SPECIAL

Dubai Knowledge Economy 2003 ~ 2008

Volume II

Greater - 2014 ● ICT Infrastructure in New Dubai Hospitality Industry ● Banking and Finance Media ● IT Labor Market ● EIM Case Study

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©2004 Hewlett-Packard Development Company, L.P. DLP TM technology made by Texas Instruments. *Picture reliability test LCD vs DLPTM technology: Conducted by Munsell Color Science Laboratory (MCSL) at Rochester Institute of Technology in May 2002. Dubai Knowledge Economy 2003-2008 Volume II

President & Research Director Abdul Kader Kamli Forward [email protected] Tel: +971.4.3903053 By the time you finish reading this research book, Dubai will probably have expanded by a few square kilometers into the Gulf waters. Urban Dubai is Editor expanding, not only vertically, but horizontally – below and above sea level, Fawaz Jarrah and well into the desert – to create an advanced hospitality and business [email protected] environment that is particularly slanted to serve knowledge-based ventures Tel: +971.4.3903051 and up-market travelers, as well as upscale property buyers. Technology Executive Editor and resources are being strategically employed to simultaneously expand Jennifer Malapitan Dubai’s turf physically and into people’s minds worldwide. [email protected] These efforts have already started to pay off, evident by Dubai’s hosting Tel: +971.4.3903057 of international conventions and events, a growth in Dubai’s share in the global knowledge-based market and an increasing flux of passengers using Senior Researcher Nahla Daoud Dubai International Airport, in addition to the international awards and [email protected] recognition Dubai and Dubai-based organizations are being awarded. Tel: +971.4.3903052 Dubai is gradually turning into a global brand name for business communities, knowledge workers and the travel industry. Research Analyst Complementing Dubai Knowledge Economy 2003-2008 Volume I, Ahmed Moussa which was published in November 2003, and hopefully exceeding its [email protected] success, this volume has a special focus on the development of hospitality Research Executive as one of the pillars of Dubai’s knowledge economy, in addition to the Mohammed Faheem equally important sector of banking and finance, and the IT job market. [email protected] This research book looks into the separate mega projects (both planned and underway), their ICT infrastructure, and how these projects will Editorial Consultant demonstrate that “the whole is greater than the sum of its parts”, when they Stefan Kemball [email protected] collectively contribute to the creation of what we like to call Greater Dubai. Knowledge Economy 2003-2008 Volume II comes to you as the UAE Sales & Marketing ICT market is witnessing a major turning point, following a recent Mehtab Ali Sayed landmark decision to liberate the telecom sector and bring in competition. [email protected] However, despite all the progress and the good prospects, there are no Tel: +971.4.3903058 short cuts in developing a knowledge economy. Both public and private MADAR Research Group organizations in Dubai still have much ground to cover and a long way to A Bin Zayed Group Company go before vision is turned into reality. Office 221, Building 8 Meanwhile, as Dubai is learning from the experience of developed nations in using ICT as a growth engine or tool to transform their P.O. Box 502180 economies, we hope this research series and the packaged experience of Dubai, United Arab Dubai contained within would assist other Arab and developing nations in url: www.MadarResearch.com forging their own path. Tel: +971.4.3903059 Fax: +971.4.3904688 Abdul Kader Kamli

Published in June 2004

Copyright(c) 2003-04 Madar Research Group. All rights reserved. Reproduction in part or whole without express written permission is prohibited

Table of Content

Section 1: Greater Dubai - 2014 Overview and Vision ...... 7 Transportation ...... 9 Heathcare ...... 10 Select Free Zone Projects ...... 10 Real Estate ...... 11 Tourism and Leisure ...... 11 Section 2: ICT Infrastructure in New Dubai Overview ...... 15 Voice and Data Communication Services for Businesses ...... 17 Voice, Data and TV Services for Consumers ...... 20 E-Learning Delivery Solutions ...... 21 Section 3: Banking & Finance UAE Financial Sector Overview ...... 25 Dubai Financial Sector Overview ...... 27 Dubai Financial Market and Hub ...... 27 ICT Infrastructure ...... 30 Banks IT Budgets ...... 32 Electronic Banking and Payment ...... 32 Contact Centers ...... 34 Section 4: Travel & Hospitality Overview ...... 39 Hotel Industry ...... 41 Dubai International Airport ...... 45 Emirates Airlines ...... 50 Section 5: Dubai Media Dubai Media Sector Overview ...... 55 Dubai Media City ...... 58 Dubai Government Media Restructuring ...... ,...... 63 Section 6: IT Labor Market Overview ...... 67 Market Demand ...... 68 Salary Levels ...... 70

Section 7: Emirates Internet & Multimedia - Case Study ...... 75

Volume III Content of Dubai Knowledge Economy 2003-2008 ...... 84

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Section 1 rmu pno StandardSponsors Premium Sponsor Greater Dubai 2014

Greater Dubai 2004-2014

Overview and Vision global scene, and – along with tourism and trade – It is 2014 in Dubai – ten years from now. will form the backbone of a well diversified economy. Urbanization has extended from Dubai city’s Dubai, then, will have largely achieved the main southern outskirts all the way to port – with targets set by its leaders to make it comparable with some development even beyond the free zone – filling major world centers of finance, business and trade any undeveloped patches left on the coast and several such as New York, London and Hong Kong. kilometers inland. Urban Dubai has now doubled its Dubai’s economy will be based on booming area, from the 600-plus square kilometers in 2004. hospitality (including international event hosting) and This includes development of the largest man-made tourism (including retail industry), up-market real islands of Palm, Jebel Ali Palm and the estate industry, international finance and investment, World, whose combined area has expanded the media services and production, information and emirate’s total land area by three percent, as well as communication technology services, and other free- extended its 72-kilometer long shoreline by more than zone trade and services, in addition to re-exports, 300 percent. This will not be all, since a fourth island which will attain new records in volume. will probably be raised from the bottom of the Gulf Select high-tech industries and several centers of by 2014. excellence will also start to emerge in Dubai. Urbanization and massive development on both Ten years from now, as land becomes more sides of Sheikh Zayed Road, from the precious, Greater Dubai will resort to the Trade Center up to will become the development of “township-style” high-rise residential New Dubai – which, together with the “old city” of projects, similar to those characteristic of Hong Kong, Dubai, will constitute what may be termed as Greater where dozens of 30-plus-floor towers share a self- Dubai. As the was duly described as the sustaining complex that houses retail shops, lifeline of old Dubai, Sheikh Zayed Road will be the supermarkets, healthcare and childcare facilities, “artery” for the longitudinal expansion of banks, restaurants, in addition to standard amenities cosmopolitan Dubai. and facilities to cater for practically all the daily needs Greater Dubai will not have one commercial of hundreds of families. center or one “downtown”. There will be many In 2014, Dubai will be offering its residents, which business districts, each with its own concentration of are forecast to increase to 2.2 million by then (double related industries or business. Free zones will, the 2003 population), several new amenities and obviously, be the major bustling clusters of specific opportunities, such as a high-speed railway system industries and sectors, such as Internet City, Media that links the city from edge to edge, cutting down on City, Healthcare City, Silicon Oasis, Aid City, Metals traffic jams, a wide range of certified professional and Commodities Center, Investment Park, and training and long life education, career and business several other clusters that will be established in the opportunities, worldclass healthcare, a high standard coming 10 years. of living and a wide range of lifestyles. By 2014 most of these clusters, in addition to a By then, however, whatever minimal fees, tarrifs globally-linked stock and commodities market will and charges that are levied today in Dubai and the have matured enough to make a presence on the UAE in general – or practically the absence of taxes,

Impact of Man-made Island Development on Dubai’s Topography Before Development After Development Land Expansion Dubai Emirate Area * 4,114 sq km 4,236 sq km 3 percent Dubai’s Shoreline 72 km 292 km 305 percent * Estimated areas of the islands are: World Island, 55 sq km; Jumeirah Palm Island, 20 sq km; Jebel Ali Palm Island, 47 sq km

Source: Madar Research

Madar Research Group 7 Dubai Knowledge Economy 2003-2008 Vol II

Dubai Demographic World Records, 2003 Parameter Ratio Rank Male to Female ratio 2.62 male to 1 female Highest Workforce to Population ratio 68.33 percent Highest Expatriates as percent of total population 82 percent Highest Population Growth 7 percent Highest 65-and-above age group to total population 0.65 percent Smallest Source: Madar Research and Dubai Municipality Statistical Yearbook – Emirate of Dubai

which has been a major advantage for professionals in . The largest group among these and businesses from the developed world to set up in passengers will be tourists, including incentive Dubai – are expected to turn into full-fledged taxes, travelers and leisure tourists. Dubai will be a year- whether in the form of income tax, value-added tax, round leisure, recreation and shopping destination. or others that will impact individual and businesses with winter remaining the favorite season for visitors alike, especially in a city dominated by expatriates. from the northern hemisphere. Nevertheless, such taxes are expected to be at much The main attraction that Dubai will be known for lower levels than those levied in most of the developed in 2014, however, is its hosting of several world world. Accordingly, the initial impact of introducing record-breaking landmarks: the world’s tallest taxes is expected to be absorbed, though taxes will building, largest man-made island, largest shopping definitely trigger changes in the make-up of Dubai’s mall, first underwater luxury hotel, one of the world’s expatriate population in the long term. largest recreation and theme parks, among few others, Another major issue with a socio-economic impact including one of the world’s longest man-made ski is the probable naturalization of specific segments of slopes. UAE’s expatriate population, particularly from Arab In 2004, Dubai already holds many world records communities, in the next ten years. in several areas. These include such attractions as Burj Regardless of how the the issues of naturalization Al Arab, the world’s first seven-star hotel, among less and taxes turn around, Dubai will become more than known records, which have their own implications. ever a hub for all sorts of visitors. More than 40 Dubai, for instance, features the world’s highest ratio million passengers will be using Dubai International of males to females, highest workforce-to-poulation Airport by 2014, making the facility one of the busiest ratio, and the smallest ratio of people over the age of 65 to population. Such demographic indicators, Select Parameters Where Dubai Ranks Among among several others, require an in-depth study to World Top Scorers, 2003-2004 arrive at a thorough understanding of their positive Parameter Global Rank and negative socio-economic impact, and their Re-export trade 3 implications in various areas to assist government Per capita retail space 3 officials, as well as business developers, in their future Gold trade undetermined planning. Ratio of investment to GDP undetermined One of the interesting records is that Dubai ranks Ratio of air flights per population size undetermined first in the world in the volume of waste disposed of Number of outbound international undetermined per capita – at least this record was valid in 2001 when phone calls per capita it was reported by , quoting UAE-based Volume of overseas money remitance undetermined Eco Plastic Industries. Such a record undelies a very World Favorite International Airport 1 high intake of consumer products, and it probably has (IATA 2003 Survey) other significant interpretations. Ratio of millionaires to population undetermined Another related record, which supports Dubai’s Source: Madar Research and various sources image as a shopping destination is the size of retail

8 Madar Research Group Greater Dubai 2004-2014

the trappings of modern, cutting-edge city living, One millionaire to every 75 people in Dubai primarily to attract both local and foreign investors. Dubai is home to some 16,000 millionaires, according In its drive to become a global digital hub, Dubai is to Madar Research estimates, based on Worldwide working on two fronts: facilitating the establishment Wealth Report 2003, published by Merrill Lynch, of a strong ICT sector, and furnishing all the emirate’s which puts the number of highest net-worth major projects with cutting-edge technology individuals in the with financial infrastructure. assets of at least $1 million – excluding home real What follows is a summary of key infrastructure estate – at 47,000. This represents one of the world’s projects that are in various phases of planning and highest “number of millionaires per capita”, standing construction. at 1.33 percent of Dubai population, which exceeds the rates in the United States and Hong Kong, Transportation estimated at 0.78 percent and 0.61 percent The Dubai Railway Transport Project will respectively. The number of millionaires in Dubai, complement the existing public transport system, which includes expatriates and nationals, has also which includes buses and taxis that ply all the major undergone an impressive five percent growth, streets in Dubai. The project, to cost the Dubai compared to Madar Research estimates based on the Municipality some $762 million (Dh2.8 billion), will 2003 edition of the report. A ratio of one millionaire be implemented in two phases. The initial phase is in every 75 residents has given Dubai a new title as the due for completion in 2009, while the final phase will “city of millionaires”. be completed in 2013. The Dubai Light Railway Transit (LRT) system space per capita, in which the emirate ranks third will have two lines– colored red and green (similar to worldwide. The total gross leasable area within Paris’ Metro). The will stretch from the shopping malls in Dubai is now estimated at being Sharjah border to Jebel Ali, while the will close to six million square feet. This leads to an stretch from the Rashidiya Bus Station to the Dubai average retail space of around six square feet per Healthcare City. person. The United States ranks first, with 13 square The system will include 55 stations, feet per capita. both elevated and underground, with 18 kilometers of A recent study conducted by Dr Ali Sadik from Al tunnels and 51 kilometers of viaduct. One major train Qabas International Economic Consultants and Dr depot and maintenance workshop and several Bassem Younis, a professor at the University of auxiliary offices are also planned to service around 99 Sharjah, has given Dubai the status of a “super city” trains that will be plying the two routes. based on its population, meeting of basic needs of The metro system is expected to transport around residents, and sustainable economic development. 43,000 passengers per hour in each direction and this The study established that Dubai adequately meets all capacity may increase to 50,400 in the future, which the needs of its residents for food (especially water), will still meet the demand for public transport in the shelter, safety, health, transport and education. emirate well beyond 2017, according to Dubai Such positive perceptions could only improve as Municipality. It is anticipated that by 2017, nearly Dubai makes no letup in building or enhancing its 1.2 million people will use the trains daily. physical infrastructure. In fact, a visiting executive The metro system will help decongest the fast- described the emirate as “one big construction site”, growing traffic, mainly at the city approchaes and in due to the ubiquitous digging and excavation chores the Deira, Karama and Satwa arteries, where traffic, as well as the giant crane, hauling and paving particularly during the weekend, can easily turn into equipment all over Dubai. gridlocks that lasts for hours. Dubai’s vision to become a digital hub in the The Dubai Civil Aviation, meanwhile, has region is complemented by the plans of its various launched an expansion project for both Terminal 1 sectors to create a cosmopolitan environment with all and Terminal 2 of the Dubai International Airport.

Madar Research Group 9 Dubai Knowledge Economy 2003-2008 Vol II

The expansion of Terminal 2, which includes creating open opportunities for Dubai to attract students from dedicated sections for passenger processing facilities the region as well as bring in medical expertise to (immigration), visa delivery and transfers as well as a Dubai. separate section for well-wishers and a 300-seat Among the earliest confirmed tenants of DHCC is restaurant, will cost $136 million. Actual budget for the famed Mayo Clinic, which currently maintains a the Terminal 1 expansion has not been made public, representative office in Dubai. The Mayo Clinic will but the expansion is in line with the projected growth be establishing a pool of full-time medical staff at the of passenger traffic in the airport. DHCC. Mayo Clinic currently treats patients in DCA projections indicated that around 70 million Dubai one week per month, where a heart specialist passengers will be passing through Dubai and a team of support staff from the US evaluate International Airport annually by 2016 and 100 patients with known or suspected heart conditions million by 2025. The Dubai International Airport is who are seeking diagnosis, further evaluation or one of the world’s busiest due to its location which follow up care. makes it ideal for connecting flights between Asia and The DHCC is a subsidiary of Dubai Development Europe. The airport’s increased capacity to handle and Investment Authority (DDIA), which is the millions of passengers every month will be facilitated major investment body of the Dubai government. by the e-Gate electronic system, which was introduced in August 2003, giving passengers the option to speed Select Free Zone Projects up their check-in and check-out by subscribing to the Companies engaged in media production – be it print facility. This service has been successful enough to or broadcast – have a new option in terms of setting attract close to 30,000 subscribers by end 2003. up their shop in Dubai. The International Media Production Zone (IMPZ) is designed exclusively for Healthcare media production houses and is expected to be Another project – – is completed in the second half of 2005. The IMPZ is currently being built on a 3.46 million square feet of being built on a 35 million square feet of property property. Initial phase of the project is expected to be along Emirates Road, with initial investments pegged ready this year, while the rest of the project should be at $109 million. Basic capital requirements for a free completed in 2010. The $490 million Health Care zone license are $136,000 for printing firms and City seeks to transform Dubai into “a global hub for $81,000 for ancillary industries. The IMPZ is being specialized healthcare and a center for medical managed and implemented by Dubai Media City. education and research.” The facility is expected to A $1.1 billion expansion project for Jebel Ali Port serve patients in the region, covering 31 countries in has likewise commenced, increasing its capacity from the , East Africa and the Indian the present four million 20-foot containers to 21.8 subcontinent. The project will establish healthcare million. The project comprises four phases extending institutions, hospitals and clinics, medical and fitness into 2020. clusters, laboratories and life sciences research centers, The Dubai Silicon Oasis (DSO), on the other a nursing school and medical university. hand, is scheduled to open in 2005, with its first Indeed the Dubai Healthcare City is an important confirmed tenant being Communicant, the $1.7 component of Dubai’s vision, filling the void for billion joint venture between , the government of world-class healthcare services in this part of the Dubai and the German government of Brandenburg world, where medical services are often branded as state. The silicon factory has scheduled its first dubious, if not too expensive. It will also significantly production in the site by 2007. An incubation facility, lower the cost of medical training for students who are the Dubai Silicon Incubation Center, is planned at interested in pursuing a career in the medical field. the DSO to provide a facility for broadband and Traditionally students obtain their education in wireless product development and commercialization. universities in Western Europe or in the US to Scheduled to open next year (2005), another free become medical professionals. The DHCC will thus zone in the works is the Dubai Metals and

10 Madar Research Group Greater Dubai 2004-2014

Major Real-Estate Development Projects in Dubai Project Name Completion Date Budget (Million $) Developer/Owner/Investors 2006 176.9 Gulf Craft Inc Project 2006 816 Omnix Group Hotel 2006 500 Residence 2005 Estithmaar Realty 2004 340 Jumeirah International International City 2006 408 Nakheel LLC/DMJM International The Palm 2007 Nakheel Corporation The World 2008 3,000 Nakheel Corporation 2008 Source: Madar Research

Commodities Centre (DMCC). DMCC, located 45 mega projects and 200 sub-projects. The along the Sheikh Zayed highway, provides a full range will boast the “world’s biggest mall” the of facilities and services for trading in gold, diamond . A number of other divisions that will and other key commodities like tea and sugar. cater to various interests such as sports, eco-tourism, family and children’s entertainment will likewise be Real Estate featured at the Dubailand. Hundreds of residential/hotel real-estate development Set to open in 2006, another tourism-related projects are being constructed or are on the pipeline. project is the . The DFC is These include the International City, Burj Dubai, expected to transform the four kilometer site along Dubai Pearl, , Madinat the creek waterfront in into a “world- Jumeirah, the Palm, Dubai Marina and the World. class” one-stop destination for dining, shopping, The Palm and the World projects stand out as they family entertainment and conventions. are intended to become the poster child for reclaimed The Autodrome and Business Park, a 7.5 square- or man-made islands designed for upscale residents. kilometer stretch of pure motor sports, will feature a The World, for instance, comprises 300 islands with five-kilometer FIA approved Formula One Race the most expensive properties near the open sea Track. The project is being developed by Union carrying a price tag of around $36.7 million. Properties and is expected to open this year (2004). The Hydropolis underwater hotel is another Bringing the arctic experience right into the heart landmark project as it is claimed as the first of the Middle East is Souk Al Nakheel Ski Resort, underwater luxury hotel in the world. which will simulate a 450-meter ski slope. One of Emaar Properties’ major projects, the Burj With Tiger Woods fast becoming a fixture in the Dubai, will become the world’s tallest building when annual Dubai Open, a set of golf courses are being it opens in 2006. The estimated 560-600 meter established in the emirate. The Al Badia Golf Resort skyscraper easily exceeds the height of the Taipei 101 is a 7,250 yard, 72 par, 18-hole recreational golf tower (509 meters) and the proposed Freedom Tower course with an initial investment outlay of $150 (542 meters) to be built at Ground Zero in New York. million. Al Badia is designed by Robert Trent Jones The tower will be the centerpiece in a huge complex. II, California’s internationally acclaimed golf course architectural firm. The other twin golf courses, one of Tourism and Leisure which will be a desert course, are built within the The region’s biggest tourism project, with a budget of . The 7,698 yard, par 72 course $4.9 billion, is the Dubailand, which is being designed by Australian Ian Baker Finch in association constructed along Emirates Road. Dubailand will be with the Nicklaus Design will reportedly rank among built on a 185 square kilometer area and will include the top 100 golf courses in the world.

