Etisalat plans to establish bi-lingual portal

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Etisalat is the monopoly operator in the United Arab Emirates. Despite economic problems in the region caused by low oil prices, the operator has increased revenues, with net profits rising by 8% in 1998. The CEO of Etisalat, Ali Salim Al Owais, talks to Global Telecoms Business about the operator's cellular, cable TV and Internet strategies.

Etisalat, the monopoly operator in the United Arab Emirates, is 60%-owned by the government and 40% by the public. The operator offers fixed, cellular and Internet services in the third biggest telecoms market in the region in terms of revenue/capita. The operator has constantly increased revenues, with net profits up by 8% in 1998 and expected to rise by 10% in 1999. The operator had a market capitalization of $8.6 billion in April 1999.

The country has a fixed line penetration rate of 40%. The operator expects to install over 100,000 new lines in 1999. At the same time Cellular subscriber numbers have increased to 800,000 today, equivalent to over 30% of the population. It has been estimated that cellular penetration may exceed fixed within the next two years. As demand for wireless data grows, the operator plans to launch trials of WAP and GPRS in the second quarter of 2000.

In an interview with Global Telecoms Business, Ali Salim Al Owais talks about the operator's investments in technologies, its cellular operations, the Thuraya satellite project, Internet and the operations aspirations to be a regional hub.

When asked about the need for competition, Al Owais responds that the operator feels that it is already being competitive: "The major benefit of a competitive environment is high quality of service at competitive prices. We believe that we are operating in a competitive environment and that it has consistently been our drive to provide the highest levels of service and offer competitive prices. Currently the quality of our GSM service is very high: our network is comparable to the best in the world and our tariffs are some of the cheapest in the world. So our customers are already enjoying the major benefits of a competitive environment."

Tariff reductions and cellular offerings

Al Owais stresses that the operator is reducing its tariffs: "It has been Etisalat's policy to constantly review the tariff structures of all our services. Our prime concern has always been to provide excellent quality of services at rates which are some of the most competitive in the world. Consequently, when we conduct regular reviews of tariffs, we do not hesitate to reduce rates, if we feel that there is scope to pass on the benefits of reduced tariffs to our customers. The prime objective of these reductions is to make the service more and more affordable to the general public and increase our subscriber base."

Al Owais describes the benefits of one of their GSM services: "Our Wasel service, formerly known as "Mobile Power", was launched in July 1997. This service was introduced to provide our customers with the convenience of instant communication by putting them in touch with the world. A subscription to the service enables the subscriber to receive incoming calls for one full year and make outgoing calls on a pre-paid basis, in line with the needs and budget of the customer. At the time of launch the service was priced at Dh520 ($141.5) which included connection charges, the cost of a SIM card and one year's rental. The Wasel SIM card also has an initial credit of Dh10, enabling the customer to make outgoing calls. The renewal charge for this service was Dh360 for one year. This tariff has subsequently been revised and the current charges are Dh360. The call charges for this service are set in line with the standard GSM call charges and are on a pre-paid basis."

Al Owais mentions some of the value-added services available to customers: "A customer can use the following value-added services: call forwarding (on unattainable, busy, and no reply), Al Mersal private voice-mail service and the reception of SMS messages Risala on their GSM handset. These services are provided free of charge to the customer. Our Speak Easy service was launched in March 1997 and offers visitors to the UAE the convenience of instant mobile communications while in the country. With a Speak Easy card customers can make and receive calls instantly through their GSM handset and save on roaming charges." Al Owais adds that Etisalat may have more cellular subscribers than fixed next year: "The cellular market has grown quite rapidly since its inception. Our current subscriber base has grown to almost 800,000 subscribers, with our penetration rate being one of the highest in the world. There is sufficient scope for the market to grow further. We envisage that our total subscriber base for GSM customers will exceed that of fixed line customers in the year 2000. We also see the market developing more on the services side - with several new value-added services and features being added, such as mobile banking."

Etisalat and the Al-Thuraya satellite telecoms system

Etisalat is one of the sponsors of the Al-Thuraya satellite telecoms system. Al Owais describes the system: "The Thuraya Satellite Telecommunications Company will operate a satellite-based regional mobile telecoms system, aimed at meeting the need for affordable high quality mobile phone services in populous regions of the world that are not served by land-based systems to cellular networks.

"Thuraya will launch its satellite in mid-2000 and start services in the last quarter of 2000. Once operational, Thuraya will provide voice, data, fax, short messaging and location determination services to a coverage area of 99 countries spanning Europe, North and Central Africa, the Middle East, Central Asia and the Indian sub-continent.

