Telecoms operators and wholesale communications carriers are under increasing pressure to reassess pricing strategies. Demand for data is growing rapidly in the Middle East, but carriers are finding it difficult to maximise profits as data prices continue to decrease.
“We have experienced tremendous growth in demand for data capacity of about 70 per cent over the past five years,” says Ahmed Khalaf, managing director of Mena Submarine Cable Systems, a subsidiary of Egypt-based Orascom Telecom Holding while speaking at the Capacity Conference Middle East in Dubai.
The rise in broadband subscribers has been the main driver of this growth. Rapid adoption of mobile devices has impacted the data demands of Middle East consumers, which was traditionally determined by desktop computers.
There will be a year-on-year growth with fibre-to-the-home plans, long-term evolution (LTE) and fourth-generation (4G) capabilities being deployed across the region.
“We’ll never run out of demand, the question is how to make money from it. Our challenge is to maintain margins to enable us to build resiliency and diversity, which is what customers are demanding,” says Diarmid Massey, vice-president of carrier services at the UK’s Cable & Wireless.
Massey says the fault lies with the wholesalers and “bad accounting”.
“There has historically been a bandwidth shortage in the region, prices are falling significantly and we need to get the pricing right, not at the consumer level, but the wholesale level,” he adds.