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ICT Infrastructure in New Dubai

Overview Construction work has already begun and the project is Dubai has over the past five odd years gained scheduled for completion by end 2007. reputation for its fast-changing skyline that acquires Not less challenging is the development of the Palm new contours every few months. Large-scale Islands, the world’s first and largest man-made islands development of Dubai is not only changing the face of in the shape of two palm trees. The smaller island, the desert, with the construction of remarkable Jumeirah Palm (stretching over 20 square kilometer), landmarks, but has gone as far as to reshape the will soon turn into a posh residential area and resort, shoreline and even the sea bed, carving out new luxury while the larger, Jebel Ali Palm (47 sq km), will habitats that are making Dubai standout as a unique combine mansions with upscale commercial and world experience for tourists, the business community entertainment facilities. and investors. This pace of development is not Another milestone is Hydropolis, which is touted as expected to slow down in the next five or six years, nor the world’s first luxury underwater hotel. Running at will the pace of state-of-the-art development of an estimated cost of $500 million, Hydropolis, will be Information and Ccommunications Technology built 300 meters off Jumeirah coast, with toughened infrastructure (particularly voice and data plastic, glass, concrete and steel, down to a depth of 20 communications services) that is underway to cater for meters. The outlandish structure, conceived by the massive expansion of Dubai. Joachim Hauser of Germany, will comprise a land ICT and related technologies are expected to play station (housing reception and management), a an important role in creating “smart buildings” in what connecting tunnel and a submarine complex that has been dubbed as the “New Dubai” – which stretches houses the 200-suites hotel. on both sides of Sheikh Zayed road, up to Jebel Ali The World, on the other hand, is a group of 300 Free Zone some 40 kilometers from the man-made islands built and clustered in the shape of area. The ongoing liberalization of the the world map and will be located two kilometers telecommunication sector will assist the process by within the Gulf and adjacent to . providing a range of top quality infrastructure and Construction of the World has begun in late 2003 and services at competitive prices. will be completed in 2008. , Burj Al Arab, Burj Dubai, the World Emirates Internet and Multimedia (EIM), the and Hydropolis, each of these projects drips with Internet service provider (ISP) subsidiary of , superlatives, such as the world’s first “seven-star” hotel, will continue to be the operator – or at least the the world’s tallest building, the world’s largest man- backbone supplier – of Internet access and related made islands, the world’s first submerged upscale hotel. services for most of these projects, at least until the Leading such projects is the iconic Burj Dubai telecommunication liberalization process is completed Development, whose centerpiece will be the world’s in near future and new players enter the market, tallest residential tower (the Tower), supplemented by EIM has been providing broadband Internet access one of the world’s largest shopping and entertainment to businesses via leased lines since 1995 and ISDN malls – . LAN connections since 1998. It also began offering The Burj Dubai Development will lead to the broadband Internet access to consumers in 2000. The creation of one of the most exclusive locations on earth, result is that the breadth of services available today in combining commercial, hotel, entertainment, Dubai matches only those offered by the wealthiest and shopping and leisure outlets, surrounded by a most industrialized cities in the world. landscape of gardens and lakes. The Tower will contain The ICT infrastructure at the Dubai Technology residential space, retail space and a hotel. Adjacent to and Media Free Zone, for instance, runs on an STM-1 the Tower there will be the Old Town, residential (155 Mbps) connection, enabling broadband Internet developments, restaurants, shopping malls, hotels and connection in every office in the free zone. office space. The one billion dollar real-estate developer firm The Tower, along with its top observation deck, is Emaar Properties, which has contracted at least ten slated to become a major tourist attraction. major real-estate projects in Dubai, including the

Madar Research Group 15 Dubai Knowledge Economy 2003-2008 Vol II

Services of Telecom and Internet Service Providers (ISPs) in New Dubai Etisalat Emirates Internet Comtrust E-Hosting Data Fort Sahm & Multimedia (Technology & Technologies Media Free Zone) (Emaar) BUSINESS

ATM Leased lines Managed e-hosting Managed e-hosting Virtual PABX Frame Relay ISDN LAN Online payment Disaster recovery Leased lines service Video-conferencing DSL Managed PKI Professional IT VPNs solutions services (BS 7799 Certification, etc) Fax on Demand Dial-up E-retailing/ Storefront service IT infrastructure services (hardware/software Shared web hosting Certification procurement, Authority structured cabling, Disaster recovery Voice over IP, video E-mail services conferencing, wireless Web directory networking, leased Interactive Voice E-learning lines, ATM, frame Response Systems Wireless Internet relay, X.25, etc.)

CONSUMERS

Multimedia DSL Digital certificates High-speed Messaging/3G Internet access GSM call waiting, Cable Internet Telephony services call conference, (call diversion, ring email notification Dial-up back, return call, call barring) Land line message Web hosting Digital satellite TV service services

Source: Websites of Etisalat, EIM, Comtrust, EHDF and SAHM

landmark Dubai Marina, and Burj Technologies, to develop a range of advanced Dubai Development, has also set the standard for communication and networking services for these real- embedding the most advanced communication estate projects. These services are deployed over an technology infrastructure within every property it has extensive fiber-optic infrastructure, which Sahm claims developed or is currently developing. will be first in the region in terms of type and size. Emaar’s $50 million deal with communications This section discusses the range of voice and data giant Marconi in 2001 has ensured that an “intelligent” communication services available in Dubai for both environment is created in each of these properties. corporate users and mass consumers, with focus made Emaar has set up its own technology arm, Sahm on New Dubai.

16 Madar Research Group ICT Infrastructure in New Dubai

UAE Opens up Telecom Sector The 26-year monopoly of Emirates Telecommunications Corporation (Etisalat) has come to an end on April 11, 2004, when President His Highness Sheikh Zayed Bin Sultan Al Nahyan issued a decree setting up two independent bodies to oversee the smooth transition and operation of this sector, as it anticipates new service providers to come along. The decree “effectively abrogated the exclusive operation of the telecommunications sector by Etisalat Corporation and assigned the minister of state for financial and industrial affairs to represent the government’s interest in that corporation,” according to Emirates News Agency (WAM). Liberalizing the telecom sector has been the subject of speculations in the past few years, with the government being pressured to do so by organizations within and outside the country, not least by the World Trade Organization (WTO) which requires all member countries to adopt an open market policy. Liberalizing the telecom sector in the UAE is expected to lure both local and foreign investors, paving the way for competition, thus, ensuring high quality of service at lower prices. It is also widely believed that having more than one telecom service provider will speed up the adoption of e-commerce in the country. The decree appointed minister of state, Dr Mohammed Khalfan bin Kharbash, as head of the Supreme Committee. The other members of the committee are Ahmed Mohammed Al Hamiari from the President’s Office and Ahmed Abdullah bin Bayat from the court of the Vice President and Ruler of Dubai. This high-powered committee will screen and approve new licenses that will be issued to new entrants, while a second committee will exercise monitoring functions over the telecom sector. It is hoped, but not guaranteed, that the new telecom players will be able to offer similar levels of service to those offered by Etisalat at a lower cost. It is also not known whether Etisalat will be required to lease its lines to the new players, as the case has been in other countries in the region. With this decree, the UAE joins two other GCC countries which have already opened up their telecom sectors: Bahrain and Kuwait. This move will assist to build up the pressure on other GCC countries, particularly Saudi Arabia, to adopt an open market policy in their telecom sectors. Etisalat’s market capitalization peaked at around $13.49 billion by end 2003 compared with $10.5 billion at the end of 2002. Its 2003 market capitalization is equivalent to 25 percent of total market capitalization of the companies listed in UAE’s major bourses. The UAE government owns 60 percent of Etisalat shares and it may seek similar ownership of shares with the future entrants in the telecom sector.

Voice and Data Communiction Services for applications, building the applications and letting a third Businesses party maintain the servers in a secure, off-site location, These servuces comprise e-hosting and broadband or the third option is to outsource the entire project to a Internet, in addition to video-conferencing and third party, which can maintain these applications. telephony, as detailed below. Etisalat subsidiary Comtrust and the e-Hosting Data Fort (EHDF) of the Dubai Technology and Media Free e-Hosting Zone address these needs by offering managed e-hosting The need for business and government organizations to services. participate in the so-called digital economy engendered Before the two service providers were established, bringing online certain – if not all – applications ranging many companies in Dubai used to host their Web-based from business communications to portals and enterprise applications in data centers located overseas. The resource planning (ERP) systems. There are three main presence of entities such as Comtrust and EHDF gave approaches which an organization may consider toward business organizations in the emirate the option to host this end: building an in-house team to manage the their applications in data centers in Dubai, which offer

Madar Research Group 17 Dubai Knowledge Economy 2003-2008 Vol II

similar services such as those found in the United States complete server and operating system (OS) management or in the UK at a more reasonable cost. along with database and application administration Comtrust is backed by the Etisalat Data Center (eDC), options. which has dual locations in Dubai and . The Service level agreements (SLAs) offered by both firms eDC infrastructure offers high speed connectivity that further ensure customers access to a legal recourse or hinges on Etisalat’s multiple STM-1 connections. It also financial compensation in the event of service deploys several layers of network security, core switching interruption, data damage or such other cases that could and fiber redundancy, and basically every physical security hurt their operations. measure foreseeable: biometric palm scans, surveillance and “24 by 7” on-premises security. Broadband Internet The EHDF, in turn, is implemented and deployed Businesses operating in the Dubai Technology and by the IBM Global Services, which provides access to a Media Free Zone are – by default – connected to the network of similar facilities operated by IBM globally. Internet via a high-speed network. The free zone’s Similar to Comtrust, the EHDF allows co-location – a Internet backbone is redundantly connected to the term used to indicate storing or “depositing” privately- Emirates Internet Exchange (EMIX), the first network owned servers into an IT rack or space in an outsourced access point (NAP) in the region operated by Etisalat. data center, which EHDF located at the Dubai Internet The STM-1 connection with EMIX allows for “diverse City premises. Alternatively, users can rent servers from and redundant porting options, direct connections to EHDF, with the additional option of obtaining ISP NAPs in North America, quicker response times, and services, back up and storage services and managed wide high-speed 155 Mbps link over terrestrial cable routes.” area network (WAN) services. This infrastructure warrants the offering of a wide EHDF is also pushing the “dedicated managed range of options for corporate-wide area network hosting” business model where, it will provide users with (WAN) and local area network (LAN) connections, the the complete physical infrastructure (server, Internet most important of which are identified in the table connection, rack space) and service that are customized below. to their unique requirements. As the term “dedicated Furthermore, the free zone offers at least 17 types of managed hosting” implies, this package provides Internet connection packages designed for small offices

WAN Connectivity Applications at DIC Leased circuits Speeds range from 64Kbps up to 2Mbps, with service coverage for the UAE and cross border connectivity to major cities around the globe Integrated Services Digital There are two levels of service: the Basic Rate Interface (BRI), intended for small Network (ISDN) enterprise, and the Primary Rate Interface (PRI), for larger enterprises. The BRI consists of two 64Kbps channels; thus, a BRI rate user can have up to 128Kbps service. The PRI consists of thirty 64Kbps channels MPLS VPN The Multi-protocol Label Switching Virtual Private Network solution is designed for the enterprise, providing coverage for intranet, extranet and Internet services combined with IP, data and voice support ATM It enables data, voice, video and Internet/intranet services to all ride the same powerful backbone intended for high-end applications Frame Relay Designed for bursty applications, FR is a cost-effective alternative to private lines. With a committed information rate (CIR), bandwidth is guaranteed even at peak network conditions X.25 This legacy networking protocol is provided by DIC to protect existing customer investments. Dial up and dedicated service are provided at different speed levels based on customer demand

Source: website

18 Madar Research Group ICT Infrastructure in New Dubai

DIC Start Up Corporate Package (DSL), with connection speeds scaling from 512Kbps to 2Mbps, leased lines and integrated services digital Service Offered network (ISDN) LAN. 2 Mbps Internet access Additionally, wireless Internet is now available at 2 GB transfer per month various locations around Dubai such as the airport and 2 email accounts (DIC sub domain) some hotels, coffee shops and malls. All EIM subscribers 4 IP addresses can access these services and are charged hourly fees, 2 Cisco IP Phone 7960 which are billed together with their e-mail accounts. 1 VLAN 2 Access Ports Telephony, Video-conferencing Etisalat’s asynchronous transfer mode (ATM) and frame Charges relay networks ensure that businesses in Dubai get One-time installation charge $204 “leading edge” services that enable them to conduct Monthly charge $108 business efficiently. ATM transports data from a wide range of applications using one seamless network and Source: IT & Telecom Services, Dubai Technology and Media Free Zone supports many types of traffic – data, image, voice and video – over common facilities, enabling users to DIC Corporate Package F consolidate diverse networks. Service Offered Leased line circuits are also available for the exclusive use of the organization that rents it. Vide-oconferencing 2 Mbps Internet access services are likewise offered, allowing companies separated Unlimited GB transfer per month by distance to meet virtually “live”. PABX services, 4 domain names interactive voice response (IVR) systems, fax on demand, 50 email accounts (customer domain) toll free services and the good old telex services are all 4 IP addresses available from Etisalat. 200 MB web space As for Sahm Technologies, as mentioned earlier in 50 Cisco IP 7960 telephones this report, it offers its property dwellers services that 2 VLANs range from virtual PABX systems, leased lines and virtual 50 Access Ports private networks (VPNs) as well as high-speed Internet 1 VPN Connection connection that starts at 512Kbps. Charges The Dubai Technology and Media Free Zone, for its part, offers a comprehensive range of voice and data One-time installation charge $817 communication services. Its IP-based telephony Monthly charge $7,600 infrastructure allows for data, voice and video to be Source: IT & Telecom Services, Dubai Technology and Media Free Zone transmitted over a single network. Every company that has set up office at the free zone all the way to enterprise-class business users, with is familiar with the “menu” served by its IT and Telecom monthly charges scaling from $108 to $7,600. Services Department. Depending on the office lay-out Emaar’s Sahm Technologies, meanwhile, provides its and design, as well as its size, a company setting up at the various properties with broadband data and voice DIC, DMC or Knowledge Village may “hit the ground connections utilizing a fiber-optic network that allows running” in terms of telephony and Internet bandwidth intensive applications through leased lines connections in as little as a few days. and virtual private networks (VPNs). As detailed in the table next page, entitled “DIC Businesses operating outside the Dubai Technology Telephony Services”, the Dubai Technology and Media and Media Free Zone and the Emaar properties can avail Free Zone charges $4 per month for an analog phone broadband Internet connection from EIM, which offers line, while it charges $8 per month for an ISDN BRI a wide range of options such as digital subscriber line connection and $598 per months for an ISDN PRI

Madar Research Group 19 Dubai Knowledge Economy 2003-2008 Vol II

DIC Telephony Services systems and other similar features could also be added to the ordinary land line both for home and business users. Service Description One-Time Monthly Sahm Technologies’ current offerings for its Installation Charge ($) residential subscribers span sophisticated telephony Charge ($) features (call diversion, calling number delivery, Analog $41 $4 incoming and outgoing call barring, etc) to broadband ISDN BRI (2*64K $41 $8 Internet connection, with a generous provision for home channels) subscribers with multiple users, who may wish to access ISDN PRI (30*64K $599 $598 the Internet simultaneously. channels) Trunk (multiple analog $46 $5.40 As for home entertainment, Dubai residents can lines into PABX) choose between satellite and cable television services. IP Telephone Purchase 7960 $14 $624 Emirates Cable TV and Multimedia (E-Vision) offers an IP Telephone Purchase 7940 $14 $433 impressive roster of programming channels that includes IP Telephone Purchase 7910 $14 $298 e-Firsnet, ART, Showtime, Orbit, e-Pehla and B4U. It Source: Dubai Internet City also designed a program targeted at kids called e-junior. A pay-per-view service is also now available offering Note: An additional monthly $8 per phone is charged for IP phone Hollywood, Bollywood and Arabic blockbuster movies services (such as voice mail and call forwarding) round the clock. E-Vision’s cable infrastructure further provides access phone line. The Cisco IP telephone ports cost between to the Internet, with Al Shamil cable package launched $298 and $624, depending on the model, with an by sister company EIM in early 2003. Al Shamil cable option to lease the ports on a monthly basis. The free service complements the DSL high-speed service that zone charges 20 percent less on intra-UAE and reaches UAE homes through Etisalat’s copper telephone international long distance calls compared to Etisalat. infrastructure. Sahm Technologies, for its part, has signed up with Voice, Data and TV Services For Consumers top TV content providers such as Showtime, Star and Etisalat’s 3G network for mobile communications ADD. The Emaar buildings are also “wired” to provide enables users to make live video calls on their 3G- users with a roaming facility inside their apartments. A enabled handset and to access the Internet at high customer subscribed to either Internet or TV services or speeds. They can also send and receive multimedia both can use various sockets in their house to enable messaging services (MMS), a next generation application them to use either service as and when they want. Sahm compared to the short messaging service (SMS), which also plans to offer more services in the near future such has been around in the UAE for the last four to five as those listed in the table next page. years. With new players expected to enter the local Meanwhile, set-top-boxes (STB) for cable and market – following the liberalization of the sector – the satellite television services will remain a staple in the cost of using these services can only go down. living room of Dubai residents. The role they play, SMS services have been very commonplace in Dubai, however, will constantly evolve as new, more advanced with Etisalat charging 8 cents (30 fils) for every SMS programming functions are introduced to accommodate sent to another GSM subscriber or fax number in the interactive television. UAE or an e-mail address under any domain (e.g. One of the interesting recent developments on the emirates.ae, hotmail.com, etc.). Sending SMS to an satellite TV front is that leading pay-TV network overseas mobile number, on the other hand, costs twice Showtime has relocated its headquarters and broadcast as much – 16 cents (60 fils). centre operations from London and Cairo (Egypt) to the Etisalat customers can also choose to integrate several Dubai Media City (DMC) campus. The Showtime “add-on” services to their ordinary GSM connections headquarters and transmission centre is expected to be such as call waiting, call conference and e-mail operational this month (June 2004) and will ultimately notification. Call forwarding, interactive voice response accommodate over 400 staff. The 50,000 square feet

20 Madar Research Group ICT Infrastructure in New Dubai

Forthcoming Services from Sahm Technologies There are currently 800 courses that are available at www.LearnOnline.ae, the e-learning division of EIM, Video on Demand (VOD) ranging from computer desktop courses, IT certification Games on Demand courses specializing in various software and hardware IP Telephony disciplines, all the way to short-term business courses Additional telephony features: call waiting, three party designed by the Harvard Business School Publishing. conference, distinctive ringing, etc (For more on EIM’s offering turn to the EIM Case Virtual PABX features Study on Page 75) Internet TV (ITV) pause function (delay of live feed) Knowledge Village – the emerging e-learning hub of ITV virtual recording (manipulation of live feed) the Dubai Technology and Media Free Zone – has also Home control automation recently welcomed Universitas 21 Global, a consortium Remote management of approved home appliances of 16 universities that include the University of New Online camera South Wales, University of Singapore and University of Smart appliances E-services (e-learning, e-health) Melbourne. Universitas 21 is currently offering an New TV channels online MBA program, as well as counseling services to students or professionals who are contemplating Source: SAHM Technologies website enrolling in the existing graduate programs. Universitas 21 utilizes threaded online discussions, e- facility will house the network’s headquarter operations mails and other Web-based communication tools to including sales and marketing activities and call centre facilitate active interaction between students and and online customer service functions. lecturers. Other learning applications are provided by Such development confirms the efficiency of the ICT Universitas 21 Global’s proprietary Learning infrastructure that exists in Dubai, particularly at the Management System (LMS) to enhance the e-learning Dubai Technology and Media Free Zone. experience. This includes online announcement boards and special notepad functions for students to create their E-Learning Delivery Solutions own lecture notes. Introducing online learning to corporate and academic Another interesting development facilitated by the institutions in Dubai has become more compelling with availability of broadband infrastructure at the Dubai the general availability of broadband Internet access. Internet City is the establishment of a remote training While there are different approaches to e-learning, each laboratory similar to the one launched by Synergy of these incorporate applications that ultimately require Professional Services, a Cisco partner. The $2 million reasonable Internet access speed, ideally faster than the Synergy Remote Lab is the biggest Cisco laboratory in standard 56Kbps dial-up connection. Europe, Middle East and Africa (EMEA) region. A number of government and private companies in The facility, hosted by EHDF at the DIC, can run Dubai, besides the academic institutions, have adopted over 25 laboratory courses simultaneously, offering the the principle of “lifelong learning,” which commonly most comprehensive training courses that lead to one of involves the use of electronic media. the following career certifications: Cisco Certified Early corporate adopters of e-learning include Internetwork Expert (CCIE), Cisco Certified Network Emirates Airlines, Emirates Bank International, Aramex, Associate/Professional (CCNA/CCNP), Cisco Certified Hilton International, Jumeirah International, the Dubai Design Associate/Professional (CCDA/CCDP), and e-Government team, Mercator and the Dubai Cisco Certified Internetwork Professional (CCIP). The Petroleum Company. Lower training costs (as much as Synergy Remote Lab serves the entire EMEA region and 50 percent less) and faster return on investments have is equipped with the latest CCIE routing, switching, been cited as the key incentives in adopting e-learning communication, services and security equipment. modules in the corporate setting, although the initial It is expected that an increase in the volume and cost of setting up a proper e-learning system can be quality of e-learning content will further spur the significant. adoption of broadband Internet access emirate-wide.

