The revenue of many telecom firms, which was on the high side is beginning to dwindle following the saturation in the voice market. Where lies the solution? Experts chart the way out in this piece by ADLINE ATILI
This is a turning point for telecom operators. Even as they need to build a new generation of high-speed fixed and mobile networks, their traditional sources of revenue are being commoditised, making it harder to raise the required funds.
At the same time, demand for broadband Internet, convergence of technologies, and increased competition are transforming how all the players in the telecom space are creating value.
IBM, in a report to determine how the industry will evolve of the post –saturation era notes: In 1999, only 15 per cent of the world’s population had access to a telephone; but by 2009, nearly 70 per cent had mobile phone subscriptions.
With the markets saturating, communications revenue growth as a whole is beginning to stall. In response, operators are moving away from the traditional structures into far-reaching horizontal business models that cut across operators’ boundaries and adapting to the hypercompetitive markets.
The rapidly changing telecom competitive environment is causing operators to explore and adapt new business models and relationships well beyond delivery of the conventional voice and data services.
One of these is content development for consumers. According to the President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr Titi Omo-Ettu, "When we speak of a mobile sector, we do not speak only of telecoms but also of other elements of its application in life, business, entertainment, and even governance."
He said many Telcos will soon realise that providing a number is only the beginning, and that value-added services will decide who is king.
He argued that as economies become knowledge-intensive, information-rich activities in which content is created, collected, managed, processed, stored, delivered and accessed are increasingly being developed.
Experts say high growth in digital content offers significant opportunities for telecommunications providers, stating that the success of the venture would be hinged on the ability of telecom operators to upgrade their networks and technology platforms to handle more sophisticated content, provide relevant and local content and extend the addressable market; this is in addition to delivering value beyond just access.
To Omo-Ettu, building the rapidly expanding mobile system to generate more business makes good sense, saying, "The millions of SIM cards that exist in the market are supposed to be doing quite a lot beyond voice.
"Content creation is key and I am particularly concerned about how much of this can be locally targeted and locally produced."
Omo-Ettu, who delivered the keynote address at the recent Mobile Web West Africa conference hosted in Lagos by All Amber, United Kingdom, noted that mobile network operators in many markets are known to be making huge amounts of revenues and profits from voice and text.
He maintained that as competition, penetration and innovation increase, they will hit a plateau and the new area of profitability will be data usage.
He said: "We have begun to see the mobile phone, in particular, as a device for change; a tool for closing the digital divide, an ultimate closer of the gap between the rich and the poor, and between the rural and the urban.
"For those who live in the developed economies, mobile telephony has surpassed its raison d’etre of information exchange between peoples and seamlessly moved into the socio-political realm of politics and consumption.
"With the unrest raging across the Northern African countries, it is irrefutable that mobile telephony is driving the mobilisation and emancipation of people against many tyrannical state machines.
"Mobile Network Operators in many markets are known to be making huge profits from voice and text. However as competition, penetration and innovation increase, these will hit a plateau and the new area of profitability will be data usage.
"For operators to take full advantage of this they need to have content and services for their consumers to use. This is why the entire ecosystem needs to work together to enhance the development of the mobile Web and applications.
"As we speak, a lot of viewed content is imported into Africa because it is so much cheaper to do so than to produce African content.
"The end result of that can only be negative – loss of culture, language and people engaging content that isn’t directly relevant to them.
"People want local, relevant information. It is important to take this opportunity to boost the local mobile ecosystem so that companies can start producing content for the local market.
"This is an opportunity to reach Nigerian mobile subscribers with Nigerian created information and services. Sports, news, jobs, education, music, film, democracy, finance, social development, and commerce are all areas where content and services can and need to be produced."
According to him, this is happening already; citing South Africa, where he said about 60 per cent of Google searches are made on mobile phones, he said: "For operators to take full advantage of this, they need to have content and services for their consumers to use. This is why the entire ecosystem needs to work together to enhance the development of the mobile Web and applications.
"Mobile advertising is a case in point. This is the single biggest opportunity to monetise the mobile Web and applications.
"Mobile marketing has created a new medium for advertisers – an entirely new way for them to reach out to and connect to consumers. Indeed, some experts consider it to be the superior way of marketing their products."
Speaking on capacity development and employment opportunities for youths, Omo-Ettu said the possibilities for capacity development were endless; already embedded in prevailing mobile systems without dependence on the government, arguing that if capacity development can be achieved, then it is to the advantage of the country as a whole in relation to local content and services.
"Having the resources of the Internet at your fingertips at a reasonable cost is fantastic for all members of society, especially if a local industry has contributed significantly to the information they are consuming," he submitted.
To expand the growth of the industry, he said the role of institutions in the development of the mobile Web and applications is a key one and their active support would have a considerable multiplier effect on the speed of the expansion of the ecosystem.
Omo-Ettu stressed that institutions such as the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) feature prominently in this area as their mandate has suddenly grown beyond what was written in the act setting them up long before mobile opportunities came into our lives.
He advised content developers on the need for collaboration to achieve set goals.
"While everyone today speaks of Google, Facebook, Skype among others, a clear difference between these companies (led by youth like Nigeria’s) and Nigerian startups is the fact that the average young Nigerian goes his way to start something without the discipline of mentors and accountability to senior professionals.
"But these mostly Silicon Valley-based companies know what it means to collaborate with other people to build a powerful team. And when these teams form, they have healthy competition," he said.
