Broadband for Development in the ESCWA Region4 Broadband for Development in the ESCWA Region Foreword Broadband is used today by almost 250 million people worldwide. It is revolutionizing

Broadband for Development in the ESCWA RegionEnhancing Access to ICT Services in a Global Knowledge Society


Acknowledgement and Disclaimer

This publication was jointly funded by UN–ESCWA andAlcatel–Lucent, with additional support for final compilation andreproduction from the United Nations Development Account proj-ect “Capacity building for ICT policymaking”. The report was super-vised by Mansour Farah, Team Leader for ICT Policies, ESCWA, andSouheil Marine, Digital Bridge Manager, Alcatel–Lucent, whodefined the initial project, jointly led the publication team, contributedto the drafting of various chapters, and assured the overall quali-ty of the publication.

In preparing this publication, Ayman El–Sherbiny, First Informa-tion Technology Officer in ESCWA, contributed to the drafting of var-ious chapters and acted as a focal point, defining and coordinat-ing substantive assignments between national and regional consult-ants and the publication team. Imad Sabouni, ESCWA consultant,carried out the regional analysis of case studies, compiled variouscontributions, and drafted core chapters. Eric Delannoy,Alcatel–Lucent consultant, also contributed to the drafting of vari-ous chapters and provided technical input.

Thanks are due to Mohamed Abdel–Wahab and MohammedAl–Wahaibi, ESCWA consultants, for their valuable contributionsof case studies on Egypt and Oman respectively, and also to HabibTorbey, CEO of Globalcom Data Services, for his input on Lebanon.We would like to express our sincere appreciation to AbdulilahDewachi, Regional Adviser on ICT, ESCWA, and to Samir Aïta,ESCWA consultant, for their review and valuable comments lead-ing to enhancements to the final drafts of the publication.

This document has been reproduced in the form in which it wasreceived, without formal editing. The opinions expressed arethose of the authors and do not necessarily reflect the views ofESCWA.

Copyright © 2007ESCWA / Alcatel–LucentAll rights reserved

Illustrations and layout by Atelier Antoine Maiffret - France (www.maiffret.net)Printed in Lebanon Coverphotos: © Alcatel–Lucent and © ESCWA

Table of Contents

Foreword 4

Executive Summary 5

Introduction 8

Chapter 1: Overview 10

Chapter 2: Broadband Market Take-Up in the ESCWA Region 18

Chapter 3: Broadband Demand & Supply Patterns in the ESCWA Region 25

Chapter 4: Selected Broadband Deployment Case Studies 40

Chapter 5: Factors Affecting Broadband Demand in the ESCWA Region 47

Chapter 6: Going Forward 61

Annex 1: Background Information on the ESCWA Region 65

Annex 2: Background Information on Alcatel-Lucent 68

Annex 3: Broadband Technologies 70

Glossary of Terms 77

Bibliography 80

Broadband for Development in the ESCWA Region4

Foreword

Broadband is used today by almost 250 million people worldwide. It is revolutionizing theway people communicate, seek knowledge, access public services, entertain, and do busi-ness. The new broadband revolution – wireline or wireless – is making changes to the telecom-munications landscape which could be as important as those made by the advent of the Inter-net and mobile telephony, yet with an even greater impact on content development and dis-semination, thus leading to accelerated socioeconomic development.

Broadband access is also drastically changing the economic model for operators. Bound-aries are becoming blurred between categories of service providers that until now were sep-arate, namely telephony operators, Internet service providers, and television content providers.Broadband will trigger the creation of multi–service providers who will offer their servic-es to subscribers any place, any time and through a variety of devices.

This report highlights the vast development potential in the ESCWA region as it moves towardsthe broadband revolution, with examples of concrete business cases focused on selected coun-tries. It also provides an assessment of factors that hinder the deployment and spread ofbroadband, while proposing concrete actions to guide ESCWA member countries in theirquest for enhanced infrastructure to build the knowledge society. It is meant to help stake-holders in the development of broadband in the ESCWA region, including governments, reg-ulators, operators, service providers and civil society at large.

We are pleased to present this publication, produced by ESCWA’s Information and Commu-nication Technology Division and the Alcatel–Lucent Digital Bridge Initiative Program, asa joint contribution to the development of broadband in the ESCWA region for the benefitof socioeconomic development. It is the result of collaborative efforts between a worldwideleader in telecommunications, particularly in broadband equipment manufacturing, and aUnited Nations organization in charge of regional economic and social development. It cap-italizes on the two organizations’ complementary expertise and objectives, and is aimed atallowing stakeholders to benefit from the development of broadband in the ESCWA region.In this regard, we wish to pay tribute to Ms. Mervat Tallawy, Executive Secretary of ESCWA,for her commitment and encouragement.

Finally, this collaboration is an illustration of the multi–stakeholder approach advocated bythe outcome of the World Summit on the Information Society. Our respective organizationsare committed to contributing to the implementation of the Geneva Plan of Action and theTunis Agenda, in order to reduce the digital divide and bring the benefits of information andcommunication technologies to all.

Yousef Nusseir Thierry AlbrandChief, ICT Division Vice–President, Digital Bridge

UN–ESCWA Alcatel–Lucent

This report is a joint endeavor by Alca-tel–Lucent and ESCWA.1 It is intendedto build a regional framework for

broadband deployment in the ESCWA region,as a contribution to the outcome of theWorld Summit on the Information Society(WSIS), and as part of ESCWA’s regional Planof Action (RPoA) for building the informationsociety in Western Asia. This report also con-tributes to Alcatel–Lucent’s commitment toESCWA’s regional plan of action, and toAlcatel–Lucent’s overall Digital Bridge Initia-tive program.2

Furthermore, it provides guidelines for ICTpolicymakers with respect to infrastructuredevelopment at the national and regional lev-els, as requested by the “Workshop on infor-mation and communication technology pol-icymaking in ESCWA member countries”,3

held in Beirut from 2 to 4 May 2006, withinthe framework of the United Nations Devel-opment Account project on “Capacity build-ing for ICT Policymaking”.

The approach adopted in this report isthree–dimensional. The first dimension is ananalysis of the status of broadband deploy-ment in the ESCWA region, substantiated byspecific country case studies. The second isan assessment of lessons learnt from inter-national experience, focusing on what hasmade broadband a success in other countries.The third dimension consists of an evaluationof technologies and business cases that maysupport broadband for socioeconomic devel-opment in the region.

Although the definition of broadband mightvary from one country to another, it is com-monly accepted that it is a high-speed,always-on (as opposed to dial-up) connectionto the Internet. Broadband availability iswidely perceived as a powerful catalyst forsocioeconomic development. It enables thedelivery of content, promotes the develop-ment of new services, and boosts useful appli-cations such as e–education, e–health, e–gov-ernment and e–business, which offer signif-

icant benefits to individuals and communities,government institutions and businesses.

Since the late 1990s, broadband has wit-nessed remarkable growth around theworld. The global number of broadbandsubscribers in the world was estimated atabout 200 million in 2005, and 250 millionin 2006, representing 35–40% of all Inter-net accounts. The regional distribution ofbroadband connectivity is very unbalanced.While Europe, North America and AsiaPacific represented 30%, 24% and 40%respectively of the total broadband share inthe second quarter of 2006, the Middle Eastand Africa region scored only 1%, with atotal number of broadband subscribers notexceeding 2.5 million.

It is shown that there is a strong correlationbetween GDP per capita and broadbandpenetration, as well as between GDP per capi-ta and the Digital Opportunity Index (DOI).4

Three representative countries from theESCWA region are highlighted; showing thatbroadband deployment in the region isbelow its expected level. The significantgrowth of mobile penetration has actuallyweakened the need for further developing thefixed infrastructure, and the investment indeploying copper has slowed down. A fixedline, however, is still necessary for DSLaccess.5

The report provides an exhaustive analysisof broadband indicators in the ESCWA coun-tries. It also discusses the market structureand existence of any national broadband pol-icy or initiative in the different countries, andthe very important issue of international con-nectivity. As an overall assessment, broad-band penetration in the ESCWA countries isstill low, despite the existence of manynational broadband initiatives and a favor-able geographical situation with respect toprincipal submarine cables that providemain links to the Internet backbone. Thiscould be due to reasons such as immaturemarkets and services, low GDP per capita (in

Broadband for Development in the ESCWA Region 5

Executive Summary

1 For a profile of ESCWA andits ICT–related activities,please refer to Annex 1.

2 For a profile of Alcatel–Lucent and its Digital BridgeInitiative program, pleaserefer to Annex 2.

3 ESCWA, 2006, Workshopon Capacity building for ICTPolicymaking, Report, 12June 2006, (E/ESCWA/ICTD/2006/2).

4 The Digital OpportunityIndex is a modular, develop-ment–orientated, e-indexbased on internationallyagreed ICT indicators, a toolfor benchmarking the mostimportant indicators formeasuring the InformationSociety, compiled for 180economies for 2004/ 2005.It is based on 11 core ICTindicators, grouped in 3clusters: opportunity, infra-structure and utilization.

5 A brief overview of the maintechnologies that are avail-able today for broadbandaccess is presented in Chap-ter 1. Interested readers canusefully refer to Annex 3 formore details about tech-nologies.

countries other than the Gulf CooperationCouncil countries), lack of awareness, inad-equate government involvement, and a defi-ciency of relevant applications and content.

Demand patterns differ significantly amongstthe three main categories of users (house-holds, businesses and public institutions), andaccordingly among the various kinds of serv-ice that are offered today to such market seg-ments. In terms of Internet services that canleverage broadband access, despite encour-aging experiences and initiatives in terms ofoffering broadband content (as in the case ofe-education in Jordan, and e–government inQatar and UAE), no broadband mass markethas emerged in the region.

It is obvious that the banning of Voice overIP services in many countries (even when theeconomic terms are favorable, as is the caseof Jordan), in conjunction with the absenceof competitive pricing and bundling of otherservices (voice and television) with Internetaccess, are likely amongst the main reasonsfor broadband under–development.

Furthermore, the analysis of a number of casestudies in the region6 shows that, even withbroadband demand that does not lead to truemass market and restrictions on bundledservices, operators can still expect a reason-able return on investment for their broad-band access projects.

An analysis of the main factors affectingbroadband demand in the ESCWA region,including service, regulatory, pricing andbusiness issues, leads to sound recommen-dations for making "broadband-for-all" a real-ity in the region for the service of economicand social development. The main findingswith respect to challenges hindering broad-band deployment in the ESCWA region, andsuggested recommendations to overcomethem, are:

1. High prices and low market maturity slowdown broadband penetration in theESCWA countries. Bundled services,whereby broadband is provided withother services like telephony and TV con-tent, constitute a key enabler for pricereduction and economies of scale for serv-ice providers.

2. Regional and international connectivity tothe Internet is both complex (no regionalbackbones) and costly in many ESCWA

countries. The improvement of regionalconnectivity and peering, as well as theemergence of powerful regional serviceproviders capable of negotiating betterinterconnection prices with the mainInternet backbones, would drasticallyreduce underlying costs.

3. Lack of a service culture and insufficientquality of telephony copper (especiallyfor DSL deployment) are factors hinderingthe mass deployment of broadband. Thepromotion of a service culture andtransparency as regards copper qualityare needed. Wireless local loop technolo-gies constitute an alternative to copperlines, provided that the availability of thefrequency spectrum required is ensuredby governments and regulatory bodies.

4. Mass broadband adoption is the result ofthe availability of content and applica-tions that are relevant to users in theirnative language, and contributes in turn tothe promotion of improved productivity inthe economy as a result of this mass adop-tion. Both factors are lacking in the ESCWAregion. The development of digital Arabiccontent and the lifting of restrictions onInternet access allow the Internet tobecome the main medium for the exchangeof knowledge between people in the envis-aged knowledge society.

5. The ESCWA region is characterized by a“relatively–low” to “fair” penetration ofPCs. Low–cost PCs and community centers– for collective access when individual pur-chase of PCs is not economically feasible– would substantially increase access to thebenefits of broadband.

6. In the ESCWA region, the scope of Univer-sal Access is confined to basic, convention-al ICT services, and Universal Access tobroadband remains an unstated priority innational policies. An extended scope forUniversal Access, which includes broad-band, should be clearly articulated innational ICT policies, with an increase ininvestments for upgrading operators’access networks. Associated regulatorymechanisms are needed to ensure effectivecompetition while bridging the digitaldivide between urban and rural areas.

7. The development of a competitive anddynamic broadband market is definitelylagging in the ESCWA region. World-


6 Selected broadband deploy-ment case studies are stud-ied in Chapter 4, which dis-cusses two business casesbased on respectively wire-less (WiMAX) and wireline(DSL) broadband accesstechnologies, and gives adescription of an ongoingproject for mixed WiMAX/DSL deployment. Theseexamples concern three dif-ferent countries of theregion (Kingdom of SaudiArabia, Lebanon and Pales-tine) that have differentsocial and economic situa-tions.

gence to a single IP–based platform – that willtrigger the mass–market adoption ofbroadband.

Finally, it is foreseen that broadband accesswill not only trigger only a change in the net-work operator economic model as statedabove (both for newcomers and incum-bents alike), but also a major overhaul in thetechnical organization of their core net-works. Network operators in the ESCWAregion need to anticipate the convergence oftheir networks towards a next–generationnetwork model, where a single networkbased on the IP protocol will be able to pro-vide any kind of service (Internet, voice, videocontent, etc.)

Concurrently, policymakers in Governmentinstitutions should formulate policies that har-ness broadband to achieve the MillenniumDevelopment Goals and sustainable socioe-conomic development, and to empower cit-izens of a people–centered knowledge soci-ety in the region.

wide, local loop unbundling of the fixedtelephony infrastructure is becoming anessential pre–requisite for such a market;hence regulators should enforce it andavoid restrictions on the provision ofother services. In the long term, incum-bent operators will benefit from suchcompetitive markets by becomingmulti–service operators themselves.

The above recommendations are closelyinter–related, and must be considered asguidelines for coherent action rather than a“one–size–fits–all” recipe. Implementationmust be adapted to the specific circum-stances of each country. However, they alldepend on one overarching observation,namely that broadband access cannot beconsidered as “a separate market” fromother information and communicationtechnology (ICT) markets like telephonyand TV distribution. Ultimately, it is the con-vergence of these markets – through thebundled service offers made possible bybroadband access and core network conver-


Broadband technologies bring rich con-tent to homes and small businessesover ordinary copper telephone lines,

wireless, or fiber–optic connections. Auser–centric broadband vision is importantto enhance and develop the informationsociety in the ESCWA region. This visionfocuses on connecting communities as amodality for creating new business opportu-nities in both urban and rural areas, there-by helping to eradicate poverty in thesecommunities. It also acknowledges that theintroduction of broadband technologies leadsto major transformations in two well estab-lished market businesses, namely voice com-munications and television/media broad-casting, both of which directly involve thelargest possible user base.

Within this context, improved telecommuni-cations can be a force for change and trans-formation towards socioeconomic develop-ment and integration into the global econo-my, as well as the development of the knowl-edge society. Specifically, broadband canlead to improvements in healthcare andeducation, particularly for rural communities.Moreover, it can lead to enhancements inpublic services such as e–government, pub-lic safety and public security. The visionstresses the important role of broadband infacilitating the development of corporateand residential usage on the same network.

The role of the government in fostering thedevelopment of broadband technologies foreconomic and social development has beenrecognized as crucial, in terms of both strat-egy and regulation. In particular, the issue ofderegulation of telecommunications has gonethrough a long learning curve in severalregions of the world.

In France for example, issues such as broad-band regulation were given great attention,and several steps were taken to encouragecompetition and market forces. A review ofthese steps underscores the role of the reg-ulator in terms of developing both the mar-

ket and competition at all levels of the valuechain. For example, the concept of Local LoopUnbundling (LLU) and its impact on the retailmarket is an important dimension, as indi-cated in Chapter 5. In the French model,unbundling services was critical for fosteringcompetition in broadband (and telephonecommunications markets), and resulted in amajor transformation of the connectivitymarket in that country, which in turn pavedthe way for extensive adoption of broadbandconnectivity.

In the Arab region, based on research per-formed by the Arab Advisors Group in2004, reviewing broadband and xDSL tech-nologies, only 13 Arab countries out of atotal of 22 offered broadband services in theform of xDSL. While residential 256 kbit/sADSL services were provided in all thesecountries, only four of them (Jordan, Kuwait,Morocco, and Qatar) provided 128 kbit/s,256 kbit/s, 512 kbit/s and 1,024 kbit/sservices. By 2006, as indicated in Chapter2, the situation had changed drastically:most of the Arab countries do now offerADSL services, but with different levels ofdissemination. While broadband via xDSLis still not available in Lebanon and Iraq,there are plans for its introduction in thosecountries. The total annual cost of ADSLvaries greatly between countries, as shownby cost comparisons based on monthlyrates as a function of gross domestic prod-uct (GDP) per capita.

For the ESCWA region, the role of Governmentin fostering market growth is crucial, especial-ly since the deployment of fixed telephone lines(copper) is still largely underdeveloped. Stake-holders agree that deregulation is a catalyst formarket development. Furthermore, deregulationcan only succeed when backed by strong polit-ical will. The liberalization of the telecom mar-ket in the Arab region is a facilitator of broad-band deployment that can lead to competitionin the sector, as demonstrated by other marketsthat now benefit from competitive forces, serv-ice improvements and decreased costs.

Introduction


ation of this task force, it was agreed thata fact book describing guidelines for broad-band deployment is essential. This reportis the materialization of that fact book.

Additionally, this report has a direct rela-tionship with ESCWA’s study on “Enhanc-ing telecom infrastructure, services andpolicies”,1 particularly the implementationof recommendations (5),2 and (7).3 Further-more, the “Workshop on information andcommunication technology policymaking inESCWA member countries”,4 held in Beirutfrom 2 to 4 May 2006, within the frame-work of the United Nations DevelopmentAccount project on “Capacity building forICT Policymaking”, stressed the impor-tance of carrying out a study on broadbandaccess in the ESCWA region, recommend-ing a “broadband–for–all” approach forsocioeconomic development.

In order to fulfill the above recommenda-tions, this report starts by presenting inChapter 1 an overview of the broadbandtechnologies and services available world-wide. Generic questions on the social andeconomic impact of using broadband serv-ices, and the affordability of those servic-es, are also discussed. Focusing on theESCWA region, Chapter 2 explains markettake–up and structure, and discusses themain policies and initiatives in place. InChapter 3, an analysis of the demand andsupply patterns in the region is provided,with the aim of understanding customerneeds in the different segments of society.It also shows how those needs are or couldbe addressed in terms of services provided,through a number of case studies of out-standing applications from the region.Chapter 4 gives three business models fromthree different ESCWA countries to illustratethe economic aspects of broadband deploy-ment, while Chapter 5 highlights some ofthe key factors affecting broadband demandand supply. Finally, in Chapter 6, propos-als for action are given, which are aimed atfacilitating progress in the region.

Additionally, with reference to the findingsof the World Summit on the InformationSociety (WSIS), particularly the Tunis Agen-da (paragraph 23), it is recognized that thereare a number of areas in need of greaterfinancial resources, where currentapproaches to financing ICT for developmenthave devoted insufficient attention to date.These include broadband capacity to facil-itate the delivery of a wide range of servic-es and applications, promote investment,and provide Internet access at affordableprices to both existing and new users.

This publication is the result of a collabora-tion that started in 2004 when three region-al projects were proposed by Alcatel-Lucentduring the Partners Forum (Damascus, 21November 2004), which was held in conjunc-tion with the Second Regional PreparatoryConference for the World Summit on the Infor-mation Society (Damascus, 22–23 November2004) organized by ESCWA. One of the proj-ects proposed by Alcatel-Lucent was devotedto the issue of “the formulation of a regionalframework for broadband deployment inthe ESCWA region”, whose development wasrecommended by the ESCWA– Alcatel-Lucentjoint workshop on “Novel telecom technolo-gies for socio–economic development”, Beirut,11–13 July 2005.

The overriding principle is to establish aregional task force representing differentstakeholders in order to develop and adoptcollectively a regional regulatory and busi-ness framework. This framework, whichincludes practical modalities based on factsand best practice, could be envisaged as areference template for the region, therebyplaying a similar role to that of the Euro-pean Commission’s broadband frameworksfor European regulators. Once established,this task force could encourage, in closecooperation with the League of Arab States(LAS), governments and policy–makers tosubscribe to the regional framework, andcould lead field trials and pilots, therebyaccelerating deployment. To help the cre-


1 ESCWA, 2005, Enhancingtelecom infrastructure, serv-ices and policies, (E/ESCWA/ICTD/2005/5).

2 Stating the need for govern-ments to endorse clear com-mitment to disseminatebroadband services as part ofan integrated socio-econom-ic developmental agenda.

3 Stating the need to coordi-nate between telecom regu-latory bodies in the region tocreate an enabling businessand regulatory environmentfor the wide-scale deploy-ment of broadband services,VoIP and Next–GenerationNetworks (NGN).

4 ESCWA, 2006, Workshopon Capacity building for ICTPolicymaking, Report, 12June 2006, (E/ESCWA/ICTD/2006/2).

What is broadband? And why is itimportant? Although the definitionof broadband might vary from one

country to another, it is commonly acceptedthat it is a high–speed, always–on (as opposedto dial–up) connection to the Internet.High–speed usually refers to a connectionwhich is suitable for running (most of) theavailable networked applications adequately.There is currently a trend to define broadbandbased on “capability”, not merely on speed.According to a “Triple Play” vocabulary forinstance, a broadband connection shouldhave “enough two–way transmission capaci-ty and speed to allow interactive, high–qual-ity, full–motion video, data and voice applica-tions simultaneously via one pipe.”1 For practical reasons, however, a broadband con-nection in this report is considered to have a download data rate of not less than 256 kbit/s.2

More than with traditional telephony penetra-tion, broadband availability in a country is wide-ly perceived as a powerful catalyst for social andeconomic development. It enables the deliveryof new, advanced, interactive content, pro-motes the development of new services (andon–line entertainment facilities), and boosts use-ful applications such as e–education, e–health,e–government and e–business, bringing signif-icant benefits to individual consumers, admin-istrations and businesses. Broadband enablesusers to access and exchange high–quality,

bandwidth–intensive content (e.g., multime-dia) that is either impossible or difficult to useeffectively over slower connections. Variousstudies and statistics in EU countries show thatthere is a strong correlation between penetra-tion of broadband lines and growth. There areclaims that “25% of recent GDP growth and 40%of EU productivity growth (60% in the UnitedStates) can be attributed to ICT.”3 Broadbandnetworks can also help attract direct foreigninvestment. This brings new money into theeconomy, and serves as a conduit for transfer-ring technological know–how.

Broadband evolution worldwideBroadband has witnessed remarkable growthsince the late 1990s (figure 1). The number ofbroadband subscribers in the world was esti-mated at about 200 million in 2005, and 250million in 2006, representing 35–40% of all

Chapter 1

Overview


Impact of using broadband networks

It is foreshadowed that the development and use of a true broadband network would involve four broad direct impacts:• an expansion of the communications activity in the region as the

new business is developed and provides services (buying and sell-ing inputs, employing staff etc);

• enhancing competition in telecommunications — in a range ofareas, but especially in Internet Service Provision;

• opening up scope for productivity gains that are apparent from theuse of broadband technologies in business; and

• competitive gains for key industries that are particularly dependentupon affordable broadband Internet access.

SSoouurrccee:: “True Broadband: Exploring the Economic Impacts,” Allen Consulting Group, 2003

2002 2003 2004 2005 2006 2007 2008 2009 2010Global - High 60,956 98,559 151,534 217,827 284,433 345,230 404,537 453,712 491,243Global - Likely 60,956 98,559 151,534 206,865 262,466 312,929 358,084 395,101 421,970Global - Low 60,956 98,559 151,534 197,153 243,331 280,868 312,910 337,068 354,904

0

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300,000

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600,000

Subs

crib

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Figure 1: Global broadband subscribers anticipated growth, 2002–2010

SSoouurrccee:: broadbandtrends.com

1 Meredith Singer, “Econom-ic and Social Benefits ofBroadband,” ITU SPUBroadband Workshop, April2003.

2 In some countries, 128kbit/s is also considered asa broadband offering. Thisallows the inclusion of BasicRate ISDN (although it is notan always–on connection)in the broadband arena.

3 Edvins Karnitis, “Broad-band Internet as a PowerfulCatalyst for Growth,” PublicUtilities Commission, Latvia,2005.

Europe, North America, and Asia Pacific scorerespectively 30%, 24%, and 40% of the totalbroadband regional share in 2Q 2006, the Mid-dle East & Africa region scored only 1%, witha total number of broadband subscribers notexceeding 2.5 million.8 This modest score,however, implies a huge opportunity for growthin the region. Indeed, the “Middle East andAfrica were identified as the fastest–growingregion with a 16.5% gain in 3Q 2005. Turkey,Morocco, and South Africa each gained 30%during the quarter. Bahrain, Qatar, the Unit-ed Arab Emirates, and Kuwait are the lead-ers in the Arab World.”9

Broadband can be brought to the end user usinga range of technologies. DSL is currently thelead broadband technology worldwide, fol-lowed by cable modems (figure 4). Other tech-nologies include fixed wireless access, wirelessLAN, 3G mobile, and satellite. Recent technolo-gies with larger capacity such as FTTx areshowing increasing deployment in many coun-tries, including Japan and the USA.

Figure 5 shows the distribution of broadbandtechnologies by region worldwide. It also showsthat broadband wireless access (e.g., withWiMAX technology) is gaining importance,especially in Africa, the Middle East, India andLatin America, partly due to the lack of anappropriate fixed infrastructure.

Affordability of broadbandThis section examines how different economiesare doing in broadband penetration relative totheir income levels. Three countries from the

Internet “accounts”.4 This number is likely toreach half a billion by the beginning of the nextdecade.5 In 2Q 2005, the USA was the countrywith the largest total number of broadband sub-scribers (38.2 million), followed by China (30.8million), Japan (20.6 million), and South Korea(12.3 million). China, however, was the leadingcountry in the number of DSL subscribers (21.2million).6 According to the ITU, the number ofcountries with commercially available broad-band has doubled during the past four years toreach 166 countries in 1Q 2006.7 Figure 2 givestotal broadband penetration for the top 15broadband economies in the world in 2005.

The regional distribution of global broadbandconnectivity is unbalanced (figure 3). While

Overview


United States

Japan

Israel

Belgium

Taiwan, China

Sweden

Canada

Norway

Finland

Switzerland

Hong Kong, China

Denmark

Netherlands

Korea (Rep.)

Iceland

0 5 10 15 20 25 30

DSL Cable Other

Figure 2: Top 15 broadband economies 2005. Total penetration (per 100 inhabitants), by type of access

SSoouurrccee:: World Information Society Report, ITU, 2006

Central Americaand Latin America

4%

United States21%

Canada3%

Western Europe28%Eastern Europe

3%

Middle Eastand Africa

1%

Asia Pacific40%

Figure 3: Global broadband subscribers byregion, 2Q 2006 (Total: 242 million)


4 The number of Internetusers is commonly estimat-ed at more than 1 billion in2006.

5 Source:broadbandtrends.com

6 Source: Broadband and DSLSubscriber Numbers to 30 June 2005, 2Q 2005.dslforum.org

7 Source: World InformationSociety Report, ITU, 2006

8 Source:broadbandtrends.com.

9 Source: The European Trav-el Commission, New MediaReview.

ESCWA region (Egypt, Saudi Arabia and the Unit-ed Arab Emirates) are compared to a basket of20 countries from other regions in the world.10

Broadband penetration vs. GDP per capitaFigure 6 shows a sound correlation betweenGDP per capita and broadband penetration,even if a higher dispersion can be observed inthe high–income segment. Broadband penetra-tion, however, varies slightly even in the sameincome segment. South Korea is an interestingspecial case, as it is the country with the high-est broadband penetration, but with only amedium GDP per capita. This can be explainedmainly by the commitment of the governmentto provide broadband to all.

Chapter 1


Subs

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000)

20020

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2003 2004 2005 2006 2007 2008 2009 2010

DSL Cable Modem FTTH Other

Figure 4: Estimation of global broadband subscriber growth by technology, 2002–2010


Africa, MiddleEast & India

NorthAmerica

LatinAmerica

WesternEurope

Central &EasternEurope

Asia &Pacific

World

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

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WiMAX-BWASatelliteFTTxCablexDSL

Figure 5: Regional distribution of broadband technologies, 2006

SSoouurrccee:: Pyramid Research

$0.00

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10.00%

15.00%

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25.00%

30.00%

$10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00

South Korea

Belgium

USA

R2=0.6148

Italy

China

RussiaEgypt

Saudi Arabia

UAE

GDP per Capita (PPP)

Broa

dban

d pe

netr

atio

n

Figure 6: Broadband penetration vs. GDP per capita

10 The analysis is based on 2005 figures provided by PyramidResearch.

Green dots represent ESCWA countries

enabler for deploying wireline broadbandservices, is considered acceptable.

Digital Opportunity Index (DOI) vs. GDP per capitaThe ITU Digital Opportunity Index (DOI) isbased on 11 core ICT indicators agreed by thePartnership on Measuring ICT for Develop-ment.11 The indicators are grouped in threeclusters: Opportunity, Infrastructure and Utiliza-tion. The major advantages of the DOI reside

The three countries of the ESCWA region arecharacterized by low broadband penetrationdespite their relatively big difference in GDPper capita. For Saudi Arabia and the UnitedArab Emirates in particular, broadband pen-etration is less than most of the medium– andhigh–income countries. This is primarily dueto market immaturity, and implies a big,unexploited potential, especially given thatfixed–line penetration, which is a major

Overview


$0.00

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$10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00

South Korea

R2=0.6768

Egypt

Saudi Arabia

UAE


DO

I

Figure 7: Digital Opportunity Index (DOI) vs. GDP per capita

$0.00

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

$10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00

R2=0.2293

Morocco

Canada

Saudi Arabia UAE

Egypt


Fixe

d/M

obile

Pen

etra

tion

Ratio

Figure 8: Fixed/mobile penetration ratio vs. GDP per capita

11 See http://www.itu.int/osg/spu/statistics/DOI/partner-ship.html for details.Green dots represent ESCWA countries

Green dots represent ESCWA countries

in its modular design, its development orien-tation, and its ability to combine fixed andmobile components.Figure 7 shows a direct correlation betweenGDP per capita and DOI. South Korea is stilla special case. The three countries represen-tative of the ESCWA region are almost situat-ed beneath the trend line, indicating mainlya utilization gap, and implying, once again, asignificant potential in the field of ICTs.

Impact of mobile telephonyGenerally speaking, the number of mobilephone lines in emerging economies is compar-atively high with respect to the number offixed lines. The significant growth of mobilepenetration has actually weakened the needfor developing the fixed infrastructure further;investment in deploying copper has sloweddown. Fixed lines, however, are still necessaryfor DSL access. This issue will be examinedin the following section.

Fixed/mobile penetration ratio vs. GDP per capitaFigure 8 shows that the numbers of fixed andmobile lines tend to reach equilibrium inhigh–income countries. Saudi Arabia and theUnited Arab Emirates seem to have a lowerfixed/mobile penetration ratio than the meanvalue represented by the trend line. Egyptappears to be a special case. The penetrationof fixed lines is very high compared to otherlow– and medium–income countries, thus, aclear opportunity exists for operators to provideDSL services.

Fixed/mobile penetration ratio vs. broadband penetrationAs DSL is currently the dominant broadbandtechnology for Internet access, it would beappropriate to compare the fixed/mobile pen-etration ratio to DSL broadband penetration.Figure 9 shows for example Egypt’s great DSLpotential, since it exhibits one of the highestfixed/mobile penetration ratios and one of thelowest broadband penetration figures in theregion. In the United Arab Emirates and SaudiArabia, figure 9 shows that development of thefixed infrastructure would lead to a growth inbroadband penetration.

Broadband technologiesBelow is a summary of the most commonlydeployed broadband technologies.

