Qatar boasts a well-developed telecommunications market, with high levels of internet use and smart-phone ownership among the populace, as well as fast mobile and fibre-based internet connection speeds. The larger of the country’s two main telecoms operators has also emerged as a major force in the regional and international mobile telecoms market.
The IT sector is less developed in some respects, with industry observers noting comparatively low penetration rates, particularly in the small and medium-sized enterprise (SME) segment. However, some fields, such as e-government, are highly advanced, and a shift towards the use of the cloud and software-as-a-service is under way in the corporate sector. There are also efforts to develop the start-up scene, and Qatar is emerging as an important centre for computing-focused research, with several applied research projects already having been successfully commercialised.
Telecoms Operators
Known as Qtel until rebranding in 2013, Ooredoo is the larger of Qatar’s two telephone network providers, providing both mobile and fixed-line connections. According to the firm’s latest available data, it had 3.48m domestic subscribers in 2016, slightly below the 3.51m subscribers in 2015, but up from 3.16m the previous year and 2.38m in 2011. The government directly holds a 52% stake in Ooredoo and another stake of a combined 17% through various state-owned entities. The Abu Dhabi Investment Authority also holds a 10% interest in the firm, while the remaining 21% is accounted for by various other investors, with shares listed on the Qatar Stock Exchange, the Abu Dhabi Securities Exchange and – in the form of global depository receipts – the London Stock Exchange.
Ooredoo achieved a blended average revenue per user (ARPU) of QR120.90 ($33.20) in 2016, up from QR118.50 ($32.54) in 2015, although previously the figure had been falling steadily, from QR128.10 ($35.18) in 2014 and QR145.20 ($39.88) in 2011. While Ooredoo operates in a variety of countries throughout the Middle East, North Africa and South-east Asia, Qatar accounted for 2.5% of the group’s total customer base, according to its presentation on the third quarter of 2017. At 65%, Indonesia accounted for the largest share of subscribers. The group’s total customer count worldwide was 150m, up from 138m in the same period of 2016.
The second network operator is Vodafone Qatar, which launched its mobile network in 2009, bringing competition to the telecoms market. Unlike Ooredoo, the firm does not operate its own fixed network, but rather offers fixed-line internet services through a carrier-neutral fibre network being built by the Qatar National Broadband Network (Qnbn). Qatar Foundation is the largest individual shareholder in the firm, with a stake of 27%, followed by the UK-based Vodafone Group with 23%. Other Qatari investors own a combined 42%, with the remaining 8% held by foreign investors.
According to Vodafone Qatar’s annual report, it had 1.5m customers as of March 2017, broken down into 1.2m prepaid subscribers and 272,000 post-paid users. The total is a 3% reduction from the 1.55m customers recorded in the same period from 2016, however that was an increase of 7% from the 1.44m recorded the previous year. It registered an ARPU of QR107 ($29.39) in 2016, down 13% from the previous year. Vodafone attributed this fall in ARPU to price competition in the prepaid segment in particular.
Telecoms Subscriptions
The penetration rate of Qatar’s fixed-line telephone market has been falling since 2012, though numbers did increase again in 2016. According to data from the International Telecommunication Union (ITU), in 2012 there were 19.23 fixed lines per 100 inhabitants, in 2014 there were 18.41 and in 2015 there were 17.59, rising to 19.34 in 2016, the latest available figure. There were 467,148 fixed-line subscriptions in 2016, up from 413,418 in 2015, which was down from 417,589 in 2014.
The mobile market has, by contrast, continued to grow in recent years in terms of both absolute subscription numbers and penetration, until 2016, when each experienced slight falls. According to ITU data, there were 3.55m subscribers in 2016, down from 3.74m in 2015, which was an increase from 3.31m the previous year and 2.19m in 2010, representing a compound average growth rate of 11.5% a year until 2015. The mobile penetration rate was 147.1 subscriptions per 100 users in 2016, a dip from 159.13 in 2015 – the 19th-highest rate in the world, yet the lowest among GCC states – up from 145.76 in 2014 and 124.96 in 2010.
Internet Use
As of 2015 approximately 93% of Qatar’s inhabitants used the internet, according to the ITU, up from 69% five years previously. This was the 13th-highest level of internet penetration in the world and the second highest among GCC countries, behind Bahrain with penetration of 93.48%.
Strong internet use is supported by comparatively cheap access. The cost of an entry-level purchase of at least 500 MB of prepaid data for a mobile handset – which in Qatar actually buys 3 GB of data – was equivalent to 0.29% of gross national income (GNI) per capita in 2015, according to the ITU, the 18th-cheapest level in the world. This improved to sixth-cheapest for the post-paid purchase of 1 GB of computer-based mobile broadband (at 0.21% of GNI per capita).
