Racing the last mile

The advent of a second telecommunications company promises to accelerate the telecom evolution and create a profusion of technological choices in the region.

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By  Caroline Denslow Published  June 5, 2005

|~|main_broadband_feature.jpg|~|The race is on to finish the critical last mile — from the network service provider’s node to the customer’s premises — a pressing concern.|~|In early May this year, the UAE announced the setting up of a second telecommunications company, which would end the monopoly of the current incumbent. If experience in other parts of the world is any indication, this could substantially speed up telecom evolution and multiply user options in the UAE. One area in which everyone will be looking for action is the so-called ‘last mile’ — the portion of the network from the service provider’s node to the customer’s premises. The last mile has always been the biggest obstacle to achieving the full potential of a modern telecom network. The service provider’s network backbone almost always has infinite bandwidth but the limitations in the last mile prevent customers from accessing it. The expectation is that with increasing competition, there will be a profusion of new technological choices that can help make the last mile problem go away and provide new reasons for consumers to use the Internet, such as video-on-demand or interactive services. It is important to unlock the potential of abundant bandwidth because internet usage in the Middle East has remained low by global standards. ||**||Scope for more|~|main_broadband_02.jpg|~|Abdullah Hashim, senior manager of eCompany, has set spectacular goals to be achieved by 2008.|~|According to InternetWorldStats, a web site providing information on worldwide internet usage, the Middle East accounts for 4% of the world’s population, but only 2% of the worldwide usage of the internet. The UAE fares better than other countries in the GCC, but its usage rates are still not commensurate with its GDP per capita. According to the International Telecommunications Union, the UAE leads the GCC region with 36.7% of its population having access to the internet. But compare that to penetration rates of 57% and 60% for New Zealand and Singapore, respectively, which are countries with comparable population sizes, and you know there is scope for more. All of this may be about to change. As the market opens up, Etisalat, the sole official service provider of telecom services, including the internet, is making aggressive plans for the future. “We expect to have a growth of 100% year-on-year in terms of broadband users over the course of the next few years. Our target is to make the UAE among the top ten countries in the world in terms of broadband penetration by year 2008,” says Abdulla Hashim, senior manager, eCompany, which is the ‘e-powerhouse of Etisalat’. But how will Etisalat — or its competitor — increase broadband usage in such a dramatic fashion? How will either of them get around the last mile problem? Broadly, there are two ways in which a service provider can dissolve the last mile bottleneck: it can either use a fixed wire solution, or a wireless solution. Within fixed wire, there is the existing copper wire that is going in to most homes in the form of landline telephones, and there is cable in the form of TV. The third option is optic fibre, which is quite costly, given the huge necessity to lay down a new connection into every home. As for wireless, there is fixed wireless, or Wi-Fi, and there is an emerging new technology standard currently being experimented with all over the world, called WiMax. Satellite and 3G — using cellular phones to access the Internet — are two other options. Traditionally, DSL, which provides data rates that are ten to 20 times as fast as dial-up on the same old copper phone lines, has been the most commonly used option. Within DSL, the Asymmetric Digital Subscriber Line (ADSL) — is currently the most used technology the world over. This is so simply because the copper network already exists, making it possible to provide internet economically to the end user. But ADSL has limitations both in terms of bandwidth availability — it does not go beyond 1.5 Mbps — and consistency of quality, since it is very sensitive to the distance between the user and the box from where the line is being distributed to individual users. Therefore, whenever new buildings come up, people have tended to go for optic fibre since a new line has to be laid in any case. Optic fibre carries unlimited bandwidth and that means users can get a three-in-one service: phone, TV and internet access. But optic fibre makes sense only for new construction, and not for existing buildings. Internet through cable has become popular only in the US. In most developed markets, the ratio of DSL to cable is 80:20, but in the US it is 50:50. In the future, when the demand for bandwidth-hungry services such as pay-per-view and video on demand spirals, last-mile networks made of coaxial cable could become more prevalent. The cost of upgrading the last mile in this case becomes justified, especially when compared to optic fibre, because the expense is spread between two types of services: access to movies and television shows on the one hand and access to the internet on the other. The way things are currently, if you want broadband internet access in Dubai today, your options would be a dial-up, ADSL or cable connection provided by Etisalat. If the building you live in has been constructed by Emaar Properties, then you’ll possibly have the option of fibre-to-home, beaming in video, voice and interactive broadband services all at one go. Internet over wireless networks would be an option only at public places, like the Dubai International Airport and a few other hot spots. Internet over mobile phones is still in its infancy. Etisalat is also offering broadband through VSATS to customers who need such a service in the UAE. Business users would have the option of dedicated leased lines in addition to ADSL and fixed wireless, again from Etisalat. According to estimates provided by Etisalat, of the current 1.8 million internet users in the UAE, 5,69,842 have access to broadband at speeds of 256 mbps and above. This includes both home, as well as business users. While Etisalat did not provide break-up of users according to technologies used to access the internet, it did state that “at the moment, ADSL has the highest penetration in term of access technology in the UAE.” This could be because it was the first access technology introduced in the market, followed by cable and fixed wireless. ||**||Wi-FI plans|~|main_broadband_03.jpg|~|The Greens by Emaar Properties has a variety of broadband options.