In his keynote speech at Mobile World Congress 2023, Karim Benkirane, Chief Commercial Officer of UAE operator du, presented the relationship between fiber and 5G Fixed Wireless Access (FWA).
He highlighted the level of expectation in the UAE and noted that as a market with very high fiber penetration, how FWA 5G fits into the UAE ecosystem is a big question.
Benkirane said du sees this as an opportunity and is investing in deploying 5G starting in 2019. the operator has reached 95% coverage in densely populated areas and Karim applauded the government's efforts to drive innovation and make the market more unique. He noted that triple-play fiber services in the UAE typically start at around $70 - a higher entry point than many other markets - but offer a matching experience in terms of value, offering high-speed fiber, content, OTT and other services.
In a market with 10 million people and 200 percent mobile penetration, where almost every customer has an extra SIM card - and fiber is readily available - how can operators survive by differentiating themselves? Benkirane says one way to achieve this is to segment the market and identify niches - if customers behave differently than typical fiber users, they may have different lifestyles and may be open to different value propositions, such as du's 5G fixed wireless access.
Despite high fiber penetration, only about 70 percent of households will have fiber connections enabled by 2021. Examining the remaining 30%, operators were able to identify the remaining homes and buildings that were occupied but not using fiber as a service. du designed its value proposition around this use, setting certain goals for 5G FWA.
The first of these was to track the NDAP segment, trying to understand their behavior and design a value proposition around that. The ideal scenario is to offer a more affordable 5G service than fiber that can complement FWA - although of course there are monetization pressures. While operators wait for 5G B2B use cases to emerge, it is clear that the consumer side of the use case is mature enough to monetize.
Benkirane described how du is taking a "technology positioning" approach when it first rolls out 4G FWA in April 2021, explaining that operators are already using 4G CPE as part of that value proposition. This was followed by another proposal that included 5G routers, although at the time 5G routers were very costly. This happened quickly, allowing them to react quickly and launch 5G FWA at a higher price in less than a year, in February 2022. This effectively transformed du's "technology positioning" basis into a "value proposition" basis; With no more distinction between 4G and 5G use cases, du chose to offer 5G CPE to everyone and differentiate the offering by enriching the value proposition. The challenge here is to enter a different market segment that can pay a premium but also values whatever proposition you are designing.
The shift from a technology base to a value proposition base has driven a shift in several KPIs, the first of which is the 19% incremental growth, with fiber penetration jumping from 70% to nearly 90%. This means du's broadband penetration is much higher than its fiber-only proposition - its market share jumped 10 percentage points in two years, and its revenue grew from 19% to 23%.
While the increase in traffic is certainly important, it's more important to look at this from a customer experience perspective, with lower churn in delivering 5G CPE and differentiated offers to everyone. 5G bases are typically happier and get a better experience than 4G bases, which reduces churn of 5G customers. Benkirane said du still needs to learn more about the use of FWA in "high fiber" markets, noting that the operator is investing in indoor and outdoor coverage and is preparing to launch 5G SA later this year. By better understanding its customer insights, du believes there will be more SLAs to deal with, and will be able to elevate FWA to a higher level. and will be able to take FWA to the next level.
Benkirane concluded by highlighting du's ongoing monetization of its 5G network and the operator's commitment to continue investing to improve its coverage - whether indoor, outdoor or standalone. In understanding previously uncharted markets, du is aware of different use cases - customers will not necessarily connect just because fiber is available, and in this way the operator believes that FWA and fiber can coexist by meeting different needs. Karim highlighted this idea by pointing out that users are migrating between all the different offerings - whether it's from 4G FWA to 5G, from fiber to 5G FWA, or vice versa. The customer journey can be mapped to understand how their lifestyles are changing; maybe the first time they move to Dubai, the customer will need 5G FWA, but after I live there for a year or so, they can switch to fiber. Understanding the definition of the customer journey is critical to ensure that 5G FWA and fiber can co-exist in the long term.
