On the move: Mobile internet dominates services, but infrastructure upgrades promise to raise penetration across the board

When economic restructuring began in Oman in the 1970s, the telecoms sector was under-developed, with less than 600 telephone lines and little in terms of fixed infrastructure. It was in 1980 that the telecommunications industry began to take off, with the formation of the General Telecommunications Organisation, which had a mandate to push telecommunications development across the sultanate’s more than 300,000 sq km of mountainous terrain. Despite its relatively delayed start to nationwide development, Oman’s internet services have developed in a unique fashion.

Roll Out

While fixed broadband internet services were never able to develop on the back of pre-existing telephone infrastructure in Oman, growth of internet usage and subscriptions has nonetheless been strong in the sultanate. There is still relatively low fixed internet penetration, but fixed broadband subscriptions have shown moderate growth in 2013, and mobile broadband subscriptions have soared. The country’s two internet service providers – Oman Telecommunications Company (Omantel) and the Omani Qatari Telecommunications Company (Nawras) – are leading the charge in nationwide development, working with the Information Technology Authority (ITA) to roll out both fixed and mobile broadband internet, services that have seen massive investment in recent years.

Plans

Oman’s IT sector has shown promising growth, as the sultanate moves to enhance IT infrastructure and economic diversification under its development plan, Vision 2020. The Digital Oman Strategy, endorsed in March 2003, lists six key pillars for IT progression, including developing human capital and human resources capacity, enhancing e-government services and enabling development of information and communications technologies (ICT). Accordingly, the e.Oman Strategy was revised following His Majesty Sultan Qaboos' address to the Oman Council in November 2008, directing the government to simplify processes, adopt technology in its operations and focus on electronic service delivery. Established in May 2006, the ITA is responsible for implementing national IT infrastructure projects, supervising all projects related to implementation of the Digital Oman Strategy, and providing professional leadership to various e-government initiatives in the sultanate. The authority serves as a competency centre on best practices in e-governance, and it has also undertaken several projects to increase technology penetration and improve digital literacy.

Oman’s IT sector is poised to see strong growth in 2014 as a result of the ITA’s efforts. The government is pushing forward on both hard infrastructure and soft skills development under the Digital Oman Strategy, with a host of foreign IT firms entering Knowledge Oasis Muscat (KOM), drawn by attractive incentives and untapped market potential. Although ICT activities comprise less than 2% of Oman’s GDP, the government hopes to see this figure grow as it expands its IT activities in 2014.

Rankings

There is room for improvement – Oman remained in 40th place in the World Economic Forum’s annual “Global Information and Technology Report 2013”, which examines national infrastructure, usage, affordability and socioeconomic impacts of ICT in 144 nations. Despite improvements in ICT infrastructure, usage levels and social impact ratings, other states in the GCC continue to lead in terms of IT development, with Qatar ranking 23rd, the UAE 25th and Bahrain 29th. A slowdown in innovation is one major detriment to IT growth. Trailing other GCC countries, Oman ranked 80th on the Global Innovation Index (GII) 2013, dropping 33 spots from 47th place in 2012. Published in July 2013 by Cornell University, business school INSEAD, and the World Intellectual Property Organisation, a specialised agency of the UN, the GII 2013 ranks 142 nations’ innovation capabilities. According to the report, the sharp drop in Oman’s innovation ranking was mainly due to data updates and adjustments to the survey framework, with more weight being placed on innovation outputs. While Oman performed well in line with regional peers in certain areas of innovation such as the quality of institutions, human capital, and research and infrastructure, it was relatively weak in areas such as market sophistication (81st), knowledge and technology outputs (102nd) and creative outputs (119th).

Moblie Broadband

The advent of mobile broadband services allowed a large mobile broadband market to spring up in just a few years, with telecoms providers focusing on using mobile services to provide high-speed internet rather than copper and coaxial wires of telephone and cable television networks. Mobile internet is the leading model for service provision within the sultanate, boosted by the advent of 3G, 3.5G, and 4G long-term evolution (LTE) technologies.

