A meeting of minds between the Middle East’s media and telecoms industries is still some way off, it emerged at the Arab Advisors Group’s Media and Telecoms Convergence conference in Jordan’s capital, Amman, last week.

Some operators have major doubts about the prospects for delivering media content over telecoms networks in the region. “Content seems very exciting, but how do you make money out of it?” said Peter Kaliaropoulos, CEO of Batelco. “We need to work that bit out. The question should be how to create a market for content that currently doesn’t exist in the Middle East.”

For telcos in the region, the amount of revenue that will come from content is likely to be small, and the scarcity of revenues will make it difficult to justify the expense of content development and acquisition to investors, according to Kaliaropoulos.

Some other operators see the convergence between media and telecoms as inevitable. “The trend is for everything to move to mobile: the Internet, TV,” said Mickael Ghossein, CEO of Orange Jordan.

Change is under way regardless, according to Du CEO Osman Sultan. “There has been a shift from the promise of ‘mobility for everyone’ to a promise of ‘everything everywhere,’” he said. “We are saying to customers, ‘You can carry your whole life [on your mobile device].’”

Even the skeptics seem to acknowledge the risks of staying on the sidelines: Despite its doubts about convergence, Batelco plans to set up a division to acquire or develop content for its various operating businesses.

But the convergence of media and telecoms brings together two completely different sets of players, each of which is moving from a position of “unshared certainties” to one of “shared uncertainties,” Sultan said.

If telcos are to offer content, they need the expertise of the media companies, according to Sultan. “We don’t know anything about content,” he said. “Those people [media companies] have spent 100 years learning how to deal with artists and singers.”

But, Sultan said, it is evident that people will not watch full movies and soccer matches on a mobile screen, because it is too small. Simplicity is vital too, he said, because 85 per cent of people who have tried mobile TV stopped after the first attempt because it was too complicated.

Sam Barnet, COO of MBC, the largest broadcaster in the Middle East, with 82 million viewers a day, made similar points. People are generally put off by difficult technology, so telcos need to make it easy for users, he said. A DVB-H system the user can turn on and watch immediately might be better than a 3G system that takes time to load.

In addition, the mobile platform requires different types of content compared with conventional TV. “Delivering the same TV content that you watch on a TV set probably isn’t the way to do it,” Barnet said. So MBC has asked Al Arabiya to make five-minute news programs for mobile, while MBC itself is creating five-minute versions of its popular 30-minute TV comedy show Tash Ma Tash. MBC also recently bought a Riyadh-based company that produces content specifically for the web and mobile.

Telcos developing mobile TV offerings should bear in mind the fact that Middle East audiences are reluctant to pay for TV. Despite the proliferation of satellite channels, the region has only three pay-to-view broadcasters - Showtime, ART and Orbit - and they account for only a small part of the overall TV market. “The Middle East broadcast market is predominantly free-to-air,” Barnet said. “Pay-to-view is very small. So telcos are going to find it very difficult to charge for TV services.” And the TV advertising market in the Middle East is also small, so if telcos are hoping for a share of the advertising market, they might be disappointed.

Also, Middle Easterners typically do not commute to work via public transportation to the extent that their counterparts in Europe and East Asia do, which removes one key opportunity for engaging with mobile content.

Telcos will find it difficult to go it alone in TV, according to Barnet. “Should telcos create their own TV brands and bring them to market?” he said. “I don’t think they should.” Telcos that have tried to do so in other parts of the world have struggled, he said.

But there might be scope for MBC to extend its brand into the telcoms sector. Asked whether MBC might launch an MVNO, Barnet said: “MBC has strong brands that are suitable to those of large cellcos. That’s all I’m saying.”

In the first of a flurry of recent mobile-money-service announcements, Vodafone said last week that it would launch its M-Pesa mobile-money-transfer service in Tanzania later this month in partnership with Vodacom. Tanzania’s No. 4 operator, Zantel, responded by saying it would introduce its own mobile-money-transfer service, beating the launch of M-Pesa. Then the UAE’s Etisalat, which has a majority stake in Zantel, said it was developing an international money-transfer service with Indian operator Idea Cellular, HSBC India and Mashreq Bank.

Next up was Orascom Telecom Chairman Naguib Sawiris, who revealed that he planned to offer mobile banking and money-transfer services to Orascom subscribers through a new company to be set up later this year.

The established services - insofar as any are established in this new sector - are going great guns too. In Kenya, where M-Pesa debuted with Safaricom, more than 1.6 million people have used the service since it was introduced a year ago, transferring a total of KES9.3 billion ($151 million). A trial of international money transfers, between the UK and Kenya, is also under way. And in February, Vodafone launched the service - branded M-Paisa - in Afghanistan in partnership with Roshan. MTN’s MobileMoney mobile banking service, which the operator runs in partnership with Standard Bank, had 250,000 subscriptions at end-2007.

Mobile money is well suited to emerging markets, such as those in Africa, because a large number of people in such countries do not have access to conventional financial services but do have access to mobile handsets and services. International remittances - the sums of money that people send to their families in developing-world countries - represent just one potential part of the mobile money market. But the sums involved are large: international remittances totaled $230 million in 2005, according to the World Bank, equivalent to four times the size of all foreign aid budgets.

For mobile operators faced by declining ARPUs, mobile money services on which they can earn transaction-based fees - and which might not require major network investment - are an ideal value-added service. Sawiris was candid about this, saying that he hoped to earn an additional $1 a month from each subscriber through mobile banking services. Orascom had 58.8 million subscriptions on a proportionate basis at end-2007, so mobile-money services could be a big earner for Orascom if they are taken up widely.

Conveniently, governments and aid agencies are often eager to support and even fund the development and introduction of mobile money services because of the perceived economic and social benefits they bring. The UK’s Department for International Development gave Vodafone £1 million ($2 million) to support the development of M-Pesa.

Although the opportunity and attractions of mobile-money are clear, there are potential obstacles too. One is that of regulation. As a money-transfer system, M-Pesa escapes being classified as a banking service, which usually involves deposit-taking for the purpose of investing or lending. Other mobile money services might be considered to be banking applications, in which case operators will require a banking license and be subject to financial-services regulation. One way to meet those requirements might be to partner with a bank, as MTN has done. Operators will have to consider carefully whether what they plan to offer constitutes a banking service. That might vary from country to country. Regulations that are designed to stop money laundering might also have an effect on international money-transfer services.

But these are problems to be addressed rather than insurmountable obstacles. The GSMA’s Mobile Money Summit in Cairo next month is likely to be a hot ticket.