This annual report offers a wealth of information on the broadband, Internet, and convergence markets in the Middle East. Subjects covered include:
This Middle East market report covers the Digital Media, Broadband and Internet markets in each of the following countries: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, UAE and Yemen.
Internet and broadband penetration rates remain low in many countries of the Middle East, access speeds are often relatively slow and tariffs are relatively high compared with other regions in the world but the region is making a strong push towards higher broadband penetration. The young population will be a driver for growth as they grow up with Internet use as the norm. In addition liberalisation and increased competition are producing a greater variety of services and mediums.
While broadband growth has taken off in the small, oil-rich and developed countries of the Gulf, wide income disparities across the Arab Middle East region as a whole are echoed by wide disparities in Internet and broadband penetration rates. Computer penetration levels are generally low. Qatar, Bahrain and UAE all have high household broadband penetration, particularly among nationals. The largest country in the region, Saudi Arabia, has low broadband penetration but it is rising quickly.
ADSL is the prevailing broadband Internet technology in the region. Only in Israel does cable have a significant market share. Services are provided by HOT Cable Systems Media, which is subject to the same broadband universal service obligations as is DSL network operator Bezeq. This has resulted in broadband being available to 99% of all households. Much is being promised by WiMAX across the Middle East region but projects have still to come to fruition.
All the GCC and Israeli operators, with the exception of recently launched Vodafone Qatar, offer HSPA mobile broadband services. Mobile broadband prices in most countries remain relatively high but the introduction of some affordable, flat-rate pricing plans has encouraged higher take-up rates. Saudi Arabia’s second mobile operator, Mobily, said it could not cope with the level of demand when it introduced flat-rate price plans. It claimed to have 600,000 subscribers in June 2009. This subscriber number is very high when compared with a total of just over 1 million Saudi ADSL subscribers at end-2008.
One of the reasons for slow Internet and broadband subscriber growth in Arab Middle East countries has been a lack of sufficient content in Arabic for users to need a high-speed broadband connection in their daily lives. There has been too much emphasis on hardware and the latest must-have gizmo and not enough on creativity. This is beginning to change with the increasing digital content produced by the flourishing Direct-to-Home satellite TV sector, including entertainment, educational programming, news and sports. At least 60-70% of homes across the Middle East have access to multi-channel TV, much of it Free-to-Air DTH satellite. Around 70% of the 400+ channels are privately owned.
Supported by forward-looking government programs, Egypt is well connected by several international submarine fibre optic cables in combination with a national fibre backbone infrastructure, and the international bandwidth market has been liberalised. The entire sector is highly competitive with more than 200 Internet and data service providers, which has led to low prices for ADSL services and broadband packages with up to 24Mb/s delivered to residential households. VoIP Internet telephony has been liberalised, and several companies are rolling out next-generation networks to provide converged IP-based voice and data services. The country’s three mobile network operators are entering the market with third generation mobile broadband systems, and each of them holds a controlling stake in a leading data and Internet service provider.
Israel has one of the highest household broadband penetration rates in the world. Market competition is fierce, both between cable and DSL infrastructures and between ISPs. Competition is also fierce between Bezeq’s satellite TV subsidiary YES and cable TV operator HOT. Israel’s very high broadband penetration rate provides great potential for triple play and digital media market developments and competitors are manoeuvring for position. New licences being granted for VoIP service provision are beginning to shake up the market.
Licensed WiMAX operators are beginning to make inroads into the Jordanian broadband market with over 8% market share of the residential market by early 2009, although incumbent JTG’s ISP retains a 50% market share. JTG has reduced its wholesale prices considerably, with a 70% reduction from the beginning of 2007 to June 2009. As one of the most stable and liberalised countries in the region, Jordan is an important base for digital media and Internet companies. The Jordan-based Maktoob portal was the subject of a purchase agreement by Yahoo! in August 2009. Services will be co-branded as ‘Yahoo! Maktoob’ and Arabic versions of Yahoo! Messenger and Yahoo! Mail will be available early in 2010.
The broadband market has been slow to grow in Saudi Arabia. Penetration rates remain low for the level of development. This is likely to change as new competitors in the broadband market have shown they intend to make a serious bid for market share. Whilst few Middle East media companies are based in Saudi Arabia, most of the larger ones are Saudi owned, including the most watched FTA channel MBC, two out of the three regional satellite pay TV operators, and up and coming TV and digital media company Rotana.
Incumbent UAE telco Etisalat and alternative operator du are vying to offer faster broadband packages over a mixture of ADSL, mobile broadband and FttH in a market that already has one of the highest broadband penetration rates in the Middle East. UAE governments, at both federal and emirate level, have been very interventionist, with programs to encourage computer and Internet use. Government policy has also included encouragement for media, IT and Internet related businesses and Dubai has become a regional centre for the industry. Around 25% of the region’s large DTH satellite TV industry is headquartered in the UAE.
Data in this report is the latest available at the time of preparation and may not be for the current year.