Madar Research Group 21 eLandscape Annual Report 2004 Comprehensive IT and Economic Indicators’ Report for all Arab States Number of Countries covered 18, Total Number of Indicators 205 per Country

A MUST HAVE FOR ALL ORGANIZATIONS!

Social Indicators – Demographic – Population (000s), Technology Incubator, Fixed line Telephony – Fixed lines Population added (000s), Growth %, Population Age operaters, Fixed telephone lines (000s), Fixed lines added Structure 0-14 years, Population Age Structure 15-64 years, (000s), Growth %, Penetration %, Penetration % Population Age Structure 65+ years, Urban Percentage, Male (households), % of residential fixed lines, % of digital fixed Female Ratio, Life Expectancy at Birth (years), % of lines, Number of payphones (000s), Payphones added (000s), Outexpatriates, in July Number 2004 of Households (000s), Households added Growth %, International Telephone Circuits, Mobile Lines – (000s), Growth %, Size of household, Literacy rate, Mobile operators, Mobile lines (000s), Mobile lines added Unemployment Rate, Total Workforce (000s), Percentage of (000s), Growth %, Penetration %, Personal Computers – PC Workforce, Education – Number of Students (000s), Number Sales - Total number of PCs Sold (000s), PCs added (000s), of Schools (000s), Number of School Teachers (000s), Growth %, Penetration %, Branded Desktops sold (000s), Number of colleges, Number of university Students (000s), Assembled Desktops sold (000s), Total number of desktops Number of Universities, Government Expenditure on Sold (000s), Desktops added (000s), Growth %, Penetration Education (Billion US$), Education Expenditure (% of GDP), %, Number of notebooks Sold (000s) – Notebook added Macro-economics – Economic, GDP (in billions), GDP per (000s), Growth %, Penetration %, Printers sold (000s) – PC capita, GDP growth %, GDP per capita growth %, Inflation, Use - PC Installed base (000s), PCs added (000s), Growth %, Foreign Direct Investment (net) in millions, Gross Foreign Penetration %, Internet – Number of ISPs, Number of Direct Investment ( % of GDP ), Foreign Direct Investment Internet Cafes, Internet users (000s), Users added (000s), (% of GDP), Investment Scenario Indicators – Governance Growth %, Users penetration %, ADSL users (000s), Users Indicators - Voice and Accountability, Political Stability, added (000s), Growth %, Users penetration %, Internet Government Effectiveness, Regulatory Quality, Rule of Law, Leased lines (000s), Users added (000s), Growth %, Users Control of Corruption, Economic Freedom Parameters – penetration %, International Internet Bandwidth (Kbps) – Trade Policy, Government Internet Bandwidth per Intervention, Foreign User (Kbps), Number of Investment, Wages & web sites (country Prices, Regulation, Fiscal domain), Total Numbers Burden, Monetary Policy, of web sites, No of Banking & finance, Arabic Language content Property Rights, Black Markets, Overall Score - Arab Ranking, web sites, No of English Language content web sites, No of World Ranking, Determinants of Competitiveness – Number Bilingual content websites, IT Market – Software Products, % of of Procedures, Duration (days), Cost (percent of GNI per total, Computer Equipment, % of total, IT Services, % of total, capita), Percentile rank of cost, Legislation & Treaties – Data Communications, % of total, Total of IT Market, Total IT World Trade Organization (WTO), World Intellectual workforce (000s), Percentage of IT workforce, IT spending as Property Organization (WIPO), Paris Convention, WIPO percentage of GDP – Per Capita IT spending, ICT Spending as Copyright Treaties (WCT), Patent Cooperation Treaty percentage of GDP, Software Piracy – Loses to Retail Software (PCT), Madrid Agreement, Hague Agreement, Trademarks Piracy (Million US$), Arab Ranking by Piracy rate, World Law Treaty (TLT), Patent Law Treaty, Nairobi Treaty, Ranking by Piracy rate, E-Commerce – B2B e-Commerce, TRIPS, Berne Convention, Copyright Law, Trademark Law, Growth (%), B2C e-Commerce, Growth (%), Total, Growth (%), Patent Law, E-signature Law, E-government Law, Data B2B e-Commerce as percentage of GDP, B2C e-Commerce as protection/Privacy Law, Freedom of Information Law, Cyber percentage of GDP, E-Government – Global Ranking, Arab Crime & Computer Misuse Law, Quality Standard – Ranking, Index Value, Media Indicators – Media, Number of Numbers of ISO 9000 Certificates, Finance & Banking English Daily Newspapers, Number of Arabic Daily Newspapers, Indicators – Number of Banks, Number of ATMs, Number of Number of Weekly Newspapers, Number of Consumer P.O.S., Number of Payment Cards (000s), Growth %, Magazines, Number of Trade Magazines, Number of News Penetration %, Average IT Spending per Bank, ICT Agencies, Number of News Portal, Number of Radio Channels, Indicators – Aspects of Political Leadership to Promote Use of Number of TV Channels, Number of Satellites, Television ICT, ICT Strategy Clearly Spelled out, ICT Implementation equipped households (000s), Growth %, Television receiver Plan Clearly Articulated, Operational ICT-Dedicated Research (000s), Growth %, Home satellite antennas (000s), Growth %, Facilities, Plan of ICT- Dedicated Research Facilities, Advertising – Total Ad. Spending (millions US$), Television, Operational Technopole Initiative, Plan of Technopole Newspapers, Magazines, Outdoor, Radio, Cinema, Performance Initiative, Existence of Technology Incubator, Planned in Press Freedom – Arab Ranking, Global Ranking, Overall Score.

Other Annual Reports eGovernment – Available◆ eCommerce – July 2004 eBanking – August 2004◆ eLearning – September 2004 Madar Research Group, T: +971 4 3903059, F +971 4 3904688, www.MadarResearch.com, Email: [email protected] Section 3 rmu pno StandardSponsors Premium Sponsor Banking & Finance

Banking & Finance

UAE Financial Sector Overview the UAE government’s banker and financial advisor. The United Arab Emirates (UAE) has long served as a The Central Bank also oversees and regulates all regional financial center – a junction for a dynamic national and foreign banks, bank representative offices, trade industry – supported by forward-looking financial and monetary intermediaries, finance government measures to create sound legal framework companies, financial investment companies, financial, and a highly developed technology infrastructure. banking and investment consultants and money Dubai, in particular, takes main credit for its exchange houses in the UAE. progressive policies which resulted in creating a leading The UAE commercial banking sector consists of trade hub for the whole Middle East and a business- locally incorporated banks and branches of foreign friendly environment, which in turn triggered the banks licensed by the Central Bank to operate in the development of a sophisticated banking and finance country. The national banks number 21, with over 340 sector. branches nationwide. Of these, some 14 banks are The UAE boasts a robust financial sector, owned, in part, by the federal or local governments. comparable in most aspects with those found in There are no fully government-owned banks in the developed countries. There are currently 46 national UAE. Foreign banks, on the other hand, number 25, and foreign commercial banks serving as the backbone with over 85 branches nationwide, down from 26 banks to the country’s financial sector – giving the UAE one in 2002, following the merger of Standard Chartered of the highest banks per capita ratios in the region. In and Standard Chartered Grindlays Bank Limited. addition to these banks, there are two investment banks Three of the commercial banks in the UAE are (United Arab Emirates Investment Bank Ltd. and operating as fully Islamic banks. These are Dubai HSBC Financial Services Bank Ltd.) and one restricted Islamic Bank, Abu Dhabi Islamic Bank and National licensed bank (Banca Commerciale Italiana) operating Bank of Sharjah. The Central Bank stipulates that in the UAE, as well as six financial investment banks either use their licenses for Islamic banking companies. The UAE also has more than 50 or for mainstream commercial banking – although representative offices of foreign banks and over 31 commercial banks may offer limited Islamic banking licensed financial and monetary intermediaries. products. In February 2004, Middle East Bank The financial sector also comprises 46 insurance announced it would be converting into an Islamic bank companies (23 national and 23 foreign) and over 105 by end 2004, bringing the number of banks in the UAE money exchange companies (excluding branches). offering full Islamic banking services up to four. Money exchange agencies are a flourishing business in The number of banks operating in the UAE has the UAE, given the country’s exceptionally large remained more or less stable, for over two decades, due expatriate community and a thriving tourism industry. to restrictions placed by the Central Bank on the The UAE Central Bank, established in December licensing of new banks in the country. The entry of 1980 to replace the Currency Board set up in 1973, is into the market in 2002 was made possible responsible for devising and implementing the UAE’s through the revival of a dormant license held by monetary, credit and banking policies in its capacity as Emirates Bank International.

Banks IT Budget – 2003* UAE Dubai Banks’ combined IT budget* 170 million $70 million Total number of employees 17,230 7,000 Total number of IT employees** 1,034 420 Total salaries of IT employees $30 million $12 million Source: Madar Research * Madar Research estimates * Includes both operating and capital budgets ** IT employees constitute about six percent of total bank employees

Madar Research Group 25 Dubai Knowledge Economy 2003-2008 Vol II

UAE Commercial Banks, Ranked by Assets, 2002 (Dubai-headquartered banks highlighted in red)

Bank Thousands $US Bank Thousands $US 1 National Bank Of Abu Dhabi 10,632,034 24 National Bank Of Sharjah 653,369 2 National Bank Of Dubai 9,575,050 25 Bank Of Sharjah 604,968 3 Abu Dhabi Commercial Bank 7,538,016 26 United Arab Bank 575,160 4 Emirates Bank International 7,410,665 27 Middle East Bank 547,043 5 Mashreqbank 6,448,790 28 Barclays Bank 488,463 6 Dubai Islamic Bank 5,336,362 29 National Bank Of Umm-Al Qaiwain 456,485 7 HSBC Bank Middle East 5,164,819 30 Lloyds TSB Bank 448,951 8 Standard Chartered Bank 4,553,688 31 Bank Of Baroda 409,193 9 Union National Bank 4,006,857 32 United Bank Limited 376,579 10 Abu Dhabi Islamic Bank 2,161,282 33 Credit Agricole Indosuez 327,136 11 Commercial Bank Of Dubai 2,142,751 34 Banque Du Caire 291,080 12 Bank Saderat Iran 1,959,797 35 BNP Paribas 280,035 13 Arab Bank For Investment & Foreign Trade 1,578,901 36 Habib Bank Limited 269,915 14 Citibank 1,515,348 37 National Bank Of Oman 188,546 15 First Gulf Bank 1,357,083 38 Banque Banorabe 156,553 16 Arab Bank 1,271,263 39 Arab African International Bank 148,044 17 ABN-Amro Bank 1,121,162 40 Standard Chartered Grindlays Bank Limited * 122,280 18 Habib Bank A,G, Zurich 1,012,720 41 Banque Libanaise Pour Le Commerce (BLC) 92,583 19 Bank Milli Iran 890,145 42 Al Ahli Bank Of Kuwait 90,592 20 National Bank Of Ras-Al Khaimah 797,926 43 National Bank Of Bahrain 80,654 21 Commercial Bank International 790,451 44 Janata Bank 69,379 22 Investbank 749,645 45 El-Nilein Bank ** - 23 National Bank Of Fujairah 731,230 46 Rafidain Bank ** - Total 85,422,993 Source: Emirates Banks Association

* Merged with Standard Chartered Bank in 2002 ** Data not available Note: Dubai Bank was not listed in 2002

The restrictive measure, meant to control and is expected to fully liberalize the financial and overcrowding in the local market and strengthen the banking sectors in the UAE. A stumbling block to its sector, also restricts the number of branches that a legislation, however, has been the country’s anti-money foreign bank can open in the UAE to eight branches. laundering legislation. The crucial importance of anti- The Central Bank has been considering an easing of money laundering led legislators to incorporate related these restrictions. While the issue as whether to allow amendments to the existing law ahead of the new new banks into the local market is still pending, the banking law. Central Bank has already allowed some banking Stress tests carried out by the Financial Sector institutions to exceed their eight-branch limit. Assessment Program, a joint initiative of the Despite the level of development the UAE banking International Monetary Fund and the World Bank, on sector has attained, the country’s intended course to the country’s banking sector, (results were published in become the leading financial and banking hub in the January 2003), indicate a healthy and profitable region is hampered by such restrictions, which prevent banking industry, supervised by a vigilant Central the market from freely developing. A new banking law, Bank. originally anticipated in 2003, is currently under review The UAE banking sector ranks second after Saudi

26 Madar Research Group Banking & Finance

National Dubai Headquartered Bank concentrated in the city of Dubai, while only some 30,000 people live in the emirate’s rural areas. Name UAE Branches According to the UAE Ministry of Planning, Commercial Bank of Dubai 21 Dubai’s workforce comprises 826,000 workers, or 68.6 Dubai Bank 3 percent of the total population in the emirate. Though Dubai Islamic Bank 19 a large segment of the workforce is involved in the Emirates Bank International 30 construction industry and other blue-collar jobs, Dubai Mashreq Bank 34 has attracted a highly skilled and educated professional Middle East Bank 9 working class to its numerous hi-tech projects such as National Bank of Dubai 34 Dubai Internet City and Dubai Media City, as well as Source: Madar Research its government and service sectors. These form the market for the emirate’s banking sector, where an Arabia – among Gulf Cooperation Council (GCC) estimated 300,000 unique persons subscribe to banking countries – in terms of total assets, according to the services in Dubai. International Monetary Fund. The Emirates Banks Dubai’s banking clients are catered to by a network Association (EBA) estimated total assets of UAE of 41 national and foreign banks. Out of the 46 commercial banks in 2002 at over $85 billion, of which commercial banks licensed to provide banking services some $64 billion were held by national banks. This in the UAE, only five do not operate branches in Dubai. gives weight to the argument that local banks are These are the National Bank of Umm Al Qaiwain, El- financially sound and can withstand the entry of new Nilein Bank, National Bank of Bahrain, National Bank foreign banks into the market, when the market is of Oman and Rafidain Bank. Dubai has attracted a liberalized. concentration of the bank branches; some 38 percent of foreign bank branches and 36 percent of national bank Dubai Financial Sector Overview branches in the UAE are located in Dubai. Dubai, headquarter to seven of the country’s 21 national banks and to the majority of foreign banks and Dubai’s Financial Market and Hub banking representative offices operating in the UAE, is emerging as the country’s principal financial center. Dubai Financial Market (DFM) Three of the top five banks in the UAE in terms of The UAE has two active official stock exchange floors – assets are headquartered in Dubai – National Bank of the Abu Dhabi Securities Market and the Dubai Dubai ranks in second place after National Bank of Abu Financial Market – both controlled by the Securities Dhabi, while Emirates Bank International and Mashreq and Commodities Market Authority. Trading is largely Bank rank in fourth and fifth place, respectively. Total restricted to UAE nationals. However, non-UAE assets of Dubai-headquartered banks in 2002 were an nationals can trade on the local stock exchange in select estimated $31.5 billion, excluding assets of Dubai companies whose shares are open to non-nationals. Bank, which started operations in Q3, 2002. The Dubai Financial Market, established in May Dubai’s vibrant trade, tourism and real estate 2000, has developed a Supreme Quote System (SQS) industries, as well as its large workforce have spurred the that delivers stock alerts to traders on their SMS or growth of the emirate’s banking sector. The real estate WAP-enabled mobile phones. Additionally, the stock industry is now expected to make an even larger exchange operates a fully automated screen-based contribution to the banking sector, due to legislation trading system. last year that allows foreign ownership of properties in Dubai stock market is still young and small, but its select new projects in Dubai. Many banks have already enlisted companies are expected to grow substantially in put plans offering house loans to expatriates. coming years. By end April 2004, the number of At end 2003, Dubai was home to some 1.2 million companies traded on the Dubai Financial Market nationals and expatriates, out of total UAE population numbered 15, with total turnover during the first half of some four million. The majority of these are of 2003 at $260.5 million.

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We are at your service www.etisalat.ae Dubai Knowledge Economy 2003-2008 Vol II

Dubai International Financial Center (DIFC) the UAE Switch is expected to rise to 44, with the Dubai’s role as an emerging regional financial hub is set addition of three new banks to the network currently to witness a considerable boost with the official launch underway. The expansive ATM network in the UAE of the Dubai International Financial Center (DIFC) in groups some 1,018 units. All national banks and the Q3, 2004. Announced in February 2002, DIFC was majority of foreign banks have their own proprietary recently granted federal approval to establish itself as a ATM networks, interconnected via the UAE Switch. financial free zone with a large degree of sovereignty. The original network, which provides cash The ambitious project aims to position Dubai as a withdrawal, balance inquiry and point-of-sale (POS or global financial center and regional gateway for capital “merchant locations”) services to bank clients, was and investment in the Middle East. installed by S2 Systems. In January 2004, the company The Dubai Financial Services Authority (DFSA) was was awarded an undisclosed-value contract by the UAE established, alongside DIFC, as an independent Central Bank to upgrade the network. The upgrade to regulatory authority responsible for the drafting of S2 Systems’ OpeN/2 online transaction processing DIFC’s legal and regulatory framework. The legislation system, will allow the UAE Switch to support, in governing DIFC has been drafted in the English addition to ATM transactions, instant POS debit language and is modeled closely on its counterparts in payments across a national POS network. At present, New York and London. DIFC will offer businesses only five banks in the UAE offer POS services. setting up in its center 100 percent foreign ownership, The upgraded network will also allow banks to add zero tax rates and the freedom to repatriate capital and new transactional functions to their ATMs, as well as profits, unrestricted. Furthermore, there are no quotas provide payment links to an expanding number of e- imposed for the employment of UAE nationals – unlike government and e-commerce ventures in the UAE. The banks operating elsewhere in the UAE, which are new UAE Switch will replace the existing switch by expected to increase the number of UAE nationals September 2004. employed by four percent annually, despite a shortage In mid-2002, the Central Bank, which oversees the of qualified nationals in the banking sector reported by UAE Switch, directed all banks in the country to some banks. replace their old or faulty ATMs – namely NCR 5685 The DIFC is made up of three core divisions: DIFC models – following a scam that hit a number of bank Development Authority, DIFC Land Company and ATMs in the UAE. Most national and foreign banks Dubai International Financial Exchange (DIFX). While regularly upgrade or replace their ATMs, in line with the first two entities serve as the administrative arms of bank policies to maintain the latest in technologies, and the financial sector, the latter has been established as the therefore only a handful of ATMs were affected by the DIFC’s electronic market for trading equities, bonds thefts. and derivatives. Through the GCC (Gulf Cooperation Council) DIFC will initially focus on six areas of financial Switch the UAE Switch connects to all (GCC) activity, namely banking services, capital markets, asset countries, except Oman which will connect soon – once management and fund registration, reinsurance, Islamic the country’s technical network problems relating to the finance and back office operations. Some 40 existence of two switch systems are resolved. There are applications from the world’s top 200 financial plans to expand the network to other countries in the institutions have already been submitted to the DIFC Middle East. Customers pay a charge to use other by April 2004, and another 20 to 30 are negotiating banks’ ATMs, $0.54 per transaction within the UAE their presence in the financial center. (although this charge is waived by a small number of banks) and $1.63 per transaction across the GCC ICT Infrastructure Switch. The UAE inter-bank switch was set up in 1996, and has Meanwhile, banks in the UAE have recently expanded to connect 41 of the country’s 46 national migrated their SWIFT legacy X.25 core bank messaging and foreign banks possessing ATM (automated teller solution to the secure IP-based SWIFTNet network. machine) systems. The number of banks connected to SWIFT, or the Society for Worldwide Interbank