Mobile broadband subscribership has increased since Nawras first introduced trial 3G services in 2007. According to data from the Telecommunications Regulatory Authority (TRA), the active mobile broadband subscribers’ penetration rate reached 52.43% by March 2013, with total active subscribers standing at 1.9m, representing an increase of 15.4% from 1.65m mobile broadband subscribers in 2012.

Internet speeds are also performing well. Of the sultanate’s total mobile broadband subscribers, 13% had access to speeds of 512 Kbps-1 Mbps, while 84% had access to speeds of between 2 Mbps and 10 Mbps as of March 2013 and 2.5% were getting online at speeds of more than 10 Mbps. Increased access to faster internet can be attributed to a roll out of new 4G LTE networks, as well as 3G upgrades undertaken by Nawras. Nawras launched its network turbocharging programme in 2012, aiming to provide 3G coverage to 97% of the sultanate by 2014, while simultaneously doubling speeds on its 3 and 3.5G networks. Omantel has been investing heavily in 4G LTE, constructing 400 LTE base stations, with plans to build an additional 400-500.

Fixed Broadband & Dial-Up

While fixed internet subscriptions have traditionally lagged behind the growth in mobile broadband, the sector is nonetheless witnessing gradual increases in subscribership and penetration. According to data compiled by the TRA, there were 127,549 total fixed internet subscribers at the end of the first quarter of 2013, up 6.8% year-on-year.

While the number of dial-up subscribers has been in decline, dropping 10.7% to 4902 subscribers, fixed broadband growth has offset the decrease. Fixed broadband subscriptions increased by 7.8% in the first quarter of 2013, from 113,324 to 122,124, while the fixed broadband penetration rate per household rose to 30.36% from 28.17%. The penetration rate per 100 households for all fixed internet subscribers grew to 31.71% by the end of the first quarter of 2013 from 29.68% in 2012. Residential and business internet broadband subscribers rose during the same period by 10.5% and 2.6%, respectively, according to the TRA.

Improved broadband access ranks high on the government’s list of IT priorities. Spreading broadband infrastructure will be critical in keeping Omani businesses competitive on the international stage, and as such, the TRA has implemented several policies geared towards expanding broadband coverage across the sultanate. The authority launched its National Broadband Strategy in 2010, aiming to provide every residence and business in the sultanate with broadband access from a number of providers. The strategy will be rolled out in phases, with the first target to offer broadband access to 60% of the population by 2017.

According to the Ministry of Transport and Communications, government departments, universities, industrial estates and commercial complexes will have access to broadband download speeds of 1 Gbps under the strategy, while Oman is also aiming to cover 80% of urban areas with download speeds of between 20 Mbps and 100 Mbps. New submarine cables will help improve connectivity – three cables began offering services in Oman in 2012, and in May 2013, Omantel announced it had signed an agreement for another submarine cable, the Bay of Bengal Gateway system. The new cable will connect Oman to Singapore, with additional landing points in the UAE, India, Sri Lanka and Malaysia.

Fibre Optic

Internet services could see dramatic improvements in the coming years as providers turn to high-speed fibre-optic cable networks for the next phase of long-term development. Fibre-optic development hit a stumbling block when a fire gutted the Oman Fibre Optic Company’s Muscat factory in October 2012. The company, which is majority-owned by Omantel, said it will take at least 14 months to rebuild, putting a significant dent in fibre-optic developments. Nonetheless, growth in this technology is set to continue in 2014. While laying thousands of kilometres of fibre-optic cable is not economically feasible for telecoms operators, as both are in the midst of aggressive 3G and 4G LTE expansion, piggy-backing on utilities infrastructure developments and leasing existing cables could see fibre-optic services expand in the sultanate.

In 2011 Nawras first began rolling out trial fibre-to-the-home services to 200 households within Muscat, working in partnership with Haya, Muscat’s utilities provider, which has been laying fibre-optic cable across the city as it moves forward on a wastewater infrastructure project. In 2012 Nawras successfully wired the German University of Technology in Oman with fibre-optic cable internet, as well as two radio stations at the Muscat Grand Mall. Omantel soon followed suit, announcing in April 2013 it was in negotiations with the TRA and Haya to lease fibre-optic cable from Haya. “Instead of investing in fibre-optic cable, we want to rent it from Haya,” Samy Al Ghassany, Omantel’s chief operating officer, told local media.