Wireline technologiesApproximately one billion phone lines world-wide provide a robust, global core infrastruc-ture capable of delivering broadband to homes,

Chapter 1


0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

Canada

R2=0.3062

Saudi Arabia

Egypt

UAE

Broadband Penetration

Fixe

d/M

obile

Pen

etra

tion

Ratio

Figure 9: Fixed/mobile penetration ratio vs. broadband penetration

ADSL

ADSL+

SHDSL

VDSL

Standards Speed Distance Type of Servicessupported

Upstream Downstream

NOW (ITU)

ITU

ATM NOW (ITU)

Ethernet (IEEE)

0.3 Mbit/s

0.3 Mbit/s

0.3 Mbit/s

2.3 Mbit/s

4 Mbit/s

12 Mbit/s

1.5 Mbit/s

8 Mbit/s

7 Mbit/s

2.3 Mbit/s

15 Mbit/s

22 Mbit/s

4.5 km

700 m

2 km

4 km

1 km

500 m

Voice, data

Voice, data, SD video

Voice, data, SD video

Voice, data

Voice, data, HD video

Voice, data, HD video

Table 1: DSL standards and performances

SSoouurrccee:: Alcatel-Lucent

WiFi hotspots are common in highly frequent-ed public places (such as stations, airports, con-gress centers, exhibition grounds, hotels, etc.),where they provide access to the Internet.Users might have to pay for broadband access athotspots, but free hotspots continue to grow.Wireless networks that cover entire cities, such asmunicipal broadband, have also mushroomed (fig-ure 11). MuniWireless,12 a portal dealing withmunicipal wireless broadband projects, reports thatover 300 metropolitan projects have been started.Hotspots usually belong to venue owners suchas airport authorities or hotel chains, whodeploy a WLAN (wireless local area network)infrastructure. Public WLANs are mainly aimedat “nomadic” usage (e.g. during a break in trav-el). Users sit in a hotspot, open their laptops, andget easy access to the Internet or their corporateIntranet. They can also access local information(flight departures in an airport, restaurantmenus in a hotel, conference schedules in a con-ference centre, etc.).A second phase will probably see the seamlessavailability of applications from both mobile andWLAN networks. Local services linked to thehotspot locations will also be implemented tooffer end users specific applications such asvideo streaming, infotainment, etc. In addition,services specifically aimed at WLAN userscould be deployed via mobile networks – forexample, the communication of WLAN serviceavailability in the area.

offices, schools and government bodies. Withcopper infrastructure already in place, DSL isthe most effective and economical technologyfor global broadband deployment.DSL technology leverages the existing pair ofcopper wires in the phone network to providea high–data–rate connection between thehousehold and the central office (CO). Typical-ly, the download speed of DSL ranges from128 kbit/s to 24,000 kbit/s; but the speed islimited by the distance between the CO andthe customer equipment (see table 1). Typical-ly, it is impossible to get a broadband connec-tion if the household is more than 5 km fromthe CO.Some high–value–added services can measur-ably increase the average revenue per user(ARPU) for users who are ready to pay for theseservices. The high margin for these products canjustify the deployment of fiber to the user(FTTU).The installation of fiber feeder loop technolo-gies is hampered by the absence of an installedbase, and the civil works required for deploy-ment. Thus fiber access is limited to use ingreenfield situations (where there is a lowerincremental cost compared with a copperinfrastructure), in the feeder network (where itshigh cost is shared by multiple users), orwhere the almost unlimited bandwidth and theservices that it can support justify the high ini-tial investment (figure 10).Cable television networks can provide broad-band access to the Internet. However, this infra-structure is not very common in the ESCWAregion. The powerline grid can also be ameans of Internet access, despite its many dis-advantages.

Wireless technologiesWireless technologies are different in scope andusage. Subject to frequency spectrum availabil-ity, wireless deployment could take place lessexpensively and more rapidly than wirelinedeployment, and offers new potential for broad-band extension.

Overview


PONpassive star

OLT ONTs

Central OfficeRemote

NodeCentral Office Central Office

Optical Ethernetactive star

Optical Ethernetpoint-to-point

Figure 10: The different fiber technological options


WorldWide Hotspots Users Forecasts (in thousands)90

60

30

02001 2002 2003 2004 2005 2006 2007

Figure 11: Market forecasts for hotspots usage

SSoouurrccee:: Gartner Group

12 Website URL: www.muniwireless.com

WiMAX (Worldwide Interoperability forMicrowave Access) is a wireless broadband tech-nology that extends the Internet broadband rev-olution by bringing two new dimensions: mobil-ity, and extended reach with no wires (figure 12).The main characteristics of WiMAX are:• Broadband with global cell throughput, typ-

ically at 25 Mbit/s/cell;• IP native;• Point–to–multipoint microwave, with a cell

radius up to 15km;• Non line–of–sight;• Cellular–like coverage design;• Standards–based: IEEE 802.16e;• Cost–effective: Customer premises equipment

(CPE) at $300 (indoor gateway);• Supported by more than 350 industry players,

which makes it interoperable.

It is useful to highlight this last feature. Inter-operability will dramatically drive down thecost of end users’ CPE, similar to what hap-pened with WiFi technology. This will allowWiMAX to become the main technology driv-er for broadband within emerging countries.Another essential feature is the cellular cov-erage design. This will open the possibility –especially in areas that are covered by mobiletelephony antennas – to share infrastructure(mainly masts, power, and security) with the

legacy mobile cellular infrastructure, avoidingthe deployment of a WiMAX infrastructure“from scratch”.

SatelliteIn isolated areas where no infrastructure canbe easily deployed, satellite is the only possiblemeans of broadband access (figure 13). Recentprogress in both satellite and ground technolo-gies has led to the introduction of attractive,two–way satellite access solutions, which offerfar better performance than traditional VSAT interms of bit rates and price. The cost of satel-lite capacity per Mbit/s will decrease significant-ly in the next few years, as a result of expect-ed improvements in signal processing (doublingthe useful throughput compared with existingtransponders) and satellite technology (multi-plying the capacity and cost efficiency ofonboard satellites).

However, satellite access has major issues. Itshigh latency (more than a second), due to thevery long radio transmission path, is a prob-lem for various services, including IP telepho-ny. Moreover, controlling a satellite connectionis quite difficult, therefore use of this technol-ogy can be highly restricted by law in somecountries.

Chapter 1


WiMAX Network

Public Internet P-CSCF

GqS-CSCF

PSTN Network

VoiceSignalingGateway

Mobile,IMS

Network

DiameterRouterHA

HA

SIP

BS/PEF

PEF

BS/PEF

WAC/PDF

WAC/PDF

HSS

ALL IP

CPE

SS-Indoor

Figure 12: WiMAX network architecture


Overview


Isolated

Scattered

Grouped

User Density

Wireless, WiMAX,or PLT, DSL,..

WiFi

DirectConnections

BackhaulConnections

AnyBroadband

Network

Figure 13: Different types of satellite connection usage


Broadband is strategically important to theESCWA region because it can potential-ly accelerate the contribution of ICT to

economic growth and productivity improve-ment. This chapter is intended to give a briefdescription of the broadband market in theESCWA region, focusing on broadband take–upby end users, market structure, and regionaland international connectivity.

Assessment of broadband penetration and number of subscribersAs an overall assessment, broadband penetra-tion in the ESCWA countries is still low (see table1). This could be due to reasons such as imma-ture markets and services; low GDP per capi-ta (in countries other than the GCC); and lackof awareness, government involvement, and rel-evant applications and content.Table 1 shows that the total number of broad-band subscribers in the whole ESCWA regionhardly exceeds half a million subscribers,whereas the total population in the region in2005 was estimated at more than 160 millioninhabitants. This gives an aggregate penetration

of about 0.3%, which is very low compared toother regions in the world (see Chapter 1). Thevast majority of current broadband subscriptionsare DSL–based. However, this aggregate valueis far from being uniform across the region. Pen-etration in the higher–income GCC countries,with the exception of Saudi Arabia, is compar-atively high. In the upper–middle–income coun-tries, Oman has a penetration value similar toSaudi Arabia. Lebanon is characterized by aclearly high penetration of broadband withintotal Internet accounts, mostly delivered usingwireless technologies. This is a good example ofhow wireless technologies are used to efficient-ly promote broadband access.Within the lower–middle–income countries(Egypt, Jordan, Palestine, Syria),1 in addition toYemen (a low–income country), Jordan seemsto have a comparatively high broadband pen-etration rate relatively to the number of Inter-net accounts and fixed lines. This is due to thelow penetration of fixed telephony, a fact thatlimits DSL deployment. Conversely, the relative-ly high penetration of fixed telephony in Egyptand Syria represents an opportunity for future

Chapter 2

Broadband Market Take–Up in the ESCWA Region


Bahrain

Population

Main fixed lines in operation

Main fixed lines in operationper 100 inhabitants

Total Internet accounts

Total Internet accountsper 100 inhabitants

Total Internet users (estimated)

Total Internet users per 100 inhabitants (estimated)

Broadband Internet subscribers

Broadband Internet subscribersper 100 population

Broadband Internet subscribersper 100 main fixed lines

Broadband Internet subscribersper 100 Internet accounts

726,617

196,515

27.05

60,000

8.26

155,000

21.33

20,000

2.75

10.18

33.33

777,800

205,386

26.41

53,146

6.83

219,000

28.16

25,168

3.24

12.25

47.36

24,573,000

3,800,000

15.46

1,000,000

4.07

4,000,000

16.28

55,000

0.22

1.45

5.50

74,033,000

10,396,150

14.04

4,886,474

6.60

5,000,000

6.75

113,526

0.15

1.09

2.32

5,703,000

650,000

11.40

130,000

2.28

450,000

7.89

28,000

0.49

4.31

21.54

3,702,000

348,968

9.43

81,000

2.19

243,000

6.56

7,665

0.21

2.20

9.46

19,044,000

2,903,139

15.24

216,000

1.13

1,100,000

5.78

7,000

0.04

0.24

3.24

20,975,000

850,000

4.05

110,000

0.52

600,000

2.86

1,400

0.01

0.16

1.27

4,496,000

1,236,860

27.51

526,978

11.72

1,397,207

31.08

128,493

2.86

10.39

24.38

3,577,000

990,000

27.68

230,000

6.43

700,000

19.57

130,000

3.63

13.13

56.52

2,567,000

265,237

10.33

57,022

2.22

285,000

11.10

8,378

0.33

3.16

14.69

2,687,000

510,295

18.99

283,200

10.54

700,000

26.05

25,000

0.93

4.90

8.83

Egypt JordanKuwait Lebanon Oman PalestineQatar SaudiArabia SyriaUnited Arab

Emirates Yemen

Table 1: Internet and broadband subscribers in the ESCWA Region, 4Q 2005

SSoouurrccee:: ITU World Telecommunication Indicators; Arab Advisors Group (with extrapolated figures for Bahrain, Jordan, Kuwait, Saudi Arabia and Yemen)

1 No significant data is avail-able for Iraq, which is one ofthe ESCWA lower–middle–income countries.

regional and international operators. The exclu-sivity of the incumbent, Jordan Telecom, expiredin 2005, but it is still the sole provider for Inter-net connectivity infrastructure. However, in2006, Jordan Telecom was supposed to start

DSL deployment in these countries. The rela-tively low penetration of broadband within allInternet accounts in Egypt is a side–effect of thefree Internet scheme, which tends to increasethe number of “account–less users” accessingthe Internet.The present status of broadband in ESCWAcountries could be considered as an attractivedevelopment opportunity. Figures 1a, 1b, and 1crepresent broadband penetration in ESCWAcountries among the overall population; the totalof main fixed lines in operation; and the total ofInternet accounts, respectively. Penetrationthresholds are also plotted in red. With theexception of Lebanon and three of the GCC coun-tries, all other ESCWA countries are well belowthe threshold of 2% (figure 1a). Egypt, forexample, has set this as a target to be reachedin 2007; but this is still very far behind the topworld figures of about 25% or the OECD region-al average of about 13.5%.2 For a typical fixedtelephony penetration of 20%, a threshold of10% could be considered acceptable; the resultsshow a similar gap (figure 1b). Limited fixedtelephony penetration could constitute a consid-erable obstacle to deploying DSL technology inthe future, as in Jordan; thus alternative, wire-less technologies should be considered. Final-ly, there is a clear opportunity for subscribers toupgrade their traditional dial–up Internet con-nections to broadband (figure 1c), if appropri-ate marketing highlighting the added value ofbroadband services is employed.

Market structureUnlike fixed telecom services, data services inmost ESCWA countries are open to competition– at least theoretically (see table 2). In manycases, ISPs act as resellers of the incumbent’sinfrastructure. This is clearly the case in Syria,where the local loop is still fully under the con-trol of the government–owned incumbent, Syr-ian Telecom, which offers new–entrant ISPs (fivein 2006) limited “bit–stream” access to its dig-ital subscriber line access multiplexer (DSLAM)equipment. In Egypt, the regulatory authorityformally enforced local loop unbundling in 2Q2002, enabling licensed network serviceproviders to share the local loop with theincumbent, Telecom Egypt. There are current-ly eight licensed data service providers, andmore than 200 ISPs in Egypt.3 In Oman, after theadoption of its national ICT strategy, e–Oman,in 2003, the telecom sector was opened to com-petition. However, the incumbent, Omantel, isstill the sole active ISP in the country.4 As inEgypt, the liberalization of data services in Jor-dan was successful. There are currently 10licensed ISPs; most of them are backed by



Yemen Syria Palestine Jordan Egypt Oman Lebanon UnitedArab

Emirates

SaudiArabia

Qatar Kuwait Bahrain0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Figure 1a: Broadband subscribers per 100 residents in the ESCWAregion, 4Q 2005

SSoouurrccee:: ITU World Telecommunication Indicators; Arab Advisors Group (withextrapolated figures for Bahrain, Jordan, Kuwait, Saudi Arabia, and Yemen)


Emirates

SaudiArabia


2.00

4.00

6.00

8.00

10.00

12.00

14.00

Figure 1b: Broadband subscribers per 100 fixed lines in the ESCWAregion, 4Q 2005



Emirates

SaudiArabia


10.00

20.00

30.00

40.00

50.00

60.00

Figure 1c: Broadband subscribers per 100 Internet accounts in the ESCWA region, 4Q 2005


2 Source: Paul Budde Commu-nication.

3 Source: Egypt Case Study,ESCWA, 2006.

4 Source: Oman Case Study,ESCWA, 2006.

leasing its infrastructure to competitors.5

The encouraging trend toward market liberal-ization in the ESCWA countries still suffers fromsignificant concerns as to the true extent of gen-uine competition. Table 2 shows that, although12 countries out of 13 have allowed competi-tion in their data markets, some of them stillhave a single service provider. In other cases,competition is only open to Internet services, butnot to data services and carrier provision. Fur-

thermore, incumbents still directly or indirect-ly dominate the markets. In Jordan (figure 2),Wanadoo Jordan (a subsidiary of Jordan Tele-com) had about 55% market share in 2005despite strong competition from other providers,especially Batelco Jordan. In Saudi Arabia, morethan 15 ISPs provide ADSL services, but theincumbent, Saudi Telecom, charges an activa-tion fee for the service in addition to a fixedmonthly fee for using the phone line.6

The situation of limited competition may reflectcommercial realities such as limited marketmaturity or high risk, but it is also the outcomeof government policies and strategies regardingliberalization. The major characteristics that still

Chapter 2


Connectivity and Infrastructure in Jordan

Jordan’s ICT industry has been attracting international and localinvestors and many public/private partnerships have been formed,carrying Jordan further down the road to becoming a hub in theregion. Jordan’s appeal to foreign investors is buried within manypositive factors that materialized in Jordan recently. King AbdullahII’s strong support, leadership and visionary perspective regardingthe key role of ICT in the economic prosperity of Jordan has set thebasis for all advancements in this area. The improvements that fol-lowed The king's nationwide prioritization of ICT include world–classinfrastructural developments, a liberalized telecommunications mar-ket and an independent regulatory framework. Consequently, Jordanhas expanded beyond many of its regional counterparts and advancedgreatly in connectivity and access.Recent trends of change related to connectivity and infrastructureinclude stagnation of fixed line growth, increased competition andfurther advancements in the mobile market and the slow but firmuptake of competition in the ISP market. More specifically:• Mobile–fixed substitution has caused fixed line penetration to stop

at a lower level than comparables in the Middle East and stagnated fixed line growth at 11%, which forms a barrier for broadbandpenetration in the future.

• Mobile penetration is growing rapidly and reached 64%, mainlydue to significant drops in mobile charges.

• The share of business customers stayed constant in fixed line. Thebilling structure in fixed line is changing with rising subscription feesand decreasing usage charges although overall costs are decreasing.This trend is visible in the billing structures of businesses in developedcountries and is expected to be the case for Jordan in the future.

• PC penetration is growing annually at 27% but it is still behinddesired levels due to affordability issues. In countries with GDP percapita below $7,500, PC penetration is a matter of affordability andJordan experiences difficulties in strengthening its PC penetrationand Internet access due to the lower level of average GDP per capita.89% of the stakeholders of the Jordan e–Readiness assessment per-ception survey have also identified the high PC costs and Internetprices as the most important obstacle against the increase of PCand Internet penetration in Jordan.

• Although competition in the ISP sector is at a satisfactory level withrespect to comparable countries, the market is dominated by twoplayers, Wanadoo and Batelco. This structure is not expected tochange unless the use of the infrastructure is regulated more effec-tively.

• Broadband penetration is still at low levels with 0.5% and is veryimmature.

• Telecommunications sector is a key industry for the Jordanian economy with 10% contribution to GDP.

• The mobile market in Jordan is the most liberalized in the MiddleEast. Still, the market share of largest mobile operator is the largestwhen compared to any OECD country, which indicates additionalregulation to foster competition in the mobile market.

• The quality and reliability of the telecommunications infrastructureis above global standards.

SSoouurrccee:: “The e-Readiness Assessment of the Hashemite Kingdom of Jordan,” Ministry ofInformation and Communications Technology, 2006

Other ISPs3.7%NEXT

5.8%

Batelco21.8%

TE Data6.7%

Wanadoo54.3%

Cyberia7.6%

Figure 2: ISPs’ ADSL market shares in Jordan, 2005

SSoouurrccee:: Arab Advisors Group

Bahrain

Egypt

Iraq

Jordan

Kuwait

Lebanon

Oman

Palestine

Qatar

Saudi Arabia

Syria

UAE

Yemen

Country PSTN Data and Internet

Competitive,Single operator to date

Monopoly,Market liberalizationinitiated during 2006

Monopoly

Competitive

Monopoly

Monopoly

Monopoly

Monopoly

Monopoly

Monopoly,Market liberalizationinitiated during 2006

Monopoly

Competitive,Market liberalizationinitiated during 2006

Monopoly

Competition,Single operator to date

Competitive

Competitive

Competitive

Competitive

Competitive

Competitive,Single operator to date

Competitive

Monopoly

Competitive

Competitive

Competitive ,Market liberalizationinitiated during 2006

Competitive,Duopoly

Table 2: PSTN and data market structure in ESCWA countries, 2006

SSoouurrccee:: Arab Advisors Group; ESCWA

5 Source: Arab Advisors Group.6 Ibid

ence. In this context, the role of regulatory author-ities and the transparent implementation of ICTstrategies are of prime importance.Given the market imperfections, governmentsmay take the decision to intervene directly inorder to guarantee access to essential facilities andnetworks controlled by the incumbent (e.g.,Egypt). For example, tariffs could be directly“imposed” by governments to facilitate the adop-tion of broadband services. This was the case inEgypt and Syria. The counter–example can betaken from Lebanon, where there is no govern-ment intervention, and prices are set by marketforces.

Broadband policies and initiativesMost ESCWA members have elaborated someform of national ICT policy and strategy,though with varying degrees of explicit imple-mentation plans (see table 3). The existence ofa specific broadband policy/initiative in thesecountries is however less clear. A notableexception is Egypt, which adopted a formalthree–year broadband strategy 7 that was offi-cially launched in May 2004, with the aim ofboosting broadband deployment based on dif-ferent technologies (ADSL, WiFi and WiMAX in

favor continued concentration of market powerin the hands of incumbents include the benefitsfrom established networks and wide subscriberbase; the significant costs involved in the deploy-ment of network elements; and market experi-



Bahrain

Egypt

Iraq

Jordan

Kuwait

Lebanon

Oman

Palestine

Qatar

Saudi Arabia

Syria

United Arab Emirates

Yemen

Detailed ICTStrategy

ExplicitImplementationPlan

YES

YES

NO

YES

NO

YES

YES

NO

NO

YES

NO

NO (*)

NO

YES

YES

NO

YES

YES

YES

YES

YES

YES

YES

YES

NO (*)

YES

Table 3: National information society policiesand strategies in the ESCWA region

The three–year broadband initiative(2004–2007) was officially launched in May2004. The initiative aims in the short term atboosting ADSL penetration, introducing WiFi andWiMAX hotspots in public areas and promotingwireless LANs in the residential sector. In themedium term, the initiative includes a plan tointroduce cable modems for the delivery ofadvanced integrated services to households. Theinitiative also considers the expansion of a WLLnetwork (based on CDMA2000–1x), currentlytargeting rural areas, to cover urban areas forvoice and broadband services. The long–termagenda includes other broadband technologiesand services such as VDSL, ETTH, and 3G broad-band services. The ultimate goal is to increasebroadband subscribers to 1.5 million, reaching apenetration of 2% by the end of 2007.

Broadband penetration has started toimprove over the last two years. The govern-ment has realized the need to build an e–soci-ety as part of the global information society,and is leading an ambitious broadband initia-tive, with the objective of increasing broad-band penetration.

Egypt has come a long way since then, as the“broadband initiative” was the latest phase ofa national “e–readiness” plan to provide citizens with Internet access and close themuch–touted digital divide. According to apress release from MCIT (Ministry ofCommunications and Information Technology),

under whose auspices the scheme washatched, the initiative is “unique in the MiddleEast and Africa, and will lead to huge progress inInternet services.”

The initiative’s primary goal is to double thecountry’s current number of ADSL lines with a20–fold increase over the next three years. Theinitiative’s second goal is to set up WiFi hotspotsto offer high–speed, wireless Internet accessfrom certain public areas. One reason for lowbroadband penetration thus far has been theprohibitive cost of ADSL subscriptions. Whileprices are comparable to international stan-dards, they are high within the context of theEgyptian economy.

The government’s new–found ability to chargeso much less for the service can be attributedlargely to a decision to boost the national bandwidth supply (which has reached 5.3Gbit/s), essentially allowing it to negotiate volume discounts from international band-width suppliers, such as FLAG telecom andSEA–WE–ME. Although state–owned fixed lineprovider Telecom Egypt (TE) enjoyed a monop-oly on international connectivity, the govern-ment struck a deal to reduce the leasing rate ofthese lines to several local ISPs. Another obsta-cle which has traditionally hampered ADSL pene-tration is the difficulties associated with instal-lation, with the process often taking far longerthan advertised. So, “a straight–forward deploy-ment process of DSL lines” was announced by

MCIT to ensure a reduction of installation timeto a matter of days.

During 2002, the focus was to set a suitable regulatory environment to encourage the spreadof broadband technologies across the nation. ByApril 2002, local loop unbundling took place. Inthe following month, ADSL services startedbeing offered to the public.

Egypt’s “Broadband Initiative Preparation”,including a market study, problem identification,and the design of the broadband initiativeaction plan, took place from October 2003 toApril 2004. The official launch of the initiativewas in May 2004. The action plan can be summarized as follows:1– Increasing ADSL penetration comes first in the

broadband initiative action plan. The initialtarget was to increase ADSL subscribers by50,000 during the first year. Starting in thefirst quarter of 2004, the plan was to focus onthree main objectives:• Reducing the minimum monthly fees for

ADSL services via a number of reductions inunbundling fees and costs of local capacitiesthrough volume discounts.

• Stimulating demand by empowering content providers to deliver more attractivee–applications.

• Launching a wide, government–supportedmarketing campaign to increase publicawareness while decreasing marketoverheads.


Egypt’s Broadband Initiative

* Despite the lack of a formal document for national ICT strategy, there areaction plans with excellent pace of implementation, particularly in DubaiSSoouurrccee:: ESCWA

the short term; cable modem in themedium term; and other technologieslike FTTH in the long term). The ultimategoal, as stated, is to reach a total broad-band penetration of 2% (1.5 millionsubscribers) by 2007.Even without a formal broadband poli-cy, the importance of promoting broad-band applications and services is gener-ally well perceived in the ESCWA region.Most of the countries in the region con-sider broadband as an increasinglyimportant developmental building blockof the Information Society. Many ofthem have launched applications run-ning over high–speed, broadband tele-com networks. In Jordan for instance, a“Broadband Learning Network” is cur-rently under construction, which aims tointerconnect all public schools and uni-versities.8 Similarly, the “Education NetInitiative” in Kuwait aims to connect allschools and libraries over one network

Chapter 2


May-04

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Total number of subscribers 115,765

0

Jun-04

July-04

Aug-04

Sep-04

Nov-04

Nov-04

Oct-04

Déc-04

Janv-05

Feb-0

5

Mar-05

May-05

Jun-05

July-05

Aug-05

Sep-05

Oct-05

Déc-06

Janv-06

Feb-0

6

Mar-06

Apr-05

Apr-06

Development of ADSL lines (May 04-April 06)

May-04

1,000

2,000

3,000

4,000

5,000

6,000

Mbit/s

0

Jun-04

July-04

Aug-04

Sep-04

Nov-04

Nov-04

Oct-04

Déc-04

Janv-05

Feb-0

5

Mar-05

May-05

Jun-05

July-05

Aug-05

Sep-05

Oct-05

Déc-06

Janv-06

Feb-0

6

Mar-06

Apr-05

Apr-06

Evolution of international capacity (May 04–April 06)

Also during 2004, the action plan focused onspreading the use of WiFi technology by encour-aging the establishment of hotspots in publicareas such as Cairo International ConferenceCenter, Cairo airport, plus universities, hotels,cafés and other public places. Collaborativeefforts took place aimed at setting the regula-tory environment and defining the licensingframework for providing public WiFi services.This was accompanied by a “Laptop for EveryProfessional” initiative.

2– The second phase of the initiative’s actionplan, which started during the third quarterof 2004, focused on exploring the newerWiMAX 802.16 technology. As 802.16 productshave become more available, the govern-ment led another pilot project to test thedeployment of the technology in last–mile

broadband access. The successful result ofthis pilot is expected to drive, at a laterphase, the widespread deployment ofWiMAX technology for expanding broadband access to residential customersand businesses.

3– Cable modem, the third component onEgypt’s broadband agenda, was planned tobe introduced during a later phase of the initiative. MCIT is still working on setting theregulatory environment for cable services incollaboration with NTRA and the EgyptianRadio and Television Union (ERTU). This willclearly define the licensing framework, aswell as the roles of the different serviceproviders, in offering broadband data accessand broadcasting services. After this phase,two districts will be selected to implement

pilot projects, which are necessary for earlymarket testing. The pilot project will explorethe different alternatives for laying downfiber infrastructure in highly populatedareas, such as new excavation techniquesand fiber–in–gas technologies. TE, in coopera-tion with different vendors, is expected toplay a key role during this phase. The defini-tion of a successful business model for pro-viding wide–scale cable services will great-ly depend on the outcome of the pilot proj-ects, and will follow at a later stage.

4– In the long term, Egypt’s broadband agendawill introduce newer technologies such asVDSL and ETTH (Ethernet to the Home), andincrease the deployment of broadband wire-less services as new technologies becomeavailable.

International Bandwidth (Mbit/s), 2005 International Bandwidth (Kbit per 100 population)

0 0.00

20.00

40.00

60.00

80.00

100.00

120.00

500

Bahrain Egypt Jordan Kuwait Lebanon Oman Palestine Qatar SaudiArabia

Syria United ArabEmirates

Yemen

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Figure 3: International Internet bandwidth in the ESCWA region, 2005

SSoouurrccee:: ITU World Telecommunication Indicators

8 Source: “Jordan Internet & Datacomm LandscapeReport,” Arab Advisors Group, 2006.

Egypt’s Broadband Initiative (Continued)

world average of more than 80 kbit/s. This lastfigure shows the wide external divide; thehighest connectivity in the region was found to

by 2006. A DSL network is set to connect pub-lic schools to the Internet.9

International connectivityInternational connectivity is a major issueaffecting Internet development in the ESCWAregion, as it constitutes the gateway to the inter-national Internet. Broadband is, by definition,a bandwidth–consuming service, so the volumeof international connectivity required is direct-ly proportional to the number of broadband sub-scribers. The ESCWA region has recently showna notable increase in its international bandwidth(see figure 3). However, if we consider theregion’s population, we can observe that both aninternal and an external divide remains.

Internally (within the region), the internation-al connectivity per 100 people in the regionvaries from a maximum of about 100 kbit/s, asin Qatar and the UAE, to a minimum of less than2 kbit/s, as in Yemen; the average for the regionis slightly over 8.5 kbit/s, compared with the



Egypt24.44%

Jordan4.44%

Kuwait6.67%

Lebanon2.22%

Oman3.33%Palestine

2.22%Qatar5.56%

Saudi Arabia11.11%

Syria3.33%

Bahrain4.44%

Yemen2.22%

United ArabEmirates30.00%

Figure 4: Distribution of international Internetbandwidth in the ESCWA region, 2005

SSoouurrccee:: ITU World Telecommunication Indicators; Arab Advisors Group

FLAG: 4 x 2.5 Gbit/sSea-Me-We 2-3: 1 x 565 Mbit/s & 2 x 10 Gbit/sFALCON: 1.28 Tbit/sALITAR-BRITAR: 2 x 2.5 Gbit/s & 622 Mbit/s

Figure 5: Submarine optical cables in the Middle East

SSoouurrccee:: Alcatel-Lucent, Optical Network Division

9 Source: “Regional Profile ofthe Information Society inWestern Asia,” ESCWA,2005.

be one order of magnitude less than the aver-age in the high–income OECD countries.

Figure 4 shows the distribution of internation-al Internet bandwidth within the ESCWAregion. The UAE has the largest share, ataround 30% of overall regional connectivity, fol-

lowed by Egypt, then Saudi Arabia (both ofwhich have a much larger population than theUAE). Lebanon’s low share is not significant,since ISPs make heavy use of “private” satellitedownlinks.10 “The UAE’s large share stems fromits advanced Internet market, the high adoptionof broadband by the large cosmopolitan com-munities that reside in the country and the sup-ply of Internet services to neighboring countriesthrough its EMIX .”11

The ESCWA region is connected to the rest of theworld through several fiber–optic cables, whichgive the region relatively high potential connec-tivity (figure 5). It is expected that increasingdemand for bandwidth, due to broadbanddeployment and the emergence of new servic-es with high data–rate requirements, will drivenew investments in international bandwidth forthe various countries in the region.Most of the ESCWA countries are still undermonopoly for international gateways, althoughcompetition has started to emerge, mainly inBahrain, Saudi Arabia, Jordan, and Egypt. “InQatar, Qtel’s monopoly over international serv-ices is expected to live out the license’s lifetimeuntil 2013.”12 The potential adoption of IPtelephony might accelerate the liberalizationprocess of this market.

Chapter 2


Fiber–optic and satellite operators in the MENA region

The Arab countries examined get most of their internationalbandwidth via either fiber–optic cables or satellite connections.Fiber–optic cables connect countries regionally such as theFiber–Optic Gulf (FOG), or globally such as FLAG (Fiber opticLink Around the Globe) and the SEA–ME–WE systems.Usually, fiber–optic cables supply the international bandwidth,the bandwidth capacity utilized for voice, data, and Internetconnectivity. As for redundancy plans, the telecom operatorsusually rely on satellite connections as a backup for securingand maintaining international connectivity.Most Arab countries still have state–owned or partially private monopoly telecom operators that exclusively provideinternational bandwidth and connectivity through theirpremises. For example, if an ISP obtains Internet bandwidthvia satellites or fiber–optics, it has to pass through themonopoly telecom operator.The majority of the Arab countries examined obtain theirinternational bandwidth via FLAG (which provides connectivityto 10 of the 13 countries listed in the exhibit below,), theSEA–ME–WE systems (10/13), Arabsat (12/13), Intelsat (12/13),amongst other operators.Source: “International Connectivity in the Arab World,” Arab Advisors Group, 2005

10 Source: “International Con-nectivity in the ArabWorld,” Arab AdvisorsGroup, 2005.

11 Ibid.12 Ibid.

This chapter will examine the demand andsupply patterns for broadband services inthe ESCWA region, from the perspective

of both customer needs, and the services andproducts that are used to fulfill them. Differentcase studies from the region are also present-ed as illustrations.

Understanding customer demands and needsAs the overall demand for broadband servic-es and applications increases, it is essentialto understand and assess user requirementsin order to deliver appropriate products.Service providers typically use market seg-mentation to identify customers’ needs. Themarket is commonly divided into business,government, household, and local communi-ty segments, each of which has its own char-acteristics in terms of required applications,tariffs, and expected growth. Customers in thebusiness and government segments can bequalified as “heavy users”, and were natural-ly targeted first when broadband was initial-ly introduced, especially since they weresupposed to be less “price–sensitive” than res-idential (household) users.In Chapter 2, broadband market take–up in theESCWA countries was examined and shown tobe still immature. Services in such markets aresupply–driven rather than demand–driven.Demand is usually stimulated by introducingnew products and applications. The productsare then adapted and expanded to better meetthe expectations and needs of the growing cus-tomer base in the specific market segment.

