Middle Eastern Digital Media, Broadband and Internet Markets

A BUDDECOMM REPORT

MIDDLE EASTERN

DIGITAL MEDIA, BROADBAND AND INTERNET MARKETS

9th Edition

Researcher: Tine Lewis

Copyright 2010 Published in August 2010 Paul Budde Communication Pty Ltd Tel 02 4998 8144 – Int: 61 2 4998 8144 5385 George Downes Drive Fax 02 4998 8247 – Int: 61 2 4998 8247 BUCKETTY NSW 2250 Email: [email protected] AUSTRALIA Website: www.budde.com.au Middle Eastern Digital Media, Broadband and Internet Markets

Disclaimer:

The r eader a ccepts a ll r isks a nd responsibility f or l osses, da mages, costs a nd other c onsequences resulting directly o r i ndirectly f rom u sing this report or from reliance on any information, opinions, estimates a nd forecasts c ontained herein. T he i nformation c ontained herein ha s been obtained f rom sources believed to be reliable. Paul Budde Communication Pty Ltd disclaims all warranties as to the accuracy, co mpleteness o r a dequacy of s uch i nformation an d s hall have n o l iability f or er rors, omissions or inadequacies in the information, opinions, estimates and forecasts contained herein. The materials in this report are for informational purposes only. Prior to making any investment decision, it is recommended that the reader consult directly with a qualified investment advisor.

Forecasts:

The following provides some background to our scenario forecasting methodology: • This report i ncludes w hat we t erm s cenario forecasts. B y d escribing l ong-range s cenarios w e identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band. • The projections shown in the tables in this report are based on our own historical information, as well a s o n t elecommunication s ector s tatistics f rom o fficial a nd n on-official, n ational a nd international sources. We assume a possible deviation of 15-20% around this data. • All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

Free Consultancy Service:

Subscribers to our publications are entitled to use our ‘Free-over-the-Phone’ Consultancy Service. You can use it for any question in relation to any of the information in this publication or to other related issues. We will advise you over the phone or provide you with the necessary contacts for your further information.

Internet Website:

Continuously updated information on the reports, described in this report, is available on our Website: www.budde.com.au.

Paul Bu dde Co mmunication P ty L td r eports a re l imited pu blications c ontaining valuable m arket information provided to a select group of customers in response to orders. Our customers acknowledge when ordering that Paul Budde Communication Pty Ltd reports are for our customers’ internal use and not for general publication or disclosure to third parties.

No part o f t his r eport m ay be gi ven, l ent, r esold o r di sclosed t o n on-customers w ithout w ritten permission. Furthermore, no part may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise without the permission of the publisher. For information regarding permission, please write to: Paul Budde Communication Pty Ltd, 5385 George Downes Drive, BUCKETTY NSW 2250, AUSTRALIA.

EXECUTIVE SUMMARY

The broadband market in the Middle East is starting to move Internet a nd b roadband pe netration r ates r emain l ow i n m any c ountries of t he M iddle E ast, a ccess speeds are often relatively slow and tariffs are relatively high compared with other regions in the world but the region is making a strong push towards higher broadband penetration. The young population will be a driver for growth as they grow up with Internet use as the norm. In addition liberalisation and increased competition are producing a greater variety of services and mediums.

While broadband growth has taken off in the small, oil-rich and developed countries of the Gulf, wide income disparities across the Arab Middle East region as a whole are echoed by wide disparities in Internet a nd br oadband pe netration r ates. C omputer p enetration l evels a re ge nerally low. Qa tar, Bahrain and UAE all have high household broadband penetration, particularly amongst nationals. The largest country in the region, Saudi Arabia, has low broadband penetration but it is rising quickly.

ADSL is the prevailing broadband Internet technology in the region. Only in Israel does cable have a significant market share. Services are provided by HOT Cable Systems Media, which is subject to the same broadband universal service obligations as is DSL network operator Bezeq. This has resulted in broadband being available to 99% of all households.

Much i s being pr omised by W iMAX a cross t he M iddle East r egion. I n B ahrain s ervices f rom Z ain Bahrain and Mena Telecom, both with country-wide networks, have rapidly gained over 30% market share. It is also having a significant impact in Saudi Arabia and Jordan.

