Middle East Telcos Mull Alliance In Facebook Fight

Middle East telecommunications firms are discussing the idea of creating a pan-Arab online platform that would earn them more revenue from their networks by challenging Facebook and other internet behemoths of the West.

The ambitious project faces technical and financial obstacles and may never be implemented on a large scale. But proponents argue the common language and culture shared by the world’s more than 350 mi l lion Arabic speakers, plus the webs of affiliated companies which Gulf operators own across the Middle East and North Africa, could make the project viable.

“A single operator, even one in multiple geographies and with tens of millions of subscribers, can’t create this platform on its own,” said Osman Sultan, chief executive of du, the second biggest operator in the United Arab Emirates.

“It would be restricted to the customers of this operator and wouldn’t have sufficient scale to succeed. But a unified platform spanning the Arab world would,” he told Reuters.

Sultan said he had proposed the idea to all major operators in the Arab world over the past 12 months.

Behind the proposal is a frustration shared by telecommunications firms globally: as they spend heavily to build networks, data traffic on the networks is increasing rapidly, but the firms essentially only make money from charging for access to their networks – a low-margin business.

The lion’s share of new revenue from traffic is being taken by so-called “over-the-top” (OTT) internet companies such as Facebook, Google, Apple and Twitter. The telecommunications firms have unsuccessfully pressed them for bigger contributions to the cost of building the networks.

“OTT players…we can’t share their gain and they won’t share our pain,” said Sultan. “Network traffic doubles every eight to nine months, but revenue is heading to a plateau, so we need to claim part of the new revenues alongside OTT players.”