Household and local community broadband market segmentResidential users tend to use the Internet for avariety of activities, including sending and receiv-ing e–mails; finding information about goods andservices (and eventually buying them on–line);obtaining information from (and sending formsto) public authorities; making on–line paymentsand Internet banking; accessing entertainmentfacilities, etc. Most of these activities can beachieved using a dial–up connection. Broadband,on the other hand, is an increasingly convenientoption because, being an always–on facility, it

allows the telephone line to be freed up duringInternet access. It also allows for multiple connec-tions to take place at the same time when coupledwith home networking, especially wireless (homeWLAN). Broadband connections also become anecessity for activities such as streaming anddownloading music and videos, on–line interac-tive gaming and entertainment, audio–and video-


Chapter 3

Broadband Demand & Supply Patterns in the ESCWA Region

Survey on Egypt’s demand pattern for broadband access and services

In 2006, Alcatel-Lucent conducted a survey in Egypt on cybercafécustomers and broadband early adopters in order to better assesspotential broadband usage patterns in the country.The objectives of the study were to identify target profiles in term ofdemography, education and income; to identify current Internet usagein professional and personal life; and to evaluate the demand forbroadband access. The study was conducted in the cities of Mansoura,Tanta, Mahala and Assout.63% of early adopters (people who are already broadband–equipped)have been using the service for less than one year; and 32% for less than6 months. The general availability of broadband access is quite recent.As for the perceived advantages of broadband access, there is animportant difference between cybercafé customers and the earlyadopters. The key points for cybercafé customers were to have a fastconnection to download pictures and videos; to have a stable connection;and to be able to make phone calls over the Internet. For the earlyadopters, the main advantage was to have an easy and stable connection.The early adopters use the Internet more for professional reasons thanthe cybercafé customers: 25% versus 15%. As far as applications areconcerned, a large proportion of both cybercafé and early adopters goon–line to send and read e–mails, chat, and listen to music. However,broadband–equipped people use certain services more than cybercafécustomers: watching on–line video; searching for information; readingnews; downloading; and making phone calls. Although it does notconcern the majority of users, the early adopters are slightly moreinterested in on–line buying and e–government services.According to the survey, 71% of cybercafé users are either quiteinterested or very interested in having a broadband connection athome. However, broadband is available for only 27% of the respondents,and 19% do not know if they can subscribe to a broadband connection.The people who are interested are quite enthusiastic, as 52% intend tosubscribe a broadband connection within six months! This proportiongrows to 78% within 12 months.As far as payment methods are concerned, respondents are splitfairly equally between the 46% who want to have a monthly priceplan without commitment, and the 42% who want a subscriptionmethod with a contractual commitment. Only 7% are interested inpre–paid cards.The survey showed that the need for home broadband amongcybercafé users is very high. It is also interesting to note thatbroadband–equipped people use more services than cybercafé users,and 74% of them would score their broadband connection at 8/10 orhigher. This indicates the satisfaction level of broadband users in Egypt.Source: Alcatel-Lucent

communication over the Internet, etc. These appli-cations are very popular with younger people.Considering that, according to 2006 statistics, over50% of the average ESCWA population is under25,1 and the fact that older generations suffer fromcomputer illiteracy, one can see that the youngergeneration represents the primary target in thehousehold segment.With the exception of the GCC countries, theESCWA region is also characterized by low– tomedium–income households with an average of4–5 children per family. Low income is a con-siderable obstacle to accelerating broadbanduptake. The overall result is that residentialbroadband users are quite price–sensitive,and tend to sacrifice quality for affordability.Therefore, basic broadband connections (e.g.,ADSL) are in most cases enough to fulfill theneeds of residential customers in the region.Local communities (especially in rural areas),public institutions and the civil society have spe-cific demands for broadband connectivity. “ITClubs,” Internet cafés and community tele–cen-ters offer Internet access to the public. Inrural areas where it is not possible to use DSLtechnology, wireless backhauling (e.g., by usingWiMAX) represents an interesting alternative.Broadband connectivity in these centers isshared among users who access the Internet tosend and receive e–mails, surf the Web, or useavailable electronic services and on–line enter-tainment facilities. Coupling tele–centers withthe development of community portals, whichcarry community–relevant content, can consid-erably increase interest in accessing the Inter-net among the community’s population, lead-ing to more demand for bandwidth.

IP TelephonyWhile IP telephony services have been available formany years, the increased use of broadbandworldwide has resulted in many operators and serv-ice providers embracing this technology as a wayto safeguard their position in the market. IP teleph-ony can provide an affordable substitute for the tra-ditional public switched telephone network (PSTN)through a broadband connection (figure 1). Userscan make and receive phone calls via an “IPphone”, without even the need for a standard tele-phone line; these calls can either be routed to otherbroadband subscribers, or to the public switchedtelephone network (PSTN). When VoIP and IPtelephony2 are widely deployed, they are also jus-tified for tele-workers, videotelephony and unifiedmessaging.Several needs can lead to the implementationof IP–based telephony:• Differentiation: To provide a service that is

different from the competitors’.• Packaging: To offer data and voice (and

multimedia) services together, as a way to lockin customers.

• New services: Voice VPN, IP Centrex andvideotelephony are examples of services thataddress particular market needs (especially inthe SOHO and small corporate markets), andrequire IP–based telephony.

• Optimization: A VoIP solution for several ter-minals using one broadband data link canreduce deployment and maintenance costs inareas where copper is scarce, on green–fieldsites and in large companies.

VoIP/IP telephony is one of the most request-ed applications in the region because it allows

Chapter 3


ONT

xDSL

PSTN

Session BorderController

Video Edge

ISP

IP Routing

VPN

InternetEdge

Voice

WWW

Video

AggregationNetwork

IP/MPLS

RegionalCenter BRAS

DSLAM/FTTN

FTTH

ResidentialGateway

VoIP Access Gateway

Access Network

Carrier-Grade Services Delivery Environment

UserProfile

UserLocation

Session StateSoftswitch

Figure 1: VoIP service delivery options


1 Source: World PopulationProspects, the 2004 Revision.

2 Technically speaking, thereare some differences betweenIP telephony and Voice overIP (VoIP); but for the sake ofsimplicity, we will use thesetwo terms interchangeablyin this report.

Television over the InternetTelevision over the Internet, or IP TV (figure 3),has several advantages for end users. It providestwo–way, interactive capabilities not offered bytraditional TV broadcasting. Interactive televi-sion allows data to be sent back to the TV serv-ice provider, which can be used in many ways– such as altering what one is watching (e.g.,switching camera angles or changing commen-tators on a sporting event), requesting moreinformation (e.g., interactive news or advertis-ing), or providing statistics and feedback.IP TV supports point–to–point distribution,allowing each viewer to watch individual broad-cast streams (Video on Demand). This enablesstream control (pause, wind/rewind, etc.) and abroad selection of programming, much like theWeb. Video on Demand can also emulate digitalvideo recorders, and may also allow the down-

international phone calls to be made at afford-able rates, sometimes even for free. Whenusing computer–to–computer communica-tions, people tend also to use Webcams tomake video calls. VoIP works better on broad-band connections, leading to the “double–play”service which enables customers to use theirconnection for both Internet access (data) andvoice calls.The imbalance between international incom-ing and outgoing telephone traffic in manydeveloping countries (figure 2) can be seen asan opportunity for IP telephony. Operators cantake advantage of a more balanced traffic dis-tribution through the increase in outgoingtraffic due to reduced–cost IP communications.Unfortunately, this approach is not accepted inmany of the ESCWA countries, especially inlow– to middle–income countries, as govern-ments and operators still depend on the differ-ence between the incoming and outgoing traf-fic to secure revenues in hard currency. InYemen, Syria, and Lebanon, licenses deliveredto data and Internet service providers explic-itly prohibit the use of VoIP. In Jordan, on theother hand, the “new integrated licensingregime gives ISPs the right to offer voice serv-ices for national and international calls.”3

Several ISPs, such as Batelco Jordan andNEXT, have started investing in internationalVoIP calling cards; and “Jordan Telecom alsolaunched its “double–play” service under thename LiveBox through its subsidiary ISP,Wanadoo.”4 Finally, in Syria, the governmenthas awarded contacts for VoIP traffic termina-tion with the aim of reducing the amount of ille-gal international traffic.



0

200

Syria Palestine Oman Jordan EgyptQatar

400

600

800

1,000

1,200

1,400

International incoming telephone traffic (minutes - in millions) International outgoing telephone traffic (minutes - in millions)

Figure 2: International telephone traffic in selected ESCWA countries, 2004

SSoouurrccee:: ITU World Telecommunication Indicators

3 Source: “Jordan Internet &Datacomm Landscape Report,”Arab Advisors Group, 2006.

4 Ibid.

Creator

- create own channel- share personal content- with family, friends, community, customers...

watch TV with your buddies- share emotions- communicate with your buddies

Director

participant

commentator

TVSpectator

3. P

erso

nal c

onte

ntCo

nten

t por

tal

2. Communities

Reality TV, docusoap

1. CommunicationSMS2TV

Figure 3: The different stages of the IP television consumer


load of programs to a hard disk for local control.Traditionally, TV has been delivered via acable or antenna (or via satellite). Telephonyuses another cable, and the Internet has beenavailable on either of them. Now both cableoperators and telecommunications operatorsare offering all three services on a single cable,which is more cost–effective. Triple Play is theexpression used by operators to describe apackage of telephony, data and TV/video overa single connection.Broadband access is an opportunity for a com-munity, like a municipality, or a group of peo-ple sharing the same interest, to set up its ownchannel. The digital nature of multimedia con-tent, and the availability of computing equip-ment and video manipulation software make thebroadcast of special–interest programs easy toachieve. The broadband subscriber can takeadvantage of the connection to access not onlynational channels, but also local, relevant con-tent. As the cost is significantly lowered, Inter-net can then offer new services that tradition-al television is not able to offer.Unlike double play, the market in the ESCWAcountries is not mature enough for the introduc-tion of Triple Play services, which are beingmarketed now in many developed countries asthe converged telecommunication broadbandservice of the future. “Official” TV broadcastingis still subject to strict regulation in several coun-tries in the region. Nevertheless, households canaccess many satellite TV programs by installingindividual receivers.

Business broadband market segmentThe business segment includes SMEs and largecorporations. SMEs have needs and demandpatterns more or less similar to residentialusers. Services include corporate e–mail sys-tems, VPN, Internet telephony and, to a less-er extent, videoconferencing. DSL is likely tobe the most attractive option for SME customers.Large corporations have different needs, astheir requirements also include large enter-prise networks, videoconferencing, andon–line administrative and financial transac-tions. These services usually require largerbandwidths. Besides DSL, other broadbandtechnologies can be used, including leasedlines and satellite links.

Virtual private networksA virtual private network (VPN) is a private datanetwork that makes use of the public telecom-munication infrastructure, maintaining privacythrough the use of a tunneling protocol and secu-rity procedures (figure 4). A VPN can be contrast-ed with a system of owned or leased lines thatcan only be used by one company. The main pur-pose of a VPN is to give the company the samecapabilities as private leased lines at a muchlower cost, by using the shared public infrastruc-ture (which should have enough capacity).Phone companies have provided private sharedresources for voice messages for over a decade.A virtual private network makes it possible tohave the same protected sharing of publicresources for data. Companies today often useVPNs for both extranets and wide–areaintranets.A well–designed VPN can provide immense ben-efits to an organization. It can:• extend geographic connectivity;• improve security where data lines have not

been encrypted;• reduce operational costs versus traditional WAN;• reduce transit time and transportation costs

for remote users;• simplify network topology in certain

scenarios;• provide global networking opportunities;• provide telecommuter support;• provide broadband networking compatibility;• provide faster return on investment than

traditional carrier leased/owned WAN lines;• deliver a good economy of scale.

VPN services over IP or indeed MPLS(Multi–Protocol Label Switching) networks thatinclude dedicated and shared leased lines areoffered by data service providers in most of theESCWA countries. This was the result of the

Chapter 3


VPNGateway

VPNGateway

VPNGateway

VPNGateway

MCS

CorporateHQ

24 x 7 Fault Detection,Fault Correction &

Reporting

*ManagementCentre Software

ResilientLoad Balanced

Solutions

VPN Client/Laptop

User

BranchOffice

The Internet

ExtranetPartners

Remote DataCentre

Figure 4: Virtual private network infrastructure

SSoouurrccee:: Community Internet UK

6. Operating on or near the cutting edge of tech-nology, and staying there as technologychanges (but remembering that the funda-mentals of commerce remain indifferent totechnology).

7. Setting up an organization of sufficient alert-ness and agility to respond quickly to anychanges in the economic, social and physi-cal environment.

8. Providing an attractive Website. The tastefuluse of color, graphics, animation, photo-graphs, fonts, and white–space percentagemay aid success in this respect.

9. Streamlining business processes, possiblythrough re–engineering and informationtechnologies.

Naturally, the e–commerce vendor must alsoperform such mundane tasks as being truthfulabout its product and its availability; shippingreliably; and handling complaints promptly andeffectively. A unique property of the Internetenvironment is that individual customers haveaccess to far more information about the sell-er than they would find in a “bricks–and–mor-tar” situation.E–commerce is developing fairly well in sever-al ESCWA countries (e.g., the GCC countries,Jordan and Lebanon), while other countries arejust starting. Many companies provide e–com-merce selling facilities through their Websitesto on–line customers. However some companies“are still not motivated to launch a fully integrat-ed Web site for e–commerce transactions due toInternet security issues in addition to the cur-rent deteriorating economic situation.”5 More-over, e–payment still faces the challenge of pub-lic lack of awareness in a cash–based society.

Public broadband market segmentThe public market segment is mainly concernedwith services that are delivered to the public.Most of those services, in developing countries,are initiated or directly provided by governments,which are considered both the major promotersand the biggest clients of ICT applications.As a client, a government has similar demandpatterns to the business segment. In particular,office automation is considered one of theimportant drivers for high traffic between mul-tiple locations, contributing to the increase inbroadband usage.As a promoter, government has a very impor-tant role to play, building “government net-works”, and encouraging ICT applications suchas e–education, e–health, e–government, ande–payment, which are key factors in creatingnew demand for on–line public services andexpanding broadband usage.

major investment in core IP/MPLS public datanetworks that replaced legacy X.25 and FrameRelay networks.

E–business and e–commerceElectronic business methods enable companiesto link their internal and external data process-ing systems more efficiently and flexibly, to workmore closely with suppliers and partners, andto better satisfy the needs and expectations oftheir customers.E–business (especially B2B) is much morethan just e–commerce. It involves businessprocesses spanning the entire value chain: elec-tronic purchasing and supply chain manage-ment; processing orders electronically; handlingcustomer service; and cooperating with busi-ness partners. Special technical standards fore–business facilitate the exchange of databetween companies. E–business software solu-tions allow the integration of intra– andinter–firm business processes. E–business canbe conducted using the Internet, intranets,extranets, or any combination thereof. Broad-band connections are often used to allowenough transaction bandwidth.An e–commerce company usually survives notjust by its products, but also by having awell–organized business structure and a secure,well–designed Website. Important success fac-tors include:1. Providing an easy and secure way for cus-

tomers to order. Credit cards are the mostpopular means of sending payments on theInternet, accounting for 90% of on–line pur-chases. Card numbers are transferredsecurely between the customer and mer-chant through independent payment gateways.

2. Providing reliability and security. Parallelservers, hardware redundancy, fail–safetechnology, information encryption, andfirewalls can enhance this requirement.

3. Providing a 360–degree view of the customerrelationship, i.e. ensuring that all employees,suppliers, and partners have a completeview, and the same view, of the customer.However, customers may not appreciate the“Big Brother” experience.

4. Constructing a commercially sound businessmodel. If this key success factor had appearedin textbooks in 2000, many of the dot–comsmight not have gone into bankruptcy.

5. Engineering an electronic value chain whichfocuses on a “limited” number of core com-petencies –– the opposite of a one–stopshop. (Electronic stores can appear eitherspecialist or generalist if properly pro-grammed.)



5 Source: “Lebanon Internet& Datacomm LandscapeReport,” Arab AdvisorsGroup, 2005.

E–governmentThe major objective of any e–governmentproject is to increase the efficiency of publicservices delivered to citizens. Typically, this isdone by converting as much information aspossible into electronic format so that it canbe retrieved by anyone using the Internet. Suchprojects target three audiences: citizens surf-ing public Internet sites; enterprises using theadministration’s extranet services; and employ-ees connected to the administration’s intranet.From the citizen’s viewpoint, e–government pro-vides free on–line information and administra-tive form processing services, such as incometax returns, local authority services, news,and social security information. For example,citizens would like to be able to renew their driv-ers’ licenses without lining up at the licensingauthority’s office. Similarly, it would be very con-venient if people could obtain visas orhealth–related information when planning avacation. Enterprises, on the other hand, areinterested in on–line administrative proce-dures, such as legal status, VAT filing, account-ing, new worker declarations, customs decla-rations and nationwide statistics. They are alsointerested in Web–based commerce with pub-lic administrations, i.e. Public Private Partner-ships (PPP). The key gains here are the automa-tion of administrative procedures, and theconsequent savings on administration andaccounting costs. Savings can be achieved notonly by the enterprise, but also by the admin-istration in terms of enhanced staff productiv-ity, and by cutting the cost of tax collection. Bothbenefit enterprise competitiveness.The key attraction from an administration’s per-spective is obtaining access to unified intranetcollaborative services. Unified procedures andworkflows (human resources, purchasing, pub-lic service support, etc.) throughout a distrib-uted virtual organization enable civil servantsto respond more efficiently to people’s requests,without the need to have a server on every site.Administrations differ from enterprises in thenumbers of users who need to be connected.Large administrations often have hundreds ofthousands of employees, and are connected totens of millions of potential users. Also, they aredistributed nationwide, and even abroadthrough their embassies. All the citizens in acountry want access to their services. Conse-quently, it is necessary to deploy multipleaccess solutions as well as measures to narrowthe digital divide. Administrations, but also cit-izens, are also sensitive about the security of pri-vate and public information databases, such aselectronic medical records. They are thereforekeen to respect privacy legislation, and protect

public services against hacker attacks in anenvironment that is open to the public.In brief, e–government supporting collaborativecommunication tools should meet three maincriteria: scalability, while preserving the mul-tiplicity of services; flexibility with respect to themethod of access and geographical location; anda high level of security for communication serv-ices, information databases and transactions.Most of the ESCWA countries have alreadylaunched some sort of e–government initiativesor projects, even if some of them are still in theinitial stages. These projects are fairly advancedin the GCC countries as well as in Jordan. TheDubai government was an e–government pio-neer. A recent study placed Dubai’s availabili-ty of basic public services on–line at 76.4%. Onlythree European countries had better availabil-ity in late 2003.6

E–educationEducational institutions, companies and govern-ments are faced with growing challenges to pro-vide improved access to education, enablelifelong learning, and deliver educational serv-ices in new ways.As we move towards a knowledge–based soci-ety, educators worldwide face a mountingseries of challenges. The first of these is to pro-vide access to knowledge to every member ofsociety, children and adults alike.Delivering educational services is yet anotherchallenge. With larger classroom sizes, teach-ers are finding it increasingly difficult to offerthe individualized attention that students need.Moreover, student populations are often locat-ed in areas that are far from teaching facilities.Broadband technologies can help educatorsmeet these challenges, by providing innovative,cost–effective systems for delivering educa-tional services. With shrinking budgets, a com-mon problem for many school districts and uni-versities, these solutions can help teachers andadministrators do more with less.Broadband technology enhances educationalservice delivery by offering increased flexibil-ity, easy communications, and immediateaccess to global resources. Broadband is a keydriver for the evolution to a multimediaworld, which integrates voice, images, dataand TV in a single connection; it can thereforereduce the disparity in access to knowledge.This gap, often called the digital divide, candeepen a nation’s economic and social rifts,and lead to the virtual exclusion of certain seg-ments of society. By contrast, providing uni-versal access to education is a way of creat-ing a cohesive, inclusive society that is focusedon development.

Chapter 3


6 Source: Madar Research,2003. The study was basedon a methodology adoptedby the European Commis-sion for evaluating the levelof on–line availability of EUbasic public services.

wireless. Wireline services include mainlyxDSL–based access, traditional leased lines offer-ings, access by fiber optics to the building (FTTB)or to the home (FTTH), and access via cablemodem technology. Wireless services include theuse of the wireless local loop (WLL) for data, WiFiand WiMAX technologies,third–generation (3G)mobile, and satellites. The selection of the bestaccess technology depends on several factors, likedemand assessment, cost–effectiveness, availabil-ity of resources (especially the frequency spectrumfor wireless technologies), and geography.In this chapter, we will analyze some of theaccess–technology supply patterns in theESCWA region.

Wireline servicesDSL is by far the most common technology inuse in almost all of the ESCWA countries; theexception is in Lebanon, where the majoroffering is wireless–based, although plans wereset to introduce DSL during 2006 (See nextchapter). DSL is characterized by its relativeaffordability and ease of deployment, especial-ly when “copper” is sufficiently available in theaccess network. Operators and service providersin the region have made use of thealready–deployed copper plant of the publicswitched telephone network (PSTN). While thePSTN provides relatively good coverage ofurban (and to some extent suburban) areas, DSLis sometimes not available in rural areas (e.g.,in Syria and Yemen.) The quality of the copperplant in terms of loop length (in the range of 3–5km) and cable characteristics (cable diameter,buried vs. suspended cables, etc.) is crucial, asit affects the decision to use DSL technology ina particular area.ADSL is the most common “flavor” of the xDSLfamily in the region, with available downloadspeeds ranging from 256 kbit/s (128 kbit/s is some-

Networks provide an ideal medium for sharinginformation. The notion of networking, howev-er, is much broader than telecoms alone, andincludes human interactions. In this broadersense, networks have a tremendous value foreducation. Broadband Internet provides instan-taneous, global access to educational resources.Inter–campus networks provide course– anddiscipline–specific links and information to aninternational user base for research and teach-ing. Virtual universities and classrooms createopportunities for collaborative learning. Theavailability of e–mail and discussion groupsincreases student/teacher interactions.E–education takes advantage of broadband toimprove ways of educating children and others.With distance learning, educators can addressdifferent audiences and diversify their teachingstyles to include interactive lessons, face–to–faceteaching, on–line tutorials, etc. Leading profes-sors can have vastly greater impact by reach-ing a much broader audience. Computers andnetworks make it easier to design and runcourses that emphasize “learning by doing,”which is more difficult in traditional classroomenvironments. Teachers can free up class-room time by using the network to collect home-work and perform other routine functions.E–education is also an excellent means ofdelivering individualized instruction on demandfor lifelong learners, although this market israther limited.

E–healthE–health refers to all forms of electronic health-care delivered over the Internet, ranging fromhospital information systems, to information-al, educational and commercial products, todirect services offered by professionals,non–professionals, businesses or consumersthemselves (figure 5). E–health includes a widevariety of the clinical activities that have tradi-tionally characterized tele–health, but deliveredthrough the Internet.Broadband enables new ways of working andhelps improve the quality of care in connectedareas. Experience and knowledge can be moreeasily shared, and collaboration is enhanced.Remote populations can access medical expert-ise from anywhere with tele–expertise andtele–diagnostics. In emergency or disaster sit-uations, a broadband network can speed up thedeployment of medical teams and enable bet-ter coordination.

Supply of services and productsBroadband services and products delivered to thecustomer are based on several access technologies,which can be broadly classified into wireline and



Systems for healthProfessionals

E-health Applications

Innovative voice & data solutionsfor hospital campuses

Transfer and archiving of medicaldigital images

Access to patients’ files from anywhere

Collaborative work

RFID systems for bedside medicationand Supply Chain management

Tele-monitoring

Tele-consultation

Patient education

Patient’s comfort withinthe hospital

Triage Contact Centers

Innovative access to healthrelated information

Emergency situationssolutions

Systems for patientsSystems for citizens

Figure 5: E–health applications


times available) to 2 Mbit/s. Higher speeds (up to8 Mbit/s or even more) can be also available insome cases, especially in the GCC countries.DSL coverage in the ESCWA region has reachedan acceptable level in many countries, especial-ly GCC countries. Jordan Telecom’s ADSL cov-erage for example is estimated at 99% of theoperator’s network, and about 92% of thepopulation.7

Internet leased lines are high–end offeringsaimed at major enterprises that havehigh–capacity synchronous Internet data trans-fer requirements, or wish to host their ownWebsite with a fixed IP address. Leased linesin the region are characterized by very high(sometimes prohibitive) prices; but tariff reduc-

tions have been applied in many countries overthe past few years. It is interesting to note thattariff reduction has not stimulated moredemand, nor has the introduction of ADSLslowed down demand. Clearly, Internet leasedlines are a niche offering for major corporatecustomers.

Cable modem infrastructure is not common inthe ESCWA countries, and the supply of Inter-net access facilities via cable modem isinsignificant or even nonexistent, as cableoperators are still focusing on building cover-age for their core business of satellite TV dis-tribution. There are, however, plans to intro-duce data and Internet services via cable in thefuture. For example, in Egypt’s Broadband

Chapter 3


ADSL supply patterns in Oman

The total ADSL subscriber base in Oman is11,500, with an additional 231 leased linesubscribers. With 2.34 million residents inthe country, the potential for growth ofservices is enormous.

Residential SectorWith around 169,400 students in Omanbeyond the secondary school educationstage, and an average of five children perfamily, the residential market ischaracterized by low–income–brackethouseholds with children. The market inOman is relatively immature comparedwith other GCC countries, and much of thedevelopment of Internet access has beencharacterized by Omantel’s low–cost post–and pre–paid dial–up Internet accessservices. The advent of ADSL broadband in2004 has however transformed the market,and Omantel has now sold its entireinstalled base of 11,500 ADSL connections,mainly to residential customers.

The current residential ADSL broadbandpackage costs OMR 12,000 per month (US$32.00), with very low–cost downloadcharges at OMR 1,000 per GB (US$ 2.60).Indeed, take–up would have been muchhigher if capacity had been available awayfrom the main urban population centers inthe capital and major city areas. Omantelis currently procuring a large base of ADSLinfrastructure, and is confident of sellingall new capacity as it becomes available.

Corporate SectorWith around 20,000 active corporate entitiesregistered in Oman as businesses, the growthpotential for high–speed (broadband)Internet access is very high. TraditionalInternet access in Oman’s SME communitywas characterized by a narrowband link andone company e–mail ID. ADSL is nowchanging this, with a focus on

the imperative for corporate domainnames and multiple e–mail IDs, one foreach company employee. Following therequirement to stay connected to theworld as a global village, there is an acutedrive towards the latest ICT trends and useof the most up–to–date technology.In addition to ADSL connectivity, there is ademand for additional business applicationsuites and connectivity types, which willcontinue to drive ADSL penetration.Examples include on–line storage/disasterrecovery; on–line collaboration/portals;application hosting; remote LANconnectivity and management; etc.

Government SectorThe government initiative to promoteelectronic services to all people in Oman

encouraged Omantel to provide,implement and deploy broadbandservices in most areas. The OmaniGovernment employs 100,000 staffspread over 43 ministries and other publicorganizations, although almost 70% ofthese employees are involved inhealthcare and education. TheGovernment Convergent Network willconnect all government organizationsincluding schools and hospitals, and serveits stakeholders’ needs. The network isbased on IP/MPLS technology that catersfor bandwidth on demand, and creates avirtual private network for governmentorganizations. Omantel’s MPLS network ispositioned as the enterprise/governmentsolution to complement its SME–orientedADSL offerings.

Korea

Internet (*) Dial-up Penetration (2003)in% of total population

DSL Penetration (2003)in% of total Fixed Lines

Canada

Germany

Italy

Spain

France

UAE

Bahrain

Qatar

Saudi Arabia

Oman

55.0%

46.0%

36.8%

35.5%

32.9%

31.4%

43.7%

23.4%

8.4%

8.0%

6.6%

6.4%

9.6%

6.5%

4.4%

3.0%

2.1%

(*) The figures reflect the number of Internet dial-up users (rather than the number of accounts)

Korea

Canada

Spain

Germany

Italy

France

Bahrain

Qatar

UAE

Saudi Arabia

Oman

1.1%

1.0%

0.8%

0.3%

0.0%

Source: Informa Fixed Line Database; ITU Database; Arab Advisors Group; Booz Allen analysis

Local communities and special needs organizations

In a move towards promoting the advancement of Digital Oman and with a view toserving the needy, Omantel has strived to offer technology access in a timely mannerand under special rating/charging plans to local communities and special/voluntaryorganizations.

7 Source: “Jordan Internet &Datacomm LandscapeReport,” Arab AdvisorsGroup, 2006.

Strategy, a plan to introduce cable modems forthe delivery of advanced integrated services tohouseholds as a pilot project is in place for themedium term.8

Fiber to the building/house/area (FTTx) is alsoa mostly nonexistent service in the ESCWAregion, whereas it is witnessing an increasinginterest in the developed world (e.g., Japan).9

This service, however, is interesting whendeployed to serve special zones (like high–techparks), huge corporate buildings and sometimesgreenfield sites where copper is not available.Trials of FTTx are planned in some countries inthe region, including the UAE, Egypt and Syria.

Wireless servicesWireless local loops (WLL) are mainly used inlow–density rural and remote areas. Beside itsprimary use for last–mile voice delivery, WLL canalso be used for providing data services. CDMA2000 WLL technology has been deployed for thispurpose in almost all ESCWA countries, but dueto its limited bit rate (typically 153 kbit/s), it canhardly be considered as a broadband offering.



WiFi in the Middle East

BahrainBatelco launched WiFi services in April2004 with initial installations at BahrainInternational Airport, Costa Coffee shops inSeef and Adliya, and the Crown Plaza andGulf Hotel lounges. In February 2005Batelco launched WiFi at McDonaldsbranches in Saar, Sakir and Bab–El–Bahrain.Further WiFi services are plannedcountrywide as part of Batelco’s“Broadband Bahrain” program. Services areaccessible via pre–paid cards.

JordanThe TRC relaxed regulations on WiFi inOctober 2003, removing fees forinternal corporate use. However,operators offering service to the publicneed to be registered with the TRC, andare required to pay an annual fee of US$22 per access point. In February 2005 JTlaunched national and internationalWiFi services in conjunction withWanadoo from France Telecom. Othersites are planned.

KuwaitMTC–Vodafone provides post–paid accessto a number of WiFi hotspots powered byZajil Telecom throughout Kuwait. Zajil hadover 50 hotspots in early 2005.

LebanonIn late 2002 Globalcom Data Services, adata company, contracted Alcatel-Lucent tosupply a nationwide LMDS access solutionfor its data backbone network. The accessnetwork operates in the 26 GHz frequencyband. Three ISPs, Cyberia, IDM and Terranet,provide broadband services in partnershipwith Globalcom Data Services.Another data company, Cedarcom,provides data services to Internet ServiceProviders (ISP)s, Application ServiceProviders (ASP)s, banks, universities, largeorganizations and small–to–mediumenterprises. It received its license in April1997, which was renewed in September2003. However, it did not commencewireless services until mid–2004. Its coreMPLS network was built using Ciscoequipment, and the access networkconsists of point–to–multipoint links builtusing World Interoperability for MicrowaveAccess (WiMAX) equipment from ApertoNetworks. The network operates in thelicensed 2.6 GHz, 3.5 GHz and 7.5 GHzspectrum bands.Fiberlink Networks, an ISP, provides wirelessservices using Cedarcom’s network. As ofOctober 2004 IDM offered WiFi access with75 hotspot locations. Hotspots have alsobeen installed in the Intercontinental,

Phoenicia and Le Vendome Hotels, coffee houses such as Starbucks andTribeca, Beirut International airport, and inthe Virgin Megastore in Beirut. IDM plansto establish additional hotspots.

OmanIn December 2004 the Ministry ofEducation announced that it had deployeda Cisco wireless solution in over 200schools that is accessible by 100,000students.Publicly accessible WiFi hotspots arelimited to a small number of hotels.

United Arab EmiratesECompany provides wireless broadbandaccess in select areas utilizing MultimediaWireless System technology in the 3.4 GHzrange.ECompany introduced WiFi, branded iZone,in October 2003 with hotspots in selectedpublic locations. By early 2004 there werearound 40 access points, and the companyplanned to have 100 hotspots by the end of2004.In July 2004 WiFi was introduced on theEmirates airlineSource: “Telecoms & Broadband – Africa & Middle East,”Paul Budde Communication, Telecommunications andInformation Highways, e-newsletter, 6 June 2005

Bahrain

Egypt

Iraq

Jordan

Kuwait

Lebanon

Oman

Palestine

Qatar

Saudi Arabia

Syria

UAE

Yemen

Country Requirement for WiMAXprovision

Entity that conductedWiMAX trials

Spectrum plan under study

Regulations under study

Local services license

Sub-contracted by IPTC

Individual License

Ministry needs to retrievethe 3.5 GHz band

No regulations


No detailed regulations

No detailed regulations

Licensed datacomm operators

Licensed mobile operators


No set policy for WiMAX


No testing conducted

MCIT

To be awarded

Wireless Telecommunications Services

Batelco Jordan

Fastlink

Jordan Telecom (Pre-WiMAX)

No testing

GlobalComm (Pre-WiMAX)

OmanTel provided WAS networkin 2.4 GHz and 5.8 Ghz

No testing

Qtel has WLL productthat is WiMAX ready

STC, ITC, Bayanat

Etihad Etisalat(to connect its network)

N/A

Demonstration at Gitex

Public Telecommunication Corporationto be in charge of operating WiMAX

Table 1: WiMAX trials in the ESCWA countries

SSoouurrccee:: “WiMAX in the Arab World: Current status and regulations,” Arab Advisors Group, 20068 Source: Egypt Case Study, ESCWA, 2006.9 Japan has recently announced its objective to connect 30 million

FTTx subscribers by 2010.

