Net Benefits

These days, you can get more than a cup of tea and a bun in a cafe. Catch some waves as we investigate the net cafe scene in the Middle East region.

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By  Vijaya George Published  December 18, 2002

I|~||~||~|Around five years ago, governments in the Arab region expressed concern over the free ways of the web and how it gave people unrestricted access to information. As a result, the internet was a precious commodity enjoyed by a privileged few in universities and specific corporate industries. Today, however, Arab countries are beginning to loosen up and, although censorship is still practised to various degrees to filter out information that might threaten political or religious practices, the internet has become available to the common man - if not at home or work, through internet cafes.

At present, there are more than 9,000 internet cafes in the region and more are likely to spring up through the year 2004, according to a Madar Research report in October 2002. The same report also states that by the end of 2005, the Arab internet community - currently standing at 8.2 million users - is expected to swell to 25 million. In fact, internet usage already exceeds PC penetration in the Arab world. According to Madar, the ratio of Internet users to the PC-installed base is now revolving around 1.21:1, and is estimated to rise to 1.63:1 by the end of 2005. And leading the GCC in PC penetration is Bahrain with around 16% PC penetration, while the UAE leads in Internet penetration with almost 28%.

Several factors have contributed to the degrees of internet usage. For one, each government in the Middle East practices different policies to either encourage internet usage or discourage it. These policies, combined with per capita income and user profiles have contributed significantly to the growth or decline of internet cafes in each respective country.

Egypt and Jordan, for instance, are excellent breeding grounds for internet cafes as they both have a huge university population, and PCs are not affordable for most people. "Students prefer to go to a small shop with 15 to 20 computers operating at 64 kbps speed, where they can access the internet or office productivity tools for under a dollar," says Jawad Abassi, president of research agency Arab Advisors Group. "That, for them, is more profitable than spending $800 on a computer." Also, a significant majority of the people living in these two countries come under the moderate-income group. As a result, countries like Jordan, Egypt and Morocco have several mid-range cafes started with relatively low investments.

||**||II|~||~||~|But they are no match for giant cafes like CompuMe Internet Cafe, started by the IT mega store CompuMe at the new Nasser city in Egypt. CompuMe Internet Café attracts more than 400 users on an average week day, and almost 800 on weekends. "If you come in the night, sometimes people have to queue up for one hour to use the PC," claims Dikran Tchablakian, CEO, CompuMe.

The queue is understandable. With 150 Compaq machines sporting 15" flat screen LCD monitors and high-speed internet connectivity for a little over a dollar per hour in a prime spot populated by moderate-income people, it is no wonder that CompuMe is all set to embark on similar ventures in other parts of Cairo as well.

CompuMe has created the right ambience for different users, cordoning off different parts of the cafe to accommodate the needs of gamers, heavy smokers etc. Moreover, the cafe runs regular promotions such as free access for ladies on one night of the week and gaming competitions with big prizes for winners. Users can access additional facilities such as scanning, printing and the use of web cams. Another attractive feature at the cafe is the privilege to make maximum use of the time for which a user has paid. "If you have used the PC only for half-an-hour, you can come back on another day and use the other half. Our system keeps a log of each user's time," explains Tchablakian.

Egypt, unlike most other Arab countries, does not have a proxy in place. Rather, it encourages self-censorship - although all internet cafes in the country are expected to ensure that users do not abuse the internet by visiting sites deemed obscene or immoral. For first-time users and people who would like to learn something beyond surfing, CompuMe has also introduced special training packages at the cafe, which can be availed at additional costs. Such continued efforts have helped to woo larger crowds to the cafe, and also helped make more Egyptians IT literate, according to Tchablakian.

"We have created an environment where people can educate themselves," he says, adding that internet cafes give more people in Egypt access to the PC.

"If you look at Dubai or Saudi Arabia, cafes have not picked up like in Egypt because most homes have PCs. If you look at Saudi, people can afford to buy very high-end PCs. It's the same with Dubai, where internet cafes are just a meeting place," he adds.

