Technology - Mobile internet a technological revolution

30 December 2010

Mobile internet will be a major growth area in the decade ahead. Despite fragmented access at present, all Middle East countries are expected to have full mobile coverage by 2015

The levels of telecoms usage, internet penetration and technology take-up vary enormously across the Middle East, with the UAE the most advanced market. But as the region’s economies develop, those disparities will start to even out over the next decade.

In the mobile telecoms sector, penetration rates range from 200 per cent in the UAE to just 30 per cent in Yemen. Internet usage is equally mixed, ranging from almost 90 per cent of the population in Bahrain to less than 5 per cent in Yemen and Iraq. Across the Arab world, there are, on average, fewer than five fixed broadband subscriptions for every 100 people, according to figures from the Geneva-based International Telecommunication Union. Africa is the only region to rank lower.

Mobile internet in the Middle East

With the next generation of mobile technology on the verge of introduction, mobile internet will be a major growth area in the years ahead. Called LTE (Long Term Evolution), it has a theoretical download speed of 150Mbits a second, 20 times faster than today’s 3G speeds of up to 7.2Mbits a second. Bahrain, the UAE and Saudi Arabia have run trials of the technology, but a rollout across the region is a couple of years away, and it will be the latter part of the decade before its use becomes widespread. Until then, versions of 3G will continue to dominate.

Countries such as Lebanon, Yemen and Iraq still lack 3G networks and political instability continues to deter telecoms firms from investing in the required infrastructure. While Iraq’s telecoms and IT sector is set to develop rapidly in the next few years, due to the foreign investment it is attracting, the situation in Yemen and Lebanon is unlikely to change in the short term. However, by 2015, all Middle East countries are expected to have full mobile coverage for rural areas.

Worldwide smart device usage
(Billions of units)
e=Estimate. F=forecast. Source: Gartner

Fixed-line broadband speeds will continue to climb, particularly in countries that have fibre-optic cables, such as the UAE. In the UK, trials are due for 1Gigabit a second over fibre, and this should eventually come to the Middle East.

On the IT front, outsourcing has fallen in and out of fashion over the years, but the business case for it is now stronger than ever. The key growth area for outsourcing will be data centres, which are expected to develop considerably in the next 10 years, as they become modular and more efficient. This in turn will drive down their operating costs.

While the use of third-party data centres is still in its infancy in the region, analysts expect more companies to outsource their information management to them in the next 10 years. US computer giant IBM estimates that the running costs for data centres over 20 years are five times higher than the cost to install them. In the wake of the financial crisis, some companies are beginning to investigate outsourcing as a cheaper alternative to running an internal data centre.

Further underpinning this move to outsourced data centres is a growing interest in cloud computing – the idea of treating computing services as a pay-as-you-use utility over the internet.

US analysts Gartner expects cloud computing to become a $148.8bn global business by 2016, although take-up in the Middle East will be far slower. It is unlikely to see even medium-level usage in the region over the next three years, but is expected to quickly become widespread after that, with GCC-based companies leading the way. A major benefit for companies that adopt cloud services is they no longer have the upfront capital outlay for IT systems, as these expenses are taken on by the service provider.

The virtualisation of computer systems is also expected to become more widespread. US research firm IDC estimates that about 10 per cent of Middle East and African servers are currently virtualised, with that figure rising to 13 per cent within the GCC. In more developed regions, the figure is 20 per cent or higher.

Virtualisation technology

Many organisations buy server and application bundles, but virtualisation allows a system to be used for more than one application. Industry analysts say server utilisation can be as low as 20 per cent of capacity in some firms. With virtualisation technologies, companies can make use of the spare capacity, enabling them to run fewer servers and manage their systems more easily, as well as reducing cooling and electricity costs. 

Another emerging trend is being led by changing attitudes towards technology among employees. The so-called Facebook generation expects technology to work for them and Gartner predicts that, by 2013, 80 per cent of organisations will support a workforce using tablet PCs, particularly touchscreen. By 2014, Gartner expects 90 per cent of companies to support corporate applications on employee-owned devices, such as smartphones and notebooks. By 2020, it expects there will be more than 200 billion smart devices in operation worldwide.

The US’ Enterprise Strategy Group says that employees in up to 40 per cent of the organisations it has surveyed are already storing confidential company data on their mobile devices. With younger employees expecting to use their mobile devices on corporate networks, this trend will continue. Such developments will require a greater consideration to security and corporate confidentiality.

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