30 Madar Research Group Banking & Finance

Financial Telecommunication, provides secure 3662 series routers. Furthermore, the bank has messaging and transaction systems to thousands of deployed a BusinessObjects Enterprise 6 business financial institutions worldwide, active in payments, intelligence system, to facilitate access to client records securities treasury and trade services. The migration through a query, reporting and analysis solution. worldwide to SWIFTNet is mandatory, and is expected Egypt’s RayaTech supplied the bank’s iConnect Utility to be completed by Q3, 2004. The UAE successfully Payment Hub and telebanking Interactive Voice completed its migration to the new system in March Response system. 2004, allowing the country’s banks to report their The National Bank of Dubai, ranking second in the financial transactions to SWIFT directly in real time. UAE in terms of assets, is running several modules of Most UAE banks have invested heavily in the Oracle e-Business Suite, including the recent technology over the past several years, especially additions of the Customer Relationship Management national banks, both large and small. The UAE Central and Oracle Financial Services Applications, to automate Bank, for one, has upgraded its entire IT infrastructure, business processes at the bank which run on a J2EE replacing its IBM 4381 mainframe with the IBM technology platform. AS/400, in addition to replacing its old accounting The emirate’s first Islamic bank, Dubai Islamic system with Equation/3 software, and all old computers Bank, is running Lotus Domino 6.5 to automate its and peripherals with new systems. business processes. RayaTech’s iSMS integrated Meanwhile, national banks have steadily moved messaging solution serves as the basis for the bank’s towards the full automation of their front- and back- mobile banking service. In November 2003, Dubai end procedures, upgrading their existing IT Islamic Bank became the first bank in the region to infrastructures to accommodate state-of-the-art upgrade its card processing network from Systems solutions and hardware. In 2003 alone, some 19 major Network Architecture (SNA) to Internet Protocol (IP). contracts were signed by UAE banks for ICT products Mashreq Bank, ranking fifth among UAE banks in and services, notwithstanding tens of smaller contracts. assets, has undertaken a number of large IT upgrade Dubai banks figure heavily among these upgrades and and implementation projects in 2002-2003. These implementations. included the deployment of two EMC Symmetrix 8530 The newest entrant in the UAE banking scene, storage systems ($1 million contract), IBM Enterprise Dubai Bank, launched its operations in late September Storage Servers, HP ATM switch and card management 2002. The bank, with no existing IT infrastructure, applications running on HP non-stop systems, turned to HP, which was awarded a $5 million contract Computer Associates Middle East’s AllFusion Process to design and execute the bank’s entire IT Management Suite and i-flex solutions’ Flexcube core infrastructure. The turnkey solution, designed from banking solution. In August 2003, Mashreq Bank scratch, is built on Misys’ Bankmaster core retail signed a five year service contract with Xerox which banking solution, and HP clustered servers, desktop included the supply of Xerox’s DocuPrint 92C PCs, printers and storage devices. The solution includes solution. Mindscape and Ascent Computing Group a contact center based on Avaya and Altitude Software deployed Interactive Voice Response solutions at the solutions. Additionally, the bank recently selected bank’s call center, while Computer Network Systems Trintech’s Payware CMS 7.0 solution to manage its supplied 4,600 Hypercom point-of-sale (POS) credit card processing requirements, and also terminals (the largest deal of its kind in the GCC), incorporated i-flex solutions’ Flexcube core banking bringing Mashreq Bank’s total in the UAE to over solution. 7,500 POS terminals. As part of an estimated $10-million IT upgrade Emirates Bank International and Middle East Bank, project, Commercial Bank of Dubai deployed an end- both part of Emirates Bank Group, are running i-flex to-end Cisco LAN and WAN network, as well as a solutions’ Flexcube core banking solution. Meanwhile, wireless infrastructure at select bank locations. The the banking group’s online banking solution, BankNet, solution is based on Cisco Catalyst 6509 switches, was developed by Emirates Computers on Brokat’s e- Catalyst 3524 XL and 2650 switches, and 7206 and services platform, Twister, and runs on Sun E250

Madar Research Group 31 Dubai Knowledge Economy 2003-2008 Vol II

servers, with Cisco switches, routers and firewalls. The Electronic Banking and Payment bank’s IT infrastructure was upgraded in 2002 by United Computer and Management Consultancy E-Banking (UCMC) which installed IBM iSeries servers to support In the post-World Trade Organization stage, UAE back-office operations. banks stand to face stiff competition from foreign banks Emirates Bank International is also running BEA looking to enter the UAE market once restrictions Systems’ WebLogic Platform 7.0, MessageLabs’ email barring their entry are removed by the Central Bank. security solution and Computer Associates’ Unicenter Although UAE banks are deemed financially sound, service desk solution. local banks, as well as foreign banks currently operating in the UAE, will have to increase their cost- Banks IT Budgets effectiveness, as well as offer their existing and potential The UAE banking sector has been at the forefront of IT clients more competitive and value-added services, in adoption in the region. IT budgets (operating and order to retain their share of the market. capital) of UAE banks were estimated at $170 million Many banks have turned to e-banking, among other in 2003, including the salaries of IT employees – an services, to both lower operational costs and retain estimated $30 million. By end 2003, UAE banks existing clients or attract new ones. Some banks offer employed some 17,230 workers (excluding auxiliary clients lower rates and charges on their e-banking staff members such as drivers, messengers and guards). services, in order to encourage them to migrate from Employees working in IT-related fields constitute some traditional to online channels. However, the return on six percent of total banking employees – or about 1,034 investment has yet to prove positive for these banks, personnel, which is a good ratio compared to many indicating that traditional “brick and mortar” banking developing countries. will continue to serve as the banks’ core banking Some of the larger banks in the UAE are each channel for at least the next few years. earmarking some $15 million annually for their IT E-banking refers to the deployment of banking budgets, underpinning an aggressive strategy to enhance services electronically through a range of technological their IT infrastructure and services. devices, but mainly over the Internet. E-banking was Meanwhile, banks (headquarters and branches) first introduced in the UAE in 1996, but has been slow based in Dubai alone employed some 7,000 workers. in the uptake, both by banks and clients. Of the 46 Employees working in IT-related fields constitute some banks operating in the UAE, 13 (28.26 percent) offer six percent of total banking employees – or some 420 clients e-banking services. Six of these banks are foreign personnel. and seven are national. Five of these national banks are The IT budgets (operating and capital) of banks headquartered in Dubai. These are Emirates Bank (headquarters or branches) based in Dubai for 2003 are International, Middle East Bank, Dubai Islamic Bank, estimated at $70 million, including salaries of IT Mashreq Bank, and National Bank of Dubai. The five employees – an estimated $12 million. banks translate into some 62.5 percent of Dubai-

UAE National Commercial Banks Offering e-Banking Services Bank Name Website HQ Branches ATMs Retail Corporate eBanking eBanking Dubai Islamic Bank www.alislami.co.ae Dubai 19 65 Yes No Emirates Bank International www.emiratesbank.ae Dubai 30 83 Yes No Mashreq Bank www.mashreqbank.com Dubai 34 91 Yes Yes Middle East Bank www.meb.ae Dubai 9 13 Yes No National Bank of Abu Dhabi www.nbad.com Abu Dhabi 57 112 Yes Yes National Bank of Dubai www.nbd.com Dubai 34 104 Yes Yes Union National Bank www.unb.co.ae Abu Dhabi 26 47 Yes No Source: Madar Research

32 Madar Research Group Banking and Finance headquartered banks offering e-banking, an impressive few banks offer their clients demos, despite the relative figure, when compared to overall penetration of e- novelty of the service in the UAE. banking services in the UAE, as well as internationally. In addition to personal e-banking services, three The other two national banks – National Bank of Abu national banks (two of them are headquartered in Dhabi and Union National Bank – are headquartered Dubai) and five foreign offer independent specialized in Abu Dhabi. corporate e-banking services. These are Mashreq Bank, Although a large number of the foreign banks National Bank of Abu Dhabi, National Bank of Dubai, operating in the UAE offer e-banking services through BNP Paribas, HSBC Bank Middle East, Citibank, their international branches, only six extend it to their Habib Bank AG Zurich and Standard Chartered Bank. UAE clients. These are Arab Bank, BNP Paribas, The majority of UAE banks offering e-banking HSBC Bank Middle East, Citibank, Habib Bank AG provide an integrated “click-and-mortar” service. E- Zurich and Standard Chartered Bank, all European and banking serves as a supplement to the banks’ existing US-based banks save for the Arab Bank which is offline channels, including bank branches, ATMs and headquartered in Jordan. They rely largely on their telephone banking. In March 2001, however, MeBank global e-banking infrastructure to offer their clients in was launched as the self-service delivery channel of the UAE online banking services. Emirates Bank International – essentially serving as a E-banking services on offer are largely similar across virtual bank. For those clients that do not have the platforms of national and foreign banks – though computer access, the bank set up Internet cafe style there are no e-banking standards governing the outlets at convenient locations, equipped with provision of services, nor the technology in use, in the computers and Internet connections to facilitate e- country. The main services include transfer of funds banking services. between accounts, the payment of bills and account and This approach has been replicated by several banks, balance inquiries. though none have followed the MeBank example of Variations among bank services include such services providing services only through online channels. as the transfer of funds to third party bank accounts, the Citibank, National Bank of Dubai, Standard Chartered payment of additional types of bills such as cable Bank and Dubai Islamic Bank have also set up Internet television and postal bills (in addition to the usual kiosks at some of their outlets. utility, telephone bills and credit card bills), the opening An estimated 20 percent of bank clients in Dubai of new accounts, the purchase of deposit certificates and use e-banking channels for transacting financial the redemption of reward points. Other services include services – equivalent to some 60,000 unique clients. email access, request of cheque books and credit cards, Take up of e-banking services hinges on Internet and outward remittances, setup and cancellation of standing computer penetration, in the first degree. With Internet instructions. user penetration in Dubai at 41.83 percent by end Customers can also customize the e-banking services 2003, and PC penetration at 19.95 percent, e-banking to suit their particular banking needs. However, only a penetration is expected to rise to 22 percent by end

UAE Foreign Commercial Banks Offering e-Banking Services Bank Name Website HQ Branches ATMs Retail Corporate eBanking eBanking Arab Bank www.arabbank.ae Jordan 8 16 Yes No BNP Paribas www.bnpparibas.com France 2 2 Yes Yes HSBC Bank Middle East www.uae.hsbc.com UK 10 45 Yes Yes Citibank www.citibank.com/uae USA 5 8 Yes Yes Habib Bank A.G. Zurich www.habibbank.com Switzerland 8 8 Yes Yes Standard Chartered Bank www.standardchartered.com/ae UK 8 22 Yes Yes Source: Madar Research

Madar Research Group 33 Dubai Knowledge Economy 2003-2008 Vol II

2004. Overall e-banking penetration among account Mobile Banking and Tele-Banking holders in the UAE is a slightly lower 18 percent, given Habib Bank Zurich’s HBZwap service also allows Dubai’s higher percentage of white-collar professionals clients to carry out a number of transactions using their and Internet savvy population. WAP-enabled mobile phones or PDAs, such as viewing While e-banking services are catching on among account balance, transferring funds, and ordering retail clients, many clients use e-banking channels for cheque books. non-transactional activities, such as viewing account In addition, a number of UAE banks provide statements and balances. Security concerns are foremost interactive SMS-based mobile phone banking. Given among the reservations to using full e-banking features the high penetration of mobile phones in the UAE on offer. (73.75 percent by end 2003), this service can be A banking scam that hit the UAE in 2003 fueled expected to take off, supported by the increasing clients’ apprehension of the Internet as a channel to mobility of the larger part of banking clients in the carry out financial transactions, despite the fact that the UAE, and in Dubai in particular. Similarly, fixed line scam targeted only ATM machines in the country. penetration, at 28.45 percent by end 2003, is a major Security concerns and the lack of strong laws driver for telebanking services in the UAE. All banks in governing e-banking services in the UAE are also major the UAE provide telebanking services, supported by hindrances to the provision of e-banking services by multi-lingual interactive Voice Response Systems or many UAE banks. The anticipated legislation of e- customer service representatives. banking laws by the UAE Central Bank will pave the way for the rolling out of e-banking services on a wider Payment Cards scale. The cost of setting up e-banking platforms also The UAE ranks second in the GCC, behind Kuwait, serves as an impediment for smaller banks, who feel that in payment card density, with some 2.1 million their small customer base does not justify the roll-out of payment cards in use by end 2003, up from 1.9 e-banking services. million at end 2002. Dubai residents constitute some Emirates Bank International has been at the 34 percent of payment card users in the UAE – with forefront of e-banking in the UAE, both in terms of some 714,000 cards in use in the emirate. Meanwhile, early launch and range of services. The bank was the merchant locations in the UAE numbered 20,000 by first in the UAE to offer e-banking services in 1996. end 2003, with some 42 percent (8,400 merchant Since then, it has launched a large number of e-services, locations) of them installed in Dubai. By end 2003, including MeBank, its standalone Internet arm. the number of ATMs in the country had risen to Additionally, the bank launched PDA banking in 1,018 ATMs, with some 38 percent of them located October 2003, the first national bank to do so in the in Dubai. UAE, allowing clients to access most e-banking functions on their hand-held devices. Payment Cards, Merchant Locations, ATMs – 2003 Most national and foreign banks in the UAE, Payment Merchant ATMs whether they offer e-banking services or not, have Cards Locations established websites that provide information on their UAE Total 2,100,000 20,000 1,018 products and services. The only four banks with no Dubai 714,000 8,400 387 website representation, as of yet, are Commercial Bank International, National Bank of Umm Al-Qaiwain, Source: Madar Research Rafidain Bank and BLC Bank (Banque Libanaise pour le Commerce). Their sites are down, under Contact Centers construction or not available altogether. Bank websites The contact centers in the banking sector in Dubai are range from the basic to the complex – those offering e- much more developed than in any other business sector. banking services have highly developed websites Most of the local banks and foreign banks with offering demos, information, interactive features and headquarters in Dubai have setup round-the clock tools to facilitate client banking. contact centers services to serve their clientele. These

34 Madar Research Group Banking & Finance

Banks with Major Contact Centers in Dubai The contact center services offered by these banks are largely similar across the national and foreign banks. Local Banks URL Some of the major services offered are account balance Mashreq Bank www.mashreqbank.com inquiries, request for cheque book or statement, transfer Commercial Bank of Dubai www.cbd.co.ae funds, payments for utility bills, payment of credit card Emirates Bank International www.emiratesbank.com bills by transferring funds from any other deposit National Bank of Dubai www.nbd.co.ae account and general enquiry of banking products Dubai Bank www.dubaibank.ae offered by the bank. Dubai Islamic Bank www.alislami.co.ae Foreign Banks Buzz Contact Center HSBC UAE* www.uae.hsbc.com The Buzz Contact Centre was established in early 2002, Standard Chartered Bank www.standardchartered.com/ae and is fully owned by Emirates Bank International. The Citibank www.citibank.com/uae Buzz Contact Centre (finance) has a capacity of 150 seats. Arab Bank www.arabbank.ae The majority of these seats are utilized for serving clientele Source: Madar Research of Emirates Bank, ME Bank and First Gulf Bank. *HSBC UAE contact center handles all calls from Oman, Jordan, UAE, Bahrain and Qatar The contact center offers management of calls around the clock in addition to other inbound and banks are offering the services in Arabic and English outbound services. Solutions offered are personalized languages, plus Hindi and Urdu offered by few banks. IVR or human agent access, dedicated telephone The HSBC contact center in Dubai acts as a regional numbers – toll free or regular – multiple language, contact centre serving clients from Oman, Jordan, outbound telemarketing and customer service, among Bahrain, Qatar and UAE. others.

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Overview

Dubai has over the past two decades passed through a Emirates Airlines has received more than 200 unique experience to create a viable tourism culture international awards for excellence since its launch, and a flourishing hospitality environment that defied and today it flies to more than 70 destinations in the many odds through strategic, optimal exploitation Europe, North America, the Middle East, the Far of the few advantages at hand. Up to late 1970s, there East, Africa, Asia and Australiasia. The airline and its was hardly any tourism or hospitality industry reputed service have contributed to making Dubai anywhere in Dubai, which – despite fast urbanization known to many people in the world. and wide-ranging development, was overwhelmed by a In 1989 Dubai government made another scorching, barren desert, like most of the Gulf important move by establishing a body dedicated to landscape. However, the quick, largely oil-funded the promotion of Dubai among business communities development of Dubai into a modern cosmopolitan and up-market travelers in the most affluent and and its emergence as the region’s leading trade hub industrialized countries in the world. The was soon drawing into the emirate a growing number development of tourism by then was still seen as of trade and business visitors from around the globe, supportive to the business and commerce world Dubai especially from industrialized countries, who came to was excelling at. negotiate trade agreements, offer services and In 1997, however, Dubai Commerce and Tourism consultancies or to set up businesses. Promotion Board was renamed to the Department of Accordingly, the first five-star hotels and related Tourism and Commerce Marketing, with added travel and hospitality businesses were established responsibility as the principal authority for the mainly to cater for these visitors. A drive by the Dubai planning, supervision and development of the tourism government to lure more foreign companies and sector in the emirate. Running 14 overseas business people into Dubai and its free trade zone in representation offices that conduct marketing Jebel Ali was producing results. But the most campaigns and road shows all over Europe, North significant move in the business hospitality came in America, southern and eastern Asia, Australia and 1980, with the establishment of the Dubai World Africa, the DTCM has been playing a leading role in Trade Center, which was tasked with turning Dubai the growth of tourism sector. into a world-class trade fair and convention center. By mid 1990s Dubai had turned into a modern The regionally unprecedented success of the ensuing oasis, defying even the desert heat with green patches, trade events, such as GITEX, brought thousands of a parks and thousands of trees planted across the city. new class of visitors from all continents, and gave With an apparent mild drop in average temperatures, more reason and opportunities for the creation of a Dubai was turning into a year-round tourist hospitality and tourism industry dedicated to business destination for leisure, recreation, entertainment and visitors. shopping, though its main international attraction International hotel chains and country clubs, golf remained for winter vacationers from the Northern and racing courses, beach resorts and marinas, desert Hemisphere. safaris and creek cruises, shopping malls and a wide In 1996 came the one event that probably best range of entertainment and exotic culinary outlets, marked the transition of tourism from a mere support and – above all – the most culturally tolerant and for business and trade to a full-fledged industry on its liberal environment in the Gulf region, soon made own, targeting not only the global jet set society and Dubai an emerging world destination for business and business travelers, but a much wider range of tourists. incentive travel. This was the Dubai Shopping Festival, which became The establishment of the award-winning Emirates a major event, practically mobilizing the whole city Airlines in Dubai in 1985 further boosted this image. while drawing into the emirate thousands of regional One of the fastest growing carriers in the world, and international shoppers and feeding all segments of

Madar Research Group 39 Dubai Knowledge Economy 2003-2008 Vol II

the tourism and retail industries with millions of of tourists and visitors to Dubai multiplying by dollars. millions. Foreign ownership of up-market properties Relying on state-of-the-art infrastructure and being developed en masse in Dubai will also facilities, backed by hundred of millions of dollars contribute to the hospitality industry – by creating, for invested in transportation and technologies instance, vacation homes (or second homes) for (particularly information and communication thousands of families, entrepreneurs and retirees technology), Dubai now organizes dozens of world- seeking warmer climate or the exotic lifestyle and class events. Among major events that today attract luxuries the emirate is offering. tourists and business visitors alike are the Dubai Air In addition to Emirates Airlines and the Show, Desert Golf Tournament, horse races, Department of Tourism and Commerce Marketing International Power Boat Racing, Pedigree Camel (DTCM), some of the major organizations which have Races, the, Dubai World Cup, Dubai Tennis been contributing to the tremendous growth of Championships and GITEX, the Big Five trade fair, hospitality industry in Dubai are Dubai International and the Dubai Summer Surprises festival. Airport and Dnata. Aggressive campaigns promoting The hospitality and tourism industry of Dubai has Dubai as one of the region’s safest destinations has apparently become the largest in the Gulf region and attracted tourist from all parts of the world, especially is growing with a rapid pace as more hotels, resorts from the Western world. Last year around 30 percent and massive hospitality projects are planned or are in of all hotel guests were from Europe and America. the development stage. Today, the result in figures is The Meeting, Incentives, Conferences and that Dubai’s tourism and hospitality industry alone Exhibitions (MICE) market is fast growing in Dubai. has outpaced the one-time largest revenue source – the This growth is the result of world-class hotels and oil industry. In 2003, hospitality and tourism was high-tech facilities designed for international events responsible for about 18 percent of the emirate’s gross and specialized conferences. Dubai was recently voted national product (GDP), while the oil sector as ‘The World’s Best Conference Venue’. In the last contributed 17 percent in that year. Dubai hotels few years, the number of exhibitions, conferences and alone served almost five million guests in 2003, symposiums held in Dubai has seen unprecedented registering five percent growth over the previous year. growth. As per a Dubai Chamber of Commerce & Dubai is now investing heavily in mega projects Industry report, 120 exhibitions and 153 conferences and infrastructure developments with a long term and symposiums were held on international and target to attract 15 million visitors by 2010, and to regional levels in Dubai in 2001. make Dubai a year-round tourist and business hub. The crowning event for the rising global status of This huge projected surge in inbound business will see Dubai came in September 2003, when the emirate tourism playing an even greater role in boosting GDP hosted the 58th Annual Meeting of the World Bank growth. Massive projects in the hospitality sector like, (WB) and International Monetary Fund (IMF), which Dubai Land and Dubai Festival City (both to be attracted over 20,000 people including heads of state, completed in 2006) and numerous other resorts under finance and trade ministers, central bank chiefs and construction, in addition to hospitality-supporting other business leaders. This event is seen as having projects such as the Dubai Healthcare City established Dubai as a main venue for high-caliber (completion by 2010) will definitely see the numbers world conventions.