However, some other services, such as leased lines, are, by contrast, comparatively expensive, leading the sector regulator, the Communications Regulatory Authority (CRA), to announce in December 2016 that it was seeking to boost the availability of competitively priced services for business in order to support the state’s objective of economic diversification.
Bandwidth & Connection Speeds
According to the latest available ITU figures from 2016, per-capita bandwidth levels of 86.95 bits per internet user per second puts Qatar behind the UAE (133.75), but ahead of Saudi Arabia (78.16) in terms of bandwidth. At 13.7 Mbps, the country had the 32nd-highest average internet connection speed worldwide, according to Akamai’s “State of the Internet” report for the first quarter of 2017, ranking it first in the Middle East, ahead of Israel and UAE. In terms of peak connection speed, the country ranked seventh at 107.9 Mbps.
Bandwidth levels are set to rise once again: in July 2017 Ooredoo was one of 17 firms to sign an agreement for the launch of the 25,000-km submarine cable Asia-Africa-Europe-1 (AAE-1), which lands in Qatar. The partners initially announced that the cable would be completed before the end of 2016, though in November of that year the launch date was pushed back to the first quarter of 2017. In May 2017 local media reported that the project was ready for commercial service. In addition to the development of the AAE-1, Qatar is served by a number of existing submarine cables. These include the Falcon Cable, the Fibre-Optic Gulf cable, the Tata TGN Gulf cable, the Gulf Bridge International Cable System/MENA Cable System and the Qatar-UAE cable.
Mobile Internet
Data use is coming to dominate the mobile telecoms market, accounting for over 60% of telecoms providers’ revenues. Both network operators offer 4G LTE Advanced (4G+) mobile internet services. Ooredoo launched its 4G+ network in December 2014, followed by Vodafone Qatar in May 2015. In December 2016 Ooredoo said that, together with its technology partner Nokia, it would launch 4.5G LTE Advanced Pro services in the first quarter of 2017. The firm has reportedly achieved download speeds of up to 1 Gbps using this technology. In November 2016 Vodafone Qatar was also reported to be planning to launch a 4.5G network in the coming months, in cooperation with Huawei. Work is also under way to develop the next generation of mobile internet services. In March 2016 Ooredoo announced plans to begin deploying a 5G network from 2018 onwards and launch 5G services commercially in 2020. In December of the same year the firm announced that, together with its partners Nokia and Huawei, it had completed trials of 5G mobile internet infrastructure, achieving speeds of up to 35.46 Gbps.
Zong Yan, CEO of Huawei Qatar, told OBG, “As the 2022 FIFA World Cup approaches, fifth-generation networks and integrated smart technology will be key to ensuring that the event is a success. As well as the construction of smart stadia, which will provide fans with an interactive and safe match-day experience, supporters should also benefit from smart city technology and ultra-high-speed connectivity from the moment they arrive in the country, covering everything from transport to accommodation.”
Fixed Internet & Fibre Rollout
The ITU put total fixed-line connections in the country at 260,000 in 2016, up from 237,774 in 2015 and 145,787 in 2010. Due to rising population growth rates – at 8.33% in 2010 and 10.12% in 2015 – the penetration rate has increased more slowly than the number of connections.
Both Ooredoo and the state-backed Qnbn have been rolling out fibre networks. According to Ooredoo, 99% of Qatari households are in areas now covered by its fibre network, and in December 2016 the firm reported that 300,000 households were connected to its fibre-to-the-home (FTTH) network. In June 2016 it began offering premium FTTH customers speeds of 1 Gbps, up from 300 Mbps, describing itself as the first company in the world to do so. In March 2017 the firm reported it had begun offering 10 Gbps to some “VIP” customers, at a monthly cost of QR7500 ($2060), and planned a wider rollout of ultra-high-speed connections later in the year. It also tested 40-Gbps speeds in December 2016.
In 2014 Vodafone, which announced plans to acquire Qnbn but subsequently decided not to go through with the purchase, has been cooperating with the state-owned firm on the development of its network. Because Ooredoo has already constructed its own fibre infrastructure, Vodafone is currently the only beneficiary of Qnbn’s network. Progress on the Qnbn network has so far been slow, and there has been little in the way of progress updates in recent years, with funding believed to have faced a number of hold-ups. However, industry figures say that the necessary financing is now in place.