"As you may know, Thuraya was founded in 1997 as a $1.1 billion turn-key mobile satellite system built by Hughes Space and Communications International (HSCI) and the sub-contractor for the ground system, Hughes Network Systems (HNS). Other sub-contractors include Sea Launch and SED, as well as ASCOM of Switzerland, which will Thuraya's phones together with HNS, Ericsson which is manufacturing the network switching sub-system, and LHS of Germany which is setting up Thuraya's billing and customer care system. The Thuraya system consists of a geo-stationary satellite, which has a life span of 12 to 15 years and is positioned at 44 degrees east. Thuraya will deploy a second operating satellite as a back-up, and has provisions for a third, which will subsequently expand capacity as and where required.

Thuraya's equity base of $500 million is provided by its shareholders - prominent national telecoms operators and financial investors. In July 1999 a bank consortium underwrote a loan of $600 million for the remainder of the project cost. The consortium comprises Australia and New Zealand (ANZ) Banking Group, Societe Generale (SG), Union National Bank (UNB), Abu Dhabi Islamic Bank (ADIB) and Kuwait Finance House. "

Al Owais explains why he believes that Thuraya will not face the well-documented problems of satellite operators, such as Iridium and ICO: "It is true that some companies in satellite telecoms have suffered setbacks in the past. But unlike other players which had financial difficulties, Thuraya is fully funded and backed by a strong consortium. There are other important considerations: Thuraya's business model is drastically different from other operators. The company is not burdened by high-cost constellation maintenance or the vagaries of complex network operation and network bypass problems that others are experiencing.

In fact, it is important to remember that the mobile satellite industry is not a homogenous entity. The Thuraya system is differentiated by its inherent characteristics as a geo-synchronous mobile satellite system. Its key attributes, such as lower outlay cost and longer satellite life span, contribute to its competitiveness in the market. This in turn accords the Thuraya system greater price flexibility in terms of both product and service cost. The longer life span also provides a stronger basis for more committed and enduring relationships with local operators. Another key technological design advantage in the Thuraya system is its ability to accommodate changes in Thuraya's traffic through a re-configurable satellite payload that optimizes performance over high traffic demand areas.

In addition, Thuraya's hand-held terminals integrate satellite, GSM and location determination services. Consequently Thuraya operates closely with local telecoms operators, complementing their services and expanding the reach of their telecoms networks."

Al Owais is confident about the future for satellite-based services: "Satellite technology is not only evolving at tremendous speed: it is also converging into other technologies. There will always be a need for a mobile satellite system, such as Thuraya, to connect remote and scattered communities in the most cost-effective manner, as well as streamline communications outside cellular and fixed telecoms areas."

Etisalat's involvement in cable TV

Etisalat is also launching a cable TV project, which will provide the consumer, in Al Owais's view, with better quality images and more choice: "Etisalat's Cable TV project, which is now called "Emirates Cable TV and Multimedia" - "E-VISION" is a subsidiary of Etisalat. The objective is to provide an exciting new television viewing experience by offering a wide spectrum of entertainment, education and information programmes, together with multimedia services. All these services will be provided on a hybrid fibre coaxial, digital quality, broadband network. The cable system will provide high quality crystal clear pictures without any degradation or interruption of service. "Different packages, with a great number of channels (up to 100 channels), will reflect the multi-cultural diversity of the UAE. Considering UAE's diverse nationalities and cultures, viewers will have the choice of selecting packages which contain a greater range of entertainment, movies, music, coverage of sporting events, documentaries and more TV favourites. A great deal of research has gone into this work. We are confident that our packages will be family favourites."

Al Owais lists some of the different packages: "The basic package will give viewers an opportunity to view regional and international channels as well as exclusive channels, which will not be available from any other source. The premium packages will offer customers the best channels with multiple themes. The superb variety of programmes and channels is offered through excellent value-for-money packages. The service also provides many advanced interactive services. Pay Per View will enable customers to view the latest movies and special live sporting, cultural and entertainment events at convenient timings throughout the day.

"Multimedia services, such as Electronic Program Guide, interactive weather and games, will set new standards in entertainment and interactive multimedia services. The services will be made available to both residential and business customers. Our focus, initially, will be to target residential customers. The services are expected to be launched by the end of this year. Initially, 20,000 subscribers will receive the cable TV service in Abu Dhabi and Dubai. The network will expand to cover a greater number of homes and business in the United Arab Emirates and will gradually cover all the Emirates."

Etisalat as a regional hub

Al Owais believes that Etisalat could become a regional hub for data services: Etisalat understands the strategic advantage that the country has in the Middle East region and has built up the telecoms service infrastructure to position itself as a regional hub in providing the advanced data services."