All t he GC C, Israeli a nd T urkish o perators o ffer HSPA mobile b roadband services. Saudi A rabia’s second mobile operator, Mobily, has claimed a 70% share of the country’s broadband market.

Fibre t o t he Home ( FttH) is l ikely t o r evolutionise t he br oadband market i n t he m ost a dvanced countries. Both Israel and the UAE will have nationwide fibre networks in the next two years.

One of the reasons for slow Internet and broadband subscriber growth in Arab Middle East countries has been a lack of sufficient content in Arabic for users to need a high-speed broadband connection in their daily lives. There has been too much emphasis on hardware and the latest must-have gizmo and not enough on creativity. This is beginning to change with the increasing digital content produced by the f lourishing D irect-to-Home (D TH) satellite T V s ector, i ncluding e ntertainment, e ducational programming, news and sports. At least 60-70% of homes across the Middle East have access to multi- channel T V, m uch of i t free t o ai r D TH satellite. A round 70% of t he 4 00+ ch annels ar e p rivately owned.

A further impetus was gained from the sale of Jordan’s Maktoob to Yahoo. This immediately prompted venture capital funds to take a greater interest in the sector. Advertising provides only a very small revenue f or d igital media companies. The U AE’s ad vertisers al lot a 3.5% s hare of t heir budgets t o online advertising compared to a regional average of 1%.

Market Highlights

Israel Israel has one of the highest household broadband penetration rates in the world. Market competition is fierce, both between ca ble and D SL i nfrastructures a nd between I SPs. C ompetition i s a lso fierce between B ezeq’s s atellite T V s ubsidiary YES a nd c able T V operator HOT. Israel’s v ery h igh broadband penetration r ate pr ovides g reat pot ential f or t riple play a nd digital m edia market developments and competitors are manoeuvring for position.

Bezeq commercially launched an NGN in September 2009. It had 374,000 subscribers connected to the network at end-2009 and 580,000 by early May 2010 (around 25% of Israeli households). Bezeq plans to make t he NG N a vailable t o a pproximately 50% of I sraeli ho useholds by e nd-2010 a nd 9 0% of households by end-2012. The network is ‘fibre to the curb’ and allows for an up to 50MB bandwidth offering.

Jordan Licensed WiMAX operators are beginning to make inroads into the Jordanian broadband market, with over 17% market share of the small broadband market by late 2009.

Jordan i s a n i mportant ba se f or r egional digital media a nd Internet c ompanies a nd s eems to be particularly successful in b reeding v iable s tart-up c ompanies. Whilst Dubai i s h ome t o t he r egional HQs of more established companies, Jordan’s cheaper operational costs, relatively open economy and pool of talent favour younger companies. The best known of these is the Maktoob Group. In August 2009, the Maktob.com portal, with its news, financial information and social networking services, was bought by Yahoo!, at a purchase price variously reported as being between US$75 and US$85 million. Services have been co-branded as ‘Yahoo! Maktoob’.

Saudi Arabia The broadband market has been slow to grow in Saudi Arabia. Penetration rates for both fixed lines and ADSL are very low for the level of development, only partly due to large household sizes. This has provided f ertile gr ound f or t he de velopment of m obile a nd wi reless br oadband s ervices, with alternative operator Mobily claiming to have the busiest HSPA network in the world

Whilst few Middle East media companies are based in Saudi Arabia, most of the larger ones are Saudi owned, including the most watched FTA channel MBC, two out of the three regional satellite pay TV operators, and TV and digital media company Rotana.

UAE Incumbent UAE telco Etisalat and alternative operator du are vying to offer faster broadband packages over a mixture of ADSL, mobile broadband and FttH in a market that already has one of the highest broadband penetration rates in the Middle East.

Etisalat’s FttH project, known as ‘eLite’, is being completed in phases. The first batch of Abu Dhabi subscribers received l ast m ile F ttH acces s i n J anuary 2008. B y e nd-2009 E tisalat c laimed t o ha ve completed 60% of the network. It expected to make Abu Dhabi “the first capital city in the world with 100% fibre deployment” by 2010 and at end-2009 had completed the roll-out for 85% of Abu Dhabi households. Completion of the entire national network is expected by 2011 at a total cost of AED5 billion.