40 Madar Research Group Travel & Hospitality

Hotel Industry

Dubai hotels now rank among the best in the world, At the top of big local names in the hotel industry is whether in terms of quality of services and recreation the Jumeirah International Group, which operates or business facilities. Most international hotel chains Burj Al Arab (the world’s first seven star hotel), have a presence in Dubai, and new hotel projects are Madinat Al Jumeirah, , World announced almost every month. Trade Center Hotel, Emirates Tower Hotel, Beit Al

Dubai Hotel Statistics - 2003 Class Number Percent Rooms Percent Beds Percent Guests Percent Five Star 32 12% 9,966 39% 14,928 36% 1,541,004 35% Four Star 30 11% 4,261 17% 5,878 14% 799,053 18% Three Star 39 14% 4,112 16% 6,789 16% 890,941 21% Two Star 48 18% 3,164 12% 5,233 13% 469,650 11% One Star 76 28% 2,583 10% 5,201 13% 402,499 9% Others 46 17% 1,485 6% 3,197 8% 239,194 6% Total 271 100% 25,571 100% 41,226 100% 4,342,341 100% Source: Department of Tourism & Commerce Marketing

Breakdown of Hotels by Class, 2003 Breakdown of Hotel Rooms by Class, 2003

Others Others Five Star One Star 6% Five Star 17% 12% Four Star 10% 39% One Star 11% 28% Two Star 12%

Three Star Three Star 14% 16% Two Star Four Star 18% 17%

Source: Department of Tourism & Commerce Marketing Source: Department of Tourism & Commerce Marketing

Guest & Residence Nights Recorded in Dubai Hotel & Hotel Apartment (1998 -2003)

14.00 12.44 12.00 10.95 10.00 9.11 8.80 8.00 7.51 6.45 6.00

Million 4.76 4.98 4.00 3.42 3.63 3.03 2.54 2.00

0.00 1998 1999 2000 2001 2002 2003 Guests Nights

Source: Department of Tourism & Commerce Marketing

Madar Research Group 41 Dubai Knowledge Economy 2003-2008 Vol II

Guest Share by Hotel Class - 2003 Revenue Share of Hotels & Hotel Apartments 2003 One Star Others 9% 6% Five Star Two Star 35% Others Lodging 11% 43% 57%

Three Star 21% Four Star 18%

Source: Department of Tourism & Commerce Marketing Source: Department of Tourism & Commerce Marketing

Hotel & Hotel Apartments’ Guest Share Revenue Share by Hotel Class - 2003 by Region - 2003 Australasia & America Three star Two star One star Listed Pacific 2% 11% 5% 2% 1% 4% UAE 8% GCC 21% Five star Europe Four star 66% 25% 15%

Africa Other Arab 11% 6% Asia 23%

Source: Department of Tourism & Commerce Marketing Source: Department of Tourism & Commerce Marketing

Bahar and Jumeirah Beach Club Resort and Spa. Break down of guests by country of origin in hotels International hotel chains include the Royal Mirage, and hotel apartments shows that 25 percent of the Le Royal Meridien, the Ritz, Hilton, Hyatt, Sheraton, guests were Europeans, followed by Asians – 23 Holiday Inn, Novotel, among many others, which percent. Guests from GCC countries other than the offer five-star and four-star services. UAE constituted 21 percent, while guest from other There are 271 hotels in Dubai with 25,571 rooms Arab countries made up 11 percent. Six percent of the and over 41,226 beds. Added to this are about 100 guests were from African countries; four percent from hotel apartments with 7,500 flats. These facilities have America and two percent from Australasia and Pacific accommodated about 4.98 million guests in 2003, five countries. percent more than the 2002 figure of 4.75 million. Of the total revenues generated by hotels in 2003, The revenue generated in 2003 was over $1.22 billion 66 percent was made by five-star hotels and 15 percent ($1,085 million from hotels and $139 million from by four-star hotels. Three-star hotels generated 11 hotel apartment). Out of the total revenue generated percent while two-star hotels made five percent of from hotel and hotel apartments, $698 million (57 total revenues. One-star and unclassified hotels percent) were from lodging. contributed two and one percent respectively. The breakdown of guests utilizing the hotels in 2003 shows that 53 percent of the guests stayed in five Online Hotel Booking and four star hotels. The share of guests in three-star A Madar Research survey of hotels in Dubai indicates hotels was 21 percent, two-star hotels, 11 percent and that Internet-based booking now constitutes about single-star hotels, nine percent. seven percent of total hotel room bookings, compared

42 Madar Research Group Travel & Hospitality

Dubai as premium travel and holiday destination, as Revenues Generated by Dubai Hotels through well as a meeting and exhibition center for the whole Online Booking Middle East. Dubai hotels generally provide standard Year Total Revenue* Online Revenue Share of Online information-technology facilities to their guests. These (Million US$) (Million US$) Revenue facilities include fully secure online reservation 2003 1,085 76 7% systems, plus Internet accessibility in the rooms, Source: Madar Reseach conference rooms and seminar halls. International *Revenue generated by hotels from lodging hotel chains have also set up regional contact centers in Dubai to facilitate booking throughout the region. Competition between Dubai hotels has brought Breakdown of Dubai Hotel-Rooms the latest IT services to hotel guests, including wireless by Booking Channel - 2003 hotspots, which allow broadband Internet access via mobile devices. Many hotels in Dubai have already

Telephone & Online started offering wireless Internet services on their Other 93% 7% premises, including Burj Al Arab, Fairmount, Grand Hyatt, Le Royal Meridien, Marriott and Novotel. With these facilities in place, business travelers and holiday makers now have high speed broadband connectivity in every bedroom, and secure wireless Internet services in lobby areas, cafes, meetings and conference areas. Source: Madar Reseach Most of the hospitality technology vendors have partnered with one another to form better and more Worldwide Hotel Rooms Booked Electronically - 2003 integrated systems, in order to serve the industry Room Nights Percentage better. Most recently, IDeaS, a solution provider based Total GDS e-Commerce 106,304,685 50% in Minneapolis, Minnesota, teamed up with SynXis, Travel Agent Component 86,330,266 41% McLean, Virginia, to implement an interface between Consumer Internet Component 19,974,419 9% revenue management system (RMS) and central Total 212,609,370 100% reservation system (CRS). The first installation of this Source: Travelclick eMonitor Report joint partnership was at Jumeirah International late last year. with two percent few years ago. Internationally, and according to a report from Travel Click, worldwide Upcoming Hotel projects Internet booking of hotel rooms stood at nine percent Dubai’s portfolio of hotels is fast increasing to meet a of total bookings. growing demand from the tourist population, and Total revenue generated from lodging by Dubai participants in conferences and major events. The hotels (excluding hotel apartment) in 2003 stood at government’s vision is to increase the number of $1,085 million. Based on the share of online booking tourists visiting Dubai to 15 million per annum by reported by hotels and their rates, the revenue 2010. The projection is that while Dubai is now home generated by online booking is estimated at $76 to 271 hotels, this number will cross the 400 mark million. within several years. Dubai Land project alone is projected to house 50 hotels. The Palm and the World IT Infrastructure in Hotels are two other mega projects that will host some 40 Dubai has been quick to respond to the changing luxury hotels each. technological trends in hotel industry. The adoption Some of the upcoming hotel projects are listed in of newer technology is mainly due to the emergence of the table next page.

Madar Research Group 43 Dubai Knowledge Economy 2003-2008 Vol II

Dubai Future Confirmed Hotel Supply Name and Area* of the Property Number of Rooms Number of Apartments Opening Year 5 – Star Hotels in Central Areas of Dubai Al Badia Golf Resort @ DFC 170 - 2005 Armani Hotel @ Burj Dubai 250 150 2007/8 Forex Rotana Suites @ DIFC 480 - 2008 Inter.Continental @ DFC 450 80 2007 Jaddaf Waterfront Hotel 330 452 2005 Kempinski @ 376 24 2005 Park Hyatt @ Dubai Creek Golf Club 238 - 2005 Rotana Al Murooj 253 147 2004 Rotana Villas 130 - 2005 Total 2,677 853

5–Star hotels in Jumeirah and Jebel Ali Abu Dhabi National Hotels @ JBR 450 - 2007 Al Fardan Hotel @ Palm 200 - 2008/9 Al Habtoor Hotel @ Palm 250 - 2008/9 Al Qasr @ Madinat Jumeirah 292 - 2004 Al Seef Resort & Spa @ Palm 220 - 2008/9 Atlantis Phase 1 @ Palm 1,000 - 2008/9 Atlantis Phase II @ Palm 1,000 - tbc Dar al Masyaf @ Madinat† 283 - 2004 Grosvenor House @ DM 218 206 2005 Hydropolis 300 - 2006 IFA @ Palm 1,200 246 2008 Jumeirah Amwaj Rotana @ JBR 300 - 2007 Manchester Star Tower @ JLT 220 - 2006 Metropolitan Resort Towers 439 - 2005 Montgomerie Golf Course Hotel 17 - 2004 Movenpick Dubai Pearl @ DMC 450 - 2005 Palm Palace Kempinski @ Palm 180 - 2008/9 Palm Sun Hotel/Resort @ Palm 1,000 - 2008/9 Private owner @ JBR 350 - 2007 Total 8,369 452 -

4 – Star Hotels Marriott Courtyard @ Green Community 160 - 2004 Private owner at JBR 300 - 2007 Traders Hotel 250 - 2004 Total 710 -- Grand Total 11,756 1,305 -

Source: The Consulting House

*Area Key: DFC = Dubai Festival City; DIFC = Dubai International Financial Centre; DMC = Dubai Media City; DM = Dubai Marina; JBR = Jumeirah Beach Residence; JLT = ; Tbc = to be confirmed

44 Madar Research Group Travel & Hospitality

Dubai International Airport

Dubai International Airport was built in 1959. At that time it was served by a 1.8-kilometer compacted Passenger Movement at DIA in 2003 1.80 runway, an apron area, a terminal building and a fire 1.79 1.74 station. Since then the Airport has expanded 1.70 tremendously to accommodate an increasing number 1.65 1.60 1.68 1.57 of passengers, aircraft and cargo. After Phuket Air 1.59 started operations from Dubai International Airport in 1.50

May 2004, the airport now hosts 106 airlines, 1.40 1.41 1.42 1.30 1.30 1.43 connecting to over 145 destinations compared to 9 1.30 Million Passengers airlines serving approximately 20 destinations in 1969. 1.20 It is now ranked among the world’s top 10 airports, 1.19 1.10 with a passenger handling capacity of 22 million. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Passenger Movement Source: Dubai International Airport website The growth and transformation of Dubai into a major business and tourist hub is also evident by the 18 million (includes transit, arriving and departing tremendous increase in passengers, cargo and aircraft passengers), constituting a growth rate of 13 percent movements over the past few years. The number of over 2002. During the period 1998-2003 passenger passengers handled by the airport in 2003 was around movement registered a compound average growth rate (CAGR) of 13 percent. Passenger Movement at DIA (1998-2003) The breakdown of passenger movement figures 20 shows that 47 percent were arrivals, 48 percent 18 18.0 departures and the balance five percent were transit 16 15.9 passengers. 14 13.5 12.3 12 10.7 10 9.7 Aircraft Movement 8 Increasing demand for passenger and freight services 6 and a fast technology adoption has led to large-scale Million Passengers 4 2 development in this sector. Figures from the Dubai 0 Civil Aviation Department indicate that traffic at the 1998 1999 2000 2001 2002 2003

Source: Dubai International Airport website Aircraft Movement (1998-2003)

180 Breakdown of Passenger Movement in 2003 168.5 160 148.3 141.2 140 132.7 134.1 Arrivals Departure 123.3 47% 48% 120 100 80 60 Numbers ('000) 40 20 Transit 0 5% 1998 1999 2000 2001 2002 2003

Source: Dubai International Airport website Source: Dubai International Airport website

Madar Research Group 45 Dubai Knowledge Economy 2003-2008 Vol II

Aircraft Movement at DIA in 2003 Air Cargo Movement in 2003

17,000 90.00 88.67 87.45 16,202 85.00 16,000 80.36 84.37 79.90 80.00 15,000 14,860 80.40 14,639 76.46 79.90 78.10 75.00 77.23 14,258 14,000 13,845 14,553 Tons 13,623 13,582 14,009 70.00

13,000 13,368 64.34 65.00 12,925 12,647 12,000 60.00 63.36 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Dubai International Airport website Source: Dubai International Airport website airport has increased from 84,780 flights in 1993 to compound annual growth rate (CAGR) of 17 168,511 in 2003. Aircraft traffic movement in the year percent. After the current expansion the cargo 2003 witnessed an impressive growth of 14 percent terminal will have a capacity of 1.2 million tones per over the previous year. year, bringing the cargo village capacity to 2.1 million tons annually by 2006. By 2015 the airport Cargo expects 3.8 million tons of cargo to move through Dubai Cargo Village is an independent entity looking the Cargo Village. after cargo operations in Dubai. It was established in 1991, with cargo handling capacity of 250,000 tons Duty Free annually. Dubai Cargo Village has minimized the Dubai Duty Free started operations in December cargo handling time and has brought all the cargo 1983, hosting 24 outlets with total sales of about $20 related companies under one roof. The cargo terminal million. At present the total area covered by the Duty provides total cargo handling to more than 80 carriers Free is about 7,000 square meters. During the last few operating through the airport. Agency services are years passenger traffic at the Dubai International provided to more than 500 cargo agents that currently Airport increased tremendously, which in turn do business with the Cargo Village. boosted sales at the Duty Free. In 2003, total sales In 2003 handled cargo soared to 940,000 tons – turnover was $380 million, which is 24 percent more 23 percent more than the previous year. The volume than the 2002 turnover of $306 million. According to of freight handled in the last five years has shown a secondary sources, the duty free sells to 42 percent of departing passengers, which is above the norms of the industry of 15-20 percent. In 2003, duty-free retailers Air Cargo Handled (1998-2003) 1,050,000 940,595 900,000 Breakdown of Air Cargo in 2003 764,193 750,000 610,866 Discharged Uplifted 600,000 562,590 54% 46% 474,778 431,776

Tons 450,000

300,000

150,000

0 1998 1999 2000 2001 2002 2003

Source: Dubai International Airport website Source: Dubai International Airport website

46 Madar Research Group Travel & Hospitality recorded nine million sales transactions, which terminal will be 900 meters long, three stories high averages at 24,524 transactions per day. and will contain storage space as well as office space. According to MenaReport, the Dubai Duty Free sales in the first quarter of 2004 were valued at $118 E-Infrastructure million – 45 percent more than the previous for the Dubai International Airport is used by millions of same period. tourists and business visitors, transit passengers, in addition to the expatriates residing in Dubai. To Future Airport Development Plans handle this enormous volume of traffic, the airport has In order to meet the rising traffic of travelers, airlines installed an advanced passenger clearance system and cargo, the Dubai International Airport has started called the e-Gate. The e-Gate allows fast passage of major expansion program. This includes construction travelers through electronically controlled gates and of Terminal 3, Concourse 2 and Concourse 3, Mega completes the immigration process with the help of a Cargo Terminal and Flower Center. Terminal 3 and smart card, thus eliminating delays and queues at the concourse 2 and 3 will serve Emirates Airlines. The passport control section. There are six e-Gates Department of Civil Aviation reports that the current installed, two for arrivals, two for economy class airport expansion will lead to a handling capacity of 70 departures and two for first and business class million passengers by 2016. departures. Dubai Airport is the first airport in the After expansion, the Mega cargo terminal will be Middle East and the third in the world to install such able to handle up to 2.7 million tons of cargo. The system.

Madar Research Group 47

Dubai Knowledge Economy 2003-2008 Vol II

Emirates Airlines

Emirates airlines, which is one of the fastest growing from excess baggage, courier & mail, destination & airlines in the world, has a fleet of 61 aircrafts serving leisure and others. Out of the total revenue of $2,557 73 world destinations. When the world was reeling million generated from ticket sales in 2003, $39 under the pressure and consequences of the September million came from online booking, which is about 1.5 11 terror attack, Emirates airlines stunned the aviation percent of the total revenue of ticket sales. industry by ordering $15 billion worth of new Boeing Revenues generated from online booking has and Airbus aircrafts. witnessed a growth of 270 percent over the previous Passengers carried by the airliner surged from 4.77 year, indicating strong interest in the relatively new million in 1999 to 10.44 million in 2003, showing a service. Net profit of the airlines has risen from $81 tremendous compound average growth rate of 22 million in 1999-2000 to $425 million in 2003-04, percent over the four-year period. The total revenue and has shown a remarkable growth rate of 51 percent generated by the airlines in 2003-04 stood at $3,591 over the period 1999-00 to 2003-04. million. Breakdown of this revenue was 73 percent During the year 2003-2004, the number of seats from passenger ticket sales, 18 percent from cargo, booked online was 105,622 compared to 33,726 seats five percent from sale of goods and one percent each booked in the previous year, registering a growth rate

Growth of Emirates Airline Fleet & Destination Revenue generated by Emirates Airline (1999-2004) (1999-2004) 80 4000.00 73 3590.89 70 3500.00 64 3000.00 60 2624.24 61 2500.00 57 55 1966.11 50 2000.00 50 1734.41 Numbers 46 1382.11 40 1500.00

35 Million US dollar 38 1000.00 30 32 500.00

20 0.00 1999-00 2000-01 2001-02 2002-03 2003-04 1999-00 2000-01 2001-02 2002-03 2003-04 Fleet Destination

Source: Emirates Group Annual Report Source: Emirates Group Annual Report

Passengers Carried by Emirates Airline Breakdown of Emirates Airline Revenue (1999-2004) 2003-04 12 10.44

10 Cargo Passenger Sales of Goods 8.50 18% 73% 5% 8 Courier & Mail 6.76 1% Million 6 Excess Baggage 1% 4.77 5.71 4 Destination & Leisure 1% 2 Other 1999-00 2000-01 2001-02 2002-03 2003-04 1%

Source: Emirates Group Annual Report Source: Emirates Group Annual Report

50 Madar Research Group Travel & Hospitality

Revenues Generated by Emirates Airlines through need not to worry about tickets getting lost or Online Booking misplaced. This service is currently offered to countries like Year Total Revenue* Online Revenue Online Share of Australia, Germany (excluding ), Hong (Million US$) (Million US$) Revenue Total Kong, Malaysia, New Zealand, Singapore, Sri Lanka, 2002-03 1,869 10.51 0.6% Thailand, Turkey, United Kingdom, United Arab 2003-04 2,557 38.85 1.5% Emirates and the US. Source: Emirates Airlines and Madar Research