|~|Although Wi-Fi was introduced in October 2003 with hotspots in selected public locations, and 3G services in December 2003, both remain on the fringes as far as access technologies are concerned. Rough estimates put the number of 3G users in the UAE at 5,000 to 7,000. Figures for Wi-Fi are not readily available. Etisalat plans to launch a triple play service by mid-2005, which will offer voice, video, interactive services and broadband internet on its HFC (hybrid fibre coaxial) infrastructure. As for fibre-to-home, there are 15,000 connections rolled out by Sahm Tehnologies, a division of Emaar Properties that buys bandwidth from Etisalat and supplies it to properties constructed by Emaar; of these, 8,000 are currently being used. 95% of these are home users. There’s no denying that both internet penetration and availability of broadband can be improved. The good news for users is that the existing copper network can now deliver an improved level of service. ADSL II+, an upgraded version of the earlier technology, offers better performance in terms of both distance and bandwidth, and can be used on the existing ADSL modems. It has already been deployed in France and some other European countries. “The UAE, like other countries in the Middle East, will need to deploy ADSL II+ in the future because it can support fast internet services such as video on demand which consume bandwidth,” says Bernard Grave, marketing director, fixed communications, Middle East, Africa and India region, Alcatel. For a booming real estate market like Dubai, optic fibre is a great option, since new networks would have to be laid anyway. But it cannot be a mass option since it is much more cost effective to use ADSL II+ on existing copper than to use fibre. For the existing areas, operators — especially the new competitor — could seriously consider wireless. “Unlike the incumbent, the new service provider will find it very expensive to lay the network all over again, and hence, would opt for wireless technology to provide telecom services,” says K Ganesan, marketing manager, Online Distribution, a company selling networking solutions and equipment. Wireless for the last mile could especially be an option for areas that are sparsely populated or remote. Wireless is served out of a base station, which can be put up on top of a building’s roof, a cellular tower, or even a water tower. The base station uses radio waves to connect with the subscribers. With each station generally serving a ten-to-15-kilometre radius, base stations can be put up wherever they can be economically justified. Experiments conducted in small numbers in some regions in the US have proved that wireless internet can deliver broadband more cheaply than digital subscriber lines, and can reach out to rural homes and others not currently served at all except by dial-up. ||**||New standard|~|main_broadband_04.jpg|~|Jawad Abassi, founder of Arab Advisors, has seen how the move has helped Egypt achieve the lowest cost in the Middle East.|~|WiMax (Worldwide Interoperability for Microwave Access) is a new standard that’s grabbing the headlines in IT and business newspapers currently. It is being touted as a threat to both fixed line high-speed broadband services as well as 3G. Published in 2002, the standard is meant to address the first-mile/last-mile connection in wireless metropolitan area networks. WiMax has a range of up to 31 miles, which can be used to provide both campus-level network connectivity and a wireless last-mile approach that can bring high-speed networking and internet service directly to customers. It is an option not just for rural areas, but also for any area where the cost of laying or upgrading landlines to broadband capacity is prohibitively expensive. Players like Sahm, though, are in no hurry to experiment with WiMax. “While we do have to offer triple play, and may assess this technology, we do not envisage using it for the time being,” says Didier Colin, chief design engineer, Sahm Technologies. Etisalat, has said it is currently evaluating the technology and will introduce it when it’s commercially feasible. But a lot of people feel there is no need for competition between the various technologies available for providing broadband. There is plenty of room for all. “The important thing to remember is that all these technologies are complementary now. There is no need for competition between them,” says Alcatel’s Grave. Universal access is the future. Service providers will no longer have the luxury of being single players in future. “Universal access will become a reality in the next 12 to 24 months,” adds Grave. There is no lack of technologies or options currently. It is a market held back by the lack of competition. The onset of competition is bound to lead to a cut in tariffs by incumbent and launching of new services, as has been the case in other markets the world over. “Egypt is the star in the Arab World in having the lowest ADSL cost, which is no surprise,” says Jawad Abbassi, founder and president, Arab Advisors. “Freed from monopoly pricing, and with government encouragement to spread ADSL service in the country, Egyptian operators are giving the best ADSL value in the region,” he claimed. Finally, a new competitor will force Etisalat to look closely at its rates, particularly for internet access, which are considered by many in the region to be expensive by global standards, and even open its mind to newer options like the ADSL II+. It is the right time to be a consumer in the UAE right now.||**||

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