Having a ubiquitous, reliable, and high speed broadband network is essential for socioeconomic growth and is pivotal for telecommunication operators' long-term survival. According to Ovum's recent report, the Middle East and North Africa (MENA) region is behind others in terms of both broadband penetration and basic access speeds. In order to remain competitive and take advantage of the opportunities that broadband access can provide, Michael Philpott, practice leader of Ovum's Consumer research practice and author of 'MENA Operators Need to Increase Investment in Broadband Infrastructure to Provide Excellent Quality of Service', believes that operators must invest in developing high quality fixed broadband networks that are capable of delivering minimum speeds of 10Mbps, and that are available and affordable to all. Telecom Review sat down with Michael Philpott to discuss this.
1. Can you start by telling me a little bit about your recent report: 'MENA Operators Need to Increase Investment in Broadband Infrastructure to Provide Excellent Quality of Service'?
In 2015, Ovum conducted a global study on the importance of receiving a high quality broadband experience. In May 2016, Ovum extended this study to focus in on the MENA region, highlighting 10 key countries within the region.
Both studies highlighted that the concept of a 'best effort' internet was a thing of the past and even consumers in emerging broadband markets demand a high quality of experience, especially when it comes to video-based applications. A high quality experience is defined as one where the application starts in less than three seconds, has zero buffering / pauses during content playback, and has high quality picture and sound throughout. The studies also went onto find that failure to deliver this level of experience is often placed at the broadband service provider's door and there is a clear link between broadband access churn and poor application experience. Delivering minimum speeds of 10Mbps, with an average target of 25Mbps, was shown to be critical in providing the required level of service and therefore should be the target for all service providers.
2. What is the reason for the MENA region being behind others in terms of both broadband penetration and basic access speeds?
MENA is a very diverse region consisting of a few developed broadband countries such as Qatar, UAE and Bahrain, as well as a number of emerging countries. Many countries in the region, therefore, are 'mobile first' with a lack of fixed infrastructure. Without a good level of fixed infrastructure, consumers are limited to mobile internet access, which is satisfactory for many applications, but does not offer the same range of services or the required quality for advanced application such as high definition large screen video. However, even in the developed countries which have good broadband penetration, speeds are still well below those seen in other regions. The vast majority of fixed broadband users in the region are on speeds well below the minimum 10Mbps that is required to ensure the level of QoE consumers demand. Across the 10 countries featured in Ovum's study, 73% of broadband users are on speeds of 5Mbps or less - in some countries it is as high as 85%. Only three of the 10 countries have an average speed of over 5Mbps, and even in these countries it is less than 10Mbps - far below speeds seen in developed broadband countries.
What is most concerning, however, is the rate of increase in access speeds. In developed countries where average speeds are already relatively high, such as the UK, the US, and South Korea, the rate of increase in 2015 was still 20-30%. In six of the MENA countries it was less than 10%; in five it was less than 5%. If this picture does not change, the MENA as a region is going to get even further behind. To stop this trend, MENA broadband operators need to invest in more advanced broadband network technologies.
3. How much do operators need to invest and what else needs to be done?
The level of investment will differ massively from country to country. Those with a lack of fixed infrastructure will need to invest in new core and access technology to increase network footprints and household penetration. However, there are a range of new fixed wireless solutions coming on to the market that can speed up deployment as well as lowering the overall cost and such solutions should definitely be explored. Those with the infrastructure already in place but with low speeds, need to carry out network upgrades, which although not as big an investment as deploying networks from scratch, can still be considerable. Size of investment will depend on a number of characteristics such as what infrastructure has already been deployed, the quality of that infrastructure and local demographics.
4. What makes an investment-friendly environment? Can you give an example of market regulations and national broadband plans that you think the region should be following?
Regulators and policymakers in the region will face issues similar to the ones at stake in other geographies, in that they will have to come up with frameworks in which competition and investment happily coexist. To this end, allowing operators to deploy competing infrastructures is most likely to be effective.
Contrary to what many believe, a healthy level of competition is beneficial to investment because it pushes providers to deliver better and more advanced services, and is likely to facilitate market growth as retail prices decrease. If needed, regulators should look to impose wholesale access obligations on incumbents to ensure that a sufficient amount of players compete in broadband markets at the retail level. They should also create a favorable environment for access to passive infrastructure (ducts and other rights of way) which plays a key role in deploying NGA networks.
5. What will happen if operators don't invest?
In countries with low network penetration, the main method of Internet access will remain via mobile devices such as smart phones and tablets. This in itself is not a major problem and it should be recognized that mobile broadband and affordable feature phone/smartphone technology has brought the broadband Internet to millions that would have otherwise not had access at all (or restricted to public access such as via an internet café). However, mobile broadband is more limited than fixed-access in terms of the applications it can deliver, if for no other reason in that it is mobile. If consumers and businesses are to maximize the opportunities that broadband access offers, they require a high quality, reliable and consistent service into the home / office. In order to maximize economic growth, therefore, mobile AND fixed broadband access are what is required.
Just providing basic access though is not enough. To enable advanced applications such as ultra-HD video and videoconferencing, as well as future applications such as virtual and augmented reality, then high speed access is needed in order to deliver the required level of experience. If operators, therefore, don't invest in bandwidth speeds as well as just reach, then countries won't be able to meet their full potential.
6. What are the biggest opportunities and benefits in the region that operators should be taking advantage of?
From a MENA region point of view, broadband is an important technology for driving productivity, increasing competitiveness, attracting foreign investment and in helping the region diversify away from natural resource-related sectors. This is as important for countries such as Pakistan, where GDP per capita remains low, as well as countries such as Qatar, which have high a GDP but remain heavily reliant on the oil and gas industries, leaving other industries below their full potential. As well as its impact on economic growth, broadband is recognized as having a range of social benefits that advantage the whole population