Mobile operators in Syria can't have been pleased with the recent efforts of activist bloggers in the southwest Asian Arab Republic. The bloggers were urging subscribers to make this month start badly for the country's two cellcos (MTN Syria and SyriaTel) by boycotting services for the duration of June 1st.
A GlobalVoices report on this protest notes that "in an extremely connected world, Syria is still lagging behind". By way of an explanation of this claim, the report states that Internet pentration stands at about 17% with "the vast majority of users... still endur[ing] the screeches of a dial-up modem due to the country's weak broadband infrastructure."
On the wireless side, mobile penetration in the country stands at just 37.86% according to WCIS. In the Middle East region, only Yemen and the Palestinian Territories are less mature mobile markets in terms of penetration. The GlobalVoices article contends that ever since the introduction of mobile services, "the media echoed the customers' discontent with service rates" with "the state of the struggling Syrian telecoms sector.. largely attributed to the US embargo on the country and corruption within the Syrian telecom bodies." The article states that the disgruntled Syrian bloggers have had enough of the current prices and services.
An article from ITP, dated June 2nd (i.e. the day after the protest), provides more details, noting that the protest gained traction after a frustrated mobile user encouraged others to stop using their phones for one day. The protest was apparently adopted by more people, with the message spreading via blogs and social networking sites such as Facebook.
I imagine it will be impossible to find any data on how much of a dent in the two cellcos' profits this will have made, and the ITP article contends that any such dent is unlikely to have been very significant. However, ITP's Roger Field, the author of the piece, wonders whether the incident will encourage the Syrian Government to take a fresh look at its telecommunications policy, which, in Field's words, "is widely viewed as thwarting competition and restricting services."
Field also took the time to speak with Josep Maria Moya of Delta Partners, a management advisory and investment firm specialising in telecoms, media and technology, which operates from offices in the UAE, Bahrain and South Africa. Moya says that mobile users in Syria "were probably frustrated not just with the relatively high cost of calls and per minute billing, but also the restrictive validity of top-up cards." Until recently, reports Roger Field, customers buying the most popular card, worth SYP150 (USD 3.25), had only seven days to use the credit before facing disconnection.
Field contends that this system, which forces mobile users "to spend a minimum of SYP600 per month", makes services too expensive for many Syrians.
Another factor suggested by Josep Maria Moya to account for the country's very low mobile penetration is MTN and Syriatel being compelled to operate under BOT (build operate and transfer) contracts, "with little incentive for the two companies to invest in their networks or build their customer bases when they could be forced to hand over all of their operations, including assets, to the Government once their licences run out."
In Roger Field's article, an unnamed Syrian expat working in the UAE contends that the two operators' disinclination to invest and innovate is such that their services are "exactly the same" and that their charges are also very similar. This Mr X also alleges that there exists "a high level of coordination" between the two cellcos "so they can decide the fee they would like to charge."
Roger Field asserts that as well as having one of the lowest moble penetration rates, "Syria has among the highest mobile tariffs in the region." The suggestion here is of a rather cosy duopoly which is not working to deliver value and meaningful choice for consumers - and this begs the question about whether a third entrant might be able to do well by differentiating its offering on price and range of services, and by taking full advantage of the room for growth created by the low level of market penetration. Who, then, might be looking to muscle in on the action? In the context of the US embargo, any strategic investor would need to hail from a part of the world where the nervousness of American shareholders would not be an issue. Perhaps that part of the world would be Russia. In March, the Middle East and Africa Wireless Analyst service offered by Informa Telecoms & Media suggested that Russian interest in a third license might be quite strong, citing remarks made in November 2008 by Russia's Communications Minister Igor Shchyogolev, who said Syria was considering inviting bids from Russian operators for a mobile concession which could be offered in 2009. The MEAWA piece, authored by a former Informa colleague with whom I had the pleasure of working from time to time, Nasreddine Mana, contends that the two Russian operators that are most eager are Vimpelcom and MTS.