The sultanate’s high-speed fibre-optic cable network should act as a key driver in the IT sector in the coming years. The cable will be laid alongside the new wastewater pipeline grid that the utility is constructing, offering much of Muscat fibre-optic access. Although Al Ghassany has said prices have not yet been discussed, he announced that Omantel is looking to establish a new fibre-optic broadband company to deliver the service, and is currently in search of employees and a CEO to direct the new undertaking.

E-Government

E-government services are an important pillar of the Digital Oman Strategy, and enhancing these offerings is of utmost importance to the ITA. As such, its e-government development platform is comprised of ongoing programmes, including promotion of free and open source software at government institutions, updating government applications to offer new online services and obtaining the infrastructure necessary to promote online services.

The government’s online service portal, operated by Omantel under a five-year contract, was redesigned and renamed Omanuna, or “our Oman” in 2012, and receives about 1300 hits daily, according to the ITA. A total of 95 new sites were added to the Oman Government Network by the end of 2012, with total connectivity reaching 697 sites. Oman’s ePayment gateway, launched in 2008, handled 125,570 transactions valued at OR4.28m ($11.1m) in 2012. In an effort to encourage transparency and improve access to information under the Oman National Open Data Initiative, the Open Government Data portal launched in July 2013, and currently contains data on 55 issues including education, business, ICT use criteria, as well as laws and decrees.

The government already moved to attract foreign investment by streamlining business registration procedures through the establishment of a one-stop shop online registration platform in 2006, which currently handles between 1200 and 1500 transactions per day, according to the ITA’s 2012 annual report.

The ITA also offers consultancy services to various government agencies looking to expand their online offerings. The ITA assisted 36 ministries and governmental organisations in 2012 across a wide range of services including IT-related HR requirements, developing IT plans and preparing tender documents for IT-intensive projects. The ITA’s efforts have paid off as Oman improved its ranking on the 2012 UN e-government development index, jumping to 64th place from 82nd in 2010. The sultanate also ranked 16th on the UN e-participation index, and 35th globally on the e-services index. In the UN’s 2012 report, Oman was evaluated at 57% in the “stage-four-labelled connected” category, which represents the most sophisticated level in e-government initiatives.

As part of its efforts to address the gaps in its IT industry and improve e-government services, the ITA announced in June 2013 it will compile statistics for its first-ever ICT survey of households and individuals. The independently organised survey targeted 11,000 randomly selected households in all 11 governorates. Results are expected to be published in early 2014.

The Tech Park

Private sector investment and start-up growth will be key in efforts toward improving the sultanate’s technological innovation and IT development. As the only technology park in the sultanate, KOM plays an important role in advancing Oman’s IT agenda. Built to support tech-focused start-ups and foreign corporate entities, KOM is a 20,000-sq-metre technology park located near the Muscat International Airport and the Rusayl Industrial Estate. Since its establishment in 2003, KOM has welcomed multinational tenants including Oracle Corporation, Hewlett Packard, Motorola, Microsoft, NCR, Wipro Gulf and China’s Huawei, which partnered with local distribution firm ABT to begin retail services for the first time in the sultanate in June 2013. Others, including Qatar Airways and Oman Air, have set up call centres in the park. KOM is also home to the Middle East College and the Waljat Colleges of Applied Sciences. Currently, the KOM campus has an undergraduate population of approximately 3000 students.

KOM offers specialised support packages for tech start-ups at its business incubation unit, The Knowledge Mine (TKM), which offers incentives like subsidised rent and utilities, as well as business support and development programmes. “KOM will introduce a new era for ICT and small and medium-sized enterprise (SME) development in Oman,” Mohammed Al Maskari, director-general of KOM, told OBG. “The National Business Centre, operated by the Public Establishment for Industrial Estates, is hosting more than 20 start-up companies every three years. Further, the ITA has also started the Software as a Service programme,” he added.