WiFi is mainly intended to connect mobiledevices (laptops, PDAs, etc.) to the Internet. Adistinction should be made, however, betweenindoor WiFi (for private use) and operator–deployed public WiFi hotspots.In most ESCWA countries, outdoor WiFihotspots are now being promoted. The numberof WiFi hotspots now exceeds 100 in Egypt,10

and 12 in Oman.11 WiFi is also commerciallyavailable in Bahrain, Kuwait, UAE and otherGCC countries.12

WiMAX is a relatively new technology forbroadband access. It can be deployed inurban and suburban areas to provide fixed,nomadic (i.e., on the pause) and/or mobilebroadband access to the Internet. There is

greater potential for WiMAX deployment inareas where copper is of limited availabilityor poor quality.Deployment of WiMAX should be associated withan appropriate legal framework, focusing notonly on frequency allocation, but also on cover-age (including universal access) and competitionregulation. These considerations are mostly stillunder study in the ESCWA countries. Experi-ences from the developing world (e.g., France)could be studied to achieve the best results.Trials of WiMAX have taken place in severalESCWA countries (see table 1). In Egypt, sev-eral pilot schemes are under way, especially atthe Smart Village. A successful result for thispilot is expected to drive, in a later phase, awider deployment of this technology to residen-

Chapter 3


Attribution of WiMAX licenses in France

At the beginning of the 21st century, thedevelopment of wireless technologies for datanetworks pushed the French government to backthe emergence of the wireless local loop (WLL) inmetropolitan areas. However, even if severallicenses have been issued at the national level forfixed wireless access, almost every operatordeclined to propose the service because thetechnology was not mature and standardized, andbecause the market was not significant at thattime. Only one company – IFW, part of the Illiadgroup – owns a national WLL license from this firstattempt.The emergence of WiMAX – a wireless broadbandtechnology – and the interest of individuals andbusinesses in mobile communications have led to anew start for WLL. These arguments pushed theFrench Government to start a new attributionprocess for WiMAX licenses in 2005. The previousexperience and the attribution of UMTS/3G(Universal Mobile Telecommunications System)licenses enabled the building of a new strategy inorder to comply with the government’s objective.The following explains the legal framework linked toradio frequency attribution, definition of the licenses,and the attribution process.

Legal frameworkIn France, the telecommunication sector is governedby the Post and Electronic Communication Act,which is mainly a transposition of European Uniondirectives. The Post and Electronic CommunicationRegulation Authority (ARCEP) is responsible for lawenforcement in this area.The main objectives of the law are to increase thecoverage of different communication systems,and toencourage competition at different stages of thetelecommunication value chain – core network,aggregation network,and access methods.This policyhas delivered good results in terms of the affordabilityof offers,and increased network coverage via e.g.DSL,through local loop unbundling.The parliament has also approved a bill whichenables administrative organizations – regions,departments and municipalities – to hold a

telecommunications license. This is a tool thathelps define telecommunication policy for local government – for instance, a rural municipality candeploy a broadband network if no company hasdone so. However, local government cannot derive acompetitive advantage over public or privatecompanies under fair competition rules.

License definitionThe regulatory authority decided in 2005 to issue newWLL licenses.It has identified the 3.4/3.6 GHz band,which is the norm for nomadic WiMAX across Europe,with 15 MHz bandwidth per license.It enables onlynomadic usage and not mobility,meaning that nohandover between cells will be allowed.To comply with the rules previously defined, theregulation authority will analyze applications on aregional basis to increase the number of operatorsand local governments involved. Two licenses will beissued for each region. The operators are allowed toresell their license to a third–party company ororganization for a part or all of the territory coveredby the license.

Attribution processAfter the call for tender in August 2005, theregulation authority received 175 letters of intent by14 October 2005. This step allowed players seekingWireless Local Loop authorization the time toexamine options for sharing their frequency usewith other parties.In early January, at the end of this phase, theauthority examined the applications to evaluate thepotential scarcity of frequencies region by region. On10 January 2006, a review of the 45 applicationsreceived showed that there was a scarcity offrequencies in the 22 metropolitan regions, andGuyana and Mayotte, where formal procedures hadbeen launched.The regulatory framework, as seen previously, isfocused on service coverage and fair competition.Therefore a simple auction system was notappropriate for choosing successful applicants. Theauthority identified three criteria for assessing the quality of the applications:

• Broadband coverage of the territory;• Ability to encourage broadband competition;• Fees payable to the government.

The selected candidates committed to extensivedeployments, which became obligatory in theauthorizations. The obligations will involvedeployments, starting in June 2008, at more than3,500 sites. The deployment commitmentparticularly targets zones not covered by DSL –referred to as broadband white spots. Moreover,some of the successful candidates intend to providewholesale frequency access offers on their network.Some have no retail plans, and may only providewholesale offers.In 2006,the French government will collect a total of 125million Euros from candidates for the frequencyauthorizations. In addition,the government will collectabout 1.6 million Euros annually in fees from operatorsfor the use of WLL frequencies.However,there is amarked difference in the fees proposed for differentregions such as Paris and Champagne.Following the industry trend, 14 regional councilsentered the WLL frequency allocation procedure, andsix were selected.The selected regional councilprojects involve large deployments – tocounter–balance their symbolic fee payment of 1 Euro– which are well coordinated with those of localauthorities within their regions. It will now be up tothe regional councils either to provide frequencies tothe local authorities designated in their frequencyapplications, or to operators for the provision ofservices in those local authority areas.

FutureThe frequency allocation process for nomadic WiMAXhas been a success.The authority has announced thatanother process will be started for mobile WiMAX(802.16e), at a lower frequency such as 2.5 GHz or 700MHz.The government has recently announced theend of analog television broadcast in 2012, and thefreed–up frequencies – 50 to 300 MHz – could beused for mobile broadband wireless access.

Source: ARCEP; http://www.arcep.fr/index.php?id=8650&L=0


11 Source: Oman Case Study,ESCWA, 2006.

12 Ibid.

ability to serve rural areas, while PON ismainly reserved for high–bandwidth applica-tions. Part (b) shows how 3G mobile networkscould be positioned relative to WiMAX: 3G serv-ices are mainly used in urban (and some sub-urban) areas. There is therefore a certain com-plementarity between WiMAX and 3G, eventhough licenses for 3G operation anywhere inthe world tend to be much more expensive.

Case studies: examples of significant broad-band applications in the ESCWA regionIn this section, several case studies illustratingapplications requiring broadband connectivity

tial users and businesses.13 Another WiMAXpilot project is now under negotiation to bedeployed in Greater Damascus, Syria.14

Internet by satellite, although still ratherexpensive, provides an interesting alternative toDSL especially when combined with satellite TVreceivers, which are abundant in the ESCWAregion. Residential Internet by satellite is main-ly used in the downlink, while the uplink (lessbandwidth–demanding) is provided by a classicdial–up (or even DSL) connection.VSATs (Very Small Aperture Terminals) aremore commonly used in business–to–businesstransactions (but also in remote regions), pro-viding high–speed, two–way data transfer.Many ISPs in the region also use satellite con-nectivity as a backup (or sometimes an alterna-tive) to traditional international cable systems.

Mobile communication networks can also beused to provide data services. All ESCWA coun-tries already have second–generation (2G)mobile networks installed. Customer needs forhigher bandwidth have resulted in most oper-ators upgrading their 2G networks by deploy-ing services like GPRS and EDGE. Certain oper-ators, however, have chosen to deploy third–gen-eration (3G) networks based on UMTS stan-dards, which provide much greater bandwidth.Figure 6 shows how different mixes of broad-band access technologies can be utilized to bestdeliver services to the end user, based on geo-graphical location and the bandwidth required.Part (a) shows how passive optical networks(PON), DSL, WiMAX, 2G mobile networks,and satellite access are positioned in relationto each other. WiMAX is distinguished by its



Broadband Internet via satellite in Oman

Omantel has taken the decision to introduce broadband Internet viasatellite by expanding the existing VSAT infrastructure at Al–AmeratSatellite Telecommunications Complex. The service will provide Internetfacilities for remote areas where there is no terrestrial networkinfrastructure, and also those areas where ADSL cannot be provided dueto its technical limitations (i.e. a maximum distance to the servingexchange of about 4 km).

Omantel, in partnership with MCA, has launched its IP VSAT service, toprovide all–digital global connectivity for overseas customers. Thepartnership with MCA for this particular IP–based VSAT service isintended to ensure customer access to reliable and cost–effective service,combined with a high–speed digital network with regional coveragethroughout the Middle East and Africa. The system uses MCA’sproprietary IP solution, and is designed to offer affordable service to smallto large enterprise users covering the Middle East and Africa. The systemsupports a range of communications solutions, including VoIP, video,database, Internet, business services data, Internet access and e–mail.

The IP VSAT terminals provide transmission speeds of up to 360 Mbit/s,making it an attractive solution for a wide range of customers thatspecialize in providing enterprise customers operating in remotelocations with a variety of superior, satellite–based IP, data, and voicesolutions.

Highratedata

Med.ratedata

Voice

Urban Suburb Rural Remote

PON DSL WiMAX 2G SAT WiMAX

Highratedata

Med.ratedata

Voice

Urban Suburb Rural Remote

3G 2G

Figure 6: Recommended mix of broadband access technologies

SSoouurrccee:: Alcatel Telecommunications Review, 3rd Quarter 2006


14 Source: Syrian Telecom.

are given. These case studies span the entireESCWA region, and cover the most significantservices discussed in the previous sections.

The IT Clubs model in Egypt 15

The IT Clubs model offers a communal solu-tion to problems of affordability, accessibility,and awareness. IT Clubs – currently 550 – arean essential component of the country’snational plan to familiarize people with com-puters, and promote ICT awareness regardlessof skills, gender, or income level. The ITClubs model is a public/private sector initia-tive to deliver affordable Internet accessthroughout the country to those who cannotafford PCs. For nominal fees of around LE 1(about US$ 0.15) per hour, and by providinghardware, software, and Internet connec-tions, the government has made IT a daily real-ity for many who previously had little experi-ence of high technology. As an added benefit,local businesses are also welcome to use theIT Clubs.With many centers based in deprived and ruralareas, IT Clubs provide opportunities for thosewith the greatest need. Users receive guidancefrom instructors in each club, as well as train-ing in basic skills such as typing, software appli-cations, and Web design. The governmentprovides all the infrastructure necessary foreach club, including computers, printers,peripherals, Internet access, a network (LAN),and a server. The government is partneringwith Egyptian and international entrepre-neurs to accelerate the rate of expansion ofthese clubs throughout the country.IT Clubs also create job opportunities for uni-versity graduates who can join the “Training ofTrainers” program. Graduates who complete

the program become IT Club trainers, respon-sible for providing courses at a particular ITClub. To reinforce the concept of community ateach club, trainers must live in the same dis-trict as the club they work in, capitalizing ontheir familiarity with the needs and interestsof the local community.Through its continuing commitment to IT Clubs,MCIT is taking the latest technology to thegrass roots of society and, by making IT a partof local communities, is increasing opportunitiesfor all citizens.

Offer from OmanTel to open cybercafés in the countryTo develop a network of cybercafés across thecountry, OmanTel, the incumbent telecommu-nication operator in Oman, launched a specialoffer for entrepreneurs wanting to set up theirown cybercafé. This is a concrete result ofOmanTel’s commitment to provide broad-band access to all, irrespective of income.To achieve maximum coverage and efficiency,OmanTel’s offer combined a significant rebatewith rules to improve the community aspectsof the project.OmanTel provides advice for future cybercaféowners, such as choosing an appropriate loca-tion (on a busy street on the ground floor ifpossible, or in a mall). The authorization toopen a cybercafé is subject to a number ofconditions: the entrepreneur must provide anexhaustive description of the cybercafé,including a layout plan, the number of com-puters and equipment, as well as financialinformation in order to check the sustainabil-ity of the business. Each cybercafé has to besufficiently far from the next to avoid concen-tration, and to encourage coverage ofunserved areas.

Chapter 3


Broadband coverage in Egypt

Although the government is encouraging thespread of ADSL, ISPs are mainly expanding inCairo and Alexandria, which already have thehighest concentration of Egypt’s access ports. ISPsare always reluctant to introduce a loss–makingbusiness in areas that consume more resourcesfor less revenue. Since the cost of a connection is

the same all over Egypt, high demand in the citiesand the fact that rural connections are oftenshared among many low–revenue users discour-age ISPs from expanding beyond the suburbs.Distribution of Ports across Egypt

The Egyptian government is encouraging serviceproviders to aggressively introduce WiFi technology, allowing users to connect wirelessly to theInternet via laptops, PDAs (Personal DigitalAssistants) or mobiles. It hopes that WiFi will oneday replace “free” dial–up Internet service. The technology is relatively new to Egypt, but thenumber of hotspots is increasing every day inpopular locations such as bookstores, hotels, air-ports and cafés.

A WiMAX field trial was deployed at the SmartVillage to investigate the technology, its application,

and the viability of the WiMAX business model. Itprovided valuable information on how to structurea regulatory framework to encourage widespreaddeployment of the technology, especially as anoptimum solution for introducing broadbandservices in rural areas and new satellite cities,where the infrastructure is less developed thanin urban areas.

Traditionally used in business–to–businesstransactions, VSAT provides high–speed,two–way satellite–based data transfer for medi-um to large companies, banks, commercial insti-tutions and government agencies, as well asISPs looking for a fast, economic and reliablealternative to traditional land–based systems.SAT technology, meanwhile, is already deployedin Egypt by some petroleum companies, theMinistry of Education, and others.

64%

Cairo

11%

Delta

11%

Alexandria& Matrouh

8%UpperEgypt

6%Canal - Sinai

& Red Sea

0

10

20

30

40

50

60

70

80

Distribution of ports across Egypt

15 Source: “Building DigitalBridges: Egypt’s Vision ofthe Information Society,”Ministry of Communi-cations and InformationTechnology (MCIT), Egypt,2006.

sitive traffic such as voice, video and Voice overIP, and non–delay sensitive data, such as e–mailand Web browsing. Tariffs are listed in table 3.

E–commerce players in Lebanon 16

E–commerce–enabled Web pages are widelyused by Lebanese companies and institutions.In fact, e–commerce users in Lebanon includemany businesses in a wide range of retail (B2C)and business–to–business categories.E–commerce solutions and applications areoffered to most of the B2C companies throughNetCommerce S.A.L (www.netcommerce.com.lb), which is managed by Inconet Data Management (IDM), Credit Libanais Bank, andFransabank.NetCommerce offers companies e–commercesolutions to help them expand their businesseson–line. The products and services tradedthrough the Internet are managed in real timeusing a secure payment gateway. Purchases aresettled by Visa and Mastercard. Transactions areauthenticated and authorized using 128–bitSSL (Secure Socket Layer) encryption technol-ogy from VeriSign. NetCommerce also pro-vides detailed and summary transaction reports,as well as financial follow–up. Furthermore, Net-Commerce has strategic alliances with leadinglogistics firms to ensure the delivery of orderedproducts. NetCommerce also registers the com-pany’s site with search engines and shoppingdirectories like Yahoo! Shopping. It also links thecompany’s site to related local, regional andinternational sites.

B2B e–business with Internet: tejari.comTejari (www.tejari.com) is a B2B marketplacethat allows companies to buy and sell goods andservices on–line. Through Tejari, buyers canfind, compare and procure products and serv-ices from the familiarity and convenience oftheir desktop Internet browser. Suppliers canlist their products and services and sell themthrough on–line catalogs or auctions.Operational since June 2000, Tejari has creat-ed, and maintains, the highest standard of B2Bcustomer service and trading facilities in theMiddle East region.Not only is Tejari now the Middle East’s lead-ing business–to–business on–line marketplace,it remains the sole on–line procurement serv-ice provider with a demonstrated knowledge ofthe unique challenges and traditions of theregion’s business community.Here is a list of the services offered by Tejari:• Tejari Transact: member companies and

organizations in Tejari Transact can buy andsell goods and services efficiently on–line andin real time. Through Tejari, buyers can find,

The Internet connection can be provided viadial–up, ADSL, or leased line. Table 2 shows therebate available to cybercafés compared withstandard businesses.

Batelco’s offer for corporate VPN connectionsThe rapid economic development of Bahrain’scommercial sector has led to the creation of sub-sidiary companies across the country andinternationally. As most of these enterpriseswant to take advantage of a single, integratedinformation system, the need for secure andseamless remote connections has increased. Toaddress this new market, Batelco proposes acomplete VPN offer for businesses.The companies have a choice between a nation-al offer based on Batelco’s national backbonenetwork, and an international offer across theMiddle East and GCC countries in partnershipwith the Cable & Wireless company.Batelco’s IP Virtual Private Network (VPN)allows the creation of a network that acts likean extension to a private corporate network, butruns on Batelco’s shared network infrastructure.The result is a fast and efficient means of mak-ing scattered locations seem like local sites, fromworkers’ homes to branch offices.Batelco’s IP VPN interconnects sites and remoteworkers to create a single, company–wide com-munications network for voice, data and mul-timedia applications. Network traffic can be clas-sified into different Quality of Service (QoS) lev-els, each with its own level of priority. This allowsthe network to distinguish between delay–sen-



Residential

Business

Cybercafé

Type MonthlyRental

Usagecharges /GB RO

Speed in kbit/sUpload/ Download

12

120

75

1

1

1

128/384

128/1024

128/1024

Table 2: Prices of ADSL connection in Oman

(1 RO = 2.60 US$)

4 Mbit/s

8 Mbit/s

10 Mbit/s

25 Mbit/s

50 Mbit/s

100 Mbit/s

200 Mbit/s

500 Mbit/s

1 Gbit/s

Speeds Tariff (BD)

1,350

1,450

1,500

1,980

2,300

2,700

3,200

4,200

5,000

Table 3: Prices for national multipoint VPN

SSoouurrccee:: Batelco; http://www.batelco.com/Bus_Data_National_MPLS.asp

(1 BD = US$ 2.65)

16 Source: “Lebanon Internet& Datacomm LandscapeReport,” Arab AdvisorsGroup, 2005.

compare, and procure products & services.Buyers can conduct reverse auctions inwhich sellers bid to supply products andservices at the most competitive prices.Suppliers can also list their products andservices, to sell them through on–line cata-logs or auctions.

• Tejari Link: an innovative on–line service fromTejari. It facilitates trade between Middle Eastcompanies by providing a convenient,cost–effective and extensive on–line market-place where they can buy and sell a widerange of products and services.

• Tejari Mobile: Offers access to the TejariWebsite from mobile devices.

Qatar e–government portalThe government of Qatar initiated an E–gov-ernment Committee to design, guide and helpto implement a government–wide initiativeproviding e–government services to citizensand businesses in an effort to achieve the high-est performance in executing governmentaltransactions electronically, through stream-lined business processes and integrated infor-mation technology solutions.To achieve this mission, in April 2001 the Stateof Qatar partnered with an international con-sulting firm to draw upon international bestpractice and thought leadership to craft astrategic vision for transforming Qatar into aleader in e–government. The project team,comprised of the Qatar e–government Commit-tee and the consulting team, developed theQatar e–government strategic vision by defin-ing key objectives and identifying the keyenablers of and barriers to success. Thestrategic vision developed for the e–govern-ment initiative includes:1. Qatar online services;2. Anytime, anywhere access;3. Providing government transactions, informa-

tion, and knowledge.

The scope of the e–government frameworkinvolves setting up a:• Single government–wide portal;• Single electronic payment gateway;• Single public key inscription security.

Ministries will be able to link their legacy sys-tems and existing processes to the e–govern-ment framework, and e–enable their services.Through parallel efforts, ministries will beresponsible for re–engineering their businessprocesses and undertaking projects to upgradeand replace their back–office legacy systems.Among the services currently available on theportal, it is possible to apply for a visitor’s visa,

health card or residence permit; pay water, elec-tricity and phone bills; settle fines for traffic vio-lations; and even donate to the Red Crescent orthe Zakah Fund.In the near future, the Website will allowapplications for building permits and new orreplacement passports; facilitate imports andthe payment of import fees and customs duties;issue various certificates on–line; and acceptnew car registrations.With a 40% Internet user growth rate,17 theQatari government has succeeded in leveragingthe opportunity to interact efficiently withmany citizens, residents and businesses, allow-ing significant savings on public servicesthrough reducing paper–based processing andpayment offices.

E–Palestine18

On 10 May 2005, the Board of Ministries gaveits approval of the e–Palestine initiative andall its components. The e–Palestine projectcovers e–government, electronic education, asmart card project, the National Institute forTelecommunication and Information Technol-ogy, the role of women in the telecom andinformation technology sector, the PalestinianEuro/Mediterranean partnership, and a proj-ect to create a database of the Palestinian cul-ture and ideologies.The establishment and execution of e–Palestineis the responsibility of the Ministries’ commit-tees as determined by the Minister of Telecom-munication and Information Technology. Thecommittees’ roles are:• Drawing up the regulatory framework, reg-

ulations and structure for the e–Palestineproject, and undertaking the necessaryresearch.

• Providing the funds required by the projectfrom the sponsoring countries.

• Executing the projects in cooperation with theministries and institutions concerned, and thespecified parties from the private sector.

E–governmentThe law establishing the e–government initia-tive was signed on 3 May 2005. It decrees:• Forming a technical committee (emanating

from the ministerial committee) to initiate thee–government project.

• Establishing a management department in theMTIT for the project.

• Setting a strategy to convert to electronic gov-ernment and submitting this strategy to theBoard of Ministers.

• Informing the project’s sponsors of the finan-cial resource requirements to obtain thebudgets required.

Chapter 3


17 Source: “Regional Profileof the Information Societyin Western Asia,” ESCWA,2005.

18 Source: “Palestine Internet& Datacomm LandscapeReport,” Arab AdvisorsGroup, 2006.

existing telephone infrastructure alreadydeployed in the country.

The Jordanian experience todayThe most important result of the Jordaniane–learning experience is that the countryhas now engaged in an upward spiral for eco-nomic growth.With the introduction of broadband access inschools, students are becoming familiar withusing high–speed Internet services andstate–of–the–art network access, therebycreating:• Demand for local e–learning media and con-

tent, thereby creating opportunities for thelocal economy to grow in these fields.

• Demand for highly skilled technology profes-sionals to support and implement this growthin infrastructure.

• Supply of a better educated, better skilledfuture workforce for the country.

Statistics• Eight public universities connected to the

Web via broadband;• 2,100 schools connected to the Web via

broadband;• 1.5 million students and teachers with

access to reliable e–learning;• 90% of the Jordanian population covered by

broadband;• More than 100 DSL hubs nationwide;• A broadband penetration rate in the Inter-

net access market of 6%.

• Decreasing Internet datacom network tariffsin cooperation with Paltel and concerned par-ties in the private sector.

The Jordanian e–learning success storyAt the start of 2002, the King of Jordan taskedthe minister of education with providing allschools with Internet access and e–learningservices. This school project was considered asa national project, and a budget was assignedto it by the government.

The Jordanian Telecommunications Company(JTC) submitted a tender to the Ministry of Edu-cation for the project at just above the deploy-ment cost, which fell within the available budg-et. An agreement framework was signedbetween the two entities for the connection of3,000 schools.

The challengeDelivering broadband access to 3,000 schools,half in Amman and the central area, half in thenorthern and southern areas.

The solution• Collaboration between Jordan Telecom and

Alcatel-Lucent.• Support from France Telecom, JT’s mother

company.• Start building the broadband access net-

work nationwide.• Choice of technology: ADSL, the most reliable

and most economic option, as it re–uses the



This chapter presents three case studies ofbroadband deployment in three differentcountries of the ESCWA region. The first

is a business case established for wirelessbroadband deployment (based on WiMAX tech-nology) in the Kingdom of Saudi Arabia. Thesecond is a description of a mixed wireline/wire-less broadband deployment project in Lebanon,based on DSL and WiMAX. The third is a DSLdeployment business case in the Palestinian Ter-ritories.1

WiMAX business model in the Kingdom of Saudi ArabiaAs a major country of the ESCWA region, theKingdom of Saudi Arabia is a good choice to illus-trate a business case for WiMAX deployment.This is particularly because of the special geo-graphical nature of the country, where wirelineDSL deployment could be limited by distance. Therate of technology adoption in recent yearsdemonstrates that mobile and Internet technolo-gies are of great interest to the Saudi population.

WiMAX technology has the capacity to offerbroadband Internet service with coverage of 1km in dense urban areas to about 20 km inrural areas. The deployment of a WiMAX net-work is appropriate to address two importantmarkets in Saudi Arabia:Fixed Wireless DSL, for areas where deployinga conventional DSL solution is not economical;where no or poor copper is available; or foroffering nomadic services linked to premiumindoor services.

Nomadic/Mobile Broadband, for broadbandwireless applications where service continuityneeds to be preserved while the end user ismoving across the coverage of different base sta-tions (BS) in the service area.

Network designThe network design consists of dimensioningthe network in order to comply with therequirements of coverage, bandwidth, anduser capacity. This will give useful informa-tion about the number of sites needed, and thecost of a WiMAX development for this busi-ness case.Following analysis, the objective will be todimension the WiMAX network for full coverageof the urban, suburban and rural parts of threecities: Riyadh, Jeddah and Dammam. It will

Chapter 4

Selected Broadband Deployment Case Studies


Population

GDP per capita

Density

HDI

Fixed line

Mobile Subscribers

Internet users

Computer equipment

Int’l bandwidth

25,192,720

$ 15,338

11/km2

0.772

3,821,000*

14,140,000*

3,400,000**

2,250,000**

750 Mbit/s**

Source: * Pyramid, ** ITU world database indicators 2005

Table 1 : Profile of the Kingdom of Saudi Arabia

0

2000

4000

6000

8000

10000

3318

5008

7238

9200

3500 3700

Fixed lines Cellular

2002 2003 2004

Figure 1: Evolution of fixed and cellular lines(in thousands) in the Kingdom of Saudi Arabia

SSoouurrccee:: Arab Advisors Group Strategic Research Service, “On the threshold ofcompetition: an analytical look at the Saudi Telecom market,” 30 March 2005

JORDANISRAEL

LEBANON

QATAR

BAHRAIN

U. A. E.

YEMEN

SYRIAIRAQ

IRAN

OMAN

SAUDI ARABIA

EGYPT

SUDAN

ETHIOPIA

ERITREA

Amman

Sana’a

MeccaTaif

Jeddah

Aden

MuscatAbu Dhabi

Dubai

Baghdad

Kuwait

HailDuba

Tabuk

Sakakah

KhafjiJubail

DammanHofuf

Doha

Ar’ar

Buraydah

Riyadh

Khartum

Asmara

Jizan

Abha

MediterraneanSea

PersianGulf

RedSea

Gulf of Aden

Arabian Sea

Gulf of Oman

DJIBOUTIDjibouti

KUWAIT

Figure 2: Map of the Kingdom of Saudi Arabia

1 The two business cases weredeveloped by Alcatel-Lucentbased on assumptionsexplained in the text. TheLebanon case is providedby Globalcom Data Servicesand describes an ongoingproject by that operator.

Deployment scenarioThe business case is based on a deploymentusing 5MHz of bandwidth in the 2.3 GHz fre-quency band. This frequency band is authorizedby the regulator in the Kingdom of Saudi Ara-bia for broadband wireless access systems.A mix of customer premises equipment (CPE)types is assumed as shown in table 5.

This split accurately follows the distribution ofprofiles, with Residential being the dominantprofile (using Residential Gateways or Outdoor),and SME (both Light and High profiles) havinga smaller penetration (using PCMCIA cards).For ease of calculation, it is assumed that thereis no overlap between CPE types and that the sce-nario is designed to be as realistic as possible.

ResultsWith these different assumptions, it is possibleto assess the number of sites (base stations)needed for the WiMAX coverage of Riyadh, Jed-dah and Dammam.

Most of the base stations will be used to coverthe suburbs of each city, since these areas arethe most extensive. However, in rural areas, thenumber of cells needed is very low comparedto the surface area covered. This is due to theimproved range of a base station in aline–of–sight situation (few obstacles and out-door CPE).In urban areas, the requirement is to providea good service level for many users at the sametime, which requires the large number of basestations shown for this profile.

Business caseRevenue assumptionsAverage Revenue Per User (ARPU) is a key prof-itability driver. It is affected by competitive tech-nology cannibalization; loss–leading service

exploit the technological and market expertise ofthe Alcatel-Lucent business consulting team.

Geographical and population assumptions

The main advantage of WiMAX in this case,compared to wireline solutions, is to facilitatethe coverage of suburban and rural areas,which constitute the majority of the total sur-face area.Table 3 shows the assumptions about the num-ber of customers in each district who wouldpotentially subscribe to a WiMAX service.

Capacity/traffic mix & traffic profile assumptionsTwo different segments of the market are consid-ered in the analysis: the residential market, andthe small and medium enterprise market. For eachmarket, a different level of service – especially interms of data rate – is envisaged (see table 4a). Therelative weighting of these profiles at each basestation (see table 4b) is a key determining factorof the capacity needed by the future system.



Riyadh

Jeddah

Dammam

District (City)DenseUrban

Urban

Percentage Split

Suburban Rural Total Surfaces(Sq. Km)

8%

13%

4%

18%

15%

20%

57%

69%

47%

17%

3%

29%

1,359

571

619

District

Riyadh

Dammam

Jeddah

Total

Total population

4,619,495

1,120,000

3,066,297

8,805,792

Number of WIMAX users

110,000

50,000

90,000

250,000

Profile 1

Profile 2

Profile 3

Profile 4

Profile 5

Profile Throughput

Residential_light

Residential

Residential high end

SME Light

SME High

256 kbit/s

512 kbit/s

1024 kbit/s

512 kbit/s

1024 kbit/s

Profile 1

Profile 2

Profile 3

Profile 4

Profile 5

Distribution per BS (%)

55

22

9

11

3

Table 2: Population categories assumptions

Table 3: Number of customers assumptions

Table 4a: Throughput per customer profile

Table 4b: Customer profile distribution per BS

Outdoor

PCMCIA card

Residential Gateway

CPE type Denseurban/urban

0%

30%

70%

Suburban

0%

100%

0%

Rural

40%

60%

0%

Table 5: CPE type distribution per customer

Riyadh

Jeddah

Dammam

Total

District

DenseUrban

UrbanNumber of sites(scenario 1.a) Suburban Rural Total

126

89

30

245

189

67

99

355

300

152

110

562

14

1

12

27

629

309

251

1189

Table 6: Number of sites needed per region and per type of district

offers (especially mobile); high–end corporateuse; and the prevalence of entry–level,mass–market services. As these assumptionshave a strong impact on the profitability of theproject, a sensitivity analysis will complete thebusiness case.Table 7 shows the monthly ARPU (in Euros) foreach profile and the connection fees paid by thecustomer at the time of subscription.

CAPEX (Capital Expenditure) assumptions• Radio site acquisition cost: € 20,000 (20 k€)

per site;• Leverage existing infrastructure:

- Core network;- Soft switches;- AAA, billing platform, etc.;- Call center;

• Backhauling: 15 k€;• Frequency license.

OPEX (Operating Expenditure) assumptions• CPE subsidies: 50%;• Workforce:

- Customer care staff (call center): 20 peoplex 8 k€;

- Sales and marketing staff: 4 people x 10 k€;- Network operation engineers: 214 people x

12 k€;- General and administrative staff: 4 people x

10 k€;• Marketing expenses: 1% of income.

Financial resultsThe main financial indicators for the WiMAXdeployment in Riyadh, Jeddah and Dammamare summarized in table 8.Even if the operator only achieves positive freecashflow after two years, financial break–even will

occur three and a half years after the beginning ofthe project, which is reasonable. The Net PresentValue (NPV) after 10 years will reach 205.6 millionEuros, confirming the project’s profitability.Figure 3 and figure 4 show respectively thebreakdown of the free cashflow, and the evolu-tion of cumulated free cashflow.