It Market
Qatar ranked 46th out of 175 countries in the ITU’s ICT Development Index 2016, with a score of 6.78, which put it fourth out of 18 Arab states. Industry figures say that uptake of IT could be higher in some fields. “A lot of work is still done manually rather than digitally or electronically, as the cost of labour is relatively low, and under current economic conditions it is widely seen as more cost-effective to employ people to do work manually rather than make large investments in capital expenditure to prepare the groundwork for digital transformation, even though this would allow for greater efficiency and savings in the longer term,” Mohammad Hammoudi, former country manager for Cisco in Qatar, told OBG, citing the private sector and SME sector in particular. “The bigger organisations in the oil and gas, banking, and education sectors are all well developed in terms of IT use, and some government ministries are also advanced, but the country has not yet reached its true potential. There is still a need for substantial investment in infrastructure at the foundation level, in both hardware and software.”
Government statistics support this view. In 2015 one-third of businesses with fewer than 10 staff did not use computers, and only 29% of all private sector employees use computers, according to the latest available data from the “Qatar ICT Landscape 2016” report produced by the Ministry of Transport and Communications (MoTC). John Buck, managing director of telecoms infrastructure firm COMTEC Middle East, told OBG that he did not see a lack of willingness to use ICT among SMEs, but noted that there were still many administrative requirements for transactions to take place manually, such as various forms of invoicing, which reduces IT use. Hammoudi added that continuous and vigilant enforcement of intellectual property protections, though improving, could still be better, especially in the SME segment.
Shifting To The Cloud
IT segments that have yet to significantly develop include cloud technologies. Only 3% of businesses currently use cloud computing services, according to the MoTC’s 2016 ICT landscape report, though this figure rose to 13% for establishments with more than 250 employees. Some 18% of companies not currently using the cloud were implementing a project to do so, or planned to do so in the near future, which leaves the majority of businesses without any plans to make use of it.
“Investments need to be made in a smarter telecoms infrastructure that has greater interoperability to accommodate new technologies and services, such as data centres and cloud solutions,” Mohammed Al Mannai, president of the Communications Regulatory Authority, told OBG. “Ideally, we would like to see more foreign investments where technological transfer is involved. The communications sector needs to be a lever for growth and innovation.”
Nevertheless, industry players see the development of ICT as holding significant promise. “When it comes to IT use, at present major players in the government and in business are still mostly building their own infrastructure and resources. However, with the issues facing the economy, people are increasingly looking at new business models, such as the cloud, outsourcing, and moving generally towards operational expenditure-based models rather than ones based on capital expenditure,” Hammoudi told OBG. “However, there are still substantial concerns regarding issues such as data sovereignty, and more trials need to be done for people to feel more comfortable with such an approach.”
E-Commerce
Online shopping has also been somewhat slow to take off. Around 20% of residents make use of e-commerce, according to the latest available data from the “Qatar’s ICT Landscape 2016” report which states that 12% of businesses take orders over the internet. This figure rises to 32% and 30% for the transport and storage industry and the construction sector, respectively. “The development of e-commerce has been slow in Qatar,” Buck told OBG, citing cultural factors – such as a local preference to do business face to face – as the cause. Other observers have identified other reasons, including the small size of the country and dense mall network, which makes it easy to purchase items in person, while the MoTC’s 2016 report points to obstacles that include security concerns, businesses’ lack of technical resources and payment issues.
However, various initiatives are being put in place to develop the sector. Notably, in 2015 the government launched a National e-Commerce Roadmap, and announced plans to allow private firms to compete with state-owned Qatar Post for the domestic delivery of packages. Currently, private firms are licensed to deliver packages originating from abroad to addresses in Qatar. In April 2016 Qatar Post also launched a new service, “Connected by Qatar Post,” which allows Qataris to use foreign e-commerce sites that do not deliver to the country, and have their parcels delivered to them by the national post office. As a result, the sector is likely to gain momentum. “A number of large investments in e-commerce have been announced in the UAE recently, and Qatar is likely to follow suit,” Buck told OBG.
E-Government
One area in which the country’s IT system is highly developed is e-government, which is being carried out under the framework of the Qatar e-Government 2020 Strategy, launched in 2014. The latest iteration of the country’s e-government portal, known as Hukoomi 3, was introduced in March 2017 and gives users the opportunity to undertake 650 administrative processes online. “If you look at the abundance of availability of digital government – which is a common indicator of wider IT development – Qatar is among the most advanced in the world, with an enormous number of services available online,” Ahmed K Elmagarmid, executive director of Qatar Computing Research Institute (QCRI), told OBG.