According to Al Owais, Etisalat was quick to perceive the potential of the Internet, after launching its own service in 1995: "Ever since 1995, when Etisalat started the Public Internet Service in the United Arab Emirates, we realized that there would be considerable demand for the back-haul link connectivity of the regional ISPs to the global Internet. We established Emirates Internet Exchange (EMIX) in 1998 with a Terrestrial FO link of 155 Mbps (STM-1) extended to the US to facilitate internet backbone connectivity for regional ISPs at differential rate services ranging from 64 Kbps to 45 Mbps level. We now have over 15 customers that subscribe to these services covering Far East to Middle East. Due to the ever-increasing demand for these services, plans are under way to expand the network to provide greater bandwidth and additional services. All services offered by Etisalat are of a high standard and are cost-effective, compared to other renowned regional or international service providers."

Other services for business users

Al Owais mentions some of the other services that the operator offers to businesses: "In February 1997, Etisalat was the first operator in the region to introduce public ATM network services in the United Arab Emirates. We have a wide customer base, which includes many businesses, oil companies, banks and educational institutions, which have built their enterprise networks in the United Arab Emirates, using our ATM transport network for voice, data and video communications on a single network. Now we are expanding the ATM network at the core and building a multi-service broadband data network, involving seamless integration with various access network technologies, such as ADSL, cable modem, high-speed wireless access networks, which are relevant for high-speed Internet access and multimedia services for customers. At present, the ADSL network is being built for 5,000 network users initially. It will be expanded to 30,000 users by the end of 2000."

Al Owais adds that Etisalat had to overcome business concerns about the safety of E-commerce: "As you know, extensive use of the Internet has tremendously changed the way in which business is being done in the US and Europe. There is a growing awareness of the potential of doing business over the Internet in this region and more so within the United Arab Emirates. However, businesses were wary about venturing into E-commerce in a big way."

The operator set up a new business unit, Comtrust, in October 1999. Its name signifies trusted, secure and total commerce solutions. Al Owais explains how it works: "Etisalat has embarked on a major initiative to dispel this misunderstanding, through Comtrust. Security over the Internet has been the primary concern of users and businesses, which we are addressing by issuing digital certificates and providing secure payment services, making on-line business safer for everybody. Comtrust is a business unit of Etisalat and an E-commerce services provider, which will provide a comprehensive infrastructure to the businesses in the region, enabling them to do business over the Internet. This can range from simple business-to-consumer applications to complex business-to-business solutions, such as supply chain management. Comtrust is offering a complete range of the products and services any business needs today to be "E-commerce enabled".

Al Owais projects continued growth in Internet use, with subscribers focusing more on E-commerce and entertainment services: "Since the introduction of public Internet service in 1995, the number of net users in the United Arab Emirates has increased to 130,000 subscribed dial-up subscribers today. This growth is expected to continue in coming years. The initial trends of using Internet access for web browsing and e-mail is being transformed, owing to the endless value-added application services on the web. Growing horizontal markets include E-commerce, entertainment (music on demand, on-line news and videos), education (distant learning). Etisalat has taken the lead in developing the required infrastructure for these new markets. We will launch a service offering in 2000."

Bilingual portal for E-commerce services

Al Owais can perceive a need for bilingual services: "Etisalat has recognized the importance of the Arabization of the Internet to promote Arabic content on the net and attract more Arab users. Consequently Etisalat has taken several steps to achieve these objectives. First of all, we have bundled an Arabic browser on the Internet Starter Kit to give the Internet users the capability to browse and view Arabic content. Etisalat is in the process of building a powerful bilingual search engine that fully indexes all Arabic content on the web to provide strong searching Arabic capabilities, as this will be the core of our planned Arabic portal. Etisalat is currently building its portal (English version) and in future an Arabic version will be available.

"As penetration of the Internet increases in the Arab world, naturally a bigger market for bilingual portals for E-Commerce services will emerge. We foresee an expansion in the quantity and quality of bilingual portals in the very near future. Comtrust can provide the necessary support infrastructure for the creation and maintenance of a bilingual portal. So portals can be based in the United Arab Emirates, as we have all the requisite expertise to maintain these portals."

As Al Owais makes clear, Etisalat is committed to bringing the benefits of modern technologies to both the United Arab Emirates and elsewhere in the region: "We will continue to develop our core and access networks, for both fixed and mobile systems, to support broadband services based on new technologies, such as ATM/IP and third generation systems. We will work together with local authorities and major private companies in the United Arab Emirates to upgrade and modernize their infrastructure to support the automation of services/utilities using the Internet and E-commerce. We will bring the Internet to every home. We want to see the establishment of a software development house and a research and development centre for the region."