mobile broadband will exceed that of fixed line services.

"Mobile operators in the region are taking advantage of this new reality, and we see more and more businesses and consumers enjoying the freedom and productivity benefits offered by mobile broadband, by being enabled to access mobile internet on the move."

The global total of mobile broadband subscribers will overtake global fixed broadband subscribers in 2011, and by 2013 mobile broadband will represent 65 per cent of the total broadband market. Drivers include the surging demand for broadband in emerging markets with a lack of fixed infrastructure, and the larger addressable market for mobile broadband services, which typically have individuals as subscribers, rather than households as in the fixed broadband market.

Population of the Arab Middle East is young and growing fast, many of them with high incomes. In the GCC almost 70 per cent of the population is under 30. Youngsters tend to be enthusiastic consumers of all types of digital media, and are said to form 75 per cent of all internet traffic in the GCC. "We are witnessing a rapid deployment of mobile broadband technologies in these countries – with many of the key players in the region having already launched their mobile broadband offerings. We are seeing continual success in Saudi Arabia, Egypt, the UAE, and higher take-up in Bahrain, Qatar and Oman," said Vasiljev.

The portable segment, based around USB modems, notebooks and netbooks, will never dominate the mobile broadband market given the massive scale advantage of the mobile device segment, but it is vital since it represents entirely new revenues and new strategic opportunities for mobile operators. Informa Telecoms estimates that the portable segment already generated $7bn in global operator data revenues in 2008, and this will increase at a CAGR of 39 per cent to $38bn in 2013.

The rise of the mobile broadband portable market has unleashed a flood of new data traffic that is forcing mobile operators to upgrade networks and revise strategies, and the same will happen in the mobile segment.

This will drive mobile data traffic up by 1,587 per cent from 2008 to 2013, compared to an 84 per cent increase in mobile data revenues over the same period. This will force operators and vendors to dramatically reduce the cost per megabyte of mobile traffic, and to look for ways to offload traffic to fixed broadband networks.

Fixed-to-mobile broadband substitution will be limited, since fixed broadband networks can carry data traffic at one-tenth the costs of mobile networks. This has led converged operators such as Japanese mobile operator NTT DoCoMo to bundle fixed and mobile broadband services in ways that shifts the heaviest usage onto fixed networks.

Long-term evolution (LTE) is the last step towards the 4th generation of radio technologies designed to increase the capacity and speed of mobile telephone networks. Where the current generation of mobile telecommunication networks are collectively known as 3G, LTE is marketed as and called 4G.

"The road to the mobile broadband future has several paths and each mobile operator will have different timetables and reasons for taking one path over another, especially due to high Capex investments required. But seemingly all agree on the ultimate goal – an efficient all-IP wireless network capable of supporting voice, video and data services.

"With Mena set to emerge as the world's leading market for mobile broadband additions over the next years, I think investments in mobile broadband technologies are being made accordingly," said Vasiljev.

Mobile operators able to do so will continue to upgrade their existing 2G/3G networks to constantly improve the mobile broadband experience. Migrations from Edge (enhanced data rates for GSM evolution)to HSDPA and HSPA+ are being evaluated and executed, but technologies alone are not enough to guarantee success and sustainable business.

High-speed downlink packet access (HSDPA) is an enhanced 3G (third generation) mobile telephony communications protocol in the high-speed packet access (HSPA) family, also coined 3.5G or 3G+, which allows networks based on Universal Mobile Telecommunications System (UMTS) to have higher data transfer speeds and capacity.

The current explosion in mobile broadband has increased the drive for faster, more efficient radio networks. Although mobile telecoms will eventually evolve to 4G networks, mobile operators are currently assessing how to upgrade their infrastructure to a next-generation mobile network (NGMN).

This is a network that will allow much higher data rates, lower latency and several new types of services that will help operators establish new revenue streams and breathe new life into mobile broadband business models.

The vast majority of mobile operators have accepted that long-term evolution is the preferred technology for their NGMN. WiMax is regarded as a competitor to LTE, having a time to market advantage over the cellular standard, but WiMax has not gained as much traction as LTE, particularly among major mobile operators. Ultra mobile broadband, the evolution of the CDMA2000 family of technologies, was competing with LTE but was not adopted by operators, and its main backer Qualcomm has stopped developing the technology.

As of early 2009, LTE has been receiving increasing interest from mobile operators, which are starting to experience capacity shortages following the mobile broadband explosion.

 

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