Internet access across Gulf climbs 33% in 2002

Internet access across Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) climbs 33% in 2002, says IDC.

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By  Greg Wilson Published  April 23, 2003

Internet access across Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) grew by 33% during 2002, to approximately 1.32 million connections. The statistics, which were compiled by IDC, indicate that broadband services constituted just 3% of all connections, but made a 12% revenue contribution.

“Clearly, connections growth, going forward, will hinge on the ability of ISPs in the respective countries to market Internet access connections to the least penetrated market segments. In most of the countries, this means increasing penetration in the consumer and small business segments,” explains to Mohsen Malaki, senior analyst, Telecommunications Group, IDC CEMA.

“For ISPs to be able to tap into these two segments, an understanding of the main inhibitors of Internet adoption within each segment is required,” he adds.

Internet penetration rates vary across the region and by customer type. Large and medium sized businesses boasted the highest penetration rate, while smaller companies with one-to-nine employees had the lowest penetration rates.

In order to get more small businesses hooked to the web, local internet service providers (ISPs) must developed targeted pricing strategies and build awareness to the internet.

“It is no longer sufficient to produce generic business tariffs for Internet connections, whether dial-up or broadband,” says Malaki.

"ISPs need to formulate prices that take into account the bandwidth usage patterns of small businesses, which will result in lower prices for this segment,” he adds.

Bahrain and the UAE there are already programmes underway to drive small businesses to the web. In both countries, the monopoly operator has partnered with local Chambers of Commerce to hold seminars on the use of the internet.

“Such efforts could go a long way in educating the small business community about the benefits of the internet for their particular businesses, guaranteeing the ISPs revenue growth in the future, while introducing the benefits of the Internet to the local business community,” claims Malaki.

According to IDC, the household web connection is highest in Kuwait, followed by Bahrain and then the UAE. There is a combination of factors inhibiting further internet adoption in the consumer segment.

However, the largest barriers to greater internet adoption continue to be PC penetration and internet literacy. Although subsidised PC schemes and a greater focus on ICT education have gone some way to remedy the situation, greater public/private partnership is still need.

“Remedying the inhibitors of growth on the consumer side requires a more coordinated approach between policy-making bodies, telecommunications operators, and ISPs,” comments Malaki.

Going forward, IDC predicts the Gulf internet access market to exhibit a compound annual growth rate of 14% for connections and 18% growth revenue between 2002 and 2007. By 2007, the market will reach 2.6 million connections and revenue of US$1.1 billion.

The largest driver of growth in connections and revenue will be broadband, while both dial-up and leased lines to the internet will witness a more modest growth curve. The dial-up market will continue growing with the exception of Kuwait, where dial-up connections should start to decline by 2005, largely due to cannibalisation of dial-up connections by broadband internet.

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