Sensitivity analysisThese financial results are based on assump-tions about many parameters, especially serv-ice revenue, OPEX and CAPEX. However, it is

Chapter 4


Profile 1

Profile 2

Profile 3

Profile 4

Profile 5

Profile Throughput

Residential light

Residential

Residential high end

SME light

SME high

256 kbit/s

512 kbit/s

1024 kbit/s

512 kbit/s

1024 kbit/s

ARPU

30

40

50

150

200

Connectionfee

60

65

70

120

140

Table 7: Monthly ARPU and connection fee assumptions per profilecategory

NPV (12% WACC) MEuro

5 Year

10 Year

14 Year

36,3

205,6

310,1

IRR

5 Year

10 Year

15 Year

Percentage Time to :

Financial Dashboard

Years Funding M Euro

34,5

56,4

59,1

FCF Positive

Breakeven(Payback Period)

2,2

3,5

Year zero

PeakAv / year

until FCFPositive

0,5

64,7

7,9

Table 8: Main financial indicators of the KSA WiMAX project

0

MEu

ros

200

400

-200

-400

-600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CAPEX Working Capital Variation

Revenues License Upfront Fees Free Cash Flow

Operating Costs Tax (30%)

Figure 3: Breakdown and evolution of free cashflow

MEu

ros

(100,00)

(500,00)

-

500,00

1000,00

1500,00

2000,00

Cumulated Free cash flowFree cash flow

2006 2008 2010 2012 2014 2016

Figure 4: Evolution of cumulated free cashflow

2005, and culminated in the signature, earlyin January 2006, of a Memorandum ofUnderstanding between the private sectorand the MoT, which identified the guidingprinciples for the introduction of DSL–basedbroadband services, and restarted the processfor their introduction.In parallel, a standard for WiMAX has beenagreed. A WiMAX pilot project will thereforebe launched in December, with nationwidedeployment planned for 2Q 2007.

DSL deployment: the current statusThe successful deployment of DSL is a jointendeavor of the MoT and the licensed datacarriers. The MoT needs to complete sixmajor initiatives before the carriers can inter-vene:• Issuing the necessary decrees to formalize

the MOU (completed);• Preparation of co–location rooms in the

PSTN exchange sites, where data carrierswill install their equipment (work inprogress, with an expected completion dateof 30 December 2006);

• Upgrading power supplies in the co–loca-tion sites (tender in progress, with anexpected completion date of 15 January2007);

• Upgrading the transmission backbone tohandle the significant data traffic expect-ed (upgrade completed outside Beirut, andwork in progress inside Beirut, with anexpected completion date of 30 December2006);

• Equipping the Main Distribution Frame(MDF) with voice/data splitters (tender inprogress, with an expected completion dateof 15 January 2007);

• Upgrading the country’s main Internet feed(work in progress, with an expected comple-tion date of March 2007).

From their side, the data carriers must com-plete five major projects:• Acquisition and installation of DSLAMs in

the co–location rooms (most carriers havealready acquired their DSLAMs, and arewaiting for authorization to install in theco–location rooms);

• Acquisition of the end–user splitters andmodems (under way);

• Acquisition and installation of the NGNswitches (most carriers have alreadyacquired their switches);

• Interconnection with Internet ServiceProviders (under study jointly with MoT; itis expected that MoT will install fibers con-necting the carriers to the ISPs);

important to appreciate the impact of a changein these parameters on the profitability of thedeployment.The following graph shows the impact of a +/–20% change in the value of the different param-eters on the 10–year Net Present Value.

In fact, only the service revenue has a strongimpact on profitability, therefore the assessmentof the ARPU and market penetration has to becarefully prepared. However, 20% less revenuestill enables a significant profit. The otherparameters have much less impact.

DSL and WiMAX deployment in Lebanon,by Globalcom Data ServicesLebanon was once a pioneer in the develop-ment of telecommunications infrastructureand services in the Middle East.Deregulation and the introduction of newservices were pushed aggressively, startingwith the award of two GSM BOT (Build, Oper-ate and Transfer) licenses in 1994; theintroduction of Internet Service Provider(ISP) authorizations in 1995; and the awardof data carrier licenses in 1996. In 1997, theMinistry of Telecommunications (MoT) start-ed to discuss license extensions with the datacarriers that would allow the introduction ofDSL–based broadband access.This rapid advance came to an abrupt halt in1998 following changes in policies. Themomentum restarted towards the end of



10 year NPV

Service Revenues

140 210 280 350

Capex

Network Opex

Advertizing &promotion

Customer Care

DataInterconnection

Bad Debt

SubscriberRetention

Billing

SubscriberAcquisition

Sales &Marketing Staff

General &Administrative

UpsideDownside

0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2 0.8

1.2

Figure 5: Sensitivity analysis

• Agreement with MoT and the ISPs on com-mercial packages (discussions under way ina joint commercial committee, with the goalof reaching a final agreement before the endof December 2006).

As can be seen, the execution of all theabove projects is well under way. It isexpected that:• Carriers will be able to start installing the

DSLAMs and the switches in early January2007;

• The first service tests are likely to take placeduring February 2007;

• The first commercial service is expected at theend of March.

The international upgrade element is a criticalrequirement, because it involves three nation-al parties: Lebanon’s MoT, Syria’s STE andCyprus’ CYTA.

DSL project economicsLebanon’s PSTN has about 350 main andremote switches with a total installed capac-ity of 1.2 million lines, but only around650,000 subscribers in total. This low ratioof subscribers to installed capacity is main-ly due to the rapid development of GSM net-works and services during the mid 1990s, ata time when the PSTN was still being reha-bilitated following years of neglect anddamage sustained during the 1975–1990Lebanese civil war. All the parties to the DSLproject have high expectations that the suc-cessful launch and development ofDSL–based services will rekindle interest inthe PSTN and will increase its penetrationratio.The first phase of the DSL project will seethe infrastructure deployed in the 36 mostimportant exchange sites, covering 70% ofPSTN subscribers across all of Lebanon’smain towns and cities.As indicated above, it is expected that theinstallation of the first DSLAMs will startmid–January, and will be completed in the36 sites around September 2007. Other

sites will be deployed according to commer-cial demand, but it is expected that 35 addition-al sites will be deployed in 2008, and 70 addi-tional sites in 2009. The remaining smalltowns and villages will be covered throughWiMAX.From the administrative point of view, the cus-tomer’s only relationship is with the ISP. TheISP in turn will contract for the DSL port withthe Data Carrier. The carrier in turn will dealwith the MoT. Five customer profiles areexpected (see table 9).It is reasonable to assume that each carriercan target a deployment of 50,000 ports with-in two years. The CAPEX per port for such adeployment, given all the related equipmentand services (NGN switches, OSS/BSS, etc.),could be assumed to be in the range of $120– 150 per port.The main operating costs for the data carriersare:1. 20% revenue sharing imposed on the carri-

er by the MoT;2. A charge by MoT per line and per month for

the services provided to the carrier. This isstill under discussion, but could be in theregion of $5 per line per month;

3. Salaries and related charges;4. Other administrative charges;5. Financing charges.

On the financing charge aspect, a carrier can ben-efit from loans with interest rates subsidized bythe Lebanese Central Bank, under a law encour-aging private sector investment in technologyfields. The interest rate can be as low as 1.5% p.a.Under the above assumptions, it is expectedthat financial break–even will be reached at theend of the second year.High–speed Internet will be the first serviceoffered on the DSL infrastructure. As for addi-tional services, in particular VoIP (Voice overInternet Protocol) and IP TV, these are notexpected for a couple of years. By law, VoIP willonly be deregulated after five years.2 IP TV willnot be viable for deployment until a large num-ber of subscribers are connected to the DSLinternet service.

WiMAX project: the current statusWiMAX will be deployed all over Lebanon. Incities where DSL will have extensive penetration,WiMAX will be deployed to target mobile datausers as a complementary service to DSL. It willalso be used to cover those few DSL darkspots. There, planning is under way to achieveindoor coverage “behind the second wall”.Where DSL will not be deployed, WiMAX will bedeployed as the main broadband access method,

Chapter 4


Residential

Residential

Residential

SME/SOHO

SME/SOHO

Profile Downlinkkbit/s

Overbooking ARPUISP ($)

ARPUCarrier ($)

Bronze

Silver

Gold

Light

High

256

512

1024

1024

2048

25

25

25

10

10

35

50

70

N/A

N/A

18

20

25

N/A

N/A

Table 9: Customer profiles for DSL deployment

2 Note from the report editors:this illustrates how banningVoIP reduces revenueopportunities for operatorsrolling out broadband infra-structure. It must be notedthat such VoIP bans have, inpractice, only harmfuleffects, since unregulatedVoIP is fairly well estab-lished in the country.

DSL business model in the Palestinian TerritoriesThe Palestinian Territories contain significanturban centers, which is why they present a goodbusiness case for DSL deployment.

AssumptionsIn spite of difficulties in finding accurate statis-tics for Palestine, it is possible to estimate themain parameters to assess the profitability ofthe project, especially by extrapolating dataavailable for Jordan. The assumptions taken forthe business case are as follows:

Cost factor assumptionsThe business case assumes a 15% WeightedAverage Cost of Capital (WACC), due to the rel-ative uncertainty of a project in the PalestinianTerritories, and a 10% tax rate. The differentcost factors for the business case are:

CAPEX• Infrastructure and installation (central office

and CPE);• Services and applications (mail, Web hosting,

FTP, gaming, etc.).

OPEX• National transmission cost (Central Office –

Point of Presence);• International transmission cost (Point of Pres-

ence – Internet backbone);• Helpdesk/support cost;• Billing and invoicing cost;• Utilities and services (security, maintenance,

power supply, etc.).

with indoor coverage in small cities, and outdoorcoverage in sparsely populated areas.Deployment will feature the IEEE 802.16eversion of the WiMAX standard, due to its supe-rior features over the earlier, intermediateversions. 802.16e will be used for fixed(on–the–roof antenna), nomadic and mobileapplications.Given the delays in finalizing the 802.16e ver-sion, and the delay in getting equipment certi-fied, the first pilot is scheduled to be deployedin December 2006. Globalcom Data Services hassigned a framework agreement with Alcatel-Lucent covering this pilot and, if successful, thenationwide deployment of the service. Nation-wide deployment is scheduled to begin in April2007. Practically, DSL and WiMAX will belaunched simultaneously.

WiMAX project economicsGlobalcom Data Services is planning to deploy,by the end of 2007, a WiMAX network with acapacity of about 20,000 subscribers. The mainconstraint is the geographical coverage require-ment, rather than the capacity requirement.Subscriber uptake remains uncertain today,since firm commitments to produce 802.16eCPEs have not yet materialized in the market.However, given some reasonable CPE deliveryassumptions, and a service tariff about 20%higher than that of DSL, it is expected that finan-cial break–even would be achieved in about 30months.

ConclusionDue to the delay in launching the DSL project,Lebanon finds itself in a situation unique in theworld, where DSL and WiMAX will be launchedin parallel. Both infrastructures will complementone another. DSL will be deployed in large cities;WiMAX will be deployed in large cities as amobile complement to DSL, and as a mainbroadband access method elsewhere. TheWiMAX strategy also benefits from the lack of3G services in Lebanon. For an overall initialdeployment of about 70,000 users, it is expect-ed to reach break–even in a 24–30 monthtimeframe.



DSL residential

DSL business

Total Number ofDSL subscribers

Net adds

PSTN lines

DSL penetrationWrt PSTN lines

2004 2005 2006 2007 2008 2009 2010 2011

0

0

0

0

249,903

0.00%

24,879

2,454

27,332

27,332

249,903

10.94%

65,057

9,174

74,231

46,899

249,903

29.70%

95,151

17,378

112,529

38,298

249,903

45.03%

102,824

24,347

127,170

14,641

249,903

50.89%

109,419

27,825

137,243

10,073

249,903

54.92%

106,924

27,825

134,749

-2,495

249,903

53.92%

111,949

27,825

139,774

5,025

249,903

55.93%

Table 11: Service take-up assumptions for the Palestinian territories DSL business case

Population

Number of Households

PC penetration

Internet subscriptions

GDP per Household

GDP growth rate

Social classes

~3,500,000

~550,000

58,600 - 26% of the households

~50,000 - 10,2% of the households(Jordan: 13%)

$ 5,600 (Jordan: ~25,000$)

0%

Jordan statistics

Table 10: Basic assumptions for Palestinian territories DSL business case

Service take–upThis is summarized in the table below, taking intoaccount residential and business subscribers, andkeeping the pessimistic assumption that the num-ber of fixed lines will remain constant (noexpansion of the PSTN installed base).

Revenue assumptionsTable 12 below summarizes the definition of thedifferent kinds of service (both residential andbusiness), and the assumptions related to retailprice and resulting ISP net revenue. Table 13summarizes the assumptions of the split overtime for each category of services (for residen-tial services) and, finally, table 14 summarizes

the total revenues and average revenue per sub-scriber/year over the considered period.

ResultsThe financial results, taking into account themarket and cost assumptions, are summarizedin figure 6 and table 15.The payback period is five years, which is quiteslow for a telecommunication project in theMiddle East. However, the business case showsgood profitability, with a Net Present Value(NPV) of 16 million Euros, and an Internal Rateof Return (IRR) of 37% after seven years.Investment in DSL in the Palestinian Territo-ries is therefore interesting, especially forinstitutional players like the incumbent oper-ator, which can appreciate a long–term returnon investment.

ConclusionThe above business cases reflect the variety ofsocial and economic conditions in the ESCWAregion, and the variety of technologies that couldbe used to deploy broadband infrastructure. Theyare also based on restrictions related to revenuesthat can be inferred from other voice telephonyand TV distribution services (especially for theDSL cases). Reasonable periods of return oninvestment are achievable, and these could beimproved dramatically, were restrictions on bun-dled services to be reduced, since this would affectboth the average revenue per user and the per-centage of users signing up to the service .

Chapter 4


Service Residential

Service 1

Service 2

2005Service Penetration 2006 2007 2008 2009 2010 2011

70%

30%

70%

30%

60%

40%

60%

40%

60%

40%

55%

45%

55%

45%

Table 13: Split of residential subscriber profile over time

Total Revenues (m$)

Revenue persubscriber per year

4

135

11

142

24

214

33

261

38

274

40

293

39

282

Table 14: Revenue and average revenue/subscriber over the period

10,00

5,00

2005 2006 2007 2008 2009 2010 20110,00

15,00

20,00

25,00

30,00

35,00

40,00

Net Revenue OPEX CAPEX

Figure 6: Financial results for DSL deploymentin the Palestinian territories (million Euros)

Horizon

Net Present Value (million Euro)

Net Present Value per subscriber (Euro)

Internal Rate of Return

Horizon

Net Present Value (million Euro)

Net Present Value per subscriber (Euro)

Internal rate of Return

Payback Period(Cumulative Cash Flow)

Payback Period(Discounted Cumulative Cash Flow)

7 years

16

117

37%

5 years

1

7

-9%

4,26 years

4,89 years

Table 15: Palestinian territories DSL business case financial results

Service Residential

Service 1

Service 2

Services (SE/LE)

Basic (Asymmetric)

Pro (Asymmetric)

Downstream(kbit/s)

Definition of service packages

Upstream(kbit/s)

Cap(Gb/hour)

Overbooking Retail fee $ Total ISPrevenu $

256

512

512

1024

64

128

128

128

30H

5Gb

10Gb

Unlimited

32

32

15

15

22,1

33,3

89,5

134,2

9,0

13,4

35,9

53,7

Table 12: Service definition for residential and business subscriber categories

In this chapter, we will identify some of thefactors and marketing issues related tobroadband services that could have a

substantial impact on both demand andsupply. This should enable governments andservice providers interested in the promotionof broadband to identify how those factorscan apply to their economies, and to addresssome of the problems encountered.

Service pricingHigh prices and low market maturity areamong the major factors slowing downbroadband penetration (especially ADSL) inthe ESCWA countries. Suitable pricingschemes are hence vital to increase broad-band adoption, as consumers will only adoptbroadband when its cost is justified in termsof the added value it offers, taking intoaccount the level of income.Figure 1 shows a comparison of basicADSL tariffs in selected ESCWA countries,compared to the GDP per capita. The figureshows that ADSL prices are generally high-er than a “typical” 2–3% of the GDP per capi-ta and, in some case (e.g., Syria and SaudiArabia), much higher. High prices are some-

times used as a means to filter demand (e.g.,in Syria) due to the lack of service availabil-ity, and service providers would lower theirtariffs considerably once network expansionis achieved. In other cases, however, highprices are merely the result of a lack of com-petition.It is also interesting to compare ADSL tar-iffs to traditional dial–up Internet access, tak-ing a typical basket of 20 hours per monthof dial–up access as a reference point (fig-ure 2). Generally speaking, the total cost ofbroadband is usually more expensive thannarrowband below a certain threshold ofusage. The price of a dial–up Internet con-nection is composed of the access chargeplus the cost of the local telephone calls toconnect to the ISP. By contrast, broadbandeliminates the cost of the telephone calls. Forheavy users, this pricing scheme leads tobroadband working out cheaper than nar-rowband. In Jordan, for instance, DSL willrapidly become an attractive option once the20 hours per month are exceeded; while inEgypt, with the Free Internet Initiative, thecost of dial–up access is as low as EGP 1.2(US$ 0.2) per hour. The cost of the (already


Chapter 5

Factors Affecting Broadband Demand in the ESCWA Region

Egypt

4.84%

3.71%

19.28%

3.06% 3.33%

12.59%

2.75%2.44%

Jordan Syria Oman Bahrain Qatar Saudi Arabia UAE0.00 0.00

5.00

10.00

15.00

20.00

25.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Tariff of Average Basic ADSL (% of GDP per capita)Tariff of Average Basic ADSL per month (US$)

Figure 1: Comparison of average basic monthly ADSL tariffs in selected ESCWA countries, 2Q 2006

ssoouurrcceess:: ITU World Telecommunication Indicators, operators’ websites

low–priced) basic ADSL access (256 kbit/s)is EGP 95 (US$16.5) per month; this is stillnearly four times the cost of the basket of 20hours per month of dial–up access. “Light”dial–up users have no incentive to switch toADSL, especially when no major value–added services are available.Market immaturity, characterized by theabsence of added value to the new broadbandservices, is another reason why service pen-etration is slow, irrespective of price. InJordan for example, the ADSL service isamong the less expensive in the region. A 256kbit/s ADSL connection costs only JD 9.9 (US$14) per month, compared to JD 6.7 (US$ 9.5)for a basket of 20 hours per month ofdial–up access. But even with this remarkableprice scheme, the total number of ADSL sub-scribers was still around 45,000 in 1Q 2006.1

In contrast, ADSL charges in Saudi Arabia arestill high. The user is charged more than SAR

400 (US$ 106) per month for a 256 kbit/sADSL connection.2 The total number ofADSL subscribers in 1Q 2006 was estimatedat 64,000. Even with the big difference inprice, the Jordanian ADSL market is still com-parable to that of Saudi Arabia.The cost of broadband can become accept-able to end users when other services aredelivered over the same connection. Forexample, a DSL connection can also be usedto provide voice telephony and a variety of TVprograms, converging to offer what is knownas Triple Play. This could result in consider-able savings for both providers and con-sumers, and accelerate the adoption ofbroadband (as happened in Europe). Forservice providers, economies of scale willmake international connectivity cheaper.Attractive prices could in this case be pro-posed for large bandwidths (tens of Mbit/s).When suitable prices are reached, a DSLprovider might become a more serious com-petitor to the incumbent operator, as sub-scribers might consider cancelling their ordi-nary subscriptions and replacing them withvoice over DSL; the environment becomeseven more competitive with cable operators,who also aim to provide broadband Internetaccess and IP telephony along with their orig-inal cable TV service.

Pricing schemesSeveral broadband pricing schemes can befound worldwide. Here we consider some ofthose schemes and their implications in theESCWA region.

Chapter 5


Bahrain

Egypt

Jordan

Oman

Qatar

Saudi Arabia

Syria

UAE

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00

Tariff of Average Basic ADSL per month (US$) Tariff of 20h Internet dial-up access par month (US$)

Figure 2: Comparison of basic ADSL and dial–up tariffs in selected ESCWA countries, 2Q 2006

ssoouurrcceess:: ITU World Telecommunication Indicators, operators’ websites

Problem of DSL line sharing in Egypt

In Egypt, the cost of basic ADSL access (256 kbit/s) is still nearly four timesthe cost of a basket of 20 hours’ dial–up access per month. One of theproblems engendered by this situation is the “sharing problem.” Oneresidential subscriber to the ADSL service may share his connection withone or more neighbors. It is estimated that of all ADSL connections inEgypt, nearly 20% in urban areas and 80% in rural areas are shared,resulting in an over–consumption of bandwidth and loss of revenue.3

The service providers are faced with a huge problem because theirbusiness model is not designed to deal with this phenomenon, hence theyare becoming reluctant to introduce the service in areas where sharing iscommon. One way of addressing the sharing problem is by “bundling”routers (especially wireless routers) with their hardware. This wouldprovide connectivity at the “local community” level, and allow serviceproviders to suggest the suitable access rate to their grouped customers.

1 “Jordan Internet & Data-comm Landscape Report,”Arab Advisors Group, 2006.

2 Source: Arab Advisors Group.3 Source: Egypt Case Study,

ESCWA, 2006.

in terms of both quality and price, as broad-band, by definition, is a bandwidth–inten-sive service. An important component of thebroadband total tariff is represented by thecost of international connectivity.The Internet backbone consists of many dif-ferent networks. Usually, the term is used todescribe large networks that interconnectwith each other and may have individualISPs as clients. For example, a local ISP mayprovide service for a single town, and con-nect to a regional provider which has sev-eral local ISPs as clients. This regionalprovider connects to one of the backbonenetworks, which provides nationwide orworldwide connections.These backbone providers usually provideconnection facilities in many cities for theirclients, and they themselves connect withother backbone providers at InternetExchange Point (IXPs) such as EMIX in theUnited Arab Emirates.Backbone networks are usually commercial,educational, or government–owned, as in thecase of military networks. Some large com-panies that provide backbone connectivityinclude UUnet, British Telecom, AT&T, SprintNextel, France Telecom, BSNL, HE.NET,Teleglobe, Qwest, and SAVVIS.

Peering and IXP developmentPeering is defined as an agreement betweentwo ISPs to interconnect their networks inorder to bypass expensive transit networks(figure 3). This connection is made throughInternet exchange points, or IXPs, which arefacilities where ISPs can deploy cable to inter-connect with other providers, generally fromthe same country or region. ESCWA membercountries can take advantage of only twoIXPs: EMIX in the United Arab Emirates, andCRIX in Egypt.Peering enables the achievement of threeobjectives:• Lower costs, as the traffic between two

providers does not require an internation-al transit bandwidth, which is very expen-sive.

• Reduce latency by taking a shorter route fora connection, which is crucial for applica-tions with a high quality of service like IPtelephony.

• Decrease significantly the loss of IP pack-ets with shorter routes. This increases theefficiency of the provider’s network.

To overcome the lack of national and region-al peering, several attempts have been madeto build some sort of regional “Pan–Arab Back-

Flat–rate is the pricing scheme where sub-scribers are charged a flat monthly ratewhich does not change according to the vol-ume of usage. This scheme has the advan-tages of being simple and “predictable” forboth customer and service provider, and iscommonly used in the ESCWA region (Egypt,Jordan, Syria, UAE, Qatar, etc.). This schemealso allows service providers to make a vari-ety of offers to attract customers and buildthe subscriber base. In Jordan, for example,Wanadoo offers two free months in returnfor a yearly subscription. It is also commonfor some providers to discount the installa-tion fee, equipment fee, or equipmentcharge for their customers.Volume–based pricing can also be used.Consumers in this case are charged on thebasis of volume downloaded. In Bahrain forexample, a threshold of 2 GB is placed at theentry–level broadband subscription (256kbit/s). According to Batelco, this enables theuser to surf for three hours per day, sendand receive 20 e–mails per day, and useinstant chatting for two hours per day.4 Onexceeding the limit, the user has to pay anextra charge, usually per 1 MB. This pric-ing scheme is mainly used to control band-width usage, especially when it is scarce.However, it tends to restrict usage patternsand may discourage market uptake andexperimentation with broadband services.Prepaid is not commonly used with DSL con-nections, but prepaid cards can be used forwireless access to the Internet in publicWiFi hotspots (e.g., in airports, hotels, cafés,etc.). The prices, however, are often prohib-itive (especially in luxury hotels). This schememight become attractive where operator–deployed wireless connectivity is used.Operators and service providers can also useother pricing techniques, like offeringreduced prices for a restricted set of servic-es, or offering product bundles. For exam-ple, cable TV operators might offer Internetaccess (and telephony) to their customers atgreatly reduced prices. While this scheme isbecoming very popular in Europe, it is stillalmost nonexistent in the ESCWA region, dueto market immaturity, but also to governmentunwillingness to “liberalize” IP telephony.Finally, it is important to note that an ade-quate pricing scheme, combined with a clearset of services, is a major factor in encourag-ing broadband adoption in a country.

Regional and international connectivityRegional and international connectivity iscrucial for the development of broadband,



4 Source: Operator’s website.

bone Network” in the ESCWA region. Todate, these attempts have not been successful-ly concretized. The argument here, however,is that if operators in these countries manageto build exchange points and aggregate localtraffic, they can save on their internationalcapacity requirements: local traffic will staywithin the region rather than travel overseasand back, therefore the overall amount paidfor international bandwidth will be reduced.More importantly, building national andregional IXPs would help operators attract con-tent from developed countries to be mirroredand/or hosted locally, thus lessening theasymmetry in the traffic exchanged withdeveloped countries.

International connectivityAs stated earlier, international connectivity isa major issue for Internet development in theESCWA region. International connectivity isan expensive resource. It can representmore than 80% of the Internet connection costfor a provider. The problem is that the highcost generated by this situation impedes thegrowth of potential Internet users, and pre-

vents ISPs from investing in more internation-al bandwidth: this is the Internet vicious cir-cle (figure 4a).The vicious circle can be broken throughlarge investments – that could form part of anational broadband strategy – in internation-al bandwidth capacities (figure 4b). Thelower cost of this connection enables ISPs tooffer broadband connection at a lower priceto stimulate demand.The degree of connectivity of a given coun-try depends partly on technical factors, butit also depends on the regulatory environ-ment. Liberalization can totally transform the

Chapter 5


Internet Backbone provider

Transit$$$

Transit$$$

Peering$

National ISP1

National ISP2

Figure 3: From transit to peering

Connection route between the Emirates and Bulgaria, going through New York, Los Angeles and Singapore

1 192.168.222.1 (192.168.222.1) 0.365 ms 0.167 ms 0.198 ms2 rtr–zonab5.powernet.bg (193.24.241.161) 1.869 ms 0.920 ms 0.870 ms Bulgaria3 193.24.240.3 (193.24.240.3) 3.093 ms 4.127 ms 3.402 ms4 ffm–b1–geth2–3–107.telia.net (213.248.79.121) 45.943 ms 45.371 ms 47.880 ms5 ffm–bb2–link.telia.net (213.248.64.141) 46.223 ms 45.714 ms 46.669 ms6 ldn–bb2–link.telia.net (80.91.249.12) 63.446 ms 62.802 ms 67.558 ms7 nyk–bb2–link.telia.net (80.91.249.251) 133.402 ms 130.599 ms 130.395 ms8 nyk–b1–link.telia.net (213.248.83.66) 131.303 ms 129.894 ms 132.947 ms9 dcr3–so–6–0–0.newyork.savvis.net (208.173.129.13) 133.011 ms 131.795 ms133.282 ms New York10 bcs1–so–1–1–0.NewYork.savvis.net (204.70.192.186) 131.147 ms * bcs2–so–3–0–0.NewYork.savvis.net (204.70.192.202) 132.222 ms11 bcs1–so–6–2–0.Washington.savvis.net (204.70.192.13) 132.410 ms 129.920 ms bcs2–so–4–0–0.Washington.savvis.net (204.70.192.1) 136.734ms12 dcr1–so–3–0–0.Atlanta.savvis.net (204.70.192.53) 147.285 ms bcs1–so–7–0–0.Washington.savvis.net (204.70.192.33) 131.450 ms 129.547 ms13 dcr1–so–1–3–0.dallas.savvis.net (204.70.192.78) 165.065 ms 164.075 ms dcr1–so–3–0–0.Atlanta.savvis.net (204.70.192.53) 166.993 ms14 dcr2–as0–0.Atlanta.savvis.net (204.70.192.42) 147.201 ms dcr2–so–2–0–0.LosAngeles.savvis.net (204.70.192.86) 196.377 msdcr2–as0–0.Atlanta.savvis.net (204.70.192.42) 147.341 ms Los Angeles15 dcr1–as0–0.LosAngeles.savvis.net (204.70.192.117) 195.490 ms 195.978 ms dcr2–so–2–0–0.dallas.savvis.net (204.70.192.70) 165.307 ms16 208.172.44.26 (208.172.44.26) 200.410 ms 208.172.44.22 (208.172.44.22) 199.871 ms dcr1.lay–so–3–2–0.losangeles.savvis.net(204.70.194.53) 195.630 ms17 208.172.44.26 (208.172.44.26) 200.761 ms 203.208.171.65 (203.208.171.65) 201.322 ms 201.218 ms18 203.208.171.65 (203.208.171.65) 200.072 ms 199.652 ms 197.150 ms19 203.208.171.1 (203.208.171.1) 198.768 ms 203.208.171.122 (203.208.171.122) 199.415 ms 205.065 ms20 203.208.171.122 (203.208.171.122) 199.402 ms 203.208.173.133 (203.208.173.133) 200.281 ms 203.208.182.73 (203.208.182.73) 396.014 ms21 p4–0.sngtp–cr3.ix.singtel.com (203.208.172.125) 419.134 ms 421.144 ms 203.208.182.73 (203.208.182.73) 390.255 ms22 so–1–0–0.sngc3–cr1.ix.singtel.com (203.208.172.149) 390.323 ms p4–0.sngtp–cr3.ix.singtel.com (203.208.172.125) 428.163 msso–1–0–0.sngc3–cr1.ix.singtel.com (203.208.172.149) 406.948 ms23 p4–1.sngtp–cr1.ix.singtel.com (203.208.182.125) 405.590 ms 203.208.143.154 (203.208.143.154) 337.672 ms p4–1.sngtp–cr1.ix.singtel.com(203.208.182.125) 396.475 ms Singapore24 195.229.0.90 (195.229.0.90) 339.959 ms 203.208.143.154 (203.208.143.154) 347.874 ms p4–1.sngtp–cr1.ix.singtel.com (203.208.182.125) 423.461ms25 dxb–emix–ra.so611.emix.ae (195.229.0.242) 366.919 ms 203.208.143.154 (203.208.143.154) 370.038 ms 195.229.0.90 (195.229.0.90) 340.55526 213.42.21.36 (213.42.21.36) 366.150 ms 195.229.0.246 (195.229.0.246) 350.179 ms 195.229.0.90 (195.229.0.90) 357.193 msUnited Arab EmiratesSSoouurrccee:: Alcatel-Lucent




No growth ininfrastructure

Limited Internetconnectivity

Little interest ofprivate investors

High connectivitycharges for ISPs

High end-usercharges

• No exploitation of economy of scale• Low bargaining power of ISPs• Lack of competition

Low InternationalInternet Connectivity

Low demand forInternet services

Figure 4a: Internet vicious circle

SSoouurrccee:: Claudia Sarocco, “Improving IP Connection in the LDCs – Background paper,” Workshopon Improving IP Connectivity in the Least Developed Countries, Geneva, 11 and 12 April 2003

Interest in investing

• Economies of scale• Bargaining power of ISPs• Market growth

Lower costs

Liberalization of theInternet market

Investment inconnectivity

Higher InternationalInternet Connectivity

Higher demand

Figure 4b: Internet virtuous circle

International connections are the raw mate-rial of an Internet service provider, as most ofthe transmissions in the Internet networkcross borders. Therefore their price is animportant issue for ISP profitability. Howev-er in developing countries, the small numberof international connections available makesprices very high, as shown by the situation inEgypt.

In July 2000, Telecom Egypt signed an agree-ment with FLAG to build a local Point of Pres-ence (PoP) in Cairo to provide licensed ISPs withmanaged bandwidth services, as well as IP tran-sit. As demand for bandwidth has increasedover time, this agreement has resulted in fur-ther reductions in price, since FLAG is, so far, theonly international carrier in Egypt that offersone–stop–shop services (both transmissionand IP connectivity), which gives it a compet-itive edge.

International Internet connectivity (IIC)The cost of IIC comprises two elements: thetransmission link from Egypt to the UnitedStates and the IP port. Although it is quite com-mon for an ISP to purchase transmission fromone carrier and the IP port from another, mostInternet connections in Egypt, as well as theirIP peering ports, are offered via FLAG.

By early 2003, FLAG and TE reached an agree-ment with the local ISPs allowing the latter toown the bandwidth instead of leasing it. Thismodel is known everywhere as IndefeasibleRight of Use (IRU), which is a long–term leasefor a certain bandwidth capacity of an interna-tional cable. The IRU contract between thelocal ISPs,TE and FLAG allows the ISPs to leasethe capacity for 15 years. Under this model, theISP was able to acquire 155 Mbit/s of bandwidthfor US$ 3.675 million.With continuous supportfrom the government as well as the roll–out of

nationwide broadbandservices, demand forinternational band-width has increasedsteadily.Therefore, thisprice has decreasedrapidly over the pastcouple of years, to US$1.25 million, which isthe present IRU pricefor a 155 Mbit/s link. Bydepreciating the IRUnumbers over a fif-teen–year contractperiod, it turns out thatthe monthly charge fora 155 Mbit/s link isaround US$ 7,000.