No doubt, many people in Saudi Arabia can afford high-end PCs. But other subtle measures make the internet less attractive and inaccessible to the average person. For instance, post-paid internet accounts are currently not available in the Kingdom. Internet users who want an account have to commit themselves to annual subscriptions or use their credit cards to guarantee the same. This system has prevented many people from subscribing for internet access and explains why the country has a mere 6.81% internet penetration. For those who do have access, information is heavily filtered. People attempting to bypass the proxy or visit unwanted sites are also warned that their requests are being logged. As a result, most people prefer to use internet cafes or prepaid card systems to access the web.

||**||III|~||~||~|Here again, Saudi authorities have imposed strict regulations on internet cafes in the kingdom and some have been closed down for immoral activities. As of March 2002, a report from the Arab Advisors Group pegged the number of cafes in KSA at 105. Cafes are expected to have separate sections for men and women, those under the age of 18 cannot visit cafes unless they are accompanied by their fathers, and others must refrain from visiting sites that disrespect Islam and the ruling family.

Despite these restrictions, Saudi Arabia has seen its cafe business booming, especially in cities like Mecca and Medina, where pilgrims who come every year to perform Hajj and Umra use the internet to keep in touch with relatives back home. Additionally, the fact that internet access is limited gives cafes an edge over their customers and most are expensive, charging anything between $5 and $7 per hour. Most cafes, however, offer monthly subscription packages which work out cheaper. A customer could, for instance, settle for 100 hours a month at $135. Regardless, rates are expensive and many do without internet access.

Kuwait, which is reported to have about 300 cafes, is also said to have gone on the offensive with them. Ahmad Abdul-Jabbar Marafi, founder and director of Kuwait-based gaming and cyber cafe The Dungeon, explains that 90% of internet cafes in the country have closed down - some have shifted business to network gaming while others have been shut down for web abuse by the Ministry of Information. Early this year, more than fifty internet cafes in Kuwait were reported to have had their licenses suspended.

"The Minister himself has gone along to conduct raids on some internet cafes," says Marafi. He also explains why most cafes have shifted business to gaming cafes. "They need a bank guarantee of roughly $33,000 for establishments, and companies need a bank guarantee of about $150,000. This is just to give you permission to serve internet in your cafe," he explains, adding that such stringent demands have forced the closure of many internet cafes.

Another significant reason for the shift, according to Ali Aloufi, computer divisions manager of Al Andalus Trading, regional distributor for Samsung in Kuwait, is the increasing demand for entertainment. "People want online competition and team play. For this, you need the right atmosphere, high-end PCs with good video cards and so on. So this is profitable for gaming cafes," says Aloufi, who has been supplying hardware to 30 gaming cafes over the last eight months.

But gaming brings in its wake other issues such as licensing. Marafi has stayed on top of this issue easily as his company is also the distributor for several international games in Kuwait. So, while many other gaming cafe owners are not aware of location-based entertainment (LBE) licenses that are given by companies such as Sierra to use their games for commercial purpose, Marafi is.

This gives him a legal edge over his competitors and has contributed to the Dungeon's success. Today, The Dungeon has three branches located in popular shopping areas like Hawalli and Salmiya, and is looking to open a fourth outlet soon. Meanwhile, with just 150 high-end PCs scattered between the three branches, The Dungeon is currently attracting more than 6,000 regular members, most of whom are teenagers. "Weekdays, daily we get about 25-50 customers in each cafe. Actually it depends. Weekends, we get about 250-500 in total," says Marafi.

||**||IV|~||~||~|The closure of internet cafes may affect Internet penetration in Kuwait, which is still a low 8.91% although PC penetration is significantly higher at 12.17%. In fact, Kuwait and Qatar are the only two countries in the GCC that have more installed PCs than internet users. Qatar has around 80 internet cafes but they face an uncertain future as connection and operating tariffs remain high while subscription rates and telephone charges for individual subscribers are dropping.
"There is no scope for more cafes in Qatar. The market is already saturated," says Marcel Briganza, who works as operations manager for Internet Cafe, which has four branches in Qatar. Here again, cafes are expected to abide strictly by the rules or have their licenses revoked. "Children below 18 are not allowed unless they are accompanied by their parents or somebody older," explains Briganza.

The country also has a strict piracy policy. Surprise checks are often conducted to ensure that PCs do not have pirated software. Briganza says that Internet Cafe has only branded machines - Dell and Compaq - and both come pre-loaded with Windows. Minimum charges at Internet Cafe are approximately $3 for one hour, and $2 for subsequent hours. Membership packages are cheaper, where you can buy 40 hours for $55 and 90 hours for $110. Like most other cafes, this one is stocked with snacks, sandwiches, hot beverages and soft drinks as well to attract customers. But unlike many others that see big money in young members and decorate their interiors accordingly, Internet Cafe is very matter-of-fact. No games are loaded on their workstations. "We mostly get older people; expatriates and the working crowd," he explains. All additional facilities such as scanning and printing cost extra.

