Internet bandwidth in the Arab World starved until 2005

According to the Jordan-based Arab Advisors Group, Internet bandwidth in the Arab World is starved and needs to be loosened before monopolies of international service in Jordan, Egypt, Lebanon and Oman end by the year 2005.

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By  Massoud Derhally Published  September 4, 2001

According to the Jordan-based Arab Advisors Group, Internet bandwidth in the Arab World is starved and needs to be loosened before monopolies of international service in Jordan, Egypt, Lebanon and Oman end by the year 2005.

A recently published research report by the consultancy maintains that more than 740,000 Internet subscribers in eight Arab countries share a grand total of Internet bandwidth of no more than 777 mbps. The combined Internet bandwidth of the eight Arab countries of Egypt, Saudi Arabia, Lebanon, Jordan, Morocco, Oman, Syria and the UAE pales in comparison to what Internet users have available to them in Europe and America. The combined bandwidth of these eight Arab markets is equal to what 518 cable modem subscribers in the US have!

According to what the report classifies as a “Regional Bandwidth Index”, Internet users in Morocco, Egypt, Oman and Jordan have better bandwidth availability than those in UAE, Saudi Arabia, Lebanon and Syria. Syria is the most bandwidth deprived of the countries with a regional bandwidth index score of 0.19. While Egypt topped the rankings with a regional bandwidth index of 2.11

The Arab Advisors Group calculated the Regional Bandwidth Index by dividing each country’s share of the total Internet bandwidth available by its share of the total subscribers base. Results of more than 1 indicate a better than regional average bandwidth per subscriber. The higher the index the better the bandwidth situation in the country compared to the region. The index results are tied to the actual countries surveyed and analyzed.

Jawad Abbassi, Arab Advisors Group’s President told ITP.net that the low Internet bandwidth in all of the countries is a direct result of high costs. According to Abbassi, countries need to follow two tracks to become more transparent and create an environment that will foster competition and innovation. “First of all Arab countries nee to implement liberalization policies to allow competition in the international service segment of the market,” Abbassi told ITP.net.

“Second, countries to encourage regional ISPs to consolidate into a regional backbone so that the number of Internet users in the Arab world increases and they will have more bargaining power with the Internet backbone operators in Europe and America. At the moment, players are paying for full circuit costs. If you want to connect an ISP in Jordan with the backbone in America, you pay for the half circuit to Jordan Telecom, and a half circuit to AT&T for instance plus a monthly fee to the backbone operator in the US. Whereas, between the regional backbones in the US, interconnecting comes at almost no prices at all,” Abbassi added.

Abbassi believes that Arab countries can afford the costs associated with implementing these necessary measures however certain measures must be in place. An initial step is to create a level playing field that will pave the way for a competitive market but will preliminarily ensure that the current monopoly of the existing player is not advantaged or disadvantaged by a competitive market, according to Abbassi. “The first step is to do what Jordan or Morocco have done, which is to have tariff free balancing. By doing so, you eliminate the practice of cost subsidization, where international phone calls, or leased lines are priced at high rates to subsidise a really cheap local rate, which is what is otherwise known as basic telephony. By eliminating cost subsidise you can introduce competition and this is all part of the WTO liberalization process,” explained Abbassi.

So what is the time horizon necessary for implementing these changes? Given that international Internet bandwidth in the Arab world will not be as wide as that of Europe and North America until the year 2005, countries need to act fast in order to be ready once the liberalization makes way for competition. Thus far, Morocco is by far the most advanced from a regulatory perspective. The other countries should prepare the rules of competition in order to have an actual infrastructure and regulatory framework in place to accommodate potential investors, according to Abbassi.

“The Gulf States compared to the Levant and North African countries have a rich monopoly of profitable operators with very good services by global standards. But they could be better, because price competition does not exist at the moment. But Bahrain and UAE and several other countries are likely to liberalise the telecommunications sector,” says Abbassi.

Arab Advisors, which focus on telecommunication, Internet, and technology in the Arab world, has 6 analysts covering 12 markets and has been researching the markets for the past year.

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