In 2013 the number of companies in TKM doubled from 14 to 30, Muadh Said Al Omeiri, customer care specialist at KOM, told OBG. “The costs of operating in KOM are one-third that of other GCC countries, which will increase the number of start-ups in TKM, while attracting larger foreign clients to the business cluster,” he said. Firms operating in KOM benefit from 100% ownership on investments over OR20,000 ($51,800), personal income tax exemption, low telecoms services rates and registration on the Tender Board, which enables access to bidding on government tenders.

The creation and improvement of SMEs should help boost Oman’s IT sector, while bolstering the economy by producing new opportunities for technologically educated Omanis and encouraging younger generations to pursue careers in the IT industry. According to the Public Authority for Investment Promotion and Export Development, investment opportunities exist in IT consulting, data centre management, call centre software development and business process outsourcing.

Cyber Security

Oman is developing as a regional destination for cyber security, after the Regional Cyber Security Centre for the Arab region opened in Muscat in March 2013. Oman’s national Computer Emergency Readiness Team (CERT) has been designated to host the centre, after signing an agreement with the ITA and the International Telecommunications Union (ITU) in December 2012 to be the first ITU regional facility.

A number of security aspects will be covered by the centre and provided to neighbouring countries, including capacity building, information sharing, child online protection, incident response and cyber drills. The centre is hoping to establish a thriving cyber-security industry aimed at enhancing foreign investment, which will eventually export service solutions to other GCC nations. According to Badar Al Salehi, director of National CERT, seven local cyber-security firms had been established in the past two years, with more set to start operations in 2014. The sultanate’s evolution into a cyber-security centre will be bolstered when it hosts the third annual Cyber Defence Summit, Middle East and North Africa, in March 2014. The summit joins annual tech exhibition COMEX, next scheduled for April 2014, as one of the largest tech conferences hosted annually in Oman.

HR Development

Development of human capital is another key pillar of the Digital Oman Strategy, as the sultanate grapples with a workforce shortfall that is set to grow as it moves forward on a number of tech-intensive infrastructure projects. “Most infrastructure projects across the country require IT connectivity. The IT at Muscat International Airport alone constitutes more than OR100m ($259m) of investment. Oman is entering the next stage of IT development,” Salim Sultan Al Ruzaiqi, CEO of the ITA, told OBG. As the government moves forward on expanding its e-service offerings, trained IT staff look set to become increasingly critical to future development. New infrastructure will also require hundreds of tech-savvy employees – for example, the upgrades at the Muscat Airport will necessitate doubling current staff numbers to 1200 employees, according to Vic Allen, acting CEO of the Oman Airports Management Company. “The new terminal will feature modern, complicated IT systems that require highly trained personnel, which is a major challenge for us at the moment,” Allen told OBG.

Recognising this, the ITA has launched training initiatives that develop soft skills under its National IT Training and Awareness Initiative, rolling out programmes through the Community IT Training Programme, providing certification courses for civil servants under the Government IT Training and Certification initiative, as well as providing specialized IT training courses and granting opportunities to obtain specialized certificates. In 2012 the ITA trained some 12,119 people, according to the authority’s annual report. In the private sector, several multinationals have plans to help improve the talent pool in Oman. Hewlett-Packard launched the HP university-graduate programme in 2010 to train IT professionals, following Oracle, which has offered university programmes since as early as 2006. Ericsson launched year-long training for new Omani graduates in July 2013, which will offer experience in advanced IT technologies, with emphasis on LTE services.

Outlook

Growth in internet subscription and penetration rates is set to remain strong, as new mobile services continue to be rolled out, attracting customers in rural areas and secondary cities. Omantel and Nawras have committed to ambitious infrastructure construction projects and upgrades in 3G, 4G LTE and fibre-optic services, ensuring the sultanate continues to offer the latest technologies to a growing number of citizens and residents. The ITA’s investment in training programmes, coupled with private sector initiatives aimed at improving IT offerings, should help the industry fill gaps and bolster the country’s role as a regional tech centre.

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The Report: Oman 2014

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