Within the UAE, however, there are several different forces at work, and the 200 odd internet cafes in the country are struggling to keep their neck above water. Citi Dot Com, based in the Atrium Centre, Dubai, occupies a hot spot. "Anyway you look, we are surrounded two kilometres diagonally on all sides by around 60 to 70 furnished apartments," says Javed Zaveri, manager of Citi Dot Com. Furnished apartments house a lot of the floating population which includes airline staff, transit passengers and tourists. But Zaveri bemoans the number of small cafes that have spoilt the market by offering surfers internet access for as little as 54 cents an hour. In 2000, when Zaveri approached the authorities, they were not issuing licenses for internet cafes. But they promised to give him one, if he started a big cafe.

||**||V|~||~||~|That is how Citi Dot Com came up. Equipped with almost 60 high-end PCs and state-of-the-art Samsung LCD monitors, Citi Dot Com is open from 8.30 am to 2 am at night. Customers are charged $2 an hour and can use the web cam, scanner and phone that come as a standard on each desk at no additional cost. Local calls can be made free-of-charge. Only printing is charged extra. "This is a full-fledged cafe. People can eat and surf. We would have been making big profits now if we had a monopoly but six months down the line, they started issuing licenses to so many people," explains Zaveri. But he was not to be beaten. His free facilities as well as a regular promotion of buy one hour and get one free have continued to bring him customers. "On an average, we get 300-350 customers a day, and on weekends, we have 60% occupancy," he explains.

Citi dot Com has other facilities as well. Members can log on with a password, download files, create a folder on the hard disc and store it for three months. Zaveri is not worried about viruses. "We already work in the IT field. So, we have a round-the-clock engineer to take care of any problems that crop up and our anti-virus software is always updated," he adds.

Although Dubai has a high PC penetration rate, cafe owners do get customers who have PCs at home. KS Vasudevan, senior manager of Samsung Electronics, which has supported several internet cafe ventures in the Emirates, says: "At home, we don't have the necessary infrastructure for gaming, for instance. A workstation that you use for internet gaming or LAN gaming requires high-end graphics card and at least a 21" monitor for you to enjoy the experience. So, gamers prefer cyber or gaming cafes."
Samsung has cause to support such initiatives. "The segment that pays and enjoys these games are the middle and upmarket people. These are the trend setters in society and these are the people we target our lifestyle products at," explains Vasudevan.

||**||VI|~||~||~|Sharjah is just about ten minutes away from Dubai but it got its first internet cafe only six months ago. Now, the emirate has three or four cafes but these charge more and cannot boast of the same free facilities as some in Dubai. Net Station, a Quality Computers venture, located in Computer Centre, Sharjah, has 23 P4 Touchmate PCs with 256 MB RAM and charges $2.50 per hour. "We have a comfortable setting. It is spacious and quiet - it's the perfect atmosphere for people who want to browse or surf in peace," explains Kamal Kumar, marketing manager, Net Station. But only two or three computers have a scanner, printer, web cam etc, and extra charges apply for the use of each of these facilities. Moreover, eating and drinking is not allowed in the cafe. Although the cafe is capable of providing additional facilities such as CD writing, Kumar explains that cafes have not yet received approval from the Ministry of Information to permit this for fear of violating copyright laws. Each emirate operates on vastly different principles and close proximity to more dynamic cities such as Dubai has not spurred some of its neighbours to buck up and improve their facilities, or otherwise make themselves more attractive to residents or tourists.

Despite all these setbacks, internet cafe owners have come to nurture a hope that things will get better and governments will ease regulations as the web comes to be used by more people for trade, communication and entertainment. However, even as things seem to appear to have improved, there is fear that these cafes are facing an uncertain future, primarily because connection and operating tariffs are climbing while subscription rates and telephone charges for individual subscribers are dropping.

Some countries, like the UAE, have witnessed tremendous dips in subscription charges and there is talk of installing internet kiosks in public areas. Others, like Egypt, have done away with internet subscription fees and the government is opening up free access areas in public arenas, clubs and community centres to encourage internet use. If more countries take this route to encourage use of the web, internet cafes will have to find more creative ways to keep the cafe society interested.||**||

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