Revenue from internet set to surge

Revenue from broadband internet subscriptions is expected to surge to more than US$1 billion (Dh3.67bn) in the Emirates over the next five years as high-speed lines are rolled out across the country. Telecommunications companies' earnings from high-speed internet is predicted to exceed $1bn by 2015.

New fixed broadband networks would increase revenue for the companies by more than 40 per cent from $695 million this year, according to a study from Pyramid Research. But a separate survey reveals that Gulf telecoms companies charge three times as much for broadband internet as the average for Europe. Hussam Barhoush, a senior analyst at Pyramid, said the growth in home broadband revenue would come from upgrades to slower, narrowband lines.

"Etisalat has already caught up and surpassed its new rival [du] in terms of roll-out," Mr Barhoush said. This competition made Abu Dhabi the first world capital to be completely serviced by high-speed lines. "The next major opportunity for vendors will be LTE [mobile broadband], which we expect both Etisalat and du to deploy within the next three years," he said. Reports of an increase in internet business for telecoms providers come alongside a survey from Bahrain's telecoms regulator finding that broadband charges in the Arab world are on average three times higher than in Europe.

The study also found that consumers in this region paid double for mobile phone calls compared with the average in the Organisation for Economic Co-operation and Development (OECD), which includes the US, Germany and UK. Prices for telecoms services in 22 Arab countries were assessed in the report, which was undertaken in January by the consulting firm Teligen. The report warned that slow and expensive broadband connections in the Arab world could inhibit "the ability of countries to harness the potential" of new technology.

"Speeds below 256 kb/s [kilobits per second] are still common in most Arab countries. Speeds in this range are hardly offered in Europe any more. The prices of broadband are three times greater than the European average. High rates are likely to inhibit broadband penetration," the report said. Mobile tariffs across the Arab countries were on average 80 to 100 per cent above those in OECD countries, the report found.

International calls made from fixed lines were even more expensive than in developed markets. "International calls out of the Arab countries are four to five times as expensive as the OECD countries on average, and even the cheapest Arab country is 11 times more expensive than the 'best in class' OECD country. However, this is an improvement from previous years," the report said. The UAE was found to have the most competitive rates for telecoms services and was the only country to rank among the cheapest in all five categories of telephone calls and broadband charges.

Although telecoms charges in the Arab world are high, they have declined - with broadband rates in Bahrain having fallen by up to 50 per cent over the past two years, the report said. "In a world in which nations compete to attract international businesses and promote economic development, it is essential that telecommunications services are competitively priced," said Dr Mohammed al Amer, the chairman and acting general director of the Telecommunications Regulatory Authority.

bflanagan@thenational.ae

gregor.hunter@thenational.ae