Over the past decade, mobile phone usage and demand for an internet connection has soared across the Middle East and North Africa (Mena) region. This is putting pressure on governments and the private sector to provide access to both wireless and fixed-line high-speed broadband services.
Between 2002 and 2012, internet usage across the region grew by 2,500 per cent, according to a May report by French market research firm Ipsos. There are currently 90 million internet users in the Mena region. Saudi Arabia, Egypt and Morocco are the three Arab countries with the largest number of users.
Away from the headline figures, there are huge disparities across the region. While all states have seen mobile and fixed-line penetration rates rise, some countries with large populations have a lot of catching up to do. Of the households in Saudi Arabia, about 50 per cent had a fixed-line broadband connection in 2012, while for Egypt this figure was just 12 per cent, says US telecoms consultancy Pyramid Research.
Overall, it is fair to say that mobile broadband brought new momentum to the region
Kerem Arsal, Pyramid Research
Despite high numbers of mobile phone and internet users in North African states such as Morocco, Egypt, Algeria and Tunisia, access to information and communications technology (ICT) infrastructure is more pronounced in the Gulf states. Petrodollars and smaller populations, principally in Qatar, Bahrain and the UAE, have led to increased access to mobile and internet services. Wireless networks and increasing mobile penetration rates are the main drivers behind the improved internet access.
Subscriptions growth in mobile penetration doesnt seem to know when to stop in the Gulf region, says Kerem Arsal, senior analyst for Europe, the Middle East and Africa at Pyramid Research. There is, of course, considerable multi-sim [card] behaviour, as evidenced by large expat communities and religious tourism, which does produce some convoluted figures. But overall, it is fair to say that mobile broadband brought new momentum to the region, which will be sustained for a while now with LTE [long-term evolution technology a standard for wireless communication of high-speed data for mobile phones].
In large emerging markets in Africa, mobile phone usage and internet access are closely linked. Governments have had difficulty, however, attracting private investment to its fixed-line sector with the result that existing infrastructure often fails to provide broadband internet access. In the Gulf states, Arsal says the trend is for mobile and fixed-line sectors developing hand in hand.
Fibre-optic links certainly played a role in mobile development by carrying the bulk of the traffic load and providing reliable connectivity, says Arsal But in some GCC countries, particularly [the] smaller [ones, such as] the UAE and Qatar, you see ambitious FTTH [fibre to the home] programmes and VDSL [very-high-bit-rate digital subscriber line], where fibre-optic [cables go] directly into the premises. This is also seen as a good source of revenue for these countries.
One of the latest examples is the QR1bn ($274m) fibre-optic network to be developed by Qatars Ooredoo, which aims to have all homes connected to its service by the end of 2014.
Another in Saudi Arabia is focused on e-government. Saudi-based Mobily plans to link up to 150 institutions with fibre to the business (FTTB) networks and is aiming to provide coverage for 1 million sites by the end of next year. And in the UAE, operator Etisalat is investing AED19bn ($5.1bn) in its own FTTH network.
On an international scale, the region is generally well supplied by submarine cables. Main ones include Falcon, operated by Indian firm Flag Telecom, a Reliance subsidiary.
Falcon connects Egypt, Saudi Arabia, Yemen, Oman, Qatar, Bahrain and Kuwait, and links to India and the Europe India Gateway (EIG) connecting Egypt, Morocco and Libya and Gulf states Saudi Arabia, Oman and the UAE.
There is also the Southeast Asia-Middle East-Western Europe 4 (SEA-ME-WE 4) cable, which was built by a consortium of 16 telecoms firms and has landing sites in the UAE, Saudi Arabia, Sudan, Egypt and Algeria.
Finally, there is Gulf Bridge International (GBI), which launched its $600m cable in February 2012, linking the Gulf states to each other, including Iraq and Iran, except Yemen, and onwards to Europe, Africa and Asia. GBIs main investors include the Qatar Foundation and the Kuwait Investment Authority.
Despite being well supplied by international cables, Michel Rogy, ICT policy adviser at the World Bank, believes there is too much reliance on third-generation (3G) broadband wireless technology and, in the medium term, fourth-generation long-term evolution (4G LTE) the main driver of data traffic. This puts existing ICT infrastructure such as the original radio link backbone and backhaul technology in North African states under severe strain.
There are concerns over a growing digital divide in the Mena region. Rogy says such a divide may occur because abundant international broadband connectivity is not disseminated into rural and remote areas.
Others accept that although countries such as Bahrain and Qatar are too small and condensed to see such a gap, a divide has existed in rich states such as Saudi Arabia. Even in a large country like Saudi Arabia, reaching some rural areas is expensive, given that operators in the GCC tend to focus on urban areas, says Arsal. Wimax [a wireless communications standard] investments in Saudi Arabia came about mostly as a result of wanting to provide rural areas with access where wireline would not be feasible.
He says insufficient national fibre-optic connectivity in North Africa could make it hard for governments to meet rising demand for large bandwidth capacities and says that using alternative infrastructure from Morocco to Egypt could be the answer. The existing fibre-optic networks held by public utilities in some of these countries could be harnessed, such as those belonging to railways, electricity grids, oil and gas pipelines, and highways. In Tunisia, state utilities own a quarter of the 20,000 kilometres of fibre-optic infrastructure covering remote areas of the country, where access is not provided by telecoms operators. So sharing fibre networks with operators could bring economies of scale.
The challenges facing such programmes are the need to address legal issues over ownership rights, how to operate and manage such schemes and the coordination of civil works for fibre networks between utilities and operators.
Rogy cites examples in Morocco where state electricity grid operator LOffice Nationale de lElectricite has leased its fibre network since 2007. Rabat has also authorised Finetis, a Moroccan subsidiary of French telecoms infrastructure firm Groupe Marais, to act as an infrastructure operator, rolling out a 2,000km alternative fibre-optic network with Les Autoroutes du Maroc (the Moroccan Highway Administration) and leasing it to telecoms operators.
In the Gulf, ready-made electricity grid connections between states, such as the grid operated and managed by the GCC Interconnection Authority, aim to lease their fibre networks to operators. But on a domestic level GCC operators find competition often dictates strategy.
In terms of shared international bandwidth infrastructure, there is always an incentive for regional operators to cooperate because competitive dynamics are different, says Arsal.
Domestically, partnerships and opportunities to share are less likely, although talk of cost-saving measures is often mentioned. There were negotiations between [operators] Du and Etisalat in the UAE, but nothing has yet come of that. The same goes for Saudi Telecom Company and Mobily [in Saudi Arabia], where competition supersedes the need for collaboration over the deployment of LTE.
The Mena region has embraced mobile telephony and wireless technology resulting in an average 40 per cent internet penetration rate, says Ipsos. Ambitious projects mainly in the UAE, Qatar and Saudi Arabia, which aim to extend fibre networks to every home and business, should have a dramatic impact in the near future.
Elsewhere in the region, there is a need for inter-state cooperation on fibre networks and for governments to find more innovative solutions to ensure access to the internet and the wider world is not restricted to urban areas alone.
2,500 per cent: Growth of internet usage across the Mena region between 2002 and 2012
90 million: The current number of internet users in the Mena region
Mena=Middle East and North Africa. Source: Ipsos