Etisalat is building the network as a commercial decision, to enable its customers “to enjoy multiple high ba ndwidth a pplications s uch a s I PTV a nd online gaming i n a n integrated s ingle i nterface for landline, Internet and television-based services, providing a truly converged digital home experience”.

UAE governments, at both federal and emirate level, have been very interventionist, with programs to encourage computer and Internet use. Government policy has also included encouragement for media, IT and Internet r elated businesses and Dubai h as b ecome a r egional centre for the industry. Around 25% of the region’s large DTH satellite TV industry is headquartered in the UAE.

Tine Lewis August 2010

Data in this report is the latest available at the time of preparation and may not be for the current year.

This Middle East market report covers the digital media, broadband and Internet markets in each of the following countries: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, UAE and Yemen.

TABLE OF CONTENTS Chapter number: on page number:

1. BAHRAIN ...... 1 1.1 Overview of the broadband access market in Bahrain ...... 1 1.1.1 Broadband statistics 1.2 ADSL ...... 3 1.3 Wireless broadband ...... 4 1.3.1 WiMAX 1.3.2 Internet via satellite 1.3.3 WiFi 1.4 VoIP ...... 4 1.5 Digital economy / digital media ...... 5 1.5.1 Services 1.5.1.1 E-government 1.6 Digital broadcasting ...... 5 1.6.1 Satellite TV 1.6.1.1 OSN Orbit Showtime

2. IRAN ...... 6 2.1 Overview of the broadband access market in Iran ...... 6 2.1.1 Censorship 2.1.2 Broadband and Internet statistics 2.1.3 ISP market 2.2 Broadband subscriber forecasts ...... 8 2.3 ADSL ...... 9 2.4 Wireless (fixed) broadband ...... 9 2.4.1 WiMAX 2.4.2 Internet via satellite (Ka band services) 2.5 Digital economy/digital media ...... 9 2.5.1 Overview 2.5.1.1 2009 Presidential elections and follow-up 2.5.2 Services 2.5.2.1 E-government 2.6 Digital broadcasting ...... 10 2.6.1 Overview of broadcasting market 2.6.2 Satellite TV

3. IRAQ ...... 12 3.1 Overview of the broadband access market in Iraq ...... 12 3.1.1 Internet statistics 3.2 Broadband and Internet subscriber forecasts ...... 12 3.3 Wireless broadband ...... 13 3.3.1 Internet via satellite 3.4 Digital economy/digital media ...... 13 3.4.1 Overview

4. ISRAEL ...... 14 4.1 Overview of the broadband access market in Israel ...... 14 4.1.1 Broadband and Internet statistics 4.2 ADSL and cable networks ...... 15 4.3 Israel’s ISP market ...... 16 4.4 Wireless (fixed) broadband ...... 16

4.4.1 WiFi 4.4.2 WiMAX 4.5 Digital Media / Digital Economy ...... 17 4.5.1 Overview 4.5.1.1 Walla! Communications Ltd 4.5.1.2 Nana 4.5.1.3 Answers.com 4.5.2 Digital broadcasting 4.5.2.1 Overview of the broadcasting market 4.5.2.2 Regulatory issues 4.5.2.3 Cable TV 4.5.2.3.1 Cable TV background 4.5.2.4 Satellite TV – Yes TV 4.5.2.5 Digital Terrestrial TV (DTTV) 4.5.2.6 IPTV 4.5.2.7 Video-on-Demand (VoD) 4.5.2.8 High Definition TV (HDTV)

5. JORDAN ...... 22 5.1 Overview of the broadband access market in Jordan ...... 22 5.1.1 Internet and broadband statistics 5.1.2 VoIP and Triple Play 5.2 Broadband subscriber forecasts ...... 23 5.2.1 Scenario 1 – higher growth 5.2.2 Scenario 2 – lower growth 5.3 ISP market ...... 24 5.3.1 Orange Internet 5.3.2 Umniah/Batelco Jordan 5.3.3 Cyberia 5.3.4 TE Data 5.4 ADSL ...... 25 5.5 Wireless (fixed) broadband ...... 25 5.5.1 WiFi 5.5.2 WiMAX 5.6 Digital economy/digital media ...... 26 5.6.1 Overview 5.6.2 Maktoob Group 5.6.3 Jabbar Internet Group 5.6.4 Jeeran 5.6.5 Watwet/TootCorp 5.7 Digital broadcasting ...... 27 5.7.1 Broadcasting market overview 5.7.2 Jordan Media City (JMC) 5.7.3 Jordan Television (JTV) 5.7.4 Rubicon Group 5.8 IPTV ...... 29