*Revenue generated by Emirates Airlines from passengers Mercator Mercator, the Information Technology (IT) division of the Emirates Group, is a leading supplier of IT Emirates Airline Online Booking solutions to the global air travel industry, which Revenue Share per Region (2003-04) originated from Dnata IT. The IT solutions provided by the company are in the area of airline Australia & financial management solutions, air cargo logistics, Other Arab New Zealand GCC Countries 2% 15% 30% frequent flyer solutions, passenger and airport solutions and Oracle e-business suites implementation consultancy. In the very short period of its incorporation the company has been able to generate and serve some of the leading Europe Asia airlines of the world. 45% Africa 7% 2% Dnata Source: Emirates Airlines & Madar Research Dubai National Air Travel Agency (Dnata) was established by the Dubai Government in 1959 and of over 200 percent. Online booking revenue grew today it is one of the largest travel organizations in the from 10 million US dollars in 2002-03 to over 39 Middle East. The three divisions of the company are a million US dollars in 2003-04. Dnata Airport service, which is the sole ground and The break up of revenue generated by online passenger handling agent at Dubai International bookings shows that 45 percent of the revenue was Airport, Dnata Agencies (which looks after travel from Europe followed by 30 percent from the GCC demands of the public and the travel trade with retail countries. Australia and New Zealand contributed and wholesale products distributed in Dubai), and about 15 percent and Asian countries seven percent. Africa and other Arab countries contributed two and one percent respectively. Passengers Handled by Dnata (1999-2004)

E-Tickets 20.00 Emirates airlines introduced a new service called the 19.13 ‘e-tickets’ to its passengers from 15th May 2004. Now 18.00 passengers can book and buy their ticket online and all 16.45 the booking and ticketing details of the passengers are 16.00 Million stored in Emirates reservation system and passengers 14.00 12.79 need not have to carry the paper tickets. Thus 13.80 12.00 reducing time of the passengers of visiting travel 11.19 agents office for collecting the ticket or for changing 10.00 travel plans. As the complete details are stored in the 1999-00 2000-01 2001-02 2002-03 2003-04 reservation system of the Emirates airlines, passengers Source: Emirates Group Annual Report

Madar Research Group 51 Dubai Knowledge Economy 2003-2008 Vol II

Revenue Generated by Dnata (1999-2004) Breakdown of Dnata Revenue - 2003-04

350.00

295.65 300.00 Reservation 259.43 Cargo Handling System 10% 250.00 Agency Information 14% 221.65 Technology Commission 181.97 200.24 200.00 23% 8%

150.00 Other

Million US dollar 100.00 3%

50.00

0.00 Airport Operations 42% 1999-00 2000-01 2001-02 2002-03 2003-04

Source: Emirates Group Annual Report Source: Emirates Group Annual Report Dnata Cargo, the sole operator of the Dubai Air Cargo agency commission and three percent from other Terminal and three satellite terminals. sources. The net profit of Dnata has grown from $34 The airport services division of Dnata, which is the million in 1999-2000 to $47 million in 2003-2004, sole passenger handling agent in Dubai, handled with a growth rate of over eight percent. 19.13 million passengers in the year 2003-04. The Dnata currently runs the largest ‘airline number of passengers handled by Dnata has shown a industry’contact center in the region, which serves as an growth of 16.3 percent over the 2002-2003 and a in-house and outsourced contact center (for travel). The compound growth rate of 14 percent during the Dnata contact center has 140 seats and 100 agents, in period 1999-2004. addition to 12 agents dedicated for the Companion The revenue generated by Dnata in 2003-04 stood Points’ reward service. Dnata also offers outsourced at $296 million – 14 percent more than the previous services to other companies. Calls related to cargo are year. The breakdown of revenue in the year 2003-04 handled by a team of nine customer care agents. By end indicates that 42 percent of the revenue was from 2002, over 75,000 calls per month were handled by the airport operations, 23 percent from information call center agents dedicated to Dnata cargo service. technology, 14 percent from cargo handling, 10 Fifteen agents handle three airline accounts in three percent from reservation system, eight percent from outside locations (multi-site contact center).

52 Madar Research Group Section 5 rmu pno StandardSponsors Premium Sponsor Section Sponsor Dubai Media

Dubai Media

Overview of Dubai Media Sector

The development of mass media in Dubai is an from publishing to production and broadcasting. example of the great difference political leadership Some of the big names include CNN, Reuters, can make by triggering change in an economic sector. Associated Press, Sony Broadcast & Professional, Up to 2001 most media segments in Dubai were McGraw Hill Publishing, Bertelsmann, Showtime, either underdeveloped or immature. Advertising Star TV, MBC, , Saatchi & Saatchi, segment and related media services such as marketing International Advertising Association and CNBC and event organization have already attained high Arabiya. As per information released by DMC, there levels of development and professionalism much are about 24 major broadcasters operating from earlier due to increasingly sophisticated and large DMC. demand by the cosmopolitan’s competitive trading However, since the creation of a media cluster and business communities in a fast growing environment and culture requires more than the consumer society. grouping of media and related companies in one Dubai has shown a tremendous growth in the friendly and high-technology serviced place, few media sector over the past three years. The creation years will have to elapse and more efforts be made of media cluster “Dubai Media City” (DMC) free before maximum benefits are reaped by both DMC zone in 2001 is seen as a major step towards Dubai’s and its media tenants. vision of transforming its economy into a knowledge- Elsewhere in Dubai, where the additional based economy and society. Dubai’s resolve to flexibility offered by the media free zone does not advance the media has also touched state-owned apply, federal restrictions on the setting up of organizations, with ongoing multi-million-dollar publishing houses and other media organizations, restructuring of its broadcast and print media. and on the freedoms they are afforded, need to be Over the last three years, impressive numbers of removed or watered down to allow for a truly regional and international media related companies dynamic, free and creative media industry that can have either setup their base in DMC, while many compete globally and to help turn the whole emirate others are in the process of setting up. DMC is into an international media hub. working with the aim of transforming Dubai into a regional as well as one of the global hubs for Outlook of Dubai Media broadcasting, printing, publishing and packaging. Dubai which is already the region’s leading A state of the art technological infrastructure and commercial hub, has invested heavily on providing a progressive policy skewed to encourage what has services and technological infrastructure to suit the been termed as the “freedom to create” at DMC have media sector. Due to its policy of press freedom and attracted many regional and international companies freedom to create, it has been able to attract many to migrate to Dubai. Currently DMC is home to regional as well as global media related companies. hundreds of media companies in various sectors, Several regional and international broadcasting and

Media Companies in UAE and Dubai Share Category UAE Dubai* Dubai Share Newspapers 8 3 38% Trade Magazines 49 43 88% Consumer Magazines 55 40 73% Television Stations & Channels 26 14 54% Radio Stations & Channels 20 14 70% Source: Middle East Media Guide and Madar Research

*Media companies with headquarters based in Dubai

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publishing companies have setup their regional base ($396 million). The print media attracted the largest in Dubai. share of advertisement spending, estimated at $129 In the print media, eight newspapers are million ($85 million in newspapers and $44 million published in UAE (five Arabic and three English), in magazines). The second largest share, $42 million, out of which three newspapers (one Arabic and two went to television, followed by radio, $7.3 million. English language newspapers) are published in Dubai. Out of the total 55 consumer magazines Media Advertisement Revenues in Dubai - 2003 published in UAE, about 40 (73 percent) are

published in Dubai in English and Arabic languages Others 21.90 covering the area of sports, motoring, business, political, entertainment, women, men and teenage & Radio 7.32 children. Of the total 49 trade magazines published Television 42.28 in UAE, 43 (88 percent) are published in Dubai in

the field of advertising & marketing; architecture & Magazine 44.34 interior design; banking & personnel finance; Building & Construction; Business Management; Newspapers 84.90

Catering & Hospitality; Communications; 0.00 20.00 40.00 60.00 80.00 100.00 Computers & Technology; Industry; Media & Source: Madar Research Broadcasting; Medical & Health; Military & Defence; Oil & Gas; Photography; Transport & Media Advertisement Revenues in Dubai - 2003 Logistics; travel & tourism. In broadcast media, over 14 television and 14 Media Revenues Percentage Share radio channels are operating in Dubai in the Arabic, (Million US$) English, Hindi and Urdu languages. Their areas of Newspapers 84.89 42% Magazines 44.33 22% operation include entertainment news, sports, music, Television 42.28 21% children and religion. Radio 7.32 4% Others 21.89 11% Media Spending in Dubai Total 200.71 100% Madar Research has estimated advertisement Source: Madar Research revenues generated by Dubai-based media, along Notes: with a share breakdown by the various media, based - Advertisement spending figures for Dubai are Madar Research estimates, on estimates for the whole UAE released by Pan derived from advertisement spending figures for UAE released by Pan Arab Arab Research Center for the year ending November Research Center. - Revenues from online advertising are not included in this table due to their 2003. Accordingly, Dubai media is estimated to have marginal size, which is estimated by Madar Research at over $1 million in generated $201 million in 2003, which is about 51 Dubai – out of some $6.5 million generated in 2003 by all major Web portals percent of total advertisement spending in the UAE based in GCC states.

UAE Media Advertisement Revenues & Dubai Share - 2003 Media Advertiesment Revenues in UAE Dubai Share Dubai Share (Million US$) (percent) (Million US$) Newspapers 212.23 40% 84.89 Magazines 60.73 73% 44.33 Television 76.87 55% 42.28 Radio 12.20 60% 7.32 Others 33.68 65% 21.89 Total 395.71 200.71

Source: Pan Arab Research Center and Madar Research

56 Madar Research Group Dubai Media

Breakdown of Advertisement Revenues Top 10 Advertisers in UAE Newspapers of Dubai-based Media - 2003 End November 2003 Rank Brand Value (Million, US$) Others Radio 11% Newspapers 1 4.79 4% 42% Television 2 Samsung 3.10 21% 3 LG 2.54 4 4x4 Motors 2.39 5 Mashreq Bank 2.21 6 Carrefour 2.10 Magazines 7 Sony Ericsson 1.99 22% 8 Allo Emirates 1.66 Source: Madar Research 9 Emaar 1.53 10 Nadia 1.49

Advertisement Revenues of Dubai-based Media Source: Pan Arab Research Center 2002-2003 100,000 Top 10 Advertisers in UAE Magazines 80,000 End November 2003

60,000 Rank Brand Value (Million, US$) 1 Damas 1.27

(000' Us$) 40,000 2 Toyota 0.93 3 Nokia 0.62 20,000 4 Samsung 0.56 5 Home Center 0.49 0 Newspapers Magazine Television Radio Others 6 Nissan 0.31 2002 2003 7 0.31 8 Givenchy 0.31 Source: Madar Research 9 Chopard 0.29 The share of other media, which include billboards 10 Sony 0.28 and cinema advertising, was about $22 million. Source: Pan Arab Research Center In terms of percentage share of advertisement reveues for each media segment in the year 2003, the print media constituted about 64 percent of the total Top 10 Advertisers in UAE Televisions advertisement spending (newspapers, 42 percent; End November 2003 magazines, 22 percent), followed by television, 21 Rank Brand Value (Million, US$) percent, radio. Radio stations attracted only 4 1 IMF - Dubai 2003 12.58 percent of the total, with the rest of the media 2 Dubai Resort Area 8.98 receiving 11 percent. 3 Dubai Summer Surprises 6.41 4 Dubai Shopping Festival 4.25 Top Spending Advertisers 5 Dubai Development & 3.65 Top 10 advertisers in each of UAE’s newspaper, 6 Investment Authority 2.38 magazines and television segments have spent a Dubai International Airport combined $74.28 million in 2003, according to Pan 7 Dubai Media City 2.18 Arab Research Center. Top 10 Advertisers spent 8 Thuraya 1.76 $23.8 million with newspapers, $5.37 million with 9 Gitex 1.47 magazines, and $45.11 million with televisions. 10 Youth Development 1.45 Source: Pan Arab Research Center

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Dubai Media City

Dubai Media City (DMC) is being positioned to play a media cluster is part of DMC’s vision. central role in the future development of the media in To realize its vision, DMC is relying on its strategic Dubai and the region. From a wider and strategic geographical location – at the crossroads of the Middle perspective, DMC is seen as one of the cornerstones in the East, Africa and South Asia, which provides easy access to structure to build a knowledge-based economy in Dubai, regional and international markets. It also relies on the along with sister free-zone communities, Dubai Internet many assets it has – or is developing – in terms of facilities, City and the Knowledge Village. From the media services, human resources, logistics, information and perspective, DMC is seeking to create the most favorable environment in the region – as well as a unique global hub communication technology, operational standards, – for the development of various media industries, in incentives and, above all, a strong political backing. addition to leisure and entertainment. Media and related In the short time since its establishment over three industries targeted include media and marketing services years ago, DMC has succeeded in attracting more that (such as advertising, public relations, research and 850 local, regional and global media companies to set up consultancy), printing and publishing, music, film, “new offices or regional headquarters. Additionally, DMC has media”, information agencies and broadcasting. become home to freelance media professionals, whose While commercial success and international number has now exceeded 75. Enjoying the free zone recognition are major goals for the DMC, fostering a status, media companies are getting numerous benefits media culture that combines the skills of home-grown including 100-percent business ownership, complete talents with the international expertise of global media exemption from taxes (personal, income and corporate), players in order to produce a distinctive and competent absence of customs duty; reasonable operational costs

Dubai Media City’s Segmentation of Client Business Activities Segments Activities Media & Marketing services Direct marketing & promotional service; Advertising & communication agency Printing & Publishing Publishing newspapers, magazines, educational & professional books, consumer books & magazines, etc Music Music production, recording & distribution; Music label & rights management, promotion & management, etc Film Film production, distribution; Media content; Film content rights management; Production & post production New Media Web designing & management; Media software development & integration; Access spending multimedia software development Leisure & Entertainment Event management; Theme parks management; Live entertainment & promotion; Sports management & promotion; Conference organizers & management Broadcasting Television and Radio broadcasting Information agencies News agencies; Media research & information services

Service Providers Activities Media Supports & Service Providers Broadcasting hardware & equipment; Satellite services & equipment provider; Digital media management; Media archiving & distribution; Systems integration services Processing Prepress; post press; printing; packaging, etc Retail Restaurants; digital printing, etc Source: Dubai Media City website

58 Madar Research Group Dubai Media compared to global levels, and cost-effective skilled labor. Dubai Media City, meanwhile, has received a good DMC also provides a single gateway – or a “one-stop share of international and regional recognition. Apart shop” – for speedy and hassle-free government approvals from acknowledgment from the global media players and business services, backed up with hospitality, call which have set up in the zone, Dubai has won centre and event-organization services, which help the bid to host the 40th World Congress of the companies focus on their core businesses. These services International Advertising Association (IAA), scheduled are manned by 360-strong staff, which is shared by DMC, for March 16-18, 2006. DIC and Knowledge Village. Other competitive In recognition of its strong strategic branding, DMC advantages include world-class technology infrastructure – recently received the “Gulf Brands of the Decade Award” ranging from secure high-speed Internet access to satellite in the government, semi-government and NGO category. communication – and a pool of independent media Organized by the Gulf Marketing Review, the award professionals available for outsourcing. came in recognition of the level of awareness DMC has As for the more important ingredients in the making created around its vision and mission, which has of a media cluster and culture, DMC has taken further established its name throughout the region and the world. steps in nourishing the relatively liberal and tolerant In addition to its management and planning roles, environment Dubai is known for, compared with other which is handled by 40 employees, DMC also plays an countries in the region. Being a free zone allows DMC advisory role to the Dubai Government on major media- more flexibility in formulating guidelines and rules to related matters in the region. define the freedoms enjoyed by its tenant companies. DMC is promoting the notion of “responsible media”, where freedom of expression and freedom of the press are Breakdown of DMC-based Companies respected and upheld provided they remain in line with by Media Segment - 2003 the moral, cultural, and political norms prevalent in Dubai and the region. While DMC stresses its New Media Print & Publishing 7% 20% Broadcasting commitment to fostering the “freedom to create” it has set 4% up a special standards tribunal to resolve disputes relating to freedoms and standards. Among media giants based in DMC today are Film Reuters, Associated Press, Agence France Presse, CNN, 11% Media & Marketing Information CNBC, MBC, Al-Arabiya, Sony, BMG, Bertelsmann, Leisure & 52% Agencies International Advertising Association and Saudi Research Entertainment Music 3% 1% 2% and Publishing Company. One of the latest prominent comers to DMC, Source: Dubai Media City Showtime pay-TV network, has moved its international operations from London and Cairo to the free zone. This Breakdown of DMC-based Companies has given a major boost to DMC as an emerging by Media Segment - 2003 international media hub. Today, DMC Type of Business Percentage Share has become home to 112 publishers and 24 broad- Media & Marketing Services 52% casters – operating 55 TV channels and six radio stations. Print & Publishing 20% Further development of the media cluster is underway, Film 11% with the launch of new projects and the organization of New Media 7% prestigious events, which range from the building of the Broadcasting 4% International Media Production Zone – the first media- Information Agencies 3% support cluster of its kind in the region – to organizing the Music 2% first Dubai International Film Festival (DIFF) in 2004. Leisure & Entertainment 1% The film festival is expected to have a very positive impact Total 100% on the regional and international film industry. Source: Dubai Media City

Madar Research Group 59 Dubai Knowledge Economy 2003-2008 Vol II

DMC Media Segments the 8,500-plus knowledge workers based at DMC Activities of Dubai Media City-based companies are work for US companies, since this national group has classified under eight main segments. The majority some of the largest firms operating in the free zone. of these activities fall under ‘media and marketing Companies from Africa (other than Arab North services’ – constituting 52 percent of the total, Africa) and Canada constitute three percent and one number of companies based in DMC. This is percent respectively. followed by ‘print and publishing’ (20 percent) and ‘film’ (11 percent). ‘New media’ constitutes seven International Media Production Zone percent, ‘broadcasting’ four percent; ‘information Dubai Media City has launched the International agencies’ three percent; ‘music’ two percent and Media Production Zone (IMPZ), the first dedicated ‘leisure and entertainment’ one percent. It must be trade zone created in the region for media-related noted, however, that this breakdown is not production activities. From CD producers to media necessarily representative of the segments in terms of equipment companies, this infrastructure will the size of operations and investment. For instance, complement the media and entertainment industry the average size of operations and investment by by creating a cluster environment that allows broadcasting companies may be much larger than collaboration across media and related industries. those of ‘media and marketing services’ companies. IMPZ will be built on an area exceeding 3.5 square kilometers, along Emirates Road, and it will offer DMC Company Breakdown by Nationality land and pre-built printing, production and Breakdown of DMC companies in terms of “country warehousing units. of origin” shows that UAE-registered companies Around $110 million has been earmarked to set constitute about one third (34 percent) of DMC’s up the zone’s infrastructure. However, as companies client list. Many of these establishments are branches sign up to set up their own facilities and offices in the (FZ establishment) of international and regional zone, total investment is expected to eventually companies. They are followed by companies from exceed Dh1 billion ($271 million). Phase one of the other Asian countries, with 15 percent. United project, which will be launched by end 2004, will Kingdom and India form the next largest groups, at focus on the creation of a printing cluster to cater for 13 percent and 10 percent respectively. Companies the rapid growth of this sector and to support from other GCC states constitute eight percent of DMC’s printing and publishing companies. the client base. European countries (other than the UK) and the United States are the origin of eight Media Standards Tribunal percent and four percent respectively. It is In November 2003, The Dubai Technology and noteworthy to mention that well over four percent of Media Free Zone Authority launched the Broadcast and Publishing Standards Tribunal (BPST) as an independent body that adjudicates issues related to DMC Clients by Country of Origin freedom of expression and the appropriateness of media content produced by companies in all sectors Canada BVI 1% of the free zone. UK USA 3% GCC India Other 13% 4% 8% 10% The Free Zone Authority also issued Regulations African 3% and Codes of Guidance, modeled on international best practice examples, providing guidelines for Free Zone companies on media content. The Tribunal adjudicates on media content in response to Other Asian applications made by companies or the Free Zone UAE 15% 34% South Africa Other European Authority itself regarding content already published 1% 8% or awaiting release. It judgments are based on the free Source: Dubai Media City zone’s own regulations and codes.