To calculate the totalvalue paid in US$ byEgyptian ISPs for inter-national Internet band-width, the followingassumptions are takeninto account:

1. The current IRU price for 155 Mbit/s band-width, which is US$1.25 million (the averageprice for a 155 Mbit/s IP port), i.e. US$ 8,000per month;

2. Depreciating the IRU number over fouryears.

The results are as follows:– The IRU price per Mbit/s per month is US$ 168;– The IP port price per Mbit/s per month is

US$ 52;– This gives a total of US$ 220 paid per Mbit/s

per month.

Since the international capacity is currently3.345 Gbit/s, and the previous calculationshows that 1 Mbit/s per month costs US$ 220,it turns out that the total amount paid for inter-national bandwidth is US $735,900 per month.This figure is based on a best–case scenariowhich uses today’s minimum prices, althoughmost of the capacity was acquired in the pastat much higher prices.

Actually, Egyptian ISPs pay this high price, likeother non–Tier 1 carriers, because they have nochoice but to pay the full amount for transmis-sion as well as for peering (i.e. transit). This isbecause they cannot fulfill any of the Tier 1 car-riers’ policies for settlement–free intercon-nection. Such policies are well–nigh impossi-ble for any of the ISPs to achieve, since the con-nectivity level demanded by these companiesreflects global levels.

One possible mean of mitigation is to pushfor peering agreements with regional ISPs inorder to bypass Tier 1 carriers. It is also pos-sible to attract new Tier 1 carriers into theregion in order to increase ISP bargainingpower.

SSoouurrccee:: Baher Esmat and Juan Fernández, “International Inter-net Connection Costs,” ITU/WGIG http://www.wgig.org/docs/book/EB_JF.html

CAIRO

EGYPT

SUDAN

GazaStrip

W. Bank

Al Kharijah

Asyut

Al Minya

Al FayyumAl Jizah

Suez

Tanta

Port Said

SINAI

Sharm ashShaykh

MountCatherine

Hata’ibTriangle

SAU. AR.

JOR.

LIBYA

IS.

SYR.

Luxor

BurSafajah

AlGhardaqah

Aswan

SuezCanal

DeadSea

Nile

LakeNasser

Siwah

MarsaMatruh

OattaraDepression

Shubraal Khaymah

AlexandriaDamietta

Mediterranean Sea

Red Sea

Egypt’s international telecommunications

telecommunication market. In Nepal, forexample, the decision of the Government toallow ISPs to have their own internationalconnectivity using VSAT technology prompt-ed an increase in the available internation-al Internet bandwidth from 320 kbit/s in May1999 to over 1 Mbit/s by the end of 1999, andto 10 Mbit/s (downlink) in 2001. Similar reg-ulatory measures are being considered in sev-eral countries in the ESCWA region, such asEgypt and Jordan.

Quality of ServiceOne of the key factors affecting the spread ofbroadband services in a country relates tooperations and quality of service. Lack of a“customer service culture” and lengthy pro-visioning logistics are one of the main chal-lenges of today’s ADSL installation process.In Egypt, for example, installation takesfrom five days to three weeks, and variesfrom one exchange to another. The proceduredelay is mainly caused by lack of technicalskills, limited numbers of technical staff, orbureaucracy. Standardization would result ina quicker and enhanced installation process,which could be achieved by a smaller num-ber of technical personnel. To minimizebureaucracy and paperwork, the introductionof operational automation is essential.Another aspect relates to the existing copperplant. In many countries, operators areexperiencing difficulties in providing DSLservices over their copper cables, either dueto the long distance separating the cus-tomer from the central office, or due to thepoor quality of the copper cables themselves(small diameter, bad installation, etc.). Theseproblems are usually more often encounteredin rural areas (but sometimes even in subur-ban areas), and tend to discourage cus-

tomers from upgrading their Internet connec-tion to DSL. To deal with this problem,wireless local loop technologies can beemployed if enough frequency spectrum isavailable.

Existence of relevant content and applicationsOne of the key factors why people adoptbroadband is the availability of applicationsand content which are relevant and have aperceived value. On–line Arabic content is typ-ically estimated at approximately 1% of thetotal content on the “visible” Web. This“content divide” can be best shown by com-paring the figures for English and Arabic lan-guages on–line (figure 5). Clearly, govern-ments have a key role to play in bridging thisdigital divide.It can be observed that in countries wherebroadband penetration is high, the amountof content in local languages is relevant. Morecontent in local languages should increaseoverall Internet usage, and broadband adop-tion in particular will benefit. This is becauselocal–language content gives users morereasons to stay on–line, and those users oftengo for faster connections. Interactive multi-media content in particular is expected tostimulate demand for higher bandwidth.In some ESCWA countries like Egypt, contentis sometimes “bundled” with the accessmethod to guarantee revenues. Accessproviders might restrict access to certain con-tent by making it only accessible via certaindial–up numbers. This also applies to ADSLusers5. It is recommended, however, that con-tent providers and access providers maintainseparate operations to ensure maximumflexibility in the market.Successful broadband economies usuallymake effective use of relevant applicationsover broadband. The business community isconstantly seeking to minimize costs andincrease productivity; this is why the avail-ability of business applications is a major fac-tor to drive broadband adoption. Many gov-ernments in the ESCWA region have drawnup policies aimed at encouraging the use ofe–commerce. For instance, the volume oftrade and transactions conducted electroni-cally in the Gulf Cooperation Council (GCC)states was estimated at US$ 11 billion in2003.6 For residential users, IP telephony isprobably one of the “killer” applications forbroadband, especially in countries withmetered local and long–distance calls (whichis mainly the case in the ESCWA region).Many countries have chosen to ban, orseverely regulate, IP telephony. This measure

Chapter 5


EnglishArabic

Total population speakingthe language

Total population speakingthe language Online

Web pages on Googlein this language

4,500

5,000

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

300508

105288

126

4,590

mill

ions

Figure 5: Comparison between English and Arabic on-line

SSoouurrccee:: “E-government development,” working paper, ESCWA policy making network, 2006


6 Source: Ernst & Young sur-vey on E-Commerce in theGulf States, 2003.

PC penetration and means of accessThe availability of personal computers inhouseholds and workplaces is essential toaccess the Internet. The ESCWA region ischaracterized by a “relatively–low” to “fair”penetration of PCs (figure 6), with an aver-age of about eight PCs per 100 population,which is lower than the world average ofabout 13. The percentage of PCs effective-ly connected to the Internet is very difficultto assess.Several ESCWA countries (e.g., Egypt, Jordan,and Syria) have launched “popular PC” ini-

might help protect the incumbent operator inthe short term, but it constitutes a consider-able barrier against the proliferation of theInternet in general, and broadband in partic-ular. Other important applications for promot-ing broadband include audio streaming,video on demand, tele–working, etc.It is worth mentioning here that in 2003ESCWA launched an initiative for Arabic dig-ital content, with the aim of identifying theeconomic priorities and opportunities for thedevelopment of an Arabic content industry.7



Many Arabic speakers lament the lack ofArabic–language material on the WorldWide Web. With statistics showing thatArabic–language e–content accounts foronly 0.3 percent of the global total – insharp contrast to the massive contributionof Arab culture and civilization to humanhistory – the Ministry of Communicationsand Information Technology (MCIT) hasmade it a national priority to rectify thissituation and develop a strongArabic–language presence on the Web. Tothis end, MCIT has already taken a numberof steps.In May 2005, MCIT launched the e–ContentInitiative following the signing of acooperation protocol with the Federation ofEgyptian Publishers and the e–Learning andBusiness Solutions Union. The underlyingstrategy is based on the creation andpromotion of an Arabic e–content portal,which aims to bring into existence 2,000addresses and 300 software programs overa four–year period. The e–Content Initiativehas a fund of LE 70 million to cover its firstthree years, and it is expected that there willbe up to 300,000 titles available on theportal by June 2007.“The target of the Digital Arabic Contentportal is to promote the use of digitaltechnology to present Arabic content in thefields of literature, culture, history, socialsciences, art and music,” explained Dr. HodaBaraka, first deputy to the CIT Minister anddirector of MCIT’s informationinfrastructure. Already, digitized contentcovers a broad spectrum of categories andtopics in the form of books, magazines,directories, news, business resources,movies, music, sports, arts andentertainment resources.The first operational phase, the digitizationof Arabic content, is to be followed by theestablishment of Arabic databases andelectronic indexes to facilitate contentsearches and retrieval. This will make thegrowing body of material more readilyavailable and reduce the cost of posting andaccessing it.Additionally, in July 2006, Dr. Tarek Kamel,

Minister of CIT, and Mr. Farouk Hosni,Minister of Culture, signed two relatedcooperation protocols: one to digitizeselected cultural heritage works from theNational Library and Archives of Egypt (DarAl Kutub) in an LE 12 million project, and theother to digitize the cultural property of theEgyptian Theater Organization in a projectexpected to cost LE 2 million.These projects, which will take three yearsto complete, fall within the context of anational plan whose goal, according to Dr.Baraka, is “to enhance the presence andawareness of information technology andthe value–added benefits of cultural andintellectual property in order to create amore knowledgeable society and activate theDigital Arabic Content Initiative.” The firstoutput is expected in the second quarter of2007.Also in July, the Information TechnologyIndustry Development Agency (ITIDA), abranch of MCIT, announced its secondnational contest for Arabic e–content as partof the e–Content Initiative.“The competition aims at pushing forwardand enriching the Arabic e–content industryin Egypt. The idea came as a means ofencouraging the efforts that individuals,private institutions and civil society entitiesexert to develop e–content production,” saidEffat El–Shooky, senior adviser at ITIDA andvice president of the Regional InformationTechnology and Software EngineeringCenter (RITSEC).“The competition acts as a mechanism thathelps to build an edge for youth and SMEs, aswell as setting the groundwork for a niche toexport e–content to Arab countries,”El–Shooky noted.While implementation of the portal hasbeen assigned to Microsoft, the ministryitself, Dr. Baraka explains, has provided allthe technical requirements for the project,such as converting content into digitalformat, portal improvement, contentprotection tools, e–payment applicationsand tools for settling accounts with thevarious parties involved. “MCIT also pays forthe copyrights and intellectual property

rights of the content providers and softwareprograms,” she notes.Other related efforts include MCIT’s recentagreement with Dar Al Maaref Printing andPublishing House to digitize selected workspublished by the company over a period ofthree years, with the first output expected tobe delivered in the second quarter of 2007.Various other parties are also working toachieve similar targets. The Center forDocumentation of Cultural and NaturalHeritage (CULTNAT) now has acomprehensive information systemdesigned to document Egyptian heritage,increasing its local and internationalexposure via hard–copy printing, on–linepublishing and a state–of–the–art Website.The digital documentation at CULTNATencompasses approximately 90 milliondocuments covering all branches ofEgyptian historical and cultural heritage.Another contributor to the MCIT initiative isGoogle, whose launch of a news service inArabic allows users to search more than 500Arabic–language sources. Meanwhile, Arabiccontent provider Maktoob.com, incooperation with the BBC, has added a newsservice to its site.Egypt has set an example as a purveyor ofquality Arabic content for various media andMCIT’s e–Content Initiative, Dr. Barakaasserts, “will promote the development ofmaterials in a wide range of categoriesincluding arts, education, sports andentertainment.”With a 32 per cent increase in the market fordigital documentation and contentmanagement in the countries of the ArabGulf being just one of the dramaticdevelopments in the Arabic e–content fieldnoted by various studies and reports overrecent years, the success of the efforts ofMCIT and others is clearly set to change theglobal digital landscape, while at the sametime opening the doors of the on-linecommunity to millions of Arabic speakers inthe Middle East and around the world.

SSoouurrccee:: Ministry of Communications and InformationTechnology, Egypthttp://www.mcit.gov.eg/FeatureDetailes.aspx?id=eO7DPO7EznY=

Egypt at the forefront of e–content arabization

7 “Digital Arabic Content:Opportunities, Priorities,and Strategies,” ESCWA,2005 (in Arabic).

tiatives offering PCs to the public at afford-able prices with easy installments. In mostcases, those PCs were bundled with Internetaccounts or telephone bills – sometimeswith broadband access.For low–income users, collective Internetaccess is an appropriate solution. Someoperators have successfully experimentedwith subcontracting collective access locationsto single or small groups of entrepreneurs.This ensures that the facility is kept up todate, and it minimizes the risk taken by theoperator. It also offers a service that is bet-ter suited to the local culture.Developing countries have also experiment-ed with “multi–purpose community tele–cen-ter” models, whereby a public access facilityprovides a variety of ICT–related services, suchas telephony, Internet access, office automa-tion workstation, photocopying, etc. Althoughthe idea appears attractive, it has turned outto be disappointing. The causes of the failureof such projects are generally the same:bureaucracy (especially in government agen-cies); financing by donations, with insufficientcommitment from the local private playersinvolved; and/or the absence of an appropri-ate business model with clear targets.These few failures should be seen as lessonslearnt in how to make such collective accesssustainable. There are no miracle recipes, justa few common–sense elements: ensure thatlocal players are involved, ensure that thepilot phase (during which aid money isavailable) is used to lay the foundations for

Chapter 5


a viable business plan and, more important-ly, the innovative use of ICT to provide use-ful, indeed essential, services to local people.

Development–oriented policiesUniversal serviceGovernments can encourage the investmentsneeded to deploy broadband in high–costareas (e.g., rural and remote regions) byincluding broadband service in the definitionof universal service or universal access.Provisions relating to a “universal service obli-gation” (USO) for basic telecommunicationsare commonly adopted in various countries.In essence, USO constitutes a requirementthat telecommunications operators providebasic voice and Internet services to all whorequest it, at a uniform and affordable price,even though there might be significant differ-ences in the costs of supply. Applying such atraditional USO approach to broadband serv-ices would mean giving all consumers (includ-ing those in regional, rural and remoteareas) the right to a broadband connectionon reasonable demand at affordable prices.By comparison, a policy of “universal access”generally refers to a situation where everyinhabitant has a reasonable means of accessto a publicly available broadband service.Universal access may be provided throughcommunity telecommunications centers,tele–boutiques, community broadband Inter-net access terminals, and similar facilities.While universal service and universal accesspolicies can be quite different, the concepts

Bahrain

Egypt

Jordan

Kuwait

Lebanon

Oman

Palestine

Qatar

Saudi Arabia

Syria

United Arab Emirates

Yemen

ESCWA Region (*)

Arab States (**)

World

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

Figure 6: PC penetration per 100 population in the ESCWA countries, 2005

SSoouurrccee:: ITU World Telecommunication Indicators; ESCWA Statistical Information System

(*)excluding Iraq (**)excluding Iraq and Libya

of different platforms, many of which areoffered by new competitors).To conclude, the policy makers have to makea trade–off between the introduction of com-petition in the telecommunication area, andthe willingness to narrow the digital gapbetween urban and rural regions, andbetween high and low income populations.The regulatory authorities, according totheir priorities, can establish a policy thattakes into account the implications of thesetwo aspects.

Local loop unbundlingLocal loop unbundling is the process ofallowing telecommunications operators to usethe twisted–pair telephone connections fromthe telephone exchange central office to thecustomer’s premises. The local loop is ownedby the incumbent local exchange carrier.The emergence of Internet services highlight-

are closely related, and the terms are some-times used interchangeably. Universal accessmay also be interpreted as not addressing theissue of “affordable price.” In the case of ISDNfor example, many regulators in Europerequired that ISDN be available throughoutthe country on demand, but prices for ISDNaccess were left to the market.Incorporating broadband into the USO is like-ly to require a significant investment inupgrading the operator’s access network. Thiscan adversely impact the development ofcompetition in the industry, both by theimposition of higher USO levies on an incum-bent’s competitors, and by further entrench-ing subsidization of the incumbent’s servic-es in USO net cost areas. Such a developmentmay well have the effect of dissuading inno-vative alternative providers from enteringregional markets (since high–speed dataservices can be delivered through a number



The evolution of the PC for Communityinitiative promises to increase thepenetration of PCs and Internet users withinEgyptian society.Adel Radwan had wanted to buy hiseighteen–year–old daughter a computer forsome time, but he could not afford it.Although it was possible for him to pay forit in installments charged to his phone bill,he still could not afford the monthly costs,and could only afford to spend around 50 LEper month. It is Adel, and others like him, forwhom the latest development in the PC forCommunity initiative was designed. Thenew initiative, dubbed “the FamilyComputer”, provides PCs at a cost rangingfrom 1,500 to 1,800 LE. All computerspreviously provided under the “PC for EveryHome initiative” (part of the PC forCommunity scheme) had beenhigh–specification units, with prices rangingfrom 2,800 to 4,650 LE. However, MCITfound out that a large proportion ofprospective users needed more basicspecifications fit for beginners, students, orsimple office use.To this end, Dr. Tarek Kamel, Minister ofCommunications and InformationTechnology, announced with Jean–PhilippeCourtois, President of MicrosoftInternational, the launch of a new, low–cost,easy–to–use personal computer. The newcomputer is available to Egyptian familiesfor a monthly installment in the range of 50LE, paid back normally over a period of 40months. The amount of the installment wasidentified by polls taken in severalprovinces.The PCs will feature an Arabic version ofMicrosoft Windows XP Starter Edition, and

will be totally compatible with beginners’needs. Windows XP Starter Edition wasdeveloped especially for Arab users by agroup of the corporation’s experts abroad. Itwas achieved with the assistance of adevelopment team in the company’sinnovation center in Egypt’s Smart Village.The new operating system is speciallydesigned with detailed audio (Egyptianvoiceover), video, and written descriptions ofall functions to assist first–time users. Thespecifications and hardware were identifiedto meet the basic needs of the largest sectorof users, with processors ranging from 1.0 to2.13 GHz, memory of 128 to 256 MB, and ahard disk of 40 GB.In addition, the system features a highlydetailed user manual to solve any operatingproblems the user might face. Internationalhardware companies like Intel and Via arepartners in the development of this new PC,and the computer is easily upgradeable byreplacing the operating system withWindows XP Home Edition, or Windows XPProfessional. Replacing the motherboardand the processor is also possible toimprove performance.With this latest low–cost PC initiative, MCIThopes to reach 40–50 per cent of Egyptianfamilies in all provinces within five to sevenyears. The PC for Every Home initiative hasso far succeeded in distributing more than250,000 PCs to low–income Egyptianfamilies.The new PC will also be offered through theinstallment programs sponsored by BanqueMisr and the National Bank of Egypt.With the framework for the new PC now inplace, MCIT is now working on providing allprovinces with quality marketing,

post–sales, and maintenance services thatwill build confidence in the initiative andhelp reach targets.Launching low–cost, easy–to–use computersis a big step towards developing anEgyptian Information Society and narrowingthe digital gap. Such initiatives areimplemented in cooperation withmultinational software and hardwarecorporations, as well as local computerassembly companies, within the frameworkof a public/private partnership model. Theobjective of these partnerships is to extendthe computer and Internet usage across alldifferent segments of the community, andto help improve the educational andprofessional levels of the users.This initiative will also support building astrong, local IT industry that fulfills theneeds of both local and regional markets forproducts. Already, offers have been tenderedby more than 12 companies participating inthe Computer for Every Home initiative toassemble the new computer.Additionally, Intel is expected to launch anew product designed at the Intel DesignCenter in Egypt, which will be released tothe local market in May 2007. According todistribution levels, it will be produced byEgyptian hardware manufacturingcompanies. There will also be continuedcooperation with VIA Technology to developproducts that are compatible with theEgyptian market, and encourage it to investin the Egyptian market.SSoouurrccee:: Ministry of Communications and Informationhttp://www.mcit.gov.eg/FeatureDetailes.aspx?id=QOLSBRAtAF8=

More for less

ed the importance of access to the local loop,since Internet service providers (ISPs) haveto depend on local network providers toaccess customers. With the emergence ofhigh–speed Internet access based on the pub-lic switched telecommunications network –mainly asymmetric digital subscriber linetechnology (ADSL) – the question of access tolocal network infrastructures has moved tothe forefront of policy agendas.Local loop unbundling can be classified intothree main types (figure 7):1. Full unbundling (or access to “raw cop-

per.”);2. Line sharing or shared access;3. Bit–stream access.

Full unbundling (sometimes referred to asaccess to raw copper) occurs when the cop-per pairs connecting a subscriber to the MDFare leased by a new entrant from the incum-bent. The new entrant takes total control ofthe copper pairs and can provide subscriberswith all services including voice. The newentrant can also enhance the copper pairs by

adding ADSL technology. The incumbentstill maintains ownership of the unbundledloop and is responsible for maintaining it.Line sharing allows the incumbent to main-tain control of the copper pair and continueproviding some services to a subscriberwhile allowing an access seeker to lease partof the copper pair spectrum and provide serv-ices to the same subscriber. Line sharingallows the incumbent to continue to providetelephone service while the competitor pro-vides broadband (xDSL) services on thesame copper pair. With line sharing, the com-peting supplier uses the non–voice frequen-cy of the loop. Consumers can obtain broad-band service from the most competitiveprovider without installing a second line.A primary difficulty of line sharing has to dowith technical interface problems. For exam-ple, implementation of ADSL with telephonyand with ISDN uses different spectrum allo-cation, such that different equipment may benecessary both for the splitter and for ADSL.In addition, line sharing may slow down thespeed for digital access in general due to “fre-quency unbundling”. When high–speed dataruns along adjacent telephone lines, the sig-nal on one wire can bring noise into the nextwire, interfering with the signal and result-ing in slower data rates. This problem isknown as “crosstalk”, which has to be tech-nically overcome in order to expand ADSLaccess via line sharing.Bit–stream access provides ISPs with awholesale xDSL product from the incum-bent. With bit–stream access, the incumbentmaintains control over the subscriber’s linebut allocates spectrum to an access seeker.The incumbent provides the ADSL technol-ogy and modems so that new entrants haveno management control over the physicalline and are not allowed to add other equip-ment. Unlike full unbundling and line shar-ing, the access seekers can only supply theservices that the incumbent designates.Accordingly, bit– stream access reducesthe level of competition compared with fullunbundling and line sharing, as there is nocompetition at the physical layer, and noincentive for the incumbent to deploy newtechnology. For new entrants, a low level ofservice–based competition can be expecteddue to the fact that they can only obtainaccess to the system that the incumbentchooses to implement.With bit–stream access, spectrum manage-ment between operators is unnecessarybecause it is handled completely by theincumbent. It is partly for this reason that new

Chapter 5


Current universal service regime in Jordan

Jordan Telecom’s license imposes certain universal servicerequirements:• JT must provide basic telephone service to any person wishing to

obtain it, willing to pay the published prices, and abide by itsgenerally–applicable terms and conditions;

• JT must provide service to any household in a municipality withover 300 residents, and to residents outside such areas, except thatJT may recover its costs of connection over and above a certainthreshold.

Following liberalization of the market, the TRC is required to create acompetitively neutral Universal Service framework:• Mechanism to be developed to allow other competing operators to

share the cost of providing universal service upon the licensing ofsuch operators;

• TRC may require JT to allow other operators to meet the UniversalService Obligation through a transfer of subsidies;

• Universal Service Obligations must be administered in atransparent, non–discriminatory and competitively neutral manner.

SSoouurrccee:: Muna Nijem, Telecommunications Regulatory Commission (TRC), Jordan, “FutureChallenges for the TRC,” 1st Regulatory Meeting for the ITU Arab Region, Algeria, 2003

DSL Modem

Full local loopunbundling

Shared local loopunbundling

Bitstream Access(ATM or IP)

Phone

DSLAM

ATM

BAS

IP backbonenetwork

Internet

Splitter

Figure 7: Types of local loop unbundling

SSoouurrccee:: Anne Lenfant, “Broadband Regulation in France,” Workshop on Novel CommunicationTechnologies for Socio-economic Development, Beirut, 11-13 July 2005



Local loop unbundling in France

Broadband competition, notably in ADSL,took off sharply in 2003, with diversifiedservice and tariff offers. At the end of 2006,France is among the European leaders inADSL and, notably, unbundling, with over 10million subscribers. The rivals of Orange,France Telecom’s Internet service provider,have 55% of the retail market.The fall in wholesale prices at the end of2003, as well as tariffs being differentiatedas a function of production costs, allowedthe substantial productivity gains in the

sector to be passed on to the end user, whilestill encouraging alternative operators andFrance Telecom to persist with thegeographical rollout of ADSL.The success of the LLU process in France hasenabled significant progress in the broadbandpenetration in French households. Thedifferent offers are well diversified, fromsimple Internet access to Triple Play services,therefore cost oriented and customer focused.The dynamic generated by this process hasbeen profitable for the incumbent telecom

operator France Telecom, although initially itfeared losing telephony business. The graphshows that, despite the entry of newcompetitors into the market, the number ofconnections fully managed by France Telecomhas increased. Moreover, the loss of marketshare is compensated for by the revenue fromcompetitors for unbundling, copper wire linerental and maintenance services, whilstnoting that copper broadband has reducedthe deployment of fiber–optics to the home.SSoouurrccee:: ARCEP; Unbundling in France at 31 March 2006

Number of unbundled accesses(in thousands)

January 2002

April 2002

July 2002

October 2

002

January 2003

April 2003

July 2003

October 2

003

January 2004

April 2004

July 2004

October 2

004

January 2005

April 2005

July 2005

October 2

005

January 2006

April 2006

Share of total unbundling

3,500

3,000

2,500

2,000

1,500

1,000

500

- 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Partial unbundling Share of total unburdlingFull unbundling Source: ARCEP

January 2002

April 2002

July 2002

October 2

002

January 2003

April 2003

July 2003

October 2

003

January 2004

April 2004

July 2004

October 2

004

January 2005

April 2005

July 2005

Num

ber o

f acc

ess (

in th

ousa

nds)

Evolution of the number of broadband Internet access in France

full LLU

shared access

Bitstream

national offer

France Télécom1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

entrants generally do not favor this method.This variant of LLU can be a good option,especially for ISPs. While bit–stream accesshas been considered as a form of unbundling,there are some countries that do not viewbit–stream access as coming within the scopeof unbundling policy.There are very few example of local loopunbundling in the ESCWA region; none of themhave yet reached the stage of full unbundling.Jordan announced an “unbundling policy” in2005 focusing mainly on bit–stream access.Partial unbundling took place in Egypt, whilein Syria, only resale services are allowed forcompetitive DSL providers, and the incumbent,Syrian Telecom, keeps full ownership of thelocal loop and the associated broadbandequipment (DSLAM).

Impact of LLU on pricesThe issue of unbundling has brought to theforefront the requirement to rebalance sub-scriber prices and, in particular, fixed sub-scriber line charges. The objective is that theyshould reflect costs. In the past, when coun-tries decided to open their telecommunicationmarkets to competition, most regulatorsbegan a deliberate policy of rebalancingcharges toward cost. In some countries a tar-get date was set for price rebalancing. In manycountries however, regulators have been

reluctant to raise subscriber prices for month-ly charges, given that these rates are political-ly sensitive. The result is that, in some coun-tries, rebalancing of subscriber fixed chargeshas not yet been achieved. Rebalanced pricesare important for new entrants wanting totake advantage of unbundling. Without rebal-anced prices, new entrants with a businessmodel focusing on low–value services can becaught in a price squeeze and may be unableto offer service at competitive prices. This isbecause regulators try to price unbundled localloops at cost. If subscriber line charges are setbelow cost, then unbundled loop prices fornew entrants will be higher than the retailprice charged for residential subscriber lines.This means that new entrants will not be ableto use fully unbundled local loops to offer sim-ilar subscriber lines (figure 8). For line shar-ing, this poses less of a problem as long asthere is non–discriminatory pricing betweenthe incumbent and its ISP, or the incumbentand new entrants, for access to spectrum oncopper loops.Another price implication of local loopunbundling has to do with the geographicaveraging of subscriber line charges. Forinstance, residential subscribers pay thesame for a line irrespective of where they livein the country, even though the cost of provid-ing these lines may differ, especially between

Chapter 5


Unbundling involves the incumbenttelecommunications operator allowing theuse of various components of its networkand their functionality to its competitors.Such a process would involve the physicalconnection of the incumbent’s facilitieswith those of the other licensed operator.This configuration enables competingproviders partly or wholly to use theincumbent’s network and to provide voiceand/or data services to end users using acombination of the incumbent’s networkand their own facilities.Given the widespread difficulties that havebeen experienced in many countries to datewith respect to full local loop unbundling(“LLU”), the TRC has decided to implementonly bit–stream unbundling for LLU andwill require that Jordan Telecom providethis facility to other operators at cost basedrates. The TRC believes that bit–streamunbundling is consistent with the desire to“ensure the availability of advanced andhigh quality Information andCommunications Technology (ICT) servicesto all users at just, reasonable, andaffordable prices”.The TRC has also concluded that“transmission link services” as defined in

the original Guidelines (“services where aDesignated Licensee provides fixed capacitybetween two fixed points over its networkto other Licensees”) are adequate torespond to the needs of competingoperators for unbundled transport services.However, for additional clarity, the TRC willclassify “transmission link services” and“interconnection link services” as “transportservices” (as defined above). In accordancewith the current definition in the“Guidelines”, such transport services do notinclude the provision of service directly tothe subscriber’s premises.Rather than develop a new proceduralframework to govern its decision regardingbit–stream unbundling, the TRC will utilizethe processes and procedures that currentlyexist in the “Guidelines” and will make thenecessary modifications to accommodatebit–stream unbundling including theinsertion of new processes on Bit–streamUnbundling. However, for the sake ofclarity, in order to ensure that bit–streamunbundling is provided to other operatorsin a timely and orderly fashion, the TRC isoutlining the procedures and provisioningintervals that incumbents (primarily JT) willbe expected to adhere to. In formulating its

decision on provisioning intervals, the TRCtook into consideration the scope and sizeof the existing fixed line network (i.e., JT) inJordan and determined that:• Upon receipt of another operator’s

provisioning request, JT will provide aninitial response within ten (10) workingdays;

• If the operator (one party) receives apositive response from JT (the otherparty), the two parties will have amaximum of 15 working days in which toreach agreement on the manner and thetime frame in which the bit–streamunbundling will be provisioned;

• Provided that the two parties reachagreement within the time framespecified above, the TRC will have five (5)working days in which to issue itsapproval or to require changes by one orboth parties;

• If JT’s initial response is negative or if theparties fail to reach agreement, theCommission will investigate and renderits decision within 30 working days.

SSoouurrccee:: “Explanatory memorandum on interconnection, net-work unbundling, infrastructure sharing and collocationrequirements,” Telecommunications Regulatory Commission(TRC), Jordan, 2005

Conclusions on network unbundling in Jordan

quate high–speed, always–on connection.One can distinguish between two types of con-vergence:1. Convergence of technologies and net-

works to build a common platform to deliv-er voice, data and video services.

2. Convergence of services, enabling thedelivery of multiple services to end usersover the same medium.

Traditional circuit–switching core networks(fixed or mobile) have long been deployed forvoice transport. With the introduction of IP,a new requirement to transport data andservices emerged – for which packet core net-works, fixed or mobile, have been deployed.With the availability of IP in the network, thereis now a new possibility: the delivery and trans-port of voice services over IP. Indeed, this is thebasis of the Next–Generation Network (NGN)core, fixed or mobile. First, there is the trans-port of Voice over IP, then the evolution towardIMS, or the transport of any kind of multime-dia/conversational services. This is usuallyreferred to as service convergence (figure 9).Many analysts and market leaders now

urban and rural areas. However, if unbundledloops are charged at cost, rather than at someaverage cost, the policy of geographic averag-ing of prices breaks down. Whether thisoccurs may be a policy or regulator decision.If geographic averaging is maintained in thepricing of unbundled local loops, new entrantsmay be faced with a price squeeze if they wantto use full unbundled local loops to offer voiceservices, unless subscriber line prices are alsogeographically averaged. As noted earlier, forline sharing, the geographic averaging ofprices may not raise a problem for newentrants, so long as there is non–discrimina-tory pricing by the incumbent for the pricesof DSL–enabled lines. Incumbents may alsoraise other problems. For example, if theyhave to charge average prices for DSL, theymay suggest that new entrants are skimmingby using LLU to supply services to the mostprofitable customers.