Senior Manager, Value Added Services, Globacom, Bankole Ojutalayo, advised that local application developers should be adequately funded; relevant services and applications should be built to meet local needs.
At the same time, demand for broadband Internet, convergence of technologies, and increased competition are transforming how all the players in the telecom space are creating value.
IBM, in a report to determine how the industry will evolve of the post –saturation era notes: In 1999, only 15 per cent of the world’s population had access to a telephone; but by 2009, nearly 70 per cent had mobile phone subscriptions.
With the markets saturating, communications revenue growth as a whole is beginning to stall. In response, operators are moving away from the traditional structures into far-reaching horizontal business models that cut across operators’ boundaries and adapting to the hypercompetitive markets.
The rapidly changing telecom competitive environment is causing operators to explore and adapt new business models and relationships well beyond delivery of the conventional voice and data services.
One of these is content development for consumers. According to the President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr Titi Omo-Ettu, "When we speak of a mobile sector, we do not speak only of telecoms but also of other elements of its application in life, business, entertainment, and even governance."
He said many Telcos will soon realise that providing a number is only the beginning, and that value-added services will decide who is king.
He argued that as economies become knowledge-intensive, information-rich activities in which content is created, collected, managed, processed, stored, delivered and accessed are increasingly being developed.
Experts say high growth in digital content offers significant opportunities for telecommunications providers, stating that the success of the venture would be hinged on the ability of telecom operators to upgrade their networks and technology platforms to handle more sophisticated content, provide relevant and local content and extend the addressable market; this is in addition to delivering value beyond just access.
To Omo-Ettu, building the rapidly expanding mobile system to generate more business makes good sense, saying, "The millions of SIM cards that exist in the market are supposed to be doing quite a lot beyond voice.
"Content creation is key and I am particularly concerned about how much of this can be locally targeted and locally produced."
Omo-Ettu, who delivered the keynote address at the recent Mobile Web West Africa conference hosted in Lagos by All Amber, United Kingdom, noted that mobile network operators in many markets are known to be making huge amounts of revenues and profits from voice and text.
He maintained that as competition, penetration and innovation increase, they will hit a plateau and the new area of profitability will be data usage.
He said: "We have begun to see the mobile phone, in particular, as a device for change; a tool for closing the digital divide, an ultimate closer of the gap between the rich and the poor, and between the rural and the urban.
"For those who live in the developed economies, mobile telephony has surpassed its raison d’etre of information exchange between peoples and seamlessly moved into the socio-political realm of politics and consumption.
"With the unrest raging across the Northern African countries, it is irrefutable that mobile telephony is driving the mobilisation and emancipation of people against many tyrannical state machines.
"Mobile Network Operators in many markets are known to be making huge profits from voice and text. However as competition, penetration and innovation increase, these will hit a plateau and the new area of profitability will be data usage.
"For operators to take full advantage of this they need to have content and services for their consumers to use. This is why the entire ecosystem needs to work together to enhance the development of the mobile Web and applications.
"As we speak, a lot of viewed content is imported into Africa because it is so much cheaper to do so than to produce African content.
"The end result of that can only be negative – loss of culture, language and people engaging content that isn’t directly relevant to them.
"People want local, relevant information. It is important to take this opportunity to boost the local mobile ecosystem so that companies can start producing content for the local market.
"This is an opportunity to reach Nigerian mobile subscribers with Nigerian created information and services. Sports, news, jobs, education, music, film, democracy, finance, social development, and commerce are all areas where content and services can and need to be produced."
According to him, this is happening already; citing South Africa, where he said about 60 per cent of Google searches are made on mobile phones, he said: "For operators to take full advantage of this, they need to have content and services for their consumers to use. This is why the entire ecosystem needs to work together to enhance the development of the mobile Web and applications.
"Mobile advertising is a case in point. This is the single biggest opportunity to monetise the mobile Web and applications.
"Mobile marketing has created a new medium for advertisers – an entirely new way for them to reach out to and connect to consumers. Indeed, some experts consider it to be the superior way of marketing their products."
Speaking on capacity development and employment opportunities for youths, Omo-Ettu said the possibilities for capacity development were endless; already embedded in prevailing mobile systems without dependence on the government, arguing that if capacity development can be achieved, then it is to the advantage of the country as a whole in relation to local content and services.
"Having the resources of the Internet at your fingertips at a reasonable cost is fantastic for all members of society, especially if a local industry has contributed significantly to the information they are consuming," he submitted.
To expand the growth of the industry, he said the role of institutions in the development of the mobile Web and applications is a key one and their active support would have a considerable multiplier effect on the speed of the expansion of the ecosystem.
Omo-Ettu stressed that institutions such as the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) feature prominently in this area as their mandate has suddenly grown beyond what was written in the act setting them up long before mobile opportunities came into our lives.
He advised content developers on the need for collaboration to achieve set goals.
"While everyone today speaks of Google, Facebook, Skype among others, a clear difference between these companies (led by youth like Nigeria’s) and Nigerian startups is the fact that the average young Nigerian goes his way to start something without the discipline of mentors and accountability to senior professionals.
"But these mostly Silicon Valley-based companies know what it means to collaborate with other people to build a powerful team. And when these teams form, they have healthy competition," he said.
Senior Manager, Value Added Services, Globacom, Bankole Ojutalayo, advised that local application developers should be adequately funded; relevant services and applications should be built to meet local needs.
He further said operators should be encouraged to offer more attractive revenue shares, adding that: "For as long as the customer remains active, the operator, the content provider, and the application developer all have an opportunity to generate revenue."
