By investing in building infrastructure, Dubai aims to support the local and regional telecoms industry and the broader knowledge-based economy. The value of these investments is significant: the Telecommunications Regulatory Authority (TRA) estimates that the sector accounted for 4.9% of UAE GDP in 2011. The true value is far higher as communications technology is a core part of any business activity in the region. The mobile market, the biggest driver in the sector, is highly saturated, but there is still a lot of scope for growth in the broadband and mobile broadband segments as more people switch to smartphones and tablet computing. There are still significant gaps in the provision of content that can be consumed on these devices.
BOOSTING CAPACITY: More than 70% of the UAE’s internet subscribers are connected through fibre, with only a minority still on copper networks, according to the TRA. Furthermore, Etisalat and du, the UAE’s two telecoms companies, are both deploying gigabit-capable passive optical network-based fibre-to-the-home (FTTH) networks. This technology allows service providers to deliver more capacity to carry bandwidth-intensive applications and provides one of the most cost-effective ways for service providers to deploy fibre networks. Recent reports prepared by the FTTH Council Europe show that more than some 56% of homes in the UAE have FTTH connectivity. South Korea is the only country with a higher penetration, at 58%. These developments are in line with the government’s strategy to diversify the economy and are catalysing investments and developments across a variety of sectors, including commerce, trade, education and health.
Both carriers are investing in upgrading their mobile broadband networks. Etisalat was the first to launch a commercial long-term evolution (LTE) network in the UAE. The technology is a mobile broadband service that provides high-speed access for browsing websites, voice over internet protocol and other IP-based services. Du is also deploying LTE, with the goal of bringing high-speed mobile broadband to its customers.
LTE is still a nascent technology in the Middle East and it may be a few years before Etisalat and du are truly able to take advantage of its full capacity. Informa Telecoms & Media, a provider of events, training and research in the media and telecoms sectors, estimates the number of LTE subscriptions in the region is in the low thousands and that they are almost entirely restricted to USB modems. Growth in the LTE segment is expected to be modest with forecasts of 15m users across the Middle East by 2016. A potential issue going forward is the variance in specifications across LTE networks in the region, which is likely to restrict roaming and other services. Investments in FTTH, LTE and other technologies have helped create bandwidth and provide a foundation for business and economic growth. Along with investments in hardware, however, initiatives to spur innovation in products and services that use these networks could help generate additional value. Content development is yet to emerge as a major business segment and the consumption of information is largely restricted to reading newspapers and social-networking sites. The government is actively working towards bridging this gap by setting up free zones to attract private investments into the sector.
ENCOURAGING INNOVATION: At the forefront of this initiative is Dubai Internet City (DIC). Several firms, such as Ducont and Apps Design, have already set up mobile commerce ventures in DIC, which hosts events that promote innovation, such as DemoCamp Dubai, to connect entrepreneurs, venture capitalists and angel investors looking for new projects and partnerships.
Media, retail and financial institutions in Dubai are also deploying digital strategies that leverage the UAE’s advanced telecoms networks. The banks, for example, have invested in technology to fully automate front- and back-end procedures to deliver robust mobile and internet banking services. Media agencies are also producing content that can be streamed to smartphones and other internet-enabled devices. Leveraging these digital services will likely be an important driver of growth.
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