Hard wired: Broadband seeing major investment push and boosts in fixed and mobile demand

Worldwide, broadband bandwidth is on the rise. Between 2005 and 2010, international bandwidth, measured by bits per second (bit/s) per user grew more than fivefold from 5464 to 28,772, according to the UN’s International Telecommunications Union (ITU). In Arab states, the trend was twice as fast, with bit/s per user growing more than 10-fold. That rise, however, took bandwidth only from 817 to 11,310 bit/s per user, while the average rates per user in the Commonwealth of Independent States, the Americas and Europe were all well over 20,000 by 2010. Such indicators show that there is still much room for growth in the Arab world.

To seize on this potential, Qatar is pushing to position itself as both a regional and world leader in broadband development. The state has experienced a rising number of broadband users in recent years. Between 2002 and 2010, fixed broadband subscriptions per 100 people in Qatar rose from virtually 0 to 8.2, according to the World Bank’s World Development Indicators. Mobile broadband, too, has seen a significant increase, as both of the state’s major telecoms operators have reported gains in demand, especially in 2011.

TOP DOWN: To nurture the growth of the sector, the government is following a path similar to the one it took in developing the energy industry. Over the past decade the state has provided major upfront investments to facilitate export of hydrocarbons. These investments are now paying off with growing energy incomes and the transformation of Qatar into the world’s top LNG exporter. The government’s approach to the telecoms industry is markedly similar: supply the upfront capital for high physical infrastructure costs, then design an administrative infrastructure to monitor the market and stimulate growth. The state established the Supreme Council of Information and Communication Technology (ictQATAR) to carry out the government’s vision for an increasingly connected Qatar. The agency regulates existing players and stimulates the growth of the market. In terms of broadband, ictQATAR is working on a $550m fixed-line infrastructure project called the Qatar National Broadband Network (Q.NBN). The nationwide fibre network aims to provide connection speeds of up to 100 megabits-per-second (Mbps) across some 95% of the country by 2015. To support this objective, in early 2011 ictQATAR created the Q.NBN Company to spearhead the task of laying down the backbone of the fibre-to-the-home (FTTH) broadband network.

“As a relatively small market, however, relying solely on attracting private investment to build an expensive fibre network infrastructure will limit progress, delay advancements in important sectors and likely stall some already planned, forward-looking projects,” Hessa Al Jaber, ictQATAR’s secretary-general, said just after the formation of the Q.NBN. “This government-led [Q.NBN] effort will ensure progress and keep our commitment to bringing connectivity to every corner of Qatar, including the most remote areas.”

WIRED AND READY: The FTTH operation will pursue the nationwide connectivity objective by constructing a network that provides fibre cables directly into individual dwellings. Fibre cables are filled with bands of silica fibres, each about as thick as a human hair. These fibres act as small “light pipes” capable of transmitting data at lightning-fast speeds compared to their copper predecessors. Both copper and fibre lose quality as the length of a cable increases, but copper is far more affected by this drawback.

The construction of a FTTH network could thus facilitate higher bitrates by using silica fibre for the lengthiest cables of the broadband infrastructure. Bandwidth on this infrastructure can then be leased wholesale to multiple retailers, introducing the benefits of competition into the fixed-line segment. Service providers authorised to use the Q.NBN can use the public network to build and develop their own telecommunications infrastructure. In this way, telecommunications companies and internet providers can use the physical infrastructure put in place by the state, which can eliminate waste and excess environmental damage from redundant cables laid by individual companies.

The government’s initiative to lay down a nationwide public fibre network also offers a number of advantages across economic sectors. Connectivity can be key for small and medium-sized enterprises, especially technology firms. The improvement in connectivity could also yield major benefits for areas like government and social programmes, which are already undergoing a major shift toward more electronic services.

PRIVATE SECTOR INNOVATIONS: Even ahead of Q.NBN’s launch, both major telecoms operators in Qatar have been working to expand their own fibre network and associated services. Qtel launched its commercial fibre network in January 2012. With the initial components already in place, the firm is now leveraging its fixed infrastructure to expand its service offerings.

For example, Qtel is offering premium television via fibre, which avoids the need for dish antennas and eliminates the drawbacks of home satellites such as upfront costs, maintenance and visual pollution on the roofs and facades of buildings. The services are offered in conjunction with broadband internet and landlines. Providers using this strategy, called triple-play, typically bundle three services, two that are more bandwidth-intensive and one less bandwidth-intensive.

By combining services, providers can obtain steady income from a range of products through one infrastructure network, while customers have the simplicity of services combined in one bill. Another television company, Qatar Satellite Company, is also expanding its infrastructure and range of services. It is due to start offering satellite services via its Es’hailSat brand, primarily focusing on TV broadcasting and telecommunications. The addition of its Es’hailSat1 satellite (to be followed by Es’hailSat2 and 3) will increase capacity and give more options to broadcasters in the region. It is also expected to create more room to invest in satellite broadband and TV broadcasting-related media.

“The number of viewers is important but the content is more important, as it is what drives viewers, so we plan to enhance content by partnering with broadcasters,” Ali Ahmed Al Kuwari, the CEO of Qatar Satellite Company, told OBG.

Vodafone Qatar is also working to deploy its own fixed infrastructure. In late 2011 the company completed the fibre connection between two data centres at Meeza and the Qtel Data Centre. The company offers 2-Mbps, 3-Mbps and 5-Mbps plans. Vodafone already offers broadband services to residents of the Pearl Qatar, a residential island development in the northern portion of Doha. By the end of 2012, Vodafone aims to provide services in Barwa City and parts of West Bay, and eventually nationwide broadband services with the opening of the Q.NBN, the company stated in its January 2012 financial report.

MOBILE BROADBAND: While a combination of public and private stakeholders works to lay down fixed infrastructure, mobile broadband is expanding rapidly. Both Qtel and Vodafone operate 3G services, which have been offered in Qatar since 2006. In October 2011 Qtel began to offer 3G long-term evolution (LTE) to customers as well. The two providers have also begun offering mobile Wi-Fi hotspots, which use technology similar to mobile internet receivers. With such devices, users can pick up a mobile broadband signal and set up Wi-Fi networks virtually anywhere in the country.

Technological advances have developed alongside the sizeable increases in demand. In 2011 both providers claimed that they had experienced massive increases in customer demand for data usage. In its 2011 financial report Qtel told investors it was experiencing a “data explosion”. Likewise, Vodafone reported doubled data consumption between August and December 2011. The growing use of smartphones among Qataris is a crucial factor driving the growth in demand for data. An ictQATAR-sponsored survey produced by Nielsen estimated smartphone penetration in Qatar to be 75% in 2011. “Smartphone penetration is high and will continue to rise as these devices become more affordable,” Richard Daly, the CEO of Vodafone Qatar, told OBG. “We are at a real tipping point with the smartphone and data usage in the industry. In the last six months we have seen data usage almost double.”

The international makeup of the state’s population has been another driving force behind the trend in smartphone adoption as many locals seek to maintain connections outside the country. The result is an increasing proportion of individuals investing in smartphones with voice over internet protocol (VOIP) capabilities in order to make low-cost international calls. VOIP and other factors could do much to boost data usage.

BROAD IMPACT: The impact of growing broadband access cannot be overstated. Laying down physical infrastructure for broadband access could offer a boost to the economy across a range of industries as better connectivity leads to improved productivity, efficiency and lower costs. Increasing mobile broadband compounds these gains. As the state seeks to fulfil its goals of greater economic diversification through the growth of knowledge-based industries, less costly and faster network connections will give budding enterprises an important edge for competing in the global arena.

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The Report: Qatar 2012

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