Bahrain maintains its lead in ICT innovation

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Bahrain has set itself the ambitious goal of universal ultra-fast broadband. Enthusiastic adoption of smartphones by consumers, coupled with investment by mobile network operators in the latest technology, have seen a rapid increase in broadband penetration, in turn laying the foundations for further growth in the sector.

On the world stage, Bahrain was ranked 31st out of 176 countries – the highest of any Arab nation – on the ICT Development Index in the “Measuring the Information Society Report”, published in 2017 by the UN International Telecommunications Union. According to the World Economic Forum’s “Global Competitiveness Report” for 2017-18, Bahrain ranked 31st, out of 137, for its technological readiness, compared to 37th for 2016.

UP TO SPEED: Bahrain’s mobile phone users are driving a revolution in the country’s use of broadband data according to the Telecommunications Regulatory Authority (TRA). In the third quarter of 2017 there were 2.37m broadband subscriptions, a 3% increase over the same period for 2016, which was attributed to rapid growth in mobile broadband subscriptions, representing 93% of total broadband subscriptions. Broadband penetration rates were 164% at the end of the third quarter of 2017, a decrease from 173% reported in 2016 but still ahead of the 146% penetration rate of 2015. Data usage in the kingdom at the end of the third quarter of 2017 was 323m GB and had already surpassed the total yearly broadband usage of 295.5m GB in 2016, which in turn was up 53% from 193.8m GB in 2015. Total data usage in just the third quarter of 2017 was 116.5m GB, up 45% over the same period for 2016.

An industry report covering 2016 to the second quarter of 2017 published by the TRA highlighted the rapid increase of broadband speed and availability in the kingdom. From 2012 to 2016 Bahrain experienced significant and steady growth in the sector, with data showing a continued trajectory into 2017. In 2012, 57% of users had access speeds below 2 Mbps, 39% had 10 Mbps and 4% could access speeds over 10 Mbps. However, in the first half of 2017 just 12% had access speeds of less than 2 Mbps, 40% were accessing 10 Mbps to 2 Mbps, and 48% were enjoying access speeds in excess of 10 Mbps, the first time the fastest access speed segment had taken the majority of broadband subscribers.

QUALITY OF SERVICE: The TRA conducts a number of audits across the spectrum of ICT services offered to consumers in Bahrain. There are annual reports on both mobile network quality and coverage and quarterly reports on broadband services, containing both mobile and fixed market segments.

In the TRA’s “Broadband QOS Report” published in the second quarter of 2017, data showed LTE mobile HTTP download performance had drastically improved overall compared to the first quarter of 2017, with average speeds of 25.5 Mbps compared to 15.9 Mbps in the first quarter for files tested within a provider’s own network.

The quality of service report also measures average download speeds for residential and business customers using both mobile and fixed-line services. The average fixed-line HTTP download speed for residential customers in the second quarter of 2017 was 5.13 Mbps, a slight drop from 5.23 Mbps in the first quarter. Among higher speed offerings the results were more mixed, with average download speeds of 13 Mbps observed on 8-Mbps packages, 22.3 Mbps on 25-Mbps options, speeds which had both increased over the first quarter. The average speed on 100-Mbps deals was 88.2 Mbps, down from speeds of 94.1 Mbps reported in the first quarter.

FIBRE CHALLENGE: The enthusiastic embrace of mobile broadband is not being matched by a call for more fixed-line broadband in homes and offices in Bahrain. In the first half of 2017 the number of fixed-line broadband users declined for the first time by 0.2% after an increase of 22% between 2015 and 2016. At the end of 2015 broadband subscriptions had peaked at 538,000 customers, a number that had grown from about 347,000 in 2012. However, by the end of the first half of 2017 fixed-line broadband subscriber numbers had slipped to 507,000.

In its fourth National Telecommunications Plan (NTP) published in 2016 the TRA acknowledged the pace of development of a National Broadband Network (NBN) using fibre optics had failed to live up to its aspirations. The NTP called for the establishment of a new body to take responsibility for rollout of an NBN capable of delivering 100-Mbps download speeds to 95% of Bahraini households and a 1-Gbps service for 100% of business premises. The new NBN operator would supply wholesale products and services to existing licensed operators in the kingdom on a non-discriminatory basis. The NTP also announced the government would make preparations for the establishment of the new entity within three years of issuing the proposal.

INTERNET OF THINGS: The NTP noted that the limited rollout of fibre optics services has restricted the appetite for the production of locally produced and hosted online content and applications. It suggests this has also slowed the development of internet of things (IoT) applications. According to the latest available statistics in its “Telecommunications Markets Indicators in the Kingdom of Bahrain” report published in 2017, the TRA noted that the number of machine-to-machine subscriptions used for communications between devices had grown from 25,000 in the first quarter of 2015 to 30,000 in the final quarter of the year.

