At Mobile World Congress 2023, Karim Benkirane, Chief Commercial Officer of UAE operator du, presented the relationship between fibre and 5G Fixed Wireless Access (FWA) in his Keynote speech.
Highlighting the level of expectation in the UAE, Mr. Karim noted as a market with very high fibre penetration, there is a big question over how FWA 5G fits into the UAE’s ecosystem.
Benkirane said that du saw this as an opportunity, and had begun investing in deploying 5G since 2019. The operator has reached 95% coverage in populated areas, with Karim hailing the government’s efforts to drive innovation and make the market more unique. He noted that triple-play fibre services typically start at around US $70 in the UAE – a higher entry point than many other markets, but with an experience that matches this in terms of value, offering high speed fibre, content, OTTs, and other services.
In a market of 10 million people, with 200% mobile penetration, virtually every customer has an extra SIM – and fibre is readily available, so how can operators survive by differentiating themselves? Benkirane said that one way of doing this was by segmenting the market, identifying niche markets – if customers behave differently from typical fibre subscribers, they likely have a different lifestyle and may be open to a different value proposition such as du’s 5G Fixed Wireless Access.
Despite the high fibre penetration, only around 70% of homes had an activated fibre connection in 2021. Examining the remaining 30%, operators were able to determine that the remaining homes and buildings were occupied but were not using fibre as a service. du designed a value proposition around this usage, setting certain objectives for 5G FWA.
The first of these was to go after the NDAP segment, trying to understand their behaviour and designing a value proposition around this. The ideal scenario is to offer a 5G service more affordable than fibre which can be complemented with FWA – although there is of course pressure regarding monetisation. While operators were waiting for 5G B2B use cases to emerge, it was clear that the use case on the consumer side was mature enough to monetise.
Benkirane described how du took a ‘technology positioning’ approach to its initial launch of 4G FWA in April 2021, explaining the operator had included a 4G CPE as part of this value proposition. Followed by another proposition including 5G router despite the fact that cost of the 5G router was very expensive at that time. This happened quickly, allowing them to react fast and introduce 5G FWA within less than a year, in February 2022, at a higher price point. This effectively changed du’s ‘technology position’ base to a ‘value proposition’ base; since there is no more differentiation between the 4G and 5G use cases, du opted to give the 5G CPE to everyone and differentiate the offering by enriching the value proposition. Here, the challenge is reaching a different market segment that can pay the premium, but also values whichever proposition you are designing.
The move from a technology base to value proposition base prompted a shift in several KPIs, the first of which was the incremental 19% increase which saw fibre penetration jump from 70% to almost 90%. This means that du’s broadband penetration is much higher than when its proposition consisted only of fibre – its market share jumped 10 points within two years, with revenue increasing from 19% to 23%.
While traffic increases are of course significant, it’s more important to look at this in terms of customer experience, and in providing the 5G CPE to everyone and differentiating the proposition, churn was reduced. The 5G base was typically happier and receiving better experience than the 4G base, and this reduced churn among 5G customers. Benkirane said that there was a lot more for du to learn about the use of FWA in ‘high-fibered’ markets, and noted that the operator was investing in indoor and outdoor coverage and lining up a 5G SA launch later this year. By better understanding its customer insights, du believes that there will be more SLAs to work on and that it be able to take FWA to the next level.
Benkirane concluded by highlighting that du is monetising its 5G network, and underlined the operator’s pledge to continue investing in improving its coverage – whether indoor, outdoor or standalone. In understanding the markets that it did not address previously, du has realised the different use cases – customers won’t necessarily connect just because fibre is available, and in this way the operator believes that FWA and fibre can coexist by serving different needs. Underlining this idea, Karim pointed out that users are migrating between all of the various offerings – whether from 4G FWA to 5G, from fibre to 5G FWA, or vice versa. The customer’s journey can be mapped to understand how their lifestyle is changing; perhaps upon moving to Dubai for the first time, a customer would require 5G FWA, but after living there for a year or so they can switch to fibre. Gaining an understanding of how this customer journey is defined is essential to ensuring that 5G FWA and fibre can have a long-term coexistence.