Mobiles offer broadband opportunity – if states can afford it

Alex Dziadosz
5 Min Read

CAIRO: The sound of a digitized Mozart sonata blending with a muezzin’s call to prayer has become increasingly common on this city’s streets, a testament to the growing presence of mobile phones here.

In Egypt, as in many regional countries, mobiles have come to dominate voice communication. And their presence extends further: Some observers expect that mobiles will eventually account for as much as 70 percent of broadband access in the Middle East and North Africa.

“If today you are in a market where mobile [technology] has advanced and fixed-line infrastructure is still basic, you will naturally see a higher uptake of mobile broadband than fixed, said Bahjat El Darwiche, a consultant with Booz & Company specializing in information and communications technology.

One upshot of all this is that many regional markets – including Egypt – have practically leapfrogged fixed-line phones. In areas where mobiles were introduced before ground lines were widespread, many households never bothered to install them.

In contrast, a higher portion of Europeans use fixed-lines, as they had been widely installed by the time mobiles became accessible. As more people have used mobiles to talk, many fixed-line operators have migrated into broadband services, said El Darwiche.

“If you look at the mobile side, a similar story is also starting to emerge, he added, speaking with Daily News Egypt at an investment conference this week. “Even on the mobile side, some countries are starting to reach saturation in terms of voice revenues.

Eventually, most people will use a mix of mobile and fixed-line broadband connections, presenting an opportunity for broadband developers, El Darwiche said.

But there is a good way to go yet. Fixed-line broadband penetration in the Middle East and North Africa is still only about two percent, as opposed to 31 percent in Europe.

Boosting this figure requires substantial investment in infrastructure, which is often too costly for individual firms, El Darwiche said. Many have therefore turned to sharing agreements or state funding.

“You will see that in many places throughout the world, the core infrastructure is starting to be considered as an essential national asset, said El Darwiche.

Some states have poured cash into expanding their internet connections, betting that more access to the web can fuel broader growth. Singapore is a good example, El Darwiche said. Recently, the state invested $500 million in a national broadband network to be shared by the country’s service operators.

“Today, I think this is critical for the future of the sector, El Darwiche said.

So far, regional telecom firms have competed largely on price, he said. But customers are becoming more sophisticated and are now demanding more services and products. Encouraging innovation in these areas will drive growth and allow small businesses to enter the market, he said.

Because Egypt has been liberalizing its communication sector for some time, it has a good base to do this, he said. It is also a major generator of Arabic content for the web, helping spark more demand.

Partially as a result, information and communication technology in Egypt has grown an average of 14 percent annually for last half-decade and now contributes six percent of gross domestic product, he said.

But much work remains. For instance, technology literacy needs to be improved. Greater literacy can breed more demand, more innovation and more jobs in the sector, El Darwiche said.

“There are initiatives today, but definitely more could be done in the future, and more effectively, he said.

Despite the heavy initial costs, Egypt also needs to bolster its broadband infrastructure. “At the end of the day, your fixed broadband infrastructure is really the heart of your network, he said.

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