Despite these modest beginnings, there are forecasts that the IoT market in the Gulf States could be worth $11b over the eight years to 2025. A report by global management consultancy AT Kearney titled, “IoT in the GCC, Building a Brighter More Sustainable Future”, suggests exponential growth in interconnected devices is being driven by investments from GCC governments and businesses. It claims the new technology could benefit a range of industries from manufacturing to mineral extraction and from health care to construction.

INTEGRATED TECHNOLOGY PROVIDERS: With much of the impetus for technological uptake coming from smartphone users, all three mobile network operators are positioning themselves as integrated technology providers offering digital solutions as well as connectivity. “A big focus of the ICT sector now is on the services that can be offered to small and medium-sized enterprises. Cloud services and other technologies that lower capital expense for start-ups and allow increased scalability are in high demand,” Rashid Al Snan, CEO of Bahraini communications provider Etisalcom, told OBG.

In May 2017 Bahraini telecom provider Batelco announced a new partnership with Amazon Web Services (AWS), allowing it to deliver AWS products and services to enterprise and government customers in Bahrain. In September 2017 AWS announced plans to establish its first cloud data centre in the Middle East in Bahrain, expected to support the growth of local companies in the sector. “With a good internet connection it is possible to access any cloud server internationally. With barriers to entry becoming very low, it can be a challenge for local providers to compete. Nevertheless, locally based servers can increase accessibility to stored data and give greater control over security,” Al Snan added.

SMART GOVERNMENT: Bahrain’s government also undertook significant steps towards migrating its operations to the cloud. In June 2017 the state run Bahraini News Agency reported that the High Information and Communication Committee had decided to adopt a cloud computing policy by the end of 2018 after reviewing Bahrain’s standing in UN e-government indicators. All government departments were duly requested to submit their requirements for e-governance in order to comply with the recommendations supplied by the UN. The committee stressed that cloud computing had the potential to reduce costs while speeding up the provision of services and increasing flexibility.

As part of a cloud computing trial, the hosting of 10 government websites was transferred to the AWS platform after Bahrain’s Information and eGovernment Authority (iGA) signed a contract with the technological investment firm C5 Capital to facilitate the changeover. The move affected the Ministry of Justice, the Ministry of Health, the Ministry of Works and the Ministry of Transport and Telecommunications. As well as the National Oil and Gas Authority, the Central Bank of Bahrain, the Survey and Land Registration Bureau, the Public Prosecution, the Capital Governorate and the Northern Area Municipality. The government is striving to improve its information gathering and dissemination processes as part of its adoption of a smart government strategy. With new digital sources of data, civil servants have more information at their fingertips. “Without statistics we would not be able to make informed decisions, and we are doing our best to collect and compile data for decision-makers in all the government departments,” Nabeel bin Shams, director of statistics at the iGA, told OBG.

TENDERS: Another step towards smart government implementation has been taken by the Ministry of Works, Municipalities Affairs and Urban Planning with the introduction of an electronic system to receive contractors’ pre-qualification applications through Bahrain’s e-government portal.

The periodical need to issue a pre-qualification licence has also been reduced from 12 to seven weeks, according to reports in local media. An electronic system was also introduced enabling firms to complete internal tenders on projects with a value of BD3,000 ($7,950) to BD25,000 ($66,300). In the first half of 2017 there were 228 tenders with a combined value of over BD2.1m ($5.6m).

VALUE PROPOSITION: Bahrain’s Economic Development Board (EDB) is actively promoting the country as an ideal location for international ICT companies looking to market their products and services in the GCC and wider MENA region. The EDB points out that the country is already a financial technology centre, particularly for companies offering payment solutions, with NEC Payments, PayTabs, 01 Systems and the SADAD Electronic Payment System already established in the kingdom.

According to the latest data published by the EDB there are more than 30 other local and international ICT firms in Bahrain benefitting from operating costs that are 30% below the GCC average, in addition to liberal regulations permitting 100% foreign ownership and a well qualified and trained workforce of 8000 ICT employees. Of those staff, 90% speak and write English, 89% hold a bachelor’s or master’s degree and 47% are Bahraini. The EDB has also highlighted cybersecurity as a potential growth area for new businesses in the country.

OUTLOOK: With continued technological expansion and an already well-established infrastructure, Bahrain is set to maintain its strong standing in the Arab world within the sector. With the kingdom’s government committed to the provision of quality services, even alongside a drastic increase in usage from the growing business and residential user base, Bahrain finds itself in a good position to solidify its role as a leading centre of ICT in the region.

Despite falling in some international technology indices, Bahrain remains focused on achieving continued sectoral growth in 2018. Expectations remain high that continued local and foreign investment, coupled with the adoption of new technology by consumers, will ensure the future of the sector and help its international standing to increase further.

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The Report: Bahrain 2018

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