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Rising bandwidth demand sees telecoms firms search for business models

The rapidly rising demand for bandwidth has telecommunications companies rushing to boost capacity and change their business models.

The rapidly rising demand for bandwidth has telecommunications companies rushing to boost capacity and change their business models. The huge investments needed to meet the demands of a booming, price-sensitive market have telecoms looking at different ways to make money. "We have to go in that direction, otherwise we will die," said Mohammed Omran, the chairman of Etisalat.

Speaking yesterday at the Abu Dhabi Media Summit, Mr Omran said every operator had this at the top of their agenda. But Etisalat is still interested in giving a fair share of its revenues to content providers such as media companies, he added. The capacity of the world's mobile networks will need to grow more than 1,000-fold within five years to keep pace with demand for mobile internet, said Karim Sabbagh, the global media practice leader at the consultancy Booz and Company.

The cost of meeting that demand could exceed US$1 trillion (Dh3.67tn), according to some estimates, and mobile operators fear most of the returns on such investments will be reaped by media and internet businesses. Hans Vestberg, the chief executive of the telecoms equipment maker Ericsson, said a deal needed to be thrashed out. "We need fair pricing in all of this," Mr Vestberg said. "We need content providers to be paid, we need telecom operators paid, and people using have to pay for what they use."

The internet company AOL has become "maniacally focused on content", said Tim Armstrong, its chief executive. While AOL has made large investments in advertising-supported sites that are free for viewers, Mr Armstrong said he hoped to generate premium products that users would pay for. Executives agreed the economics of the industry would expand to include new revenue models. Suk-Chae Lee, the chief executive of the South Korean telecoms company KT Corporation, said internet TV would allow viewers to buy goods they saw on screen. Such technology was emerging in Korea, Mr Lee said.

Dirk Meyer, the chief executive of the US-based chip maker AMD, predicted devices would borrow from science fiction, with screens able to recognise voices and faces, and a holographic communications device he expected to be commercially available before the decade ends. Jonney Shih, the chief executive of Asus, said media groups and telecoms would have to work together on providing the right technology to access content on any device - TV, mobile or personal computer.

@Email:tgara@thenational.ae dgeorgecosh@thenational.ae

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