ConvergenceConvergence can be defined as the integrationof computers and information technology,communication networks, and broadcastingand television. A more formal and compre-hensive definition of convergence is “theprogressive integration of the value chain ofthe information and content industries–telecommunications, posts, multimedia,electronic commerce, broadcasting, informa-tion technology, and publishing industries–into a single value chain based on the com-mon use and distribution of digital technol-ogy”.8 This definition shows the tight rela-tionship between convergence and broad-band access, as the delivery of services in aconverged environment requires an ade-



Incumbentoperator

Alternativeoperator

Incumbentoperator

Alternativeoperator

Price ofthe offer

Normal Situation Eviction Situation

Incumbentinfrastructure

rental

Cost ofproprietary

infrastructure

Price ofthe offer Incumbent

infrastructurerental

Cost ofproprietary

infrastructure

Profits

Figure 8: Avoiding eviction prices

SSoouurrccee:: ARCEP

Telecom1990’s

Telecom + IP plug2000-2005

IP + Telecom plug2005-2010

All IP2010

Voice VPN

Voice

ManagedCommunication

Services

Triple Play

Convergence

Payment

Corporate Data

Data, Video & Music

One phone

Converged IMSServices

NGN Core IMS Core

Circuit Network

Prepaid Convergent Payment Multi-domain Payment

Packet Network

IP & IT

Figure 9: Evolution toward converged services


8 Cited in: Edwin S. Soriano,“Nets, Webs, and the Infor-mation Infrastructure,”UNDP-APDIP, 2003.

60 Broadband for Development in the ESCWA Region

Chapter 5

to control the Voice over Internet Protocol(VoIP) service, the service layer logic, such asthe intelligent network, can be re–used. In thecase of the Wireless Application Protocol(WAP) or Voice eXtensible Markup Language(VXML), the interface to the shared WWWbrowser component can be re–used becauseit has been defined between the core logic anddifferent network services even at the serv-ice layer. Network–level integration has twocomponents: a data plane (integrated with IP)and a control plane (integrated with unifiedcontrol equipment such as a softswitch). Con-vergence at the lower layers will, of course,facilitate convergence at the higher layers.However, the cost of implementing conver-gence at the lower layers may be high, asthese layers represent a large percentage ofthe total network CAPEX. For example, theaccess layer represents about 30-50% of theinvestment in the whole network.The second objective of the operators is toreduce their investment and operationscosts. This can again be achieved throughnetwork convergence. In order to expand andintroduce new services, network operatorscan continue to develop specific overlay net-works or attempt to develop converged ones(figure 11).

agree that IT innovation should be broughtto the telecom market, including its core func-tions, as soon as possible. Service providersshould be able to leverage the advantages ofIT in their existing networks immediately.They need to complete and transform theirnetworks at several levels, including thenetwork control level, for traditional circuitnetworks with traditional terminals.The first objective of the operators is to increasetheir revenues by offering new services (includ-ing VoIP and IP TV), which can be introducedin two ways through network expansion.The first approach is to implement the serv-ice offered by one network through anothernetwork, thus creating a new service on thesecond network. A universal service can beprovided after extracting the common fea-tures of both networks. Examples of tradition-al services provided through different net-works are shown in figure 10, where the boldtype shows the new services generated fromthe traditional services.The second way is to combine existing servic-es to generate a new one. For example, multi-media services combine voice and data servic-es, and location–based services combine mobileinformation and data services. Other examplesare browse & talk, and unified messaging.Technical and economic considerations mustbe taken into account when deploying net-work convergence. Indeed, network con-vergence at the service layer may be used toexpand services. When a softswitch is used

Fixed voice services

Voice message

VXML

Voice Mail

Data Services

VoIP

WWW browse

Email

Mobile Services

Voice

WAP

Unified message

Figure 10: Example of traditional services andtheir mapping to other service networks


Simplifies the networkarchitecture

Shares the commonequipment to reduce Capex

Reduces Opex(fewer networkelements, less, room, spareparts, management, training)

Reuses resources statistically

Low cost to change service orintroduce new ones

Dimensioning accordingto the deployment

Less dependency on onesupplier

Optimized according toservice requirement

Faster deployment

Proven large scaledeployment

Converged network Overlay network

Figure 11: Comparison between converged andoverlay networks


In this chapter, we will revisit the factorsdiscussed in previous chapters, and try tosuggest recommendations for action in

order to solve some of the problems encoun-tered, and to address those factors thathave a substantial impact from both thedemand and supply perspective, with the aimof improving broadband deployment in theESCWA region.

It will be evident that these recommenda-tions are closely inter–related, and dependoverall on one overarching principle: theeconomic case for broadband access cannotbe made separately from voice telephonyand TV distribution, with their associatedadvertising-based or subscription–basedparadigms.

The dramatic take–up of broadband access inFrance, which was highlighted in the previ-ous chapter of this report, was “technically”related to a regulatory framework that favoredlocal loop unbundling. Yet the main driverbehind customers signing up massively tobroadband access was the introduction ofcompetitive offers for bundled broadbandaccess, telephony and TV services (so–calledTriple Play).

The list of ideas below must be considered asrecommendations for coherent action, ratherthan a “one–size–fits–all” recipe. The ESCWAregion consists of 13 countries that sharemany sociological, political and culturalaspects, but also demonstrate profound dis-parities in economic, social, and humanterms. Hence, what is proposed below is ageneral framework for action. Implementa-tion must be adapted to each country–specif-ic situation.

Bring down broadband prices with bundled serv-ice offers, and create a virtuous adoption circleConsumers will only adopt broadband whenits cost is justified and affordable; suitable pric-ing schemes are thus vital to increase broad-band adoption. High prices for broadbandaccess services in the ESCWA region cannot

be brought down in a sustainable mannerunless market dynamics and the interest of theplayers involved reinforce such a target.

From the strict point of pricing, the key fac-tor seems to be the availability of bundledoffers, where broadband access is offeredwith other services like telephony – fixed andeven mobile (see convergence issues below)– and access to video content. Customers willbe more willing to pay a single one–stop shopoperator, especially if the bundle cost ischeaper than the sum of its individual ele-ments, resulting in considerable savings forboth providers and consumers, and thusaccelerating the adoption of broadband.

With bundled services, even “light” dial–upusers might have an incentive to switch tobroadband, since the cost of broadband iscombined with other services that they use,like telephony or TV.

For service providers, the economy of scalewill make international connectivity cheap-er. Attractive prices could in this case be pro-posed for huge bandwidths (tens of Mbit/s).

Improve regional connectivity and peering, andallow the emergence of powerful regional service providers The ESCWA region should further takeadvantage of the two existing IXPs: EMIXin the United Arab Emirates, and CRIX inEgypt. Previous attempts to build a region-al “Pan–Arab Backbone Network” coveringthe ESCWA region should be completed,and given the undivided attention of poli-cy–makers. Accordingly, operators in thesecountries will be able to build exchangepoints and aggregate local traffic, thus sav-ing on international capacity requirements,reducing the overall amount paid in inter-national bandwidth, and enabling opera-tors to attract content from developedcountries to be mirrored and/or hostedlocally. This would eventually reduce theasymmetry in the traffic exchanged withemerging countries.


Chapter 6

Going Forward

International connectivity is very expensive,hindering the growth of potential Internetusage, and preventing ISPs from investing inmore international bandwidth. The viciouscircle can be broken through a major invest-ment – as part of a national broadband strat-egy, for instance – in international bandwidthcapacities. The resulting lower connectioncosts would enable ISPs to offer broadbandconnectivity at a lower price to stimulatedemand.

Promoting peering agreements with region-al ISPs in order to bypass Tier 1 carrierswould also relieve the pressure on ISPs topay high prices. Since ISPs cannot fulfill anyof the Tier 1 carriers’ policies for settle-ment–free interconnection, they have nochoice but to pay the full transmission cost,as well as peering and/or transit costs. It isalso possible to attract new Tier 1 carriersto the region in order to increase ISPs’ bar-gaining power.

Finally, allowing the emergence of at least onepowerful regional service provider operatingin many countries of the ESCWA region, andcapable, due to the volume of traffic it han-dles, of negotiating peering agreements withmajor Internet backbone providers, could bea welcome move.

Improve technical and human factors related toQuality of Service as a key enabler for massbroadband adoptionQuality of Service is one of the most difficultissues to solve, and depends on both techni-cal and human factors.

Promoting a “customer service culture” andsimplifying provisioning logistics are twomain recommendations to enhance today’sbroadband installation process. The processdelay can be reduced through standardiza-tion of technical experience, raising theskills of technical staff, and alleviating bureau-cracy through the introduction of automation,which would result in a quicker and betterinstallation process being achieved by asmaller number of technical personnel.

Lack of quality installation and maintenance,especially at the end–user side of the network,is an issue in the region. For instance, thequality of copper for DSL access in theregion is generally perceived as “bad”, butthis is based only on anecdotal evidence. Areliable and independent source of informa-tion – published for instance by a regulato-

ry authority – on copper quality would allowindependent service providers to build a reli-able business plan for DSL deploymentbased on sound assumptions.

Encouraging the adoption of wireless localloop technologies, and ensuring the availabil-ity of the necessary frequency spectrum, areinitiatives that must be taken by governmentsand policy–makers. This allows circumven-tion of the difficulties in providing DSLservices over copper cables, especially inrural areas.

Another issue is the lack of a “service cul-ture”. It is fairly well established that broad-band access installation requires a minimumlevel of technical skills from the end user, andquality “hot line” support from the serviceprovider. Service providers in the region mustpay special attention to this problem, andlearn from the experience of developedcountries.

Provide relevant content and applications, anduse broadband access as a lever to improvehuman development deficiencies in the regionAs has been demonstrated in several parts ofthe world, the availability of applications andlocal content boost the adoption of broadbandtechnologies and services. The more relevantcontent available in the Arabic language, thegreater the increase in overall Internet usage,and the wider broadband will be deployed.For further information on the issue of Ara-bic content, refer to the ESCWA Initiative on“Promoting Digital Arabic Content”,1 andESCWA’s study on “Digital Arabic Content:Opportunities, Priorities, and Strategies”.2

Spam is also a problem that must be tackledwithin the framework of international collab-oration agreed upon by the World Summit onthe Information Society, and as recommend-ed by the Internet Governance Forum (IGF).

Interactive multimedia content is expected tostimulate demand for higher bandwidth. It isrecommended that a regulatory frameworkthat allows content providers to providetheir output through any access platform(including broadband access) should beencouraged, since many of the countries inthe region face serious problems in terms ofcontent piracy.3 Willingness (or lack thereof)to give access to information and educationto the general public is another key issue. The2003 UNDP Arab Human DevelopmentReport devoted to the subject of “Building aKnowledge Society” calls for “the establish-


Chapter 6

1 ESCWA, 2003, “PromotingDigital Arabic Content”(E/ESCWA/ICTD/2003/10)

2 ESCWA, 2005, “Digital Ara-bic Content: Opportunities,Priorities, and Strategies”(E/ESCWA/ICTD/2005/4)

3 Through satellite becauseof advances in scramblingtechnologies, as exempli-fied by the last soccer WorldCup.

access. Applying a traditional Universal Ser-vice Obligation (USO) approach to broadbandservices would mean giving all consumers theright to a broadband connection on reason-able demand at affordable prices.

Accordingly, a policy of “universal access”generally refers to a situation where everyinhabitant has a reasonable means of accessto a publicly available broadband service.Incorporating broadband services into theUSO is likely to require a significant invest-ment in upgrading the operator’s accessnetwork. In this regard, policy makers haveto make a trade–off between the introductionof competition in the telecommunicationsarena, and their willingness to bridge the dig-ital gap between urban and rural regions, andbetween high– and low–income populations.The regulatory authorities, depending ontheir priorities, can set up a policy thattakes into account the implications of thesetwo aspects.

Develop and generalize local loop unbundlingand the emergence of multiple–service offers bynewcomers and incumbentsMany of the ESCWA countries have estab-lished an independent telecom regulatoryauthority and introduced effective compe-tition in the telecom sector. However, effec-tive competition – in terms of service andprice – in the domain of Internet access ingeneral, and broadband access in partic-ular, is still lacking. This is due to theabsence of effective unbundling of thelocal loop due to the fear of many regula-tors, governments and incumbent opera-tors that unbundling the local loop willopen a Pandora’s box of unregulated Voiceover IP (VoIP).

This fear of unregulated VoIP is at best short-sighted, and will cause unnecessary delay inthe evolution of service operators in termsof business and technology.

The experience of developed countriespoints to an initial post–unbundling periodwhere incumbents could see their revenuesattacked by multiple–play newcomers. Insuch situations, they will typically fightback, retaining customers with their ownmultiple–play offers that leverage theirmastery of their own networks. In short,they evolve from being basically asingle–play (voice service) operator to a mul-tiple–play service provider. This evolution isalso based on technical considerations

ment of an independent knowledge spherethat produces and promotes knowledge”, andhighlights “the legal constraints on publica-tions…and electronic media” in many coun-tries in the region.

Furthermore, the new, so–called “Web 2.0”paradigm, where the Internet is becomingmore of an exchange platform where every“user” can become a “publisher” and “contentproducer”, is an important development. Thecreation of local and regional portals allowingthis kind of platform will contribute to the useof the Internet by everyone – especially youngpeople – and to the creation of a virtual pub-lic space for freedom of speech, the absenceof which was also pointed out by the last 2004UNDP Arab Human Development Report.

Develop collective means of access to the Inter-net and affordable PCsSince the ESCWA region is characterized bya “relatively low” to “fair” penetration of PCs,it is evident that the limited availability of PCsis still a major obstacle to the widespreadadoption of broadband.

For users with low incomes, especially thoseliving in remote rural areas, collective accessto the Internet through cafés or communitycenters may provide an appropriate solution.For such an approach to work and be sustain-able, local players must be involved in the def-inition and launching of innovative applica-tions and services that relate to the local com-munities in these areas. The connectivity ofsuch community centers with broadband canleverage new broadband wireless technolo-gies like WiMAX.

On the other hand, launching low–cost,easy–to–use PCs is an essential step towardsdeveloping the Information Society. Suchaffordable PCs need to be offered in cooper-ation with multinational software and hard-ware corporations, as well as local comput-er assembly companies, within the frameworkof a public/private partnership model. Prop-er pay–by–installment programs sponsored bylocal banks, coupled with quality marketing,post–sales and maintenance services, will helpbuild confidence in such schemes.

Include broadband access as a Universal Service Obligation Governments should support investment todeploy broadband services in high–costareas by including broadband services in thedefinition of universal service or universal


Going Forward

related to convergence, which will be dis-cussed in the section below.

Furthermore, policy–makers should try torebalance subscriber prices, in particularfixed subscriber–line charges, with the objec-tive of reflecting costs. A clear target dateshould also be set for price rebalancing.Rebalanced prices are important for newentrants wanting to take advantage ofunbundling. Without rebalanced prices, newentrants with a business model focusing onlow–value services can be caught in a pricesqueeze, and may be unable to offer serviceat competitive prices. As explained previous-ly, if subscriber line charges are set below cost,then unbundled loop prices for new entrantswill be higher than the retail price charged forresidential subscriber lines. Whether this isa policy or regulatory decision, one more ben-efit of unbundled loops being charged at costis that the policy of geographic averaging ofprices will automatically break down.

Develop core network convergence into anext–generation network paradigmNetwork convergence is the paradigm thatallows service providers to evolve from net-work silos (one network per service – fixed

voice, mobile voice, Internet access, video dis-tribution, etc.) to a single network capable ofoffering any service and, most importantly,offering it to the customer anytime, any-where and through any access network, fixedor mobile.

Convergence can be seen as the transposi-tion of this blurring of the frontiers from theaccess part of the network (which, due tobroadband, is now capable of handling anykind of service) toward its core. Such an evo-lution is inevitable not only from the econom-ic standpoint, as stated above, but alsofrom the technical standpoint: in the longterm, there is an inherent “impedance mis-match” between the development of broad-band access networks on the edge that areessentially multi–service in their capabilities,and maintaining legacy “silos” of single–serv-ice networks within the core.

Governments and regulators must thereforeencourage efforts by operators towards con-vergence. This is the only sustainable way foroperators to stay in business, and for poli-cy makers to ensure the delivery of any kindof telecom service in an open, competitiveand regulated environment.


Chapter 6

The Economic and Social Commission forWestern Asia (ESCWA) is part of theSecretariat of the United Nations, and

is one of the five regional commissions,which report to the UN Economic and SocialCouncil (ECOSOC), the principal organresponsible for coordinating economic andsocial activities in the United Nations system.The other regional commissions are: the Eco-nomic Commission for Europe (ECE); the Eco-nomic and Social Commission for Asia andthe Pacific (ESCAP); the Economic Commis-sion for Latin America and the Caribbean(ECLAC); and the Economic Commission forAfrica (ECA). ESCWA carries out its work atthe Western Asia regional level. The history of ESCWA starts in 1973, whenan Economic Commission for Western Asia(ECWA) was established by the ECOSOCresolution 1818 (LV) of 9 August 1973 as thesuccessor to the United Nations Economicand Social Office in Beirut (UNESOB). In 1985,the social dimension was emphasized and theEconomic Commission was renamed as theEconomic and Social Commission for West-ern Asia (ESCWA), in accordance withECOSOC’s resolution 1985/69 of 26 July1985, in order to acknowledge more fully thesocial aspect of the Commission’s activities.

ESCWA regionThe ESCWA region covers 1.8 million squaremiles, the equivalent of 3.5 per cent of theworld’s surface, and its total population in2004 was some 179 million, representing 2.8per cent of the world population. It generatesa GDP of US$649 billion; a mere 1.6 per centof global GDP; 2.7 per cent of global foreigntrade; and 2.7 per cent of global foreign cur-rency reserves.1 Member countries of theESCWA region are: Bahrain, Egypt, Iraq, Jor-dan, Kuwait, Lebanon, Oman, Palestine, Qatar,Kingdom of Saudi Arabia, Syrian Arab Repub-lic, United Arab Emirates and Yemen.2

While the economies of the ESCWA region havebecome further integrated into the worldeconomy over the past years, the region’s shareof the world economy is not commensuratewith its share of the world’s surface and pop-

ulation. Key factors in the limited growth of GDPin the Arab world are the inability to effective-ly mobilize sufficient local financial resourcesand to attract foreign sources of finance,including the large volume of Arab investmentsabroad, which are valued at over US$1 trillion.The financial markets and the banking sectorare insufficiently developed, and the regionneeds more effective mechanisms to mobilizelocal financial resources. Local rates of growth,trade systems, laws and institutions similarlyhinder FDI flows.3 A large proportion of thelabor force is not specialized, and economiesare not diversified. The raging conflicts sufferedby the region also have a substantial negativeimpact on trade and production. While deter-mined efforts have been made to diversifysources of funding in the region, oil exportsremain the dominant factor in foreign trade.The only two sectors that showed growth in2004 and contributed to facilitating the Arabworld’s integration into the global economy arethe ICT and oil and gas sectors.4

Key challenges and issues for the ESCWA regionThe region has demonstrated progress inmany Millennium Development Goals (MDGs)related fields. However, progress varies acrosssub–regions and at the country level, whereurban/rural disparities persist. Despite con-certed efforts to rectify the situation, therehave also been setbacks that are attributable


Annex 1

The ESCWA Region

1 The situation in the Arabworld as a whole does notdiffer greatly from that inthe ESCWA region. TheArab world covers an areaof 5.3 million square milesand contains 306 millionpeople, the equivalent of10.2 per cent of the world’ssurface, and 4.8 per cent ofits population. In 2004 itproduced a total GDP of$865 billion, the equivalentof only 2.1 per cent of glob-al GDP, and generated only3.5 per cent of global foreigntrade.

2 ESCWA, 2005, “The annualreview of developments inglobalization and regionalintegration in the countriesof the ESCWA region”.

3 Ratios of regional FDI toworld FDI flows were lessthan 1.2 per cent for theESCWA region

4 Ibid

to several factors, including poor economicperformance, inadequate financing, and polit-ical tensions and conflicts. That poor growthrecord has been reflected in slow progress inhuman development in comparison with theaverage for developing countries. The regionfaces a number of challenges to achieving theMDGs, including unemployment, the gendergap, illiteracy, regional disparities, war andconflict, and the digital divide.5

Digital divideThe region suffers from a significant digitaldivide. This divide is manifested in low pen-etration rates and per–capita indicators forbasic ICT services, including fixed and mobiletelephony as well as the number of PCs, Inter-net users and Internet hosts. This disparityexists not only between the region and therest of the world, as shown by values belowworld averages, but is also present betweenthe countries of the region, and even betweenthe rural and urban communities of individ-ual countries. Political, economic, social andcultural factors are major obstacles to thewide–scale dissemination of ICT services, inaddition to the language barrier and thenon–availability of adequate local content inthe Arabic language. Lack of financing is alsoan obstacle in the non–GCC countries. Despitethe multi–dimensional efforts and the majorpolicy initiatives in the region, closing the dig-ital divide remains one of the main challengesto the process of establishing sustainable

socio–economic development. There followsome of the ICT indicators for the ESCWAregion for the year 2005 (see table next page).

ESCWA’s activitiesESCWA promotes economic and social devel-opment through regional and sub–regionalcooperation and integration, and serves as themain general economic and social develop-ment forum within the United Nations systemfor the ESCWA region. It formulates and pro-motes development assistance activities andprojects commensurate with the needs andpriorities of the region, and acts as an execut-ing agency for relevant operational projects.ESCWA coordinates its activities with thoseof the major departments/offices of the Unit-ed Nations at Headquarters, and with special-ized agencies and intergovernmental organ-izations, such as the League of Arab States,the Gulf Cooperation Council and the Orga-nization of the Islamic Conference, with aview to avoiding duplication and ensuringcomplementarity, synergy and exchange ofinformation. The majority of activities underthe regular program of work are regional indimension. There are, however, a limitednumber of activities that are country–specif-ic, but which have regional implications.6 Themain themes of work in ESCWA are:• Sustainable development and productivity;• Social development;• Economic analysis;• Globalization and regional integration;

Annex 1


5 “The Millennium Develop-ment Goals in the Arabregion”, United Nations,New York, 2005

6 For more information, visitthe ESCWA Website: www.escwa.org.lb

ESCWA member countries are working toenhance their human and institutional capac-ities, improve policies, and promote invest-ment. This will require sustained actions atthe local, national and regional levels, andreform aimed at good governance, partner-ship, gender equality, environmental sustain-ability, pro–poor economic policies, and clos-ing the digital divide.Closing the digital divide will be achievedthrough a multi–dimensional strategy, onewhich can induce a tangible and leapfrog-ging impact on the ground. New technolo-gies such as broadband and wireless, cou-pled with innovative tools for Arabic soft-ware and content creation, should be cre-atively blended so as to directly target thecore socioeconomic problems at thegrass–root level. Opportunities need to beseized for the benefit of the young and formarginalized communities. Policy–makersand business leaders need to work more col-laboratively to create the regional informa-tion society and knowledge economy, thefuture landscape for the younger generationin the ESCWA region. The role of ESCWAmember countries in the ongoing globaldebate on Internet governance, and inenhancing access to ICT services, is essen-tial to combating the threat of further mar-ginalization, and to maximizing opportuni-ties for the region’s participation in shapingthe future of the Internet.

• Information and communication technology;• Emerging and conflict–related issues;• Women–related issues;• Statistics coordination.

Information and Communication TechnologyDivision (ICTD) The Information and Communication Tech-nology Division (ICTD) aspires to play a sig-nificant role alongside ESCWA membercountries in their transformation toward theknowledge–based society and global com-petitiveness in the market, through advocat-ing policies to increase employment, reducepoverty, and enhance quality of life throughstate–of–the–art ICTs and their applica-tions. On the national level, the ICTD aimsto increase the capabilities of memberstates to harness information and commu-nication technology for their development.In this respect, it provides support for thedevelopment of ICT policies, infrastructure,and applications, and raises awareness ofthe potential of ICT in promoting sustain-able development and enabling ESCWAcountries to integrate into the global econ-omy. On the regional level, ICTD endeavorsto establish cooperation and coordinationmechanisms between regional playersengaged in ICT development activities. Itpromotes ICT applications for develop-ment, and strives towards the establishmentof a sustainable ICT sector in the region.

The ESCWA Region


Bahrain

Egypt

Iraq

Jordan

Kuwait

Lebanon

Oman

Palestine

Qatar

Saudi Arabia

Syrian ArabRepublic

United ArabEmirates

Yemen

ESCWA

World

Number of fixed telephonelines inoperation per100 individuals

Number of cellular mobilesubscribers per100 individuals

Number of personalcomputers per100 individuals

Number of Internet hostsper 10,000individuals

Number of Internetusers per 100individuals

DigitalOpportunityIndex (DOI)

27.05

14.04

4

11.36

18.99

27.68

10.33

9.43

26.41

15.46

15.24

27.51

3.85

12.36

19.78

103.04

18.41

2.22

28.93

88.57

27.68

51.94

29.57

92.15

54.12

15.49

100.86

9.54

24.3

33.95

16.9

3.78

…

5.34

22.33

11.45

4.66

4.59

17.88

135.39

4.2

19.84

1.45

8.131

13.38

25.84

0.5

–

5.28

10.93

19.37

5.94

...

4.23

6.96

–

62.02

0.08

3.542

421.63

21.34

6.75

0.14

11.22

26.05

19.57

11.1

6.56

28.16

6.62

5.78

31.08

0.87

6.5

15.17

0.56

0.38

…

0.41

0.49

0.4

0.4

…

0.51

0.42

0.36

0.54

0.28

0.383

0.37

NNootteess:: 1: Excluding Iraq 2: Excluding Palestine 3: Excluding Iraq and Palestine(...) data is not available (–) data is negligible

SSoouurrccee:: International Telecommunication Union, 2006

Alcatel–Lucent provides solutions thatenable service providers, enterprisesand governments worldwide to deliv-

er voice, data and video communicationservices to end users. As a leader in fixed,mobile and converged broadband network-ing, IP technologies, applications, and serv-ices, Alcatel–Lucent offers the end–to–endsolutions that enable compelling communi-cations services for people at home, at workand on the move.

With 79,000 employees and operations inmore than 130 countries, Alcatel–Lucent is alocal partner with global reach. The compa-ny has the most experienced global servicesteam in the industry, and one of the largestresearch, technology and innovation organ-izations in the telecommunications industry.

Alcatel–Lucent achieved pro–forma com-bined revenues of 18.6 billion Euros in2005, and is incorporated in France, withexecutive offices located in Paris.

For more information, visit Alcatel–Lucent onthe Internet: http://www.alcatel–lucent.com

Alcatel–Lucent Digital Bridge Initiative 1

Alcatel–Lucent strongly believes that infor-mation and communication technologies(ICT) are a necessity for economic and socialdevelopment, and that multi–stakeholder ini-tiatives involving service providers, equip-ment manufacturers, national and localauthorities, and international organiza-tions are key levers to bridging the digitaldivide.

Convinced of the benefits of innovation in newtechnologies and new business models, webelieve that making "broadband-for-all" areality, especially to populations ofhigh–growth economies, is an achievable taskin the next few years.

Alcatel–Lucent’s Digital Bridge Initiative con-tributes to the materialization of the "broad-band-for-all" vision through a set of concrete

actions aimed at providing win-win solutionsfor all involved stakeholders, namely:

The implementation of pilot projects for thedevelopment of local added–value services inrural and under–served areas. The aim is todeliver the proof that the deployment of tele-com infrastructure in rural areas can be prof-itable to all stakeholders – not just the localpopulations, but also telecom operators. In allprojects, Alcatel–Lucent is teaming up withpublic and/or private partners in a truemulti–stakeholder public–private partner-ship, in which each entity stays within its roleand stated objectives. For this purpose,Alcatel–Lucent is leveraging mobile 2G infra-structure as well as broadband access solu-tions such as WiMAX, to connect rural com-munities to the Internet for useful applicationsin the domains of health, education, gover-nance, and so on.

Alcatel–Lucent is currently conducting sever-al pilot WiMAX deployments in under–cov-ered areas of the African continent to illus-trate how this infrastructure can be used toconcretely improve the living conditions ofrural populations, and stimulate largerdeployment projects by operators.

These pilot schemes will allow, inter alia, hos-pitals in rural areas to offer improved health-care thanks to the transmission of medicalimages; local authorities of rural communi-ties to offer improved public services (landregistration, civil services, etc.); and theestablishment of IT discovery and trainingprograms for young people (16–25 years old)in deprived areas.

Support for local partners through partnershipcenters designed to incubate innovative ideasfor local ICT–based services. The aim is todevelop local ecosystems, which will developservices tailored to local needs and generatemore traffic for the network operators.

Two Alcatel–Lucent “partnership centers”were inaugurated at Alcatel–Lucent premises

Annex 2

Alcatel–Lucent


1 For further details seehttp://www.alcatel-lucent.com/digitalbridge

current report with ESCWA. An earlierreport was prepared jointly with infoDev(World Bank Group) and was entitled: “Pro-moting Private Sector Investment and Inno-vation to Address the Information and Com-munication Needs of the Poor in Sub–Saha-ran Africa”.2

The latter report was issued as a joint contri-bution to the second World Summit on theInformation Society held in Tunis in Novem-ber 2005.

in Tunis, Tunisia, in December 2003 and inCairo, Egypt, in September 2005. They areopen to anyone with an idea for developinga service, but this must respond to local needsand the constraints of the local environment.Alcatel–Lucent has set as an objective the cre-ation of three more partnership centers by2008 within its premises located in emerg-ing countries.

Finally, Alcatel–Lucent conduct joint studieswith international organizations, such as the

Alcatel–Lucent


2 Available at http://www.alcatel-lucent.com/digitalbridge

To date, the ESCWA countries havemainly used the Internet for basice–mail and Web browsing services. To

provide broadband access to the end user,ISPs need to widen the bottleneck betweentheir network and the user. Today, the chal-lenge of telecommunication technologies is toenable fast Internet access all along thetelecommunication chain. The existing phonenetwork has reached its limits with a 56 kbit/sdata rate, which is not enough to providevalue–added services like VoIP (Voice overInternet Protocol) or IP TV.The network model (figure 1) depicts thearchitecture needed to connect remote sub-scribers to the regional fiber ring. There arethree levels to be considered.Customer Premises Equipment (CPE) level:This encompasses all the equipment installedat the customer’s premises, ranging from a sim-ple modem for Digital Subscriber Line (DSL)access, to a satellite dish and associated termi-nal for satellite access. Installation costs nat-urally depend on the access technology, rang-ing from nothing for DSL access, to quite a highprice for a two–way satellite solution.Access level: This corresponds to all elementsin the access node that is installed close to theusers. The reach and modularity of thesenodes depends on the technology. A DSLaccess node (DSL Access Multiplexer, orDSLAM) has a reach of up to 5 km, whileWiMAX (Worldwide Interoperability forMicrowave Access) systems can reach up to

15 km. Note that no access node is deployedin the case of an end–to–end, two–way satel-lite solution. The focus has been on accessnodes connecting fewer than a hundredusers, which corresponds to a village of 250households on average, and a varying broad-band access penetration rate from a few per-cent in 2003 up to 30% in 2006.Aggregation level: The aggregation node isat one end of the fiber connected to theregional ring, while the other end terminatesall the backhauling links to the access nodes.It aggregates a large number of users(between 1,000 and 10,000). Depending onthe type of access, various aggregation tech-nologies have been considered, for exampleAsynchronous Transfer Mode (ATM); Ether-net; and satellite–specific ground stations. Thebackhauling distance will depend on the localgeography, but is generally limited to a fewtens of kilometers in Europe. As an example,preliminary studies set this distance at anaverage of 12 to 15 km in France.

The main technological challenge is to pro-vide broadband access with the same qual-ity of service in different areas under differ-ent conditions. It is not possible to addresshigh–density population zones with the samesolutions used for isolated villages. The tech-nological answers to this issue have to takeinto account the population density of thearea, the way of life of the potential users, andthe existing telecommunications infrastruc-

Annex 3

Broadband Technologies


ISP: Internet Service Provider PoP: Point of Presence

Network under study

1-5 km 10-30 km (more for satellite) 100-1000 km

Internet

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- WiFi- DSLAM- WIP station

- DSLAM- Ethernet switch- Satellite hub

- Copper - Radio- Satellite

- Leased Lines E1- Radio- Satellite- Fiber

- Fiber

Source: Alcatel-Lucent

Figure 1: Network model

Typically, individual DSL connections providefrom 28 Megabits per second (Mbit/s) to 512kilobits per second (kbit/s) downstream(from the network to the end user), and about128 kbit/s upstream. A DSL line can carryboth data and voice signals, and the data sig-nal is continuously connected.

The different flavors of DSLVarious DSL variants can be considered forthe future evolution of the access network.They differ primarily in their spectrummasks and the number of tones used fortransmission in each direction. The differentreach, bandwidth and spectral compatibili-ty characteristics can be leveraged for differ-ent deployment approaches.• ADSL

ADSL, recently updated with the ADSL2standard, is the most widely deployed tech-nology in the CO (Central Office, i.e. localtelephone exchange) today. With a reach of5 km at 1 Mbit/s, it is excellent for massdeployment. ADSL can be deployed indense urban zones because there are noadjacent ADSL pairs feeding from the CO.However, there is a spectral problem if ADSLis injected at two locations (the CO and aremote site) on the same cable. For this rea-son, ADSL is not suitable for the suburbanor rural zones unless all ADSL lines beyondthat point can be provided from the remotenode. However, if this condition is met, it canbe an economic solution.

• Reach Extended ADSL2 (READSL2)This recent standard aims to extend service to 5.5 km (on 26–gauge loops) with aminimum downstream/upstream bit rate of192/96 kbit/s in addition to the standardtelephone service. The extra reach isachieved by boosting the power spectraldensity in the lower end of the spectrum(both upstream and downstream) and

ture. Therefore, the appropriate technologywill help to achieve the goals of regional ICTpolicies: extending coverage and increasingbandwidth.

