The right signals: Unrolling cheaper and faster broadband services

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Broadband internet is one of the fastest-developing markets in Bahrain, as an economically powerful consumer base calls for speedier and better-quality internet services. According to reports issued by the Telecommunications Regulatory Authority (TRA), there were around 290,000 internet subscribers in Bahrain in 2011, all of them broadband users, accounting for 23% of the population. This represents a 43% rise on 2010 and the highest rate of internet penetration in the GCC. With home and mobile internet services acting as the major drivers of growth for companies competing in Bahrain's competitive information technology (IT) sector, increasing the quality of service and decreasing price are the top priorities in the medium-term, as companies look to gain a competitive edge in the IT market.

Demand for bandwidth has been growing faster than the subscriber base, as new users consume bandwidth-intensive activities, such as videos and gaming. According to George El Aily, the chief operating officer at broadband provider Greenisis, “The issue is that mobile data traffic is far exceeding people in developed markets.” At the end of 2011 35% of internet subscribers had access to broadband speeds of 2 Mbps or higher. Launched in 2012, Greenisis uses mobile broadband wireless access technology, which requires far fewer towers than traditional technology (such as 30 versus 450 for the same coverage area).

COST EFFECTS: Despite falling prices in recent years brought about by increased competition, Bahraini consumers also face relatively high prices for this service. While the TRA estimates that broadband service charges dropped 40% in the past year, average prices are still substantially higher than those in Europe and the US. The Kingdom is not alone in this: across the Arab region, the price of internet as a percentage of income is higher than in any region, with the exception of Africa.

Operators in Bahrain have plausibly maintained that this owes more to region-wide infrastructural limitations than to any features particular to Bahrain itself, which boasts excellent domestic infrastructure. Rashid Abdulla, the CEO of Batelco Bahrain, said in early 2012 that the lack of undersea cables increased the price and decreased the speed of internet service across the Gulf: “Prices compared to many other countries are not really as low as they should be. We have got routes going outside the Gulf, but it is not really as many as it should be... with more competition, and more cables coming to the region, hopefully prices will go down.”

Fortunately, the imminent roll-out of several new global submarine links to the country should improve this situation. Gulf Bridge International, the private operator of a $445m submarine cable connecting Europe and India through the Gulf and Egypt, has entered into an agreement with Batelco for the telecoms operator to build a landing station in Bahrain. The cable will be turned over for testing in May 2012 and is expected be brought on-line in June. Another undersea connection is expected to be operational in March. Managed by the Bahrain Internet Exchange (BIX), it connects the country to the internet through India. It is probable that the rise in capacity will bring BIX an increased share of routing traffic, according to the TRA.

GROUND WORK: Much of this additional capacity will likely be channelled into mobile services, but a significant number of users will continue to rely on wired internet, as wired service is considered by many to be more secure. To that end, Batelco is expanding its high-speed fibre network on the ground. In early 2012 the firm unveiled an upgrade of its fibre coverage to select parts of the island. As it looks to court customers in its increasingly competitive home market, the company is likely to use its expanded capacity as part of a “triple play” package that will provide voice, internet and internet protocol television together. In a media-hungry and highly competitive market, quality of service is likely to be a tremendous competitive advantage as rival companies elbow each other for a share of the impressive revenue growth in the broadband sector. New and upcoming links to international internet connections should provide the infrastructure the sector needs.

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The Report: Bahrain 2012

IT chapter from The Report: Bahrain 2012

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