A GlobalVoices report on this protest notes that "in an extremely connected world, Syria is still lagging behind". By way of an explanation of this claim, the report states that Internet pentration stands at about 17% with "the vast majority of users... still endur[ing] the screeches of a dial-up modem due to the country's weak broadband infrastructure."
On the wireless side, mobile penetration in the country stands at just 37.86% according to WCIS. In the Middle East region, only Yemen and the Palestinian Territories are less mature mobile markets in terms of penetration. The GlobalVoices article contends that ever since the introduction of mobile services, "the media echoed the customers' discontent with service rates" with "the state of the struggling Syrian telecoms sector.. largely attributed to the US embargo on the country and corruption within the Syrian telecom bodies." The article states that the disgruntled Syrian bloggers have had enough of the current prices and services.
An article from ITP, dated June 2nd (i.e. the day after the protest), provides more details, noting that the protest gained traction after a frustrated mobile user encouraged others to stop using their phones for one day. The protest was apparently adopted by more people, with the message spreading via blogs and social networking sites such as Facebook.
I imagine it will be impossible to find any data on how much of a dent in the two cellcos' profits this will have made, and the ITP article contends that any such dent is unlikely to have been very significant. However, ITP's Roger Field, the author of the piece, wonders whether the incident will encourage the Syrian Government to take a fresh look at its telecommunications policy, which, in Field's words, "is widely viewed as thwarting competition and restricting services."
Field also took the time to speak with Josep Maria Moya of Delta Partners, a management advisory and investment firm specialising in telecoms, media and technology, which operates from offices in the UAE, Bahrain and South Africa. Moya says that mobile users in Syria "were probably frustrated not just with the relatively high cost of calls and per minute billing, but also the restrictive validity of top-up cards." Until recently, reports Roger Field, customers buying the most popular card, worth SYP150 (USD 3.25), had only seven days to use the credit before facing disconnection.
Field contends that this system, which forces mobile users "to spend a minimum of SYP600 per month", makes services too expensive for many Syrians.
Another factor suggested by Josep Maria Moya to account for the country's very low mobile penetration is MTN and Syriatel being compelled to operate under BOT (build operate and transfer) contracts, "with little incentive for the two companies to invest in their networks or build their customer bases when they could be forced to hand over all of their operations, including assets, to the Government once their licences run out."
In Roger Field's article, an unnamed Syrian expat working in the UAE contends that the two operators' disinclination to invest and innovate is such that their services are "exactly the same" and that their charges are also very similar. This Mr X also alleges that there exists "a high level of coordination" between the two cellcos "so they can decide the fee they would like to charge."
Roger Field asserts that as well as having one of the lowest moble penetration rates, "Syria has among the highest mobile tariffs in the region." The suggestion here is of a rather cosy duopoly which is not working to deliver value and meaningful choice for consumers - and this begs the question about whether a third entrant might be able to do well by differentiating its offering on price and range of services, and by taking full advantage of the room for growth created by the low level of market penetration. Who, then, might be looking to muscle in on the action? In the context of the US embargo, any strategic investor would need to hail from a part of the world where the nervousness of American shareholders would not be an issue. Perhaps that part of the world would be Russia. In March, the Middle East and Africa Wireless Analyst service offered by Informa Telecoms & Media suggested that Russian interest in a third license might be quite strong, citing remarks made in November 2008 by Russia's Communications Minister Igor Shchyogolev, who said Syria was considering inviting bids from Russian operators for a mobile concession which could be offered in 2009. The MEAWA piece, authored by a former Informa colleague with whom I had the pleasure of working from time to time, Nasreddine Mana, contends that the two Russian operators that are most eager are Vimpelcom and MTS.
Much as it is appeals to my possibly somewhat British tendency to root for the little guy/underdog, my guess is that the entry of a powerful new player such as a major Russian cellco would be more likely to deliver hard-pressed Syrian consumers with lower prices and better services than the efforts of the bloggers agitating for change this week.
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