Home > innovation > Why waste a perfectly good monopoly?

Why waste a perfectly good monopoly?

In general, telecom operators in the MENA region have a very sweet deal. They are either operating as monopolies, comfortable duopolies, or are in markets where the incumbent was heavily entrenched before deregulation kicked in. They regularly rake in massive profits and many have stockpiles of cash. Yet, what are they doing with this cash? Where is the feedback loop that is taking this cash and injecting back into the economy to drive innovation and support the development of new ecosystems? In competitive markets, telcos have tried to innovate with mobile operating systems, mobile payment mechanisms and mobile content distribution. Unfortunately in MENA, most seem to be content to just upgrade their networks to faster speeds using technology developed elsewhere. Don’t get me wrong, telcos in the region have done much to increase access to information and allow people to connect, but they have in general failed miserably in making an impact that is proportional to the billions they have collectively made in profits over the years. Where are the Arabic operating systems? Where are the unified payment mechanisms to enable e-commerce? Where are the funds for launching mobile and online startups? So far, the combined score for telcos in MENA is, at best, a C-. Only they can change this for the better, if they ever decide to move beyond increasing short-term dividends to shareholders.

  1. August 31, 2011 at 6:56 pm

    Hi Karim,

    Sadly changing things to the better will never happen. And the reason this will never happen is because the culture doesn’t nurture the concept of development and innovation. There are a few hundred million Arabs but when one of them creates something from scratch, he or she will get the funding to develop their idea from foreign countries or businesses having been rejected numerously by his or her own people. There are over a billion Muslims and the best mass produced product we could come up with was Mecca Cola. We talk a good game, build like crazy, spend a couple of billion on real estate but we can’t put a decent car together. Why is that?

    You’re talking about innovation, market and global leadership, and in essence being number one. The culture doesn’t support these ideas. The culture supports indifference. The reason we are indifferent is we look at business from a personal perspective. I am the leader. I made a million dollars. I am powerful. Contrary to how most successful world dominating businesses are run, in this part of the world it’s always personal and never business.

    Case in point, the telcos you mentioned don’t have a research and development department because they are expecting to acquire the technology from other countries. We have become a nation of salesmen. We sell other people’s products. In fact we don’t even do that, the products sell themselves. We are distributors and not the good ones either. We are a copy/paste nation. The Arab League’s logo should be “Ctr+V”.

    But you can’t blame management for this behavior. Oh no. Management is not at fault. It is the fault of the owner and/or the board of directors. And if you dig deeper, it is the fault of their environment and education system. And if you dig even deeper, it is the fault of the family heads who tell their kids “keep your head down, mind your own business, why do you want to create, who needs the headache….Why don’t you become an doctor or a businessman like your cousin?”. The fault, dear Brutus, is not in our stars but in ourselves, that we are underlings.

    The first magic word we must learn is “adapt”. We don’t know how to do that. It scares people. You don’t have to change who you are, you just have to adapt to your new environment. The problem is we think adapting means “buy the best and latest technology”. We don’t see it as “invest in our people”. We can’t fathom an idea where Arabs create, develop and sell new technologies or products to the rest of the world. We will lease the rest of the world the real estate required to do so, offer them tax breaks and lenient regulation so THEY can create and we can buy back from them. And then we brag about how it’s made in our countries.

    The second magic word is “risk”. We don’t take risks. The great ones do. But it’s not willy nilly. It is calculated risk. The only thing we can calculate is how much money we stand to make. The most successful companies bet on an idea. There is no greater risk than investing hundreds of millions of dollars into the research of one human being’s idea that could quite easily fail but has a decent chance of success that will yield billions in the long run. Scientists work for decades on a cure for a disease and in many cases the brainchild of this cure would die before seeing his/her work save lives. Ford adapted to his environment and took the risk of creating a more efficient motor vehicle. Google, Facebook, Youtube and Twitter are adapting to a fast-paced environment and taking risks.

    The final magic words are “think big”. We build big. We live big. But we don’t think big. Sometimes we don’t even think! Hence the phrase “what were you thinking?”. Ehhhhh
    Examples of “Think Big” are our laptops, mobile phones, cars, popular TV shows, movies, microwaves, medicine, clothes, light bulbs, technology etc.. How many of those do we make? Not a single one. But we use them because after all we are a nation of consumers and not a nation of creators. We don’t even have a decent publishing house for God’s sake. We don’t read to our kids, we just feed them.

    I think the C- you gave them is optimistic. We have failed miserably and we don’t even know it. We’re complacent but we think we’re market leaders. We’re chillin!!! It’s all good!! Don’t rock the boat!!!

    Eid Mubarak to all.
    Goodnight and good luck : )

    mohamed youssouf
    the joker
    why so serious?!

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