Wireline solutionsThe main characteristic of urban areas is ahigh density of population and, therefore, ofpotential broadband subscribers. Moreover,the fixed–line phone network (Public SwitchedTelephone Network, or PSTN) is mostly welldeveloped due to customer demand, andthere are no installation waiting lists in theESCWA region.The PSTN can offer cost–effective broadbandconnectivity to local populations using DSLtechnology. However, where demand forhigh levels of service exists, alternative tech-nologies would need to be deployed to pro-vide the requested data rate.

DSLApproximately one billion phone lines world-wide provide a robust, core global infrastruc-ture capable of delivering broadband tohomes, offices, schools and governments.With the copper infrastructure already inplace, DSL is the most effective and econom-ic technology for global broadband deploy-ment (figure 2).

DSL avoids the bottleneck problem associ-ated with delivering network services overphone lines. When accessing the Internetvia a dial–up modem, the digital data isconverted by the network into analog sig-nals that can be transmitted over the tele-phone line. The receiving computer’smodem must change the data back into dig-ital form. A DSL transmission is digital anddoes not need this conversion. This allowsphone lines to carry more bandwidth fortransmitting data.



Source: Alcatel-Lucent

Open MediaSuite

SoftswitchPSTN

IP/MPLS

BSAAccess BSR

EthernetSwitch

DHCPServer

ServiceRouter

Figure 2: DSL network architecture

using a narrower frequency band, whilemaintaining the same total power asADSL2. Deployed in the CO, it is possibleto slightly increase reach using this variantof ADSL2.

• ADSL2+This important variation on the ADSL2standard substantially increases band-width by doubling the spectrum to 2.2 MHz,resulting in a throughput of 5.5 to 15 Mbit/sover 1.5 to 3.2 km. The performance overlonger distances is equivalent to ADSL2.Interestingly, it is possible to achieve spec-tral compatibility between remote ADSL2+and CO–based ADSL by using a flexible startfrequency. The extended start frequency forremote ADSL2+ results in a slightly lowerthroughput than CO–based ADSL2+, butprovides an effective means of increasingthe bandwidth and coverage in all areas ata moderate cost because of the relativelylong reach. Further, the bandwidth provid-ed by ADSL2+ corresponds quite closelywith the targeted bandwidth tiers forfuture service requirements, as mentionedearlier.

• Very high bit rate DSL (VDSL)The VDSL standard has been under consid-eration for several years. It provides anasymmetric downstream bandwidth of 5 to25 Mbit/s over 1 to 1.5 km (or a symmet-ric bandwidth of 2–10 Mbit/s). VDSL isspectrally compatible with CO–based ADSL,and can therefore be deployed in grayzones. However, because of its shorterreach, nodes must be deployed closer to thecustomer (typically at the distribution areacabinet, referred to as FTTCab), therebyincreasing deployment costs.

Cost AnalysisThe relative costs for the various scenariosare shown in figure 3. In analyzing these

results, it is immediately apparent that thecloser the fiber deployment to the user, thehigher the cost. This is not so much becauseof the cost of fiber, but due to the cost of theelectronics, civil engineering, and associatedpower supply equipment required in multi-ple locations.

It is important to note that the initial first cost,that is, the cost of realizing a presence beforeany customers are added, is low for centraloffice–based deployment, and increases asfiber is deployed closer to the user. The initialfirst cost is related to the risk of deploying thetechnology. If there is uncertainty aboutwhether, where and when customers will usea service, then central office deploymentoffers the broadest coverage with the least risk.Of course, deployment costs can vary signif-icantly according to local conditions. It is pos-sible that fiber is already present and is there-fore considered as a sunk cost. It is also pos-sible that power is provided by the buildingowners, thus reducing capital costs. Further-more, installation and manpower rates varyfrom place to place, in some situationsreducing the cost of deep fiber deployment.Finally, it is worth noting that Passive Opti-cal Network (PON) based solutions are not sig-nificantly more expensive than VDSL solu-tions. The initial first cost is identical, but theCustomer Premises Equipment (CPE) is cur-rently quite expensive for PON solutions. Iflarge numbers of simple CPEs are introducedoffering low cost/functionality, PON might wellbecome a reasonable alternative.

Fiber–to–the–User (FTTU)The access network, also known as the lastmile, can be a bottleneck that limits thedeployment of new services. Optical technol-ogy can be used in the last mile to meettoday’s broadband requirements. At thesame time, FTTU provides the assurance thatthe network will be able to support demandsthat emerge in years to come.In certain cases, for large companies or forindividuals who want a very high level of serv-ice, a DSL connection cannot provide a suffi-ciently high data rate. For example, a solutioncombining several high–definition televisionstreams, VoIP (Voice over Internet Protocol)lines, and very–high–speed Internet access willrequire a data rate of over 20 Mbit/s.

Passive Optical NetworkWith this technology, each fiber from the cen-tral office can deliver very–high–speedbroadband services to up to 64 users. The


Annex 3

FTT ExchangeADSL

ActivationCPEDeferred ElectronicsInstallationFixed ElectronicsFiber

FTT CampusVDSL

FTT BuildingVDSL

FTT SuitePON

Figure 3: Cost analysis for fiber backhauling


ices such as corporate VPN, and home officeand business broadband connections. Thesame network will also provide mobile broad-band services in urban and suburban areas.WiMAX enables the rapid and cost–effec-tive deployment of the access loop forvoice and data, plus wireless DSL andmobile broadband services, to areas witheither poor or non–existent copper infra-structure, or high unbundling costs. Timeto market is greatly reduced compared toa wired infrastructure, and the mobilityaspect offers the possibility to explorenew usages of broadband communica-tions. These opportunities will open a newera of broadband wireless access.

WiMAX cost efficiencyWiMAX’s advanced antenna technologieswith beamforming and Multiple Input Mul-tiple Output (MIMO) are beneficial for cov-erage extension, signal quality interferencemitigation, and throughput enhancement.

split between the different users is made bypassive splitters which do not need a powersupply. This solution is the most economical,but the data rate is limited by the multiplex-ing and splitter equipment. PON technologyis the most widely used technology world-wide in 2006.

Active Optical NetworkContrary to PON, active networks use activesplitters, which need a power supply.Although active splitters enable an efficien-cy increase, the relatively high cost of theequipment and its power supply needs, com-pared to the potential gains, mean that thistechnology is not widely used.

Ethernet point–to–pointWith this technology, each fiber from the cen-tral office is exclusively dedicated to one enduser. This enables virtually unlimited datarates, depending on the equipment at the ter-mination point of each fiber. Compared toPON, this increases dramatically the numberof central offices needed – by a factor of eight– but this is the only solution to deliver sym-metrical Gigabit services to customers if thedemand for more speed continues to grow.

Wireless solutionsWiMAXIn suburban and rural areas, alternative tech-nologies may have to be deployed to compen-sate for poor DSL penetration and poor cop-per quality, and to offer VoIP. In these areas,WiMAX will provide data/Internet access,fixed voice access, as well as enterprise serv-



Residential

VideoconferencingBa

ndw

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ium

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Figure 4: Matrix of different wireless broadband technologies


Number of antennas

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ber o

f Site

s

10

0,5

1

1,5

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2,13

1,39

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2 4

Figure 5: Ratio of cell use to the number ofantennas with advanced antenna technologies

The above technologies halve CAPEX require-ments due to enhanced coverage, and providea 40% throughput increase in the cell.

Beamforming is a mandatory feature forWiMAX terminals, and WiMAX 16e profilesfeature sufficient “hooks” to be able to sup-port advanced algorithms for the antennaprocessing required. In addition, beamform-ing is a mature and field–proven technology.Because of the ability of beamforming tech-nology to enhance coverage (a key operatorissue when deploying a new system) and mit-igate interference (with the effect of higherthroughput), and also because the impact onthe terminal is minor (all the complexity isinside the BS), the operator gains a compet-itive advantage by deploying WiMAX systemswith this technology.

The deployment of a large GSM networkacross the Middle East has extended cover-age to several hundred thousand people. Animportant investment effort has been madeby different mobile phone operator, especial-ly in terms of base station infrastructure.

These base stations can be used as WiMAXbase stations as well. A classic GSM tower canhost a WiMAX system with dedicated anten-nas. The capital expenditure for mass–mar-ket wireless broadband is therefore signifi-cantly lowered, since the civil engineering costdisappears, and the fact that one towerhosts two systems creates economies ofscale at the operating level.An Internet service provider can take advan-tage of the synergy between DSL and WiMAX.The base station can be installed close to thecentral office, to take advantage of the back-haul infrastructure deployed for the DSLAM.Since DSL only connects users within 4 kilo-meters or so of the central office, this systemenables the broadband coverage area to beextended. Moreover, significant capital andoperating savings are achieved through there–use of operational and maintenance meth-ods, and network infrastructure.

The terminal challengeThe major obstacle to WiMAX becoming aglobal mass–market technology for broad-band wireless access (BWA) is the availabil-ity of low–cost terminals, and terminalsadapted to targeted markets (W–DSL,Nomadic or Mobile).


Annex 3

No beamforming - 2 cells Beamforming - 1 cell

Figure 6: Example of the benefits of beamforming

Figure 7: GSM coverage in Lebanon – an opportunity for WiMAX

SSoouurrccee:: GSM Association

DSL coverage4 Km

5-15 KmWiMAX

coverage

Fiber backhauling

DSLAM

WiMAX BS

Figure 8: Use of DSL/WiMAX synergies

requires some frequency to be allocated in thesub–1GHz band, for instance 700MHz, whichhas already been allocated in some parts of theUSA and in some APAC countries.

Third–generation mobile (3G)These technologies are already availableand can provide a data rate of up to few hun-dreds kbit/s, which is enough for mostusages. However, a 3G deployment requiresthree times more CAPEX than WiMAX, withlicenses representing a large part of theinvestment. The fact that the network is notfully IP (Internet Protocol) based limits theeconomies of scale and scope available from

convergence, and the handsets remain expen-sive, even if 3G is nowadays widely deployed.

HSDPAHSDPA (High Speed Downlink Packet Access)is a standardized Universal Mobile Telecom-munications System (UMTS) feature, part of3GPP release 5, which enhances radio–access bit rates and improves cell capacity.By re–using the existing UTRAN (UMTS Ter-restrial Radio Access Network) infrastructure,with an improved radio modulation andsmarter radio access management, HSDPAprovides UMTS networks with a smooth evo-lutionary path to access speeds up to five timesfaster than standard UMTS. In commercialusage, end users will benefit from throughputof around 2 Mbit/s with peaks up to 10 Mbit/s;current UMTS networks can only offerthroughputs up to 384 kbit/s per cell. Corpo-rate users will be able to retrieve e–mails with

While today’s available BWA technologies areonly compatible with high–cost outdoor ter-minals, WiMAX and 802.16 evolutions offersome valuable radio features that makeWiMAX systems compatible with indoorSelf–Install CPE and even smart devices, fromPCMCIA cards to chips embedded in Smart-phones or PDAs.Such compact, indoor, low–cost terminalshave limited performance (in terms of outputpower and antenna gain) that need to becompensated by rich radio features embed-ded in the base station, otherwise the linkbudget, and therefore coverage and operatorCAPEX, would be drastically affected.

Frequency bandBroadly speaking, the resources availabletoday for first WiMAX deployments fall intotwo main bands:• 3.5GHz (3.4–3.6) in Europe, Africa, the

Middle East, Asia–Pacific and some LatinAmerica countries;

• 2.5GHz (2.5–2.7) in North America, Brazil,Mexico, and some South–East Asian coun-tries.

There are also some resources available inthe 2.3GHz band in the USA and someAPAC countries, particularly South Korea,whose emerging WiBro system has nowconverged with WiMAX based on 802.16e;and in the 3.3GHz band (India for instance).All these bands are quite suitable for an opti-mized network deployment in urban/suburbanenvironments, but the deployment of broad-band wireless systems in rural conditions



@

OK

Low Cost CPE Embedded

PC Card

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Figure 9: Evolution of WIMAX CPE prices


bulky attachments much faster than withUMTS, and will enjoy quicker and easieraccess to corporate networks and intranets.In addition, HSDPA will also provide up to 100per cent increased cell capacity.HSDPA is a good solution to providingfirst–class mobile broadband if a UMTS net-work already exists, because costs are great-ly reduced by virtue of it being a simple evo-lution. However, if we consider a completegreenfield network deployment, HSDPA andUMTS require two to three times moreCAPEX than WiMAX.

Satellite solutionsRecent progress in both satellite and groundtechnologies has led to the introduction ofattractive two–way satellite access solu-tions, which offer far better performancethan traditional VSAT in terms of bit rate andprice. The cost of satellite capacity perMbit/s will significantly decrease in thefuture, as a result of expected improvementsin signal processing (doubling the usefulthroughput compared with existingtransponders) and satellite technology (mul-tiplying the capacity and cost–efficiency onboard satellites).A new standard, known as the Digital VideoBroadcast Return Channel System(DVB–RCS), is emerging for two–way accessby satellite. Based on this standard,end–to–end solutions exist that are compat-ible with existing geostationary satellite tech-nologies, providing what we describe as“ADSL–in–the–sky”, with a performancecomparable to terrestrial solutions.Satellite access is useful to deliver telecom-munication services directly to users distrib-uted over a wide area, such as a continent.

Potential users can be classified into threetypes: residential/SOHO (Small Office/HomeOffice) users with a single PC; Small and Medi-um–size Enterprises (SME), with severalPCs usually connected through a small router;and Large Enterprises (LE) with numerous,widely dispersed sites (some possibly inremote areas), which might own some localdata storage facilities (e.g. a cache).Dedicated equipment at the user’s premiseshandles reception from the satellite (forwardDVB–S, in this example) and transmission tothe satellite (return TDMA, in this case),adapting packet transmission/reception toand from the antenna across standard inter-faces (Ethernet or Universal Serial Bus).The actual service to the user will be deliv-ered via a connection to an ISP (which willgive access to the Internet), or to a corporatesite and servers. The hub (or gateway) is thecentral point controlling all customer termi-nals. It manages user connections, hosts allthe packet–to–radio adaptation functions forboth transmission directions, shares radiocapacity between all the satellite terminal traf-fic, and finally adapts packet handling to ter-restrial networks.The cost of the satellite terminal is a key fac-tor determining the success of Internet serv-ices via satellite, because the user terminalrepresents nearly two–thirds of the totalinvestment in a satellite–based Internet sys-tem. As the established DVB–S standard isused downstream, DVB–RCS terminals ben-efit from the millions of DTH receivers pro-duced every year. Upstream signal process-ing and transmission require dedicated hard-ware, which has not yet achieved the samelevel of integration and the same productionquantities as DVB–S.


Annex 3

3G Third Generation (3G) is a term given to the next generation ofmobile communication systems that offer enhanced services, suchas multimedia and video. The main 3G technologies include UMTSand CDMA2000.

Access Part of a telecommunication network close to the subscribers.It is the link between the subscriber’s terminal and the local,national and international core networks.

ADSL–in–the–sky Two–way satellite network providing broadbandaccess to end users at layer 2, and with an ADSL–like interface fromthe perspective of the telecom operator.

Aggregation In telecommunications, aggregation is the process bywhich information is gathered from different sources and combinedinto a single information stream. The purpose is to optimize theresource required in the network, by grouping together fine gran-ularity flows into coarser granularity flows, for example whenmoving from access to core networks. Aggregation is typicallyimplemented in metro networks.

ADSL Asymmetric Digital Subscriber Line transforms an operator’s exist-ing copper twisted pair investment into a multimedia broadband dis-tribution system. Working on an existing copper telephone line,ADSL’stransmission speed is up to 200 times faster than today’s analogmodems. ADSL’s speeds range from 128 kilobits per second up to 12Megabits per second.ADSL supports high–speed data communicationson top of traditional telephone service,on a single telephone access line.

ARPU The Average Revenue Per User (ARPU) measures the averageamount of money spent by a customer per month for a given serv-ice such as a cellular phone, pager, etc.

ATM Asynchronous Transfer Mode (ATM) is a data transfer technol-ogy in which information is organized into fixed–size, labeled cellsthat flow via end–to–end virtual connections. It is asynchronous inthe sense that the recurrence of cells containing information froma connection is not necessarily periodic, but depends on therequired instantaneous bit rate.

AAA Authentication, Authorization and Accounting (AAA) is a wayof checking user access to a network. It is a very important function,particularly when the service provider is not providing the networkaccess. Authentication verifies the user’s identity, e.g. with a pass-word or other mechanism. Authorization checks what the user isallowed to do, i.e. to which services or levels of quality of service hehas access. Accounting bills for all the above according to differentprinciples such as time, data volume, application used, etc.

Backbone network A network that uses high–speed transmission pathsand provides connectivity for regional networks and other sub–net-works.The two terms “backbone network”and “core network”are oftenused as synonyms.They both refer to the actual heart (or core) of thetelecom network. This network should be able to transmit and han-dle a huge amount of information.Normally when using the term “corenetwork”, the operators refer to both routing and transmission. Theterm “backbone network” refers only to the transmission resourcesneeded to support the network. In order to offer efficient communi-cations,operators need a huge transmission capacity at the core of thenetwork. Backbone networks are used to interconnect cities, regions,countries or even continents. The Internet was initially based on theinterconnection established in the late 1960s between universities and

research centers in the United States.Lack of appropriate interconnec-tion is, at the same level as lack of universal access, at the root of theDigital Divide. Some African countries have an interconnection capac-ity to the Internet that is equivalent to that available to an individualbroadband user in a developed country.

Backhaul (1) In wireless network technology, to transmit voice anddata traffic from a cell site to a switch, i.e. from a remote site to acentral site. (2) In satellite technology, to transmit data to a point fromwhich it can be uplinked to a satellite. (3) To transmit data to a net-work backbone.

BWA Broadband Wireless Access. Any technology that offers broad-band access via wireless. A generic term that encompasses both newBWA technologies like WIMAX and older technologies.

Bandwidth The maximum amount of data, measured in bits per sec-ond or bit/s, which can travel a communications path in a given time,usually measured in seconds. Usually prefixed with a k for 1000, Mfor 1 million and G for 1 billion bit/s.

BS Base Station: a transceiver station in a terrestrial mobile network.

CAPEX Capital Expenditure:expenditure used by a company to acquireor upgrade physical assets such as equipment, property, or indus-trial buildings. In accounting, a capital expenditure is added to anasset account (i.e. capitalized), thus increasing the asset base.

CATV Community Antenna Television:a television distribution methodin which signals from distant stations are received,amplified,and thentransmitted by coaxial or optical fiber cable or microwave links to users.CATV was originally used in areas where good reception of direct broad-cast TV was not possible. CATV now also consists of a cable distribu-tion system to large areas in competition with direct broadcasting.CATVis now usually understood to mean cable TV.

CDMA2000 CDMA2000 1X technology supports both voice and dataservices on a standard 1x CDMA channel, with a capacity twice thatof the previous IS–95 CDMA system, to better adapt to the growingdemands of voice and wireless Internet services. Its upload rate is153 kbit/s now, and will attain 2.4 Mbit/s in the future, without los-ing voice services due to data requirements. CDMA2000 1x is com-patible with previous CDMA technology, and can be easily upgrad-ed in a secure and economical way for operators.

CO Central Office, the local telephone company office to which all localloops from customers in a given area connect,and in which circuit switch-ing of subscriber lines occurs.An end office (also known as a central office,serving wire center,wire center, local serving office) in the message net-work that establishes line–to–line/trunk,and trunk–to–line connections,and provides the first line of switching (dial tone to end users).

Core network A network that uses high–speed transmission paths andprovides connectivity for regional networks and other sub–networks.The two English terms “backbone network”and “core network”are oftenused as synonyms.They both refer to the actual heart of the telecomnetwork.This network should be able to transmit and handle a hugeamount of information.Normally when using the term “core network”,the operators refer to both routing and transmission.The term “back-bone network”refers only to the transmission resources needed to sup-port the network. In order to offer efficient communications,operatorsneed a huge transmission capacity at the core of the network.


Glossary

Churn The churn rate describes the percentage of subscribers thatchange operator to buy the same service from another operator.

CPE Customer Premises Equipment (CPE) is a generic term used todescribe all customer devices, including modems, Integrated AccessDevices (IAD), Residential Gateways (RGW) and terminals.

DSL Digital Subscriber Line (DSL) technology works on the existingcopper telephone line already in a house, also known as a “twistedpair”. It uses sophisticated digital coding to utilize more of the exist-ing space on the wire, without interfering with normal phone con-versations. It is extremely fast.With Asymmetric Digital SubscriberLine (ADSL) download speeds of up to 8 Mbit/s, it is 200 times fasterthan traditional analog modems. DSL technology comes in differ-ent flavors, with ADSL and Very high speed Digital Subscriber Line(VDSL) the best known.

DSLAM A Digital Subscriber Line Access Multiplexer (DSLAM) is a pieceof equipment used by a telecom operator to provide DSL services toend users.

DVB–RCS The Digital Video Broadcast Return Channel by Satellite(DVB–RCS) standard was approved in 2000 by the EuropeanTelecommunications Standards Institute (ETSI). DVB–RCS is theinternational standard for two–way broadband IP communicationby satellite.

EFM Ethernet in the First Mile refers to a set of fiber–based accesstechnologies based entirely on Ethernet packet transport. Refers tothe collection of technologies being standardized by the IEEE to deliv-er Ethernet to the end user.

EPON The Ethernet Passive Optical Network is an optical access tech-nology currently being standardized by the IEEE 802.3ah Ethernetin the First Mile (EFM) initiative. It offers a shared, bi–directional band-width of 1 Gbit/s for a typical number of 16 users. It builds furtheron the Gigabit Ethernet (GbE) protocol, but with some modificationsto allow for the bi–directional delivery and processing of 802.3 MediaAccess Control (MAC) frames on emulated point–to–point links.Withrespect to the optical components, two system versions are defined,long–reach (max. 20 km) and short–reach (max. 10 km), correspon-ding to different optical budgets.

FTTCab Fiber To The Cabinet involves laying fiber, and the associat-ed fiber management equipment, down the entire feeder route toeach and every FDI. At each FDI, an active VDSL node is deployed. Pow-ering can be provided locally with individual power hookups and bat-tery packs, or from a centralized location either in the centraloffice or from a central outside cabinet via heavy–gauge copper pairsthat can be laid for this purpose.

FTTB Fiber To The Building:a technique of subscriber distribution usingoptical fibers, in which the optical network terminations are locat-ed at the cable entrance into the building, usually in the basement.

FTTP Fiber To The Premises technology enables homes and business-es to have several telephone lines, digital trunking, hundreds of ana-log and digital TV channels, interactive video services, and multiplevery–high–speed Ethernet connections.

FMC Fixed/Mobile Convergence is the transition from distinct andseparate fixed and mobile telecommunication services to converged,seamless services using a combination of fixed and mobile networksto offer a user–centric service. Fixed/Mobile Convergence hasthree main aspects: infrastructure, services and devices.

G.SHDSL A DSL technology from the ITU (G.991.2) that provides sym-metric transmission from 192 kbit/s to 2.3 Mbit/s using a single cop-per pair, depending on distance from the central office (from20,000 ft. to 6,500 ft.).With two wire pairs, 384 kbit/s to 4.6 Mbit/scan be achieved.

GPON The Gigabit–per–second Passive Optical Network is an opti-cal access technology currently being standardized by the ITU–T as

G.984.x (as a follow–up to G.983 B–PON), on the recommendationof the Full Service Access Networks (FSAN) workgroup. G–PON offersa bandwidth of 155 Mbit/s, 622 Mbit/s, 1.244 Gbit/s or 2.488 Gbit/sto a maximum of 128 users per system upstream (from the userstowards the network), and 1.244 Gbit/s or 2.488 Gbit/s down-stream (towards the user).

Greenfield situation A scenario in which an access network must bedeployed to serve a brand new sub–development with new streets,and new buildings.

Handover The action of switching a call in progress from one radioresource to another radio resource without disrupting the commu-nication.

HSDPA High–Speed Downlink Packet Access (HSDPA) makes life easyfor 3G customers, with data delivered at speeds comparable to, orbetter than, fixed–line broadband access systems. Mobile operatorscan also significantly boost network speed at relatively little cost.HSDPA is a packet–base data service with data transmission up to14 Mbit/s over a 5 MHz bandwidth in WCDMA downlink. It wasdesigned to increase packet data throughput and traffic by meansof “smarter radio management” (new radio modulation, fast phys-ical layer retransmission and transmission, etc.) and the introduc-tion of shared channels for different users.

HSI High–Speed Internet (HSI) is a service that telecom operators offerto residential users. The service allows the residential user toaccess the Internet using a high–bandwidth connection (e.g. Digi-tal Subscriber Line (DSL) or Cable).This high–bandwidth connectionenables immediate and fast access to large amounts of data.

Hotspot Refers to WLAN/WiMAX access points made publicly avail-able by a service provider. Refers to a single cell environment.

IMS IP Multimedia Subsystem (IMS) is a voice/video over IP archi-tecture based on Internet standard protocols (RTP, SIP), and whichintroduces the notion of domain. Domains are managed by the oper-ators. IMS enables interoperability between IMS domains and withlegacy telephony (through border nodes), whereas the proprietaryVoIP tendency was to design systems for a single operator.

IP Internet Protocol (IP) specifies the format of packets (or datagrams)and the addressing scheme for sending information over the Inter-net or some other network.Most networks combine IP with a higher–level Transmission Con-trol Protocol (TCP).TCP/IP establishes a virtual connection betweena destination and a source. On its own, IP allows information to beaddressed and dropped into the system, but there is no direct linkbetween the sender and the recipient.

IP–Transit Direct access to the IP backbone network without peering.

IP TV Internet Protocol Television (IP TV) is a term used to describea number of service offerings for the delivery of packetized video serv-ices over a broadband network.These video services can range froma multi–channel video service (switched digital video) that mimicstraditional broadcast TV, to true video on demand (VoD), and fullyinteractive and/or enhanced video services.Typical service enhance-ments include robust program information, selection and naviga-tion, as well as multiple camera angles, integrated digital video record-ing functionality, and the integration of data and telephony servic-es into the video experience.

IRR Internal Rate of Return, often used in capital budgeting, is theinterest rate that makes the net present value of all cashflow equalzero.

ISP An Internet Service Provider is a company or organization thatprovides Internet access to the public or to other organizations, usu-ally for a fee. Most offer a full set of Internet services (access toe–mail, newsgroups, File Transfer Protocol (FTP), and Telnet, at a min-imum) for either an hourly rate or for a flat fee for a fixed numberof hours of access.


Universal access Describes a situation where, within a specified geo-graphical zone, access to Information and Communication Technolo-gies (ICT) has become ubiquitous. Historically, universal access meantthe ubiquity of access to a wireline telephony network.The term hasevolved, and now means any – possibly combined – access to a wire-line or wireless telephony network and (broadband) access to theInternet.

VDSL A Very–high–speed Digital Subscriber Line (ITU–T G.993.2) sup-ports the transmission of symmetric or asymmetric data rate serv-ices over the twisted pair access network (existing copper telephonelines) at maximum aggregate data rates up to 200 Mbit/s (sum ofdownstream and upstream) by using a maximum frequency rangeof up to 30 MHz. VDSL can be used inside buildings to deliver 100Mbit/s symmetrical services. It can also deliver lower bit rates overlonger lines from a remote cabinet or a central office, with typicalasymmetric service offerings of 25 + 5 Mbit/s and 50 + 10 Mbit/s overdistances in the range of 500 m to 1.5 km. Over longer lines, VDSLcan deliver similar bit rates to ADSL2+.

VoD Video on Demand: a service offered by a network operator whichallows the end user to browse, select and purchase from a varietyof video assets such as movies for playback on their television or PC,depending on the service. VoD services generally allow DigitalVideo Disc (DVD) like control such as pause, fast forward, rewind andstop.

VoIP Voice over IP, i.e. voice delivered using the Internet Protocol,describes a set of facilities for managing the delivery of voice infor-mation using the Internet Protocol (IP). It means sending voice infor-mation in packet mode rather than the circuit–switched mode usedby the PSTN.

VPN Virtual Private Network: a network exhibiting at least some ofthe characteristics of a private network, even though it uses theresources of a public switched network.

VSAT Very Small Aperture Terminal: an earth–bound station used forthe communication by satellite of data,voice and video signals,exclud-ing broadcast television. A VSAT consists of two parts: a transceiv-er that is placed outdoors in direct line of sight to the satellite; anda device that is placed indoors to interface the transceiver with theend user’s communications device, such as a PC. The transceiverreceives or sends a signal to a transponder on a satellite. The satel-lite sends and receives signals from a ground station computer thatacts as a hub for the system.

WACC Weighted Average Cost of Capital. A calculation of a firm’s costof capital in which each category of capital is proportionatelyweighted. All capital sources – common stock, preferred stock, bondsand any other long–term debt – are included in a WACC calculation.

WiFi Wireless Fidelity is the common name for the Wireless Local AreaNetwork (WLAN) technology based on the IEEE 802.11 standard.

WiMAX Worldwide Interoperability for Microwave Access is a wire-less industry coalition whose members organized to promote IEEE802.16 standards for Broadband Wireless Access (BWA) networks.WiMAX 802.16 technology is expected to enable multimedia appli-cations via wireless connection, and enable networks to have a wire-less last–mile solution.

WLL Wireless Local Loop is a way of provisioning local loops withoutwires. Local loops are the lines between a customer and a telephonecompany. Such systems are being deployed in Asia and developingcountries to avoid the costs of wires and cables.

IXP An Internet Exchange Point is a physical infrastructure that allowsdifferent Internet Service Providers (ISP) to exchange Internet traf-fic between their autonomous systems by means of mutual peer-ing agreements. IXPs are typically used by ISPs to reduce dependen-cy on their respective upstream providers; furthermore, they are usedto increase efficiency and fault–tolerance.

LAN A Local Area Network is a group of computers and associateddevices that share a common communications line, and typicallyshare the resources of a single processor or server within a small geo-graphic area (for example,within an office building or a group of build-ings). Usually, the server has applications and data storage that areshared in common by multiple computer users.

LLU Local loop Unbundling describes the access provided by localexchange carriers so that other service providers may buy or leaseportions of its network elements, such as interconnection loops toserve subscribers.

MDF Main Distribution Frame. A distribution frame on one part ofwhich the external trunk cables entering a facility terminate, andon another part of which the internal user subscriber lines and trunkcabling to any intermediate distribution frames terminate.

NPV Net Present Value: a financial approach where the present valueof cash outflows is subtracted from the present value of cash inflows.

OPEX Operating Expenses (OPEX) before depreciation and amorti-zation of tangible and intangible assets, and before amortization ofactuarial adjustments in the early retirement plan.

Payback period The payback period represents the amount of timethat it takes for a capital project to recover its initial cost.

Peering Peering is the arrangement of traffic exchange between Inter-net Service Providers (ISP). Larger ISPs with their own backbone net-works agree to allow traffic from other large ISPs in exchange for traf-fic on their backbones.They also exchange traffic with smaller ISPsso that they can reach regional end points. Essentially, this is howa number of individual network owners put the Internet together.

PoP Point of Presence: the node at which an Internet ServiceProvider (ISP) connects a subscriber to the Internet.

PSTN Public Switched Telephone Network. A telecommunication net-work established and operated by an administration or a recognizedprivate operating agency, in order to offer telephone services to thegeneral public.The term “switched”is commonly used although notessential since, in practice, all public telephone networks includeswitching exchanges.

READSL Reach Extended ADSL (READSL) is a variant of ADSL that usesthe same modulation standards as its cousin Discrete Multi Tone(DMT).The idea behind READSL is to boost the lowest part of the spec-trum by sending more energy between 25 and 200 kHz. This tech-nology enables a 5–10% increase in the range of lines for through-puts of 128 and 512 kbit/s. Subscribers located in an ADSL zone, butuntil now too far away from the exchange, will thus be able to takebetter advantage of the offered services.

STB A Set–Top Box (STB) is a consumer electronics device installedin the home that decodes digital video and audio signals into a for-mat playable on a television.

Triple Play Triple Play refers to offering voice, video and data acrossthe same connection. Thanks to major advances in video compres-sion, Triple Play services are now offered across a range of smallerpipes using technologies ranging from DSL to broadband wireless.

UMTS Universal Mobile Telecommunications System is a technolo-gy for 3G mobile services, the next generation of GSM (Global Sys-tem for Mobile communications). In addition to voice and videotelephony services, UMTS supports data transfer rates up to 144 kbit/sin rural environments, and 2 Mbit/s in indoor environments.


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Bibliography


Broadband for Developm

ent in the ESCWA

RegionEn

han

cing

Access to ICT Services in

a Glob

al Kn

owled

ge Society

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PO Box 11-8575, Beirut, Lebanonwww.escwa.org.lb

Documents

Broadband for Development in the ESCWA Region4 Broadband for Development in the ESCWA Region Foreword Broadband is used today by almost 250 million people worldwide. It is revolutionizing