60 Madar Research Group Dubai Media

DMC says that the codes have been drafted in a phase, when the WSA’s Grand Jury meeting was descriptive as opposed to a prescriptive manner, and hosted by DIC, DMC and KV in Dubai in October that they are based closely on the codes published by 2003. A 36-member grand jury panel met to evaluate the Broadcasting Standards Commission in the over 800 e-content products from 136 countries to United Kingdom, while taking into consideration select best examples for a content village exhibition, broadcast and publication codes issued by various which was held in Geneva in December 2004. international industry bodies. DMC Technology Infrastructure Building Cultural Bridges Dubai Media City offers the latest technology and A prominent DMC initiative, the Dubai support services to its clients to operate locally, International Film Festival (DIFF), aims to build regionally and globally out of Dubai. DMC offers cultural bridges while celebrating work from the broadband access/ISP, television production and world’s film production cultures, including Arab post production facilities and Web-enabling services. cinema. The inaugural festival will feature 80 films, including some special sidebars of retrospective films. IP Telephony Dubai’s cosmopolitan character is reportedly a key Dubai Media City’s voice telecommunication factor in designing the program structure. infrastructure has been built on IP Telephony. This Dubai Media City will organize and manage the next-generation technology allows for data, voice, DIFF, scheduled for December 2004. and video to be transmitted over a single, IP-based Commenting on the festival, Sheikh Ahmed bin network infrastructure. Combining multiple types of Saeed , chairman of DIFF, who is also traffic on a single network connection reduces the president of the Dubai Department of Civil Aviation cost of investment in separate networks as well as the and chairman of Emirates Group, said: “Dubai has complexity in managing and maintaining both always been a cultural crossroads where people from networks. all over the world live together in a peaceful and harmonious environment. I hope that this festival, Teleport Stations through the medium of film, can make a small Dubai Media City has an advanced teleport station contribution toward building cultural bridges and managed by free zone subsidiary, SamaCom. promoting peace and understanding on the SamaCom is a vertically integrated satellite service international stage. I am confident that, in time, the provider that owns and operates its own festival will be able to establish itself as an important communication infrastructure, enabling it to act as a event on the international film industry calendar.” strategic partner to its customers. It provides one- stop-shop satellite communications (broadcast and Digital Content Hub Internet/data) services and support to DMC DMC’s proximity to Dubai Internet City helps it to companies as well as other international and regional promote industries in the convergence space between customers operating in Dubai and the region. IT and media, including digital media. There are many companies in the digital media sector in Dubai The organization also provides solution development Media City for whom DMC provides the backbone services, in addition to the following: to create, share and disseminate digital content. DMC, along with DIC and Knowledge Village (KV), ● Broadcasting services (uplink, downlink, has promoted digital content through the free zone’s occasional, turnaround, DTH and playout association with the UN-endorsed World Summit services) Awards (WSA) initiative, which seeks to showcase ● Voice, data and Internet services and recognize the world’s best digital content and ● Co-location services for uplink facilities ● new-media applications. Data center services for disaster recovery ● The partnership was rolled out in the very first Consultancy

Madar Research Group 61 Dubai Knowledge Economy 2003-2008 Vol II

Dubai’s position on the globe (55.28E longitude and identify, showcase, and foster outstanding student 25.22N latitude) is an added asset in satellite talent. Ibda’a Awards recognize students who communication. The location is ideal for satellite demonstrate exceptional creativity in 10 categories: visibility covering all the five continents. The satellite journalism, radio, digital photography, analogue visibility arc extends from 130 E to 342 E (18 W) photography, film/TV feature, TV documentary, and provides coverage, through various satellites, to a graphic design, TV advertising, print advertising and region extending from East Asia and Australia to animation. Prizes include sponsored workshops, Europe, Africa, the East Coast of North America and training programs and internships with global media all of South America. companies. The 2004 Ibda’a Media Student Award is going international. This move was made to meet Nurturing Talent growing interest in the awards program from outside For the past three years DMC has been organizing an the initially targeted region, which included 22 awards program called Ibda’a (Arabic for countries spreding from the Indian Subcontinent to “creativity”) to recognize the best media student West Africa as well as South Africa, the Middle East talent in the region. The Awards are designed to and the Gulf region.

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62 Madar Research Group Dubai Media

Dubai Government Media Restructuring

Dubai Media Incorporated was formed in July 2003 by a government decree issued by Dubai Crown Restructuring Costs Prince Sheikh Mohammad bin Rashid Al-Maktoum The costs to restructure Dubai Television are to oversee the restructuring of Dubai’s state-owned reported to be within the budget set out for the media corporations, which include Dubai Television, project, to the tune of $110 million. In addition to Al-Bayan newspaper and several radio stations. the latest in broadcast and transmission equipment Leading Arab media personnel were brought in to and studios, several hundred new computers and lead and manage the restructuring phase, and flat-screen monitors were purchased for the following extensive research and study, a plan was corporation’s news editors, program teams, developed to begin the restructuring of Dubai administration and auxiliary staff. Subsequent Television, in terms of human resources, programs restructuring is expected to benefit from similarly and even physical structure. In late 2003, large budgets, as part of a no-holds barred strategy to construction of a new building dedicated to the raise Dubai’s media sector to the standard of its television’s news center was begun in Dubai Media ambitious development projects springing up around City. the city. The building, meant to house the news center studio and related offices and functions, was The new programs range from political talk shows completed in record time. By April 2004, some five and interviews with leading personalities in Arab months after construction was begun, the news politics, to game shows and entertainment talk center was fully equipped with the latest in television shows, as well as the usual range of women’s and broadcast equipment and technology, on par programming, such as fashion shows, health news with some of the largest media corporations in the and cooking programs. Dubai Television has also West, and probably the best among full-featured signed long-term exclusive contracts with several television corporations in the Arab world. Arab and international production companies for a The official re-launch of Dubai Television took variety of films, serials, sitcoms and other programs. place on June 1, 2004, amid a large media campaign The faces of Dubai Television’s new programs that had taken off some 10 days earlier, locally and and news broadcasts have been drawn from various regionally. The launch of the new television station spheres, where many enjoy long and successful commenced with the evening news from Dubai Television’s news center at Dubai Media City, and Matching Investment with Quality was followed by a number of family-oriented Restructuring of Dubai state media has made all programs specifically developed for Dubai modern production and broadcast technology and Television. A new logo and look for the station facilities available to Dubai TV staff. However, accompanied the revamping of programming and though restructuring has covered human resources content. and boosted the corporation’s talent set, what is yet A day earlier, a press conference was held by to be seen is a genuine break away from the static and Dubai Media Incorporated’s executive manager, stereotyped productions that dominate TV studios Hussein Lootah to announce the event and outline in the Arab world. While there are signs of adopting the television’s strategies and mission. Set to serve an new techniques and concepts that have proven Arabian Gulf audience in the first degree, and a successful for their Western counterparts, there is wider Arab one in the region and internationally, the still much space for true innovation, creativity and station has developed over 25 new programs, some professionalism that can distinguish Arab TV original and others based on formats of popular production and justify the level of investment in international shows. technology and facilities.

Madar Research Group 63 Dubai Knowledge Economy 2003-2008 Vol II

careers in the industry and are leading Arab and office buildings shortly, making Dubai Television personalities in their domains. one of the largest occupants in Dubai Media City, both Dubai Television’s news center at Dubai Media City in terms of personnel and physical size. is set to be joined, within a year, by the television’s Dubai Media Incorporated’s restructuring is also program studios and offices, which for the time being expected to expand to Dubai Television’s subsidiary remain at the corporation’s old location in Dubai. stations, such as Channel 33, Dubai Business However, the old locale has also been re-equipped, in Channel and Dubai Sports Channel, within the line with the corporation’s strategy to upgrade its entire coming year, as well as Al-Bayan newspaper, followed operations. Construction will begin on the new studios by the radio stations.

64 Madar Research Group IT Labor Market

Premium Sponsor Standard Sponsors Section 6

IT Labor Market

Overview Dubai has succeeded in creating prototypes of Report Highlights information technology (IT) clusters which now have ● 40,000 IT professionals work in Dubai, the critical mass to trigger expansion and tying up with constituting 45 percent of UAE’s IT workforce future clusters of other industries. This concentration of ● Dubai features the highest workforce to population high technology companies primarily at the Dubai ratio in the world, at more than 68 percent Technology and Media Free Zone, as well as at the free ● Dubai’s IT labor market will grow at an average of zones of Jebel Ali and Dubai Airport has contributed six percent per year until 2008, creating between significantly to driving the demand for IT skills in the 2,400 and 3,000 new IT jobs annually emirate. One of the most favorable trends in this area is ● Jobs that fall under “network design and multinational IT companies establishing or relocating administration” and “programming and software their Middle East or Gulf headquarters and customer engineering” lead the IT labor demand in the support centers in Dubai, which further generates labor emirate demand. ● Those engaged in “enterprise system analysis and Additionally, the momentum e-government and integration,” however, are the top earners, related projects have gained on all departmental and receiving an average monthly salary of $4,174 municipal levels of Dubai government has contributed to the consistent rise in demand for IT professionals in Dubai. Expansion projects in the telecommunication, higher percentage ratio, with 68.33 percent of its construction and finance industries are also population currently employed. contributing to this demand. The continuous influx of foreign workers in the Analysis of the trends impacting IT skills demand UAE exceeds by far the natural growth (births versus and recruitment in Dubai, however, requires looking at deaths) in the country’s population. This influx is the the nature, volume and quality of workforce in the single biggest contributor to the projected six to seven whole United Arab Emirates. percent annual population growth in the UAE. The UAE relies heavily on an expatriate workforce – Further research and analyses indicate that the IT from unskilled labor to highly specialized professionals. workforce in the UAE as of end 2003 was at around Popular estimates place the density of expatriate 90,000, or 3.67 percent of the total workforce. Dubai, workers to about 80 percent of the whole UAE which accounts for 30 percent of the total UAE workforce. The same makeup applies in the emirate of population, and 34 percent of the total UAE workforce, Dubai, where the ratio between expatriate and national is home to an estimated 44.4 percent of the total UAE (or local) workers goes as high as 85 percent against 15 IT workforce. The country’s capital, Abu Dhabi, percent. accounts for 40 percent of the UAE IT labor market, Approximately 61.25 percent or 2.45 million of while Sharjah holds a distant eight percent. The four UAE’s four million population are active in the remaining emirates have a combined share of only seven workforce, making it probably the world’s leading percent. county in terms of workforce volume vis-a-vis the Interestingly, IT workers account for 4.88 percent of population. Dubai, in particular, registers a significantly the total workforce (820,000) in Dubai, which is

IT Workforce in Dubai Population(2003) Total Workforce* Workforce/Population IT Workforce* IT WF from Total WF UAE 4,000,000 2,450,000 61.25% 90,000 3.67% Dubai 1,200,000 820,000 68.33% 40,000 4.88%

Source: Madar Research

* Madar Research Estimates

Madar Research Group 67 Dubai Knowledge Economy 2003-2008 Vol II

Market Demand Geographic Distribution of UAE IT Workforce 2003 Annual Demand for IT Skills Madar Research estimates the number of IT workers in Other Dubai at 40,000 as of end 2003. It also projects and Sharjah Emirates 7% that this figure will grow at an average of six percent 8% Dubai 45% annually, at least in the next five years, creating between Abu Dhabi 2,400 and 3,200 new IT jobs per year. This growth rate 40% outweighs the projected growth for the total UAE IT workforce, which is five percent. This rate is also much higher than growth in the UAE’s total workforce.

Demand for IT Skills per Specialization The IT skills demanded by the Dubai market in 2003 Source: Madar Research reflected a strong bias towards ‘network design and administration,’ with a demand share of 26.09 percent, markedly higher than the world average of 3.61 percent based on advertised demand. Network engineers and and more than two thirds of the North American administrators emerged at the top of the list of required average, which stands at 7.13 percent. The ratio in IT skills in terms of jobs advertised by the various Dubai also exceeds that of the whole UAE, which is recruitment companies, Web portals and newspapers estimated at 3.67 percent. monitored by Madar Research in the UAE last year. Eight IT job categories have been used in this report: This was followed by ‘programming and software programming and software engineers, and workers in engineering’ jobs which accounted for 18.26 percent technical support, enterprise systems, database of total demand, while ‘technical support’ jobs development, Web development, network design, landed third at 16.52 percent. This trend resembles digital media and technical writing. the North American IT job market to some extent,

Distribution of Demand by Job Category 2003

30.00% 26.09% 25.00%

18.26% 20.00% 16.52% 15.00%

7.83% 8.70% 9.57% 10.00% 6.09% 6.96% 5.00%

0.00% Digital Media Development Database Enterprise chnical Writing chnical Support Administration Te Network Design Development and Te Systems Analysis Programming / Web and Administration and Administration and Administration Software Engineering

Source: Madar Research

68 Madar Research Group IT Labor Market

Distribution of Demand by Industry 35% 31% 30%

25% 22% 20%

15%

10% 10% 8% 8% 5% 5% 6% 5% 2% 3% 0% IT com Media Health Finance Tele Oil and Gas Government Engineering Construction/ Other Sectors Hospitality/Travel

Source: Madar Research with demand for computer software engineers administration, digital media and technical writing, will projected to grow by 100 percent in 10 years’ time continue to register moderate growth. These sectors’ (from 2000 to 2010) equivalent to a 10 percent individual demand share – according to the 2003 annual average. demand sampling – were just under 10 percent of the Network security and skills in advanced business total market demand. software will continue to be important factors in the IT job market in coming years. Initiatives to build secure Demand by Industry networks, applications and proprietary databases in There are remarkable differences in the distribution of both private and public sectors are expected to sustain demand for IT professionals across major industrial the strong demand for network engineers and sectors in Dubai. The massive expansion in the administrators, programmers and software engineers in information technology and construction/engineering Dubai in the next few years. Demand for technical sectors have rendered a strong demand for IT personnel support personnel will also continue to grow as IT in the two industries, with 31 percent of the monitored requirements of business organizations become more demand (through advertisements) in 2003 arising from complex, compounded by the trend towards the IT industry and 10 percent from outsourcing of IT services. construction/engineering. Jobs in ‘enterprise system analysis and Government demand for IT professionals – 22 administration’ and in ‘database administration and percent of total demand – reflects the Dubai development’ accounted for 7.83 percent and 6.96 Municipality’s and its various departments’ strong focus percent of the 2003 demand, respectively. These on automating and updating its backend operations as sectors, however, will experience brisk growth (although required by the drive to introduce a complete range of lower than growth in the three sets of job skills that e-government services. These range from the payment registered highest demand in 2003) in the next few of traffic and utility bills by individuals to the renewal years as the local market embark on massive system of trade licenses by businesses. integration and e-commerce-related projects. The telecom and finance sectors shared the same Job demands in the areas of Web development and level of IT demand (eight percent), which reflect that

Madar Research Group 69 Dubai Knowledge Economy 2003-2008 Vol II

the IT infrastructure in these sectors are already stable and mature, being among the earliest industries to Demand for Arabic Speaking IT Professionals introduce IT systems in their operations. 2003

Demand for Arabic Speaking IT Professionals No Language Arabic Speaking Despite Dubai being very cosmopolitan, the drive to Preference Preferred employ Arabic expatriates – when supply of local labor 62% 38% is scant – over other nationalities, is evident. It is also in agreement with the vision of ‘emiratization’ (giving employment priorities to the locals) – as it encourages employment of Arabic speakers – or bilingual – over speakers of only English. However, companies preferring to recruit Arabic individuals don’t always make that clear when advertising a job. This is especially true of international Source: Madar Research companies who state their identity in recruitment ads in the hope of attracting distinguished candidates, but at that appeared in the Arabic daily, Al Khaleej, where the same time wouldn’t want to be tagged as preferring naturally the assumption is made that the recruiter is one ethnic group over another. However, it remains targeting Arabic speakers. true that entities operating in Dubai do, inevitably, take candidate’s language skills into consideration when Salary Levels making recruitment decisions. There are inherent limitations in trying to understand Thirty-eight percent of ads monitored by Madar the salary structure for IT professionals working in Research explicitly indicated that the relevant employer Dubai. Some of these are 1) for different reasons, many seeks an Arabic speaking IT professional, while the companies choose not to specify the salary package remaining 62 percent carried no indication of language when advertising a position; 2) most employers decline preference, except for less than one percent of the ads to answer specific questions on salaries earned by their

Average Monthly Salary Per Job Category

5,000

4,000

3,000

US Dollars 2,000

1,000

0 Digital Media Database Enterprise b Development echnical Writing Administration and Integration echnical Support T Network Design Systems Analysis Development and T Programming / We and Administration and Administration Software Engineering

Source: Madar Research

70 Madar Research Group IT Labor Market employees; and 3) jobs requiring similar skills and Dubai IT Job Categories Ranked by Average Monthly qualifications offer strikingly different salaries Salary (in US$), 2003 depending on the nature of the employer. To overcome these limitations, Madar Research Enterprise Systems Analysis & Integration 4,174 opted to identify average salaries earned by IT Network Design & Administration 3,828 professionals working within each of the eight job Programming/Software Engineering 3,024 categories defined in this report. Technical Writing 2,812 It turned out that IT professionals working in Web Development & Administration 2,733 ‘enterprise systems analysis and integration’ earn the Technical Support 2,381 highest salaries with an average $4,174 per month, Database Development & Administration 2,360 Digital Media 2,297 whereas ‘digital media’ specialists command the lowest with an average of $2,297. Average salaries for the rest Source: Madar Research of the job categories are illustrated in the table below. Further analysis of ads surveyed by Madar Research This means jobs which accept less than two years’ showed how experience affects salary levels within each experience paid about 25 percent less than the salary job category. Most ads require candidates with average in that category. experience ranging between two and five years. Inversely, jobs that require more than five-year Examination of similar jobs with different experience experience paid anywhere from 25 to 100 percent more requirements indicates that average pay varied +/- 25 than the category average. In certain cases the salary percent depending on whether the experience could go higher than 100 percent of the average category requirement was less than two years or more than five. salary, depending on the nature of the employer.

Madar Research Group 71 Madar Research

Knowledge Economy Research on the Middle East

Large multinationals and corporations use Madar Research’s vital e-market data and analyses for their strategic business planning, for the preparation of their annual budgets and to ascertain the future of ICT in the Arab world.

Looking for reliable, in-depth, accurate data on the Arab world? Madar Research Journal is the only primary and secondary B2B publication covering all segments of the Knowledge Economy in the Arab world. The journal, published periodically, is an affordable and invaluable source for large and small corporations, alike.

