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Wed 17 Dec 2008 05:58 AM

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Mideast broadband prices 'too high' to stimulate growth

EXCLUSIVE: Telecoms expert says operators have got pricing 'so wrong'.

Broadband operators in the Middle East need to learn from European providers by dropping pricing to increase their revenue growth and stimulate uptake of the service, a leading telecommunications analyst has said.

Nicholas Jotischky, principal analyst, mobile research for London-based Informa Telecoms & Media, said he was “staggered” that operators in the region had “got it so wrong” over pricing and that it was fundamental the broadband market was opened to competition.

Fixed broadband penetration is as low as four percent in Kuwait, with even the figure for the UAE at around 30 percent, low compared to the UK where broadband penetration is over twice that number, said Jotischky on the sidelines of the GSM>3G Middle East telecommunications event in Dubai.

“I am staggered operators have got broadband pricing so wrong and penetration rates are so low,” he said. “There are lessons to be learnt from European operators in terms of pricing strategies.”

His colleague, Mark Newman, chief research officer, mobile operator strategies for the firm, said there was potential for Dubai’s mobile phone market to be opened to a third operator, which would help to bring down prices and improve services.

“The relative cost of building up a network is low, it’s a dense population and it’s flat and the cost of good infrastructure is relatively cheap,” he said, at the same event.

“The issue for any operator coming into Dubai is regulation and whether the regulator is prepared to impose cost-base interconnection on new players and fair access for other services.”

Newman said Qatar would be the last country in the Gulf where the monopoly of the mobile market would end when Vodafone launches its service early next year.

Jotischky said Iran was close to awarding its third mobile licence, with three Gulf-based operators, Omantel, Zain and Etisalat, succeeding in getting through the pre-qualification process, in addition to a number of local Iranian groups.

He said the contract would likely be worth more than the $6 billion Zain paid to become the third mobile operator in Saudi Arabia two years ago, launching in September.

“Iran is a bigger market in terms of population and penetration is around 60 percent, so there’s a huge amount of growth.”

He said it was likely Qtel, Zain, Etisalat and Saudi Telecom (STC) would look to expand their operations into Africa and South Asia going forward.

Informa Telecoms & Media is the leading provider of business intelligence to global telecoms and media markets and has over 100 analysts, researchers and journalists across 14 countries.

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Name Withheld 11 years ago

I'm glad to see this issue being reported on. I've been involved in running an IT operation in Dubai for a large MNC, and bandwidth cost in here has been the single most painful aspect that stopped any scope of business growth. DIC and Dubai Outsourcing Zone both offers very good scope for outside investments, but cost of bandwidth simply makes it that much difficult to have a business case to run operations from Dubai.

gwenhael 11 years ago

In France, where I come from, anyone can get a triple-play system (Internet 4 MB minimum + TV + telephony, usually with a built-in hard drive to record programs) for less than 200 aed per month...Here, for this price you get ONLY 256k download + you have to pay for your telephone and satelitte bills...PLEEEASE a bit of competition !

Naveed 11 years ago

I agree that the broadband costs are much higher than the average of the world. The governments need to ensure they do something about lowering broadband costs. However, the broadband penetration ismuch higher than what Tom says, especially for Kuwait. I would say the Kuwait broadband penetration is around atleast 20-25%. This could easily rise to 40-45% if costs were reduced!