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Abu Dhabi, UAETuesday 16 October 2018

Regional telcos will have to innovate for wider internet penetration

Internet connectivity across the region could contribute up to 3.8 per cent annually in GDP - around $95bn, experts say

Drones could play a crucial role in driving digital inclusion in the region. AP
Drones could play a crucial role in driving digital inclusion in the region. AP

Telecom operators in the Middle East have to look for innovative means using drones and balloons to provide internet services in countries such as Egypt, Iraq and Oman, experts say.

As of March 2018, internet penetration in the region was 64.5 per cent among the local population, with the global average lagging behind at only 54.5 per cent, according to Statista.

Still, there is a wide range of internet access across countries, including Oman (68.5 per cent), Yemen (24.3 per cent) and Iraq (48.3 per cent), while countries like the UAE, Saudi Arabia, Lebanon, Bahrain and Kuwait have more than 90 per cent internet connectivity.

“Over the next three to five years, regional enterprises have to start using the untapped potential of drones, balloons and satellites,” said Sam Blatteis, chief executive of The Mena Catalysts, which advises technology companies on policy and government affairs in the region.

The upshot could be massive. Internet access across the region would contribute to the economic growth in the Middle East by up to 3.8 per cent annually in GDP – around $95 billion – according to consultancy McKinsey.

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It can also have a positive effect on lowering poverty, giving access to quality health care and education, and reducing carbon emissions, McKinsey said.

“These unconventional means, like drones and balloons, would provide connectivity in those parts of the Middle East region that were earlier not financially attractive to investors,” Mr Blatteis said.

But the technology has a long way to go. Facebook abandoned its efforts to provide broadband internet using balloons in Africa in June. Alphabet, Google’s parent company, established a subsidiary called Loon in July to beam broadband internet via balloons and plans to start serving remote areas of central Kenya next year.

“In the Middle East, still there are some geographies that are not financially attractive for companies to build networks and provide connectivity. But with the rise of cities, we will see more private sector involvement leading to enhanced connectivity,” said Mr Blatteis, who is the former head of Gulf government relations and public policy at Google.

“If you go outside the GCC region – to North Africa and Egypt – there is a huge gap when we talk about digital inclusion. There is clearly a vast scope of growth in terms of internet connectivity and mobile broadband in that region,” said Maaz Sheikh, chief executive of Starzplay, a video on-demand service for Mena.

Digital inclusion means ensuring all individuals and communities have access to communication technologies, and internet connectivity is key to it.

“But if you look at the GCC countries, mobile broadband and the internet penetration is very strong, very similar to Western Europe.”

There are around 25 million mobile 4G customers in the region, Mr Sheikh said. “This number is expected to reach 75 million by 2020. So a lot of work needs to be done in terms of digital inclusion in some countries and we see a major part of this growth coming from the North Africa region.”

The Etisalat Group is also helping Afghanistan to access mobile services and internet connectivity.

“Etisalat has set a benchmark in the UAE and we are working very closely with it to cover more numbers of local people, residing in various remote areas,” said Ajmal Ayan, chief executive of the Afghan Telecom Company.