Arab Advisors Group
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Egypt emerges as the Arab World’s ADSL star!
Tuesday, September 28, 2004

New Arab Advisors research covering 17 major Arab markets reveals that Egypt has the lowest total cost of residential ADSL service in the region. Syria lies on the opposite extreme with the highest cost of ADSL service. The regional average cost for a 256 Kbps residential ADSL connection stands at US$ 956 per year (US$ 80 per month), a figure that is quite high by global standards which surely limits uptake of broadband Internet in the Arab World. In addition to relatively high ADSL costs in virtually all Arab countries, quite a few still do not have the ADSL broadband Internet service. The remedy, as the Egyptian example shows, is infrastructure-based competition between operators.

A new report, “ADSL Rates in the Arab World: A Regional Comparison” was released to the Arab Advisors Group’s Strategic Research Services subscribers on September 28, 2004. This report can be purchased from the Arab Advisors Group for only US$ 500. The 14-pages report, which has 8 detailed exhibits, analyses the residential broadband ADSL rates in the Arab region. The report focuses on the thirteen Arab markets that currently have ADSL services. The thirteen Arab countries covered in this report are: Algeria, Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, and the UAE. In order to allow for comparisons, the report focuses on the average ADSL rates of these countries’ Internet services providers.

Any investment in this report will count towards an annual Strategic Research Service subscription should the service be acquired within three months from purchasing the report.

“In the Arab markets where there is competition amongst ISPs, Internet service providers (ISPs) either act as resellers of the incumbent’s DSL infrastructure (like in Jordan), or have their own DSL infrastructure and even their own international gateways (like in Egypt). The first scenario exists in the majority of the Arab countries, while the second scenario currently exits in Kuwait and Egypt and will be soon the case in Saudi Arabia as a result of the recent liberalization of the fixed datacomm market with the award of two data licenses. Of course in monopoly markets like the UAE, Qatar and Oman, the ISP is also the monopoly operator.” Mr. Sami Sunna’, Arab Advisors Research Manager, wrote in the report.

“The ongoing and upcoming liberalization of the datacomm markets in a few Arab countries, especially in those WTO members who are committed to liberalizing their telecom markets by 2005/2006, should enhance the infrastructure-based competition in these countries. Allowing for ILD competition in these Arab countries will also lower the International bandwidth costs which will allow the Internet and datacomm providers to start offering more advanced services at cost-based rates, and hence much lower rates.” Mr. Sunna’ added.

In the report, the Arab Advisors Group compared the total cost of the residential ADSL rates in twelve Arab countries according to their deviation from the average total cost (specific to the region), in addition to comparing these rates with the GDP per capita in each country (specific to the country). The comparison only includes those countries that have special residential ADSL packages. Tunisia was excluded from the comparison since its ISPs only offer corporate ADSL packages at high prices. Residential ADSL packages are expected to be introduced in Tunisia as of November 2004.

When comparing the ADSL rates on the regional level, the total annual cost of residential ADSL services (for a 256 Kbps downstream speed) in the Arab region ranges from a minimum of US$ 290 per year in Egypt (US$ 24 per month) to a maximum of US$ 1,620 per year (US$ 135 per month) in Syria. Syria is the most expensive followed by Kuwait, Sudan, Saudi Arabia, Bahrain, Algeria, Jordan, Qatar, UAE, Morocco, Oman, and ending with the lowest ADSL cost in Egypt due to the recent broadband initiative in Egypt.

“That Egypt is the star in the Arab World in having the lowest ADSL cost is no surprise. The major Internet Service Providers in the country are allowed to negotiate their own international bandwidth agreements and not be tied to getting the bandwidth from the incumbent fixed operator (Telecom Egypt).” Mr. Jawad Abbassi, Arab Advisors Group Founder and President commented. “Moreover, these ISPs are allowed to collocate at Telecom Egypt’s exchanges and use Telecom Egypt unbundled copper wires at reasonable rates. They, therefore, own their infrastructure for the most part. Freed from monopoly pricing, and with government encouragement to spread ADSL service in the country, Egyptian operators are giving the best ADSL value in the region. Anyone that doubts the effect of infrastructure-based competition (and local loop unbundling) on lowering ADSL rates should look no farther than Egypt!” Mr. Abbassi added.

When including the GDP per capita in the analysis, the Arab Advisors Group concluded with the ADSL Affordability Measure. Basically, the total annual cost of ADSL in a country was calculated as a % of that country’s GDP per capita. This calculation indicates that Sudan has the least affordable service, followed by Syria, Jordan, Morocco, Algeria, Egypt, Saudi Arabia, Bahrain, Kuwait, Oman, UAE, and ending with most affordable (i.e. lowest as a % of GDP per capita) in Qatar. Clearly, the income level of the country is also a major determining factor in addition to the absolute price level. For instance, while Egypt’s rate is low by regional and international standards, the price remains steep for many middle and low income Egyptians.

The Arab Advisors Group’s team of analysts in the region has already produced close to 280 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s Strategic Research Services (Media and Telecom). To date, Arab Advisors Group has served more than 205 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.

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