For more information, please contact: Madar Research Group Dubai Media City, Office 221, Building 8 P.O. Box 502180, Dubai, United Arab Emirates Tel. +971 4 3903058, Fax. +971 4 3904688, www.madarresearch.com, [email protected] Section 7 rmu pno StandardSponsors Premium Sponsor Emirates Internet & Multimedia Case Study

Emirates Internet & Multimedia - Case Study

Overview Today, with three out of every ten people in the There is no doubt that any case study of Emirates UAE – and four out of ten in Dubai alone – having Internet & Multimedia (EIM) would largely reveal a access to the Internet, choosing an Internet access success story. The United Arab Emirates’ sole Internet option is no longer limited to the affordable dial-up or service provider (ISP) – just like the case with its parent expensive leased line connections. ADSL services were company Etisalat – has enjoyed the greatest advantage introduced three years ago and cable Internet a year ago. of all: monopoly. Regardless of this fact, however, EIM ISDN LAN remains an option for small and medium does take credit for offering a combination of quality businesses. Consumers may also opt to obtain Internet service and Internet access technology unmatched by access on an “as needed basis” in one of the thriving any other ISP in the Arab world, nor in many parts of Internet cafes around the UAE that charge anywhere the developing world. The ultimate assessment of EIM, from $0.75 to $3 per hour. of its services and rates, however, can be made once The most tech-savvy users also have the option of liberalization of the Internet access provision market subscribing to a wireless network service, where they takes shape in the near future and new players enter the can access the Internet in hotspots which are spreading market. around the UAE, particularly in Dubai, in such places If a recent upbeat statement by Etisalat’s chairman, as the airport, hotels and cafes. Dr Mohammed Khalfan bin Kharbash, on the general EIM has garnered much recognition since its course Etisalat will be following in a deregulated inception, among them: Editor’s Choice Award for Best telecommunication market applies to its Internet ISP in the Middle East (Internet Arab World, 2000), subsidiary, then EIM will be seeking innovation in a nomination as Middle East IT Company of the Year more aggressive customer-centered approach. (PC Magazine Middle East, 2000) and Best Regional “Etisalat will soon embark on the next phase of the ISP (Middle East Information Technology Awards, corporation’s development including adopting a new Datamatix, 2002). style of conducting business, marketing innovation and The best recognition, however, comes in the cutting-edge customer service. The focus will be on the number of subscribers to its various services, although customer – the engine of our future growth,” Kharbash this statement will surely be contested by some quarters was quoted as saying by AMEInfo website. since EIM’s subscriber base comes wholly by default. “We will leverage our technology heritage and first- Indeed, what merits does EIM wield to win the class human capital to be the brand of choice for our recognitions it has so far earned? Would lowering customers and drive an ambitious expansion plan to connection charges accelerate broadband adoption reach new markets across the region ... Competition is among consumers in the UAE? Or would the good. Experience around the world shows that open introduction of new services such as e-learning do the markets work to everyone’s advantage. We therefore see deregulation of the telecom market as an opportunity for Etisalat to further strengthen its position,” said EIM Monthly Subscription Charges Kharbash, who is also minister of state for finance and (Corporate Services) industry. Meanwhile, this report takes an in-depth look at Bandwidth Leased DSL ($) ISDN LAN EIM and its services to assist readers to formulate a clear Lines ($) Limited ($) Unlimited ($) view about the company, as well as help them 64K 136 (plus 817 understand the future directions EIM will likely take. hourly EIM has covered much ground in its four-year charges of history. Providing Internet access to the third biggest $1.6) economy in the whole of the Arab world is no small feat 512K 2,399 244 and EIM was established to tackle that challenge in 1M 3,866 353 2000, five years after Etisalat initially introduced public 2M 6,412 543 Internet access in the country. Source: EIM Website

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EIM Milestones Year Milestones and Services Launched 1995 - Internet Dial Up launched - Dedicated Circuits limited to 64 and 128 Kbps 1996 - ISDN LAN Connect - Web Hosting 1997 - Expansion of Dedicated Circuits up to 2Mb - Arab News Group 1998 - International Dial In to Emirates Internet 2 Mbps - Dial n Surf - Net@ds 1999 - Internet Roaming 2000 - Emirates Internet & Multimedia formed - Internet Online Registration service launched - Arabvista – the most powerful bilingual Search Engine in the Middle East – launched - EIM wins IAW Editor’s Choice Award for Best ISP in the Middle East - Internet Public Access Kiosks launched - Al Shamil high-speed ADSL Internet service launched - BusinessOne launched - Arabvista voted as the most popular search engine in the Arab World in a survey conducted by Abu Dhabi Television. It also wins DIT Award of Excellence for Arabic Internet Application and Service of the Year - EIM nominated as Middle East IT Company of the Year along with Compaq and Oracle 2001 - AlBahhar.com, the Arab World’s most comprehensive portal launched - Mplayer-Arabia.com, Middle East’s premier game vortal launched - AlefonKids.com - an interactive learning and knowledge site for children launched 2002 - EIM gains ISO9001:2000 certification - EIM wins the Best Regional ISP in the Middle East Information Technology Awards - Slash in Dial up and User ID change prices - ISP site launched - Albahhar.com launched - EIM and eBayanat - Slash in Dedicated access prices - New gaming website launched - New shared web hosting service launched - New web mail interface launched - Extra mail and storage packages - Internet over ATM (interim solution) launched - Shopping and career channel launched on Al Bahhar.com 2003 - Al Shamil Cable over HFC launched - Al Shamil 1 & 2MB launched - Wireless Hotspot - Subscription model launched - New Business One packages launched - Learn Online launched - Mapping and internal directory launched on the Internet Yellow Pages

Source: EIM

76 Madar Research Group Emirates Internet & Multimedia - Case Study

Growth in Internet Provision Services and Subscribers, 1995-2003 Service 1995 1996 1997 1998 1999 2000 2001 2002 2003 Dial Up 2,503 9,669 26,703 66,547 126,949 209,548 256,236 290,513 317,202 Annual Growth 286% 176% 149% 91% 65% 22% 13% 9% ISDN LAN - - - 211 367 584 620 455 302 Annual Growth 74% 59% 6% -27% -34% Leased Lines 10 24 130 70 128 291 427 766 1,219 Annual Growth 140% 442% -46% 83% 127% 47% 79% 59% ADSL - Corporate - - - - - 48 946 2,740 5,447 Annual Growth 1871% 190% 99% ADSL - Home - - - - - 1,389 7,754 16,177 24,880 Annual Growth 458% 109% 54%

Source: EIM job? Would relaxation of policies Twenty-five (25) percent of this backhaul capacity, promote growth in the use of ICT in the country? Is according to EIM, is left idle for backup purposes, competition necessary to improve services? which allows the redirection of traffic in cases of natural or man-made disasters. This idle capacity makes Internet Subscribers and Users possible the accommodation of burst traffic in case of Data released recently by EIM shows that the number the occurrence of special events. It also provides of corporate DSL subscribers in 2003 has grown 99 sufficient time for EIM to respond to natural traffic percent compared to 2002, while individual or home growth with new expansion plans, as expansion projects DSL users have grown by 54 percent during the same can take up to three months to implement. year. The combined subscriber base for home and EIM’s massive bandwidth capacity underlies a wide corporate DSL connections, at 30,327, however, is still range of Internet access services, whether for corporate less than 10 percent of the dial-up subscriber base, or home use. which reached 317, 202 as of end 2003. The dial-up Internet service segment, however, grew only nine Corporate Services percent last year. These cover high-speed Internet service provision, from If the number of subscriptions is translated into Leased Lines to Corporate DSL and ISDN-LAN users, the result would be 1.25 million Internet users, at services, as detailed below. a penetration rate of 31.25 percent as of end 2003, which is the highest in the Arab world and speaks well Leased Lines of EIM’s success as far as providing Internet access to A total of 1,219 businesses have a leased line the public is concerned. subscription with EIM as of end 2003, which was 59 percent higher when compared to the total number of EIM’s War Chest subscribers to this service in 2002. Leased line speeds The data communications backbone that supports scale from 128Kbps up to 2Mbps, and monthly charges EIM’s services – dial-up and broadband Internet range from $790 to $6,400, with deep discounts connection, web hosting, call center and others – (around 15 percent) offered to the government and includes 11 STM-1 connections (155Mbps each) from educational sectors. two cable operators, FLAG and SEA-ME-WE 3. The A 1-Mbps Internet leased line connection with EIM routes for these cables are diversified for redundancy, costs around $3,800 per month, which is $200 more with each of the two cable operators going in both the than the average monthly fee charged by Kuwait ISPs eastern and western directions, resulting in four for the same bandwidth. ISPs in Kuwait hold the international routes. distinction of charging the lowest monthly fees for

Madar Research Group 77 Dubai Knowledge Economy 2003-2008 Vol II

Leased Lines Subscriber Growth (1995-2003) Corporate DSL Subscriber Growth (2000-2003)

1400 6000 1219 5,447

1200 5000

1000 4000 800 766 3000 2,740 600 427 2000 400 291 Number of Subscribers Number of Subscribers 1000 946 200 130 128 10 24 70 48 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2000 2001 2002 2003 Year

Source: EIM Source: EIM

leased lines in the Gulf Cooperation Council (Madar Corporate DSL Research Journal, September 2003). Offered to the public under the brand name Benefits inherent to a leased line connection include BusinessOne, digital subscriber line (DSL) services unmetered access that is especially cost-effective for became available in the UAE in 2000. Small and large user groups whose traffic patterns can grow medium businesses (SMBs) greatly benefit from a DSL unchecked or uncontrolled; static IP addressing and connection for two reasons: the speeds of connection routing, which permits the hosting of customer (384K, 512K, 1-Mbps and 2-Mbps) are significantly applications allowing them to extend their business higher compared to dial-up, and volume-metered access processes (CRM, ERP, VPNs) to the Internet; and fail- makes “aggressive” price points possible. A DSL over configurations for customers with mission critical subscription with EIM comes bundled with virtual e- requirements. mail hosting services with mailboxes ranging from 10 to The last benefit is achieved by a public ATM 40 depending on the package under consideration, with network, which permits the setup of backup circuits to a total quota storage from 50MB to 200MB. respond to unplanned outages in the customers’ access There were a total of 5,447 DSL corporate links. subscribers in the UAE as of end 2003, which translates EIM’s Internet leased lines are available via copper, to about 81,700 users. over fiber, and over very small aperture terminals (VSAT). Leased line connections via copper are offered ISDN LAN by EIM using High bit-rate Digital Subscriber Line There were only 302 ISDN LAN subscribers in the (HDSL) for locations that are proximal to central office UAE as of end 2003, down from 455 in 2002 and 620 buildings with HDSL modem racks (distance limitation in 2001. The availability of DSL services explains the of HDSL is 9 kilometers with line repeaters). Those narrowing subscriber base to a big extent. Indeed while beyond the 9-km HDSL range or those requiring an ISDN LAN Connect subscription is a feasible option scalability beyond the 2-Mbps limit of HDSL could get for businesses that need full Internet access for their their leased lines over a fiber optic network using LANs but are not ready for full dedicated connection, redundant SDH (synchronous digital hierarchy) rings. the availability of other options will make this form of Alternatively companies with remote operations, Internet connection less compelling in the future. such as oil rigs in the sea or construction sites deep in the desert may opt for leased lines over VSAT, especially Consumer Services because a wired connectivity over such a geographic EIM’s home user services include dial-up and DSL scenario is likely to be cost prohibitive. connections in various packages, as follows.

78 Madar Research Group Emirates Internet & Multimedia - Case Study

that tie in with the total volume of download and ISDN LAN Subscriber Growth (1998-2003) upload, which costs $2.7 per 250 kilobytes.

700 Al Shamil (DSL, Cable and Wireless) 620 600 There were 24,880 Al Shamil DSL subscribers in 2003,

584 500 which means total number of home DSL users reached 455 about 77,120 last year. This represents an increase of 54 400 percent compared to the number of 2002 subscribers. 302 300 367 Madar Research believes that the Al Shamil services will 200 continue to experience rapid growth in the next few 211 Number of Subscribers 100 years primarily due to EIM’s efforts to bring down connection costs. 0 19981999 2000 2001 2002 2003 The company has in fact introduced a new entry- Year level Al Shamil DSL package, which offers maximum Source: EIM speed of 256Kbps, at $51 per month. The previous entry-level package was at 384Kbps, which has since Wireless Internet been upgraded to 512Kbps at the same monthly fee of EIM’s iZone refers to the wireless broadband Internet $68. Hence, all subscribers to the 384Kbps package access service which it provides to institutions operating have been automatically upgraded to 512K as of June in high-traffic areas such as cafes, airport, hotels and this year. Monthly charges for the 1Mbps and 2Mbps exhibition halls. These geographic locations are packages have also been decreased by $27 and $82, commonly called “hotspots”. respectively, from their previous monthly fees of $150 Designed for nomadic Internet users or those who and $259. are always “on the go” EIM’s wireless service utilizes the A comparative study conducted by Madar Research 802.11b standard and offers access speeds of up to last year, when the entry level DSL connection offered 11Mbps depending on the user’s proximity to the by EIM still costs $68 per month, showed that EIM’s wireless access point. DSL fees were the lowest in the GCC. The reduction of All EIM dial-up and DSL subscribers have fees made halfway this year further reinforces this fact. automatic access to the iZone service. Users pay Meanwhile, the Al Shamil Cable service is a clone of “log-in charges” of $2.7 for the first log-in in any its EIM’s Al Shamil DSL service from the perspective of specific monthly billing cycle, plus usage charges functionality and perceived customer value. The service

Home DSL Monthly Subscription Home DSL Subscriber Growth (entry level speed) (2000-2003)

200 30,000 180 175 24,880 160 25,000

140 133 20,000 120 16,177 100 15,000

US$ 82 80 80

60 51 10,000 US Average = 40$ US Average = 40$ Number of Subscribers 40 7,754 5,000 20 1,389 0 0 UAE Bahrain Qatar Kuwait KSA 2000 2001 2002 2003 Year Country

Source: Madar Research Source: EIM

Madar Research Group 79 Dubai Knowledge Economy 2003-2008 Vol II

Al Mawrood Service Charges Dial-Up Subscriber Growth (1995-2003) Number of PCs Number of Flat Monthly Charges 350,000 ADSL Lines per PC (US$) 300,000 3 to 9 1 136 250,000 10 to 19 1 122

200,000 20 to 39 2 109 40 and above 3 95 150,000 Data source: EIM 100,000 Number of Subscribtion 50,000 learning maetrail, specialized web portals and Al 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 Mawrood, Year

Source: EIM Al Mawrood This option suits business entities wanting to offer is targeted for residential customers who are connected Internet access to the public but may not be willing or or covered by the HFC (hybrid fiber coaxial) network. ready to acquire a leased line from EIM. Al Mawrood Primarily the coverage is in Abu Dhabi and Dubai rides on EIM’s DSL infrastructure, with monthly charges emirates (subject to availability) where the HFC tied up with the number of computers that the business network currently passes through approximately decides to install. As the number of PCs increases the 150,000 homes in both emirates. number of monthly charges per PC decreases (see the Lastly the Al Shamil Wireless services, offered by table entitled “Al Mawrood Service Charges”). EIM at the same price points as the Al Shamil DSL packages, are now available for residential customers Web Hosting who are covered by the Multimedia Wireless System Launched in 1998, EIM’s web hosting services have Access Technology network. attracted 7,000 companies and individuals by end 2003, registering a growth of 10 percent from the Basic Dial-up (Analog and ISDN) previous year. EIM offers four packages for Web There were 317,202 individuals subscribing to EIM’s hosting beginning with a starter package and on to an basic dial-up Internet service as of end 2003. Dial-up ultra package, especially suited for those with more subscribers registered a modest growth of nine complex requirements. percent compared to 2002, and the growth is Depending on the package, the disk space and expected to slow a bit further in succeeding years, if data transfer capacities offered by EIM scale from one considers the historical data available: percentage 20MB to 500MB, on the lower range, and from growth in 2000 was 65 percent, 22 percent in 2001 600MB to 1500MB, on the higher range. EIM and 13 percent in 2002. further supports all the major Web technologies such EIM has been charging users $5.5 per month for as HTML, WML, XML; FrontPage extensions; Pre- basic dial-up subscription, plus an hourly charge of Written CGIs; FTP access; PHP; Java and others. It $0.50 on peak hours or $0.27 on off peak. The same hourly charges apply to those who choose to use an EIM Web Hosting Packages ISDN line and ISDN line adapter, with the additional option of enjoying a faster access speed of 64kbps to Package Monthly fees ($) Setup Fees ($) 128kbps. Starter 20 20 Economy 35 20 Other Services Advanced 124 41 EIM offers other ISP and Internet related services to both Ultra 148 41 corporates and consumers, such as web hosting, e- Data Source: EIM website

80 Madar Research Group Emirates Internet & Multimedia - Case Study also provides weekly tape backup for all packages. These courses cover a wide range of topics that largely EIM utilizes the dual-location Etisalat Data Center focus on desktop computing, information technology (eDC), which ensures customers that their websites are and business and professional development. hosted in a highly secure environment. The eDC has a Most course contents was developed in partnership direct link to the Internet through multi and fully with the Middle East office of Element K (formerly Ziff redundant STM-1 connections and utilizes firewall Davis Education) and it also carries the various systems to protect all its servers. management courses developed by the Harvard Business School Publishing. IT-related programs EIM Email Service include the most popular and sought-after courses in EIM hosts well over 400,000 email accounts the field from vendors such as Cisco, , Oracle, comprising dial-up subscribers and broadband Adobe, Sun, Novell and Macromedia. EIM also offers subscribers (business and individual DSL, leased training necessary to obtain an International Computer lines) and those that are bundled with its Web Driving License (ICDL). hosting services. It also offers “virtual email hosting” Business and professional development programs services for corporate customers, which is a feasible include the classic courses offered by Element K such as alternative for businesses that prefer to outsource high performance management, managing crisis and their email application while using their own financial accounting, as well as the Harvard Business domain name (not EIM’s). Mentor series that spans the whole gamut of business According to an EIM document, corporate users management topics: budgeting, negotiating, project can reduce their in-house hosted email cost by 75 management, building a business plan, hiring, percent with the EIM Mail Service. EIM estimates delegating, coaching, etc. that total cost of ownership for a mailbox with anti- LearnOnline.ae provides interactive libraries in both virus and firewall protection when hosted in-house Arabic and English and a variety of learning methods could reach $10 per month, while it only charges a that use extensive audio and visual technologies. quarter of that amount for one email account with According to EIM, annual subscription ranges from 5MB space and anti-virus protection. $26 to $163 per series, depending on the type of courses being offered. A helpful feature of the LearnOnline Portals service is the Learning Management System (LMS) To sustain user interest for regionally and culturally KnowledgeHub, which tracks and assesses users’ relevant Internet content, which EIM expects to boost progress online throughout the courses and bookmarks demand for Internet services, a series of portals or topics and useful links. “information gateways” have been launched by EIM in Initially only EIM subscribers will be able to the last three years. These range from a children’s purchase courses from the site using their Internet learning resource site (Alefon.com) to online yellow accounts, but plans are afoot to allow non-subscribers to pages (albahhar.com) which include a shopping and purchase courses online using a secure credit card sports channel. There are no data available, however, to payment service. conclude if the said portals have generated measurable Other future plans for the service include the launch demand that leads users not only to acquire a basic dial- of several popular applications such as TV-based video up connection but to upgrade from an existing dial-up on demand, online travel, business news and financial to a broadband connection. information center, Internet kiosks, Internet executive Hence, the need to create serious, relevant content workstations, Web design centers, online games and that users cannot ignore: online learning and entertainment, and Internet home banking. certification. Call Center E-learning EIM’s interactive voice response (IVR) services received EIM offers about eight hundred (800) courses on a a total of 1,827,055 calls for the year 2003, while its dedicated e-learning website (www.LearnOnline.ae). customer service representatives received 1,232,962

Madar Research Group 81 Dubai Knowledge Economy 2003-2008 Vol II

calls, each averaging three to four minutes, with less option other than the incumbent provider could have than a minute average waiting time per call. stunted the quality of customer support services. A 24/7 operation, very un-typical of Middle Eastern Meaning, more value could have been generated out of businesses, the EIM contact center is manned by highly the consumers’ money has there been a competing ISP. trained professionals who address a slew of customer Except for leased lines, research studies conducted issues including technical queries, setup and by Madar Research last year, however, reveal that EIM configuration, billing information and clarifications charges the lowest fees and offers the most complete and disputes logging, network, connectivity and Internet access services compared to any ISP in the browsing problems. GCC, including in those states that have a semi- There has not been any study carried out to assess competitive ISP sector. the level of customer satisfaction as far as the EIM As for the free market advocates, a recent decree contact center is concerned, in the absence of which promulgated by the UAE government, which effectively it is impossible to evaluate the level of its ends Etisalat’s monopoly status, is the first concrete step performance. If, however, the length of waiting time indicating that market liberalization is indeed starting and call are valid in themselves to determine a to take place in the UAE’s telecom services industry. contact center’s efficiency, then EIM is definitely on Other questions that remain to be answered are how the right track. soon the new players will set up, what kind of services they will offer the public, and how will Etisalat Conclusion eventually respond to such a challenge? With the foregoing discussions providing the backdrop Another point of contention is the level of on the scale, quality and pricing of EIM’s services, it censorship that is observed by EIM using its proxy may be important to ask whether these services would servers. The implementation of such has been a double- have been rolled out much faster and at lower price edged sword: it has been pretty successful in protecting points had there been a competitive environment in the users from inappropriate and “harmful” content, but first place. has also – in various ways – limited access to a number Few would venture to officially offer their insights of sites that are potentially helpful in research and although there are Internet sites and message boards education. that basically respond in the affirmative. The popular This concern, however, is more administrative and view holds that if there was a competing ISP, the price legislative than technical in nature, and will eventually of Internet access services could have been lower than it be treated by policy makers through more debates and is now. Likewise the mere fact that users do not have an thoughtful consideration.

82 Madar Research Group Out in October 2004

Dubai Knowledge Economy 2003-2008 Volume III Dubai Knowledge Economy 2003-2008 – Volume III (To be published in October 2004)

Table of Content (Subject to Change)

❖ Dubai Cluster-Based Economy; Development and Analysis ● Dubai Government Approach to Cluster Development ● Private Sector Influences ● Dubai Clusters Growth

❖ Dubai Knowledge Economy Assessment ● Education Systems ■ E-Learning Delivery Solutions ■ New Roles of Universities and Research Firms ● Innovation Systems ● Information Society Infrastructure ● Economic and Institutional Framework

❖ ICT in Health Sector ● Overview of Dubai Health Sector ● ICT Infrastructure ● Telemedicine ● Dubai Health Care City (DHCC)

❖ Real Estate & Construction Sector ● Overview of Dubai Real Estate & Construction Sector ● Technology Used by Real Estate & Construction Sector ● ICT Use (Hardware, Software, IT Services, Data & Voice Networks)

❖ Software in Government & Semi-Government Establishments ● System Software (OS, NOS, Database, etc) ● Major Applications (Document Management, Content Management, Security, ERP, CRM, etc) ● In-house Software Development

❖ Dubai Municipality ● Overview of Dubai Municipality ● ICT Infrastructure ● e-Government

❖ Key ICT Statistics and Forecasts for Dubai, 2003-2008 ● Macroeconomic Indicators ● ICT Use indicators ● Competitiveness Indicators

84 Madar Research Group

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