Things are getting crowded

The world is migrating to the high speed internet, but broadband access remains almost non-existent in the Middle East — for a number of reasons. Does it matter and what’s to be done?

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By  David Ingham. Published  December 8, 2002

|~||~||~|British Prime Minister, Tony Blair, thinks it’s so important that he’s pledged to give every school, university, hospital and doctor’s surgery in Britain a high speed internet link. He’s promised to spend a cool £1bn over the next three years to make this a reality.

Here in the Middle East, however, concerns are growing that the region may be falling behind in the roll out of broadband networks around the world. Whilst broadband traffic in the US surpassed narrowband traffic for the first time this year, and Europe is beginning to catch up, broadband availability remains limited in the Middle East and the cost high. “Not very many countries offer ADSL [the most common broadband internet technology] or broadband in general,” laments Sarah Alalul, an analyst at Arab Advisors Group.

However, might this not all be a little bit premature? There is little internet usage of any kind in the Middle East, and does broadband really matter? After all, the vast majority of content on the internet remains text based and an analogue or ISDN connection is fine for that. At the moment, it’s questionable whether the average punter really needs or wants to pay $100 per month for an ADSL connection that let’s them enjoy streaming video and audio.

However, Ahmed Al Oteify, spokesperson for the recently formed Arab Broadband Internet Forum, argues that knowledge is power and broadband is therefore absolutely essential for the region. Without broadband, he says, the so called ‘digital divide’ will grow even larger over the long term.

“ADSL will become the predominant way to access the internet by 2005 and… bandwidth hungry content and applications will develop,” says Al Oteify. “There is what we call now the information divide and the information divide is leading to an economic divide. If your children are not accessing the same type of information and knowledge, then in the long term it will lead to economic inequality.”

Mohsen Malaki, telecomms analyst for IDC Middle East, also made strong arguments in broadband’s favour in a recent presentation to the forum. In a slide entitled, ‘The pipe is only the beginning: Applications drive demand’ he outlined some of the business services that broadband enables, such as voice over IP, voice portals, remote monitoring, software on demand and data backup and replication.

Such applications are becoming second nature to businesses in Europe and the USA, but remain scarce in the region. Application service providers (ASPs) are one example of a business that certainly benefits from the availability of broadband.

ASPs maintain software on secure servers and allow companies to access the software over the internet in return for monthly fees. It’s a form of outsourcing and potentially allows customers to reduce in-house IT overheads and save money. For ASP services to work, however, internet connections have to be fast and reliable.

“Etisalat’s ADSL services are a big boost to us, no doubt,” says Tony Sparks, CEO of ASPGulf, an Abu Dhabi-based ASP. He says revenue is growing 100% a month, thanks in part to the fact that ADSL simply makes his services work faster. “ADSL can provide you with connectivity for something like 40 PCs, which is fantastic for a company like ours,” adds Nadim Ghorayeb, chief operating officer of Trinec, an ASP in Lebanon and Jordan.
Arab Advisors Group, the Jordan-based telecomms and IT analyst firm, also believes regional businesses could benefit considerably from broadband internet. The company uses itself as an example.
“We work with companies in other counties, we have to send huge documents by e-mail, so obviously it has its advantages,” says Arab Advisors’ Sarah Alalul. “It’s much more feasible than leased lines,” adds Shahin Shahin, also of Arab Advisors.

How to get to a world of high bandwidth bliss, whether at the consumer or corporate level, is the challenge. On a purely technical level, the handful of regional PTTs that offer broadband internet have chosen to do so through ADSL (digital subscriber line), the technology favoured by the vast majority of broadband users around the world.

ADSL is the simplest route for PTTs because it requires less investment in new technology than alternative broadband methods. Services are now available in Saudi Arabia, Kuwait, UAE, Bahrain, Jordan and Egypt, according to IDC, with Morocco, Tunisia, Oman and Qatar to follow soon.

Consumer access prices vary from $70 to $100 per month for unlimited access. In Jordan, businesses pay the same amount of JD49 ($70) as consumers, but in the UAE the cost is much higher for businesses at a starting price of $300. ADSL access speeds range from 384 kbits/s to 2 mbits/s (compared with 64 kbits/s for ISDN.)

Although ADSL is the most common method of broadband internet access, it isn’t without its limitations as a technology, however. Its effectiveness tends to deteriorate the further away the user is from a digital exchange.

In Saudi Arabia, this is a big problem, according to Arab Advisors. “The main reason behind the slow uptake of ADSL in a largely affluent society is a supply side cause. Some 50% of the applications for ADSL are rejected due to the fact that applicants’ premises are not located within 5 cable kilometers of the STC exchanges,” says Shahin Shahin. “ISPs are complaining of much unmet demand due to this very reason.”

Alternative methods are through cable, satellite and ‘wireless hot spots’, access points in places such as hotels and airports that allow PDAs and notebooks to surf wirelessly. The UAE is now offering broadband access through its home cable service, E-Vision, and Bahrain is experimenting with wireless hot spots.