Computing Research
The founding of QCRI in 2010 also helped the country emerge as a centre for IT-related research. The institute, which is part of Hamad Bin Khalifa University (itself a part of Qatar Foundation), focuses on five areas of computing research: Arabic-language technologies, social media analytics, cybersecurity, data analytics and distributed systems.
The institute has put numerous aspects of its research into practice, with close to 30 local and international technology patents in place. Successful examples of applied research that have come out of its work include a platform for conducting medical clinical trials, known as Rayan, which has been deployed in over 3100 hospitals and research centres worldwide; a system for assessing humanitarian needs in the wake of natural disasters by monitoring social media in affected regions, known as Artificial Intelligence for Disaster Recovery, which has been deployed over 300 times; and an Arabic-language transcription system, called the Qatar Advanced Transcription system, which is used by Al Jazeera to transcribe spoken Arabic and has been utilised for thousands of hours of programming.
According to Elmagarmid, QCRI is focusing in particular on developing its cybersecurity group. “Cyber-security is extremely important, not only in Qatar but throughout the region and beyond, and the problems involved are not very well understood and are constantly changing as well,” he told OBG. “So there is a need for a forward-looking research institution, focusing not just on existing technology, but also on trends and developments that are under way.”
Workforce
According to the MoTC, there are 35,500 ICT professionals employed in Qatar, representing 3% of the private sector workforce. The figure has grown by a compound average rate of 12% each year since 2012. While there is significant interest in the ICT sector, the availability of secure and well-paid government jobs, or opportunities in well-developed commercial ventures which carry less risk, creates an obstacle to local recruitment efforts. “The attractiveness of packages in the energy, finance and government sectors are a magnet to the national workforce. As a result, we do not see enough citizens employed in many other sectors, including IT, which is dominated by expatriates,” Hammoudi told OBG. Furthermore, regional competition for foreign workers in the segment is strong. “Dubai in particular is a major attraction for people, which makes it harder to attract engineers to Qatar.”
Smart Qatar
Steps are being taken to address this issue, including the recent launch of the Smart Qatar Programme. The initiative began in March 2017 and aims to generate revenue for the economy and stimulate job growth, particularly in the start-up scene. Crucial to its mission is the development of ICT SMEs. It will provide financial support to 50 new Qatari enterprises to increase the number of jobs in ICT by 10% per year.
While the programme should prove a boon for local industry, there are also opportunities for international players, with the MoTC signing a series of memoranda of understanding with Beijing’s International Smart City Research Centre, Huawei and Estonia’s e-Government Academy, among others, covering various start-up developments and research projects in open data, big data analytics and the internet of things for smart cities.
As a result of the programme, the availability of local talent is expected to substantially increase in the years to come; Elmagarmid told OBG that the interest from Qatari youth in IT-related careers is increasing, and at what he described as a “higher-than-linear” rate.
The country is also taking steps to ensure a safe environment for all workers, including those with disabilities. “The main barrier to creating more inclusive workplaces for people with disabilities is the lack of legislation, which leads to a general lack of awareness among employers,” Maha Al Mansouri, CEO of Mada Assistive Technology Centre, told OBG. “We are working with our partners for legislative changes, creating policies and initiatives that will enshrine the rights of people with disabilities at work.
Outlook
Internet connection speeds and bandwidth availability are expected to continue increasing in the coming months and years, as the AAE-1 cable comes on-line and as mobile and fixed-line operators roll out 4.5G networks, fibre connections and faster fixed-broadband connections.
Furthermore, the carrier-neutral fibre network on which Vodafone operates, and which Qnbn aims to turn into a unified digital network, could benefit the broader market, according to Ahmed Salman Ali Al Sulaiti, CEO of Qnbn. “A national broadband network is attractive to international investors because it enables them to offer customer-centric products and services without having to make capital investments in a physical telecoms network, thus shortening the time to market,” he told OBG. “Qnbn has created a secure telecoms infrastructure that is fulfilling requirements of the government while also satisfying the connectivity needs of telecoms operators.” While the initial investment costs in a national fibre network are significant, Al Sulaiti added that it would lower costs in the long run, facilitate the entry of new operators and improve network security, accessibility, maintenance and administration.
The country is also likely to be among the early adopters of 5G services towards the end of the decade. Major IT users, such as the government and large businesses, may soon shift to cloud-based services, which would reduce capital expenditure costs. Meanwhile, numerous government strategies in areas such as e-government and e-commerce, are set to help develop the sector in segments that have trailed behind sector growth.