“We are planning a rollout of ‘wi-fi’ hotspots that will enable people to get fast wireless access to the Internet while sitting in shopping malls, hotel lobbies or coffee shops,” confirms Tony Hart, chief executive officer of Batelco, Bahrain’s monopoly telco. “We have the potential to deliver download speeds to hand-held devices and laptop computers at up to five times faster than 3G’s best promise.” A trial is now underway at Bahrain International Airport and is to be extended to a number of hotels and a shopping mall.
An unspecified number of users had reportedly been using satellite internet services in KSA, despite high subscription costs, until they were banned by the government last month. STC is now believed to be looking at utilising wireless technology to overcome the problems with ADSL.

It appears, therefore, that whilst alternatives to ADSL are available, it is likely to remain the most widespread option for those that want broadband internet access. The question is how to drive uptake of ADSL.

It appears to be a combination of cost, customer ignorance of broadband and, where knowledge of ADSL does exist, a lack of content and services that are holding back wider uptake.

Whilst cost is always an issue, it is less of a problem for businesses than it is for consumers. Even at $300 per month in the UAE for business ADSL, a service called ‘Business One’, the technology is affordable, especially compared to leased lines. At $69 per month in Jordan for businesses, the same pricing as for consumers, ADSL seems like a godsend.

For businesses, the benefits of the service go way beyond simply speeding up basic internet access. They can implement offsite data backup procedures, for example, and make use of internet telephony and ASP services that could help them save operational costs.

Why, therefore, is there so little usage of ADSL amongst corporates, especially in Jordan? Shahin Shahin at Arab Advisors thinks that businesses just don’t know about ADSL and the reason is that the incumbent simply hasn’t gone out and promoted it. That appears strange to say the least, but Shahin says that monopoly operators will always focus on the most lucrative revenue streams and at the moment that isn’t datacomms.

“Monopoly operators usually concentrate on their core business, which is voice, whether fixed lines or GSM,” says Shahin. “They’re not really so interested in expanding the datacomms or internet market because it constitutes a small part of their revenue.”

Furthermore, if you want to get ADSL, Arab Advisors’ Sarah Alalul that the whole experience is a pain. “The user is put off because they have to get details themselves, approach Jordan Telecom to set it up, which takes three weeks, and find an ISP to deliver the internet service,” she says.

Emirates Internet & Multimedia (EIM), the ISP unit of Etisalat, offers words of comfort, however. Maan Al Sabi, development manager for emerging technologies & services, told Arabian Business that EIM is pleased with the 17,000 ADSL subscribers it has, but that EIM will go big on promoting broadband in 2003. “We definitely want to make broadband mainstream and this is evident in our marketing strategy,” he says.

Taking the region as a whole, the impediments to wider uptake of ADSL amongst businesses appear, therefore, to be availability, awareness and the hassle involved in getting upgraded. For consumers, it’s a combination of all those things, plus cost and content.
On the question of content, $70 is affordable for many consumers in the UAE, but it’s still not cheap, and the same amount is a heck of a lot of money for consumers in Jordan and Egypt. If they are going to cough up $70 or more a month, they need convincing that broadband is worth paying for, and to do that you have to give them something they want. It’s what IDC’s Malaki refers to in his presentations as the ‘killer app.’

The problem at the moment, however, is that no-one has yet really ascertained what that ‘killer app’ is going to be. Videoconferencing or streaming videos, for example, might be nice, but do you really need them?

Ahmed Al Oteify, of the Arab Broadband Internet Forum, has strong views on the cost and content issues. On the question of localised content, he is calling for pan-Arab co-operation.

“I believe there should be a mutual effort,” says Al Oteify. “We would like to create a pan-Arab organisation or company where all the incumbents participate in order to pump a large amount of money into development of content. Otherwise, the [broadband] business is not going to pick up.”

On the question of cost, he says that it is the price of international bandwidth that is the killer, a view echoed by EIM’s Maan Al Sabi. “Backbone internet access from the UAE is a costly matter,” he says. “We’re right in the middle of the world and 80% of internet content is [hosted] in the States.”

Deal with the issue of local content, Al Oteify argues, and you go some way towards dealing with the cost problem. “If you move content here, there is not as great a need to drive the cost of international bandwidth down,” he says.

Whether or not Al Oteify gets his way and sees a pan-Arab effort to develop local content, Al Sabi may have words of comfort for him. EIM, Al Sabi says, has quietly been developing content through its albahhar portal and intends on taking that further.

“Access is a service, but if there’s nothing to access, there’s no point subscribing,” says Al Sabi. “Online gaming is one of our initiatives and we intend on taking that further, and e-learning will be another.”

Whether it’s content, cost, technology or apathy, there are many factors slowing the adoption of broadband internet access across the region. The players involved are all aware of the problems. Now the challenge is to deal with them.||**||

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