6. KUWAIT ...... 30 6.1 Overview of the broadband access market in Kuwait ...... 30 6.1.1 Broadband and Internet statistics

6.2 Broadband subscriber forecasts ...... 31 6.3 ISP market ...... 32 6.3.1 Overview 6.3.2 Qualitynet 6.3.3 Zaji /KEMS

6.3.4 Fast Telecommunications Company 6.3.5 United Networks 6.4 ADSL ...... 32 6.5 Wireless broadband ...... 33 6.5.1 WiMAX 6.5.1.1 Mada Communications 6.5.2 Internet via satellite 6.5.3 Mobile broadband (access) 6.6 VoIP ...... 33 6.7 Digital economy/digital media ...... 34 6.7.1 Overview 6.8 Digital broadcasting ...... 34 6.8.1 Overview of broadcasting market 6.8.2 Orbit Showtime Network (OSN)

7. LEBANON ...... 35 7.1 Overview of the broadband access market in Lebanon ...... 35 7.1.1 Internet and broadband statistics 7.2 Broadband subscriber forecasts ...... 36 7.3 Data service providers ...... 37 7.3.1 Overview 7.3.2 Cable One (Wigo Lebanon) 7.3.3 Cedarcom 7.3.4 GlobalCom Data Services 7.3.5 Pesco Telcom 7.3.6 Sodetel 7.4 ISP market ...... 38 7.4.1 IDM (Netlink) 7.4.2 Cyberia 7.4.3 TerraNet 7.4.4 LYNX/Fiberlink Networks 7.5 ADSL ...... 39 7.6 Cable modems ...... 39 7.7 Wireless broadband ...... 39 7.7.1 Local Multipoint Distribution System (LMDS) 7.7.2 WiFi 7.7.3 WiMAX 7.7.4 iBurst 7.7.5 Internet via satellite (Ku band services) 7.8 VoIP ...... 40 7.9 Triple play ...... 40 7.10 Digital economy/digital media ...... 41 7.10.1 Overview 7.10.2 Woopra 7.11 Digital media ...... 41 7.11.1 Digital broadcasting overview 7.11.2 Broadcasting regulation 7.11.3 Free-to-Air (FTA) and satellite TV 7.11.4 Pay TV 7.11.4.1 World Cup 2006 – the practicalities of illegal cable TV

8. OMAN ...... 43 8.1 Overview of the broadband access market in Oman ...... 43 8.1.1 Internet and broadband statistics

8.2 Broadband subscriber forecasts ...... 45 8.3 ADSL ...... 45 8.4 Wireless broadband ...... 45 8.4.1 WiFi 8.4.2 WiMAX 8.4.3 Mobile broadband Digital economy/digital media ...... 46 8.4.4 Overview 8.4.5 Knowledge Oasis Muscat 8.4.6 Services 8.4.6.1 Telemedicine centre 8.4.6.2 E-learning 8.4.6.3 E-government 8.5 Digital broadcasting ...... 47 8.5.1 Overview of the broadcasting market

9. QATAR ...... 48 9.1 Overview of the broadband access market in Qatar ...... 48 9.1.1 Broadband and Internet statistics 9.2 Broadband forecasts ...... 49 9.2.1 Scenario 1 – higher growth 9.2.2 Scenario 2 – lower growth 9.3 ADSL ...... 50 9.4 FttH ...... 51 9.5 Wireless Broadband ...... 51 9.5.1 WiFi 9.5.2 WiMAX 9.5.3 Mobile broadband 9.6 Triple play ...... 51 9.7 VoIP ...... 51 9.8 Digital economy/digital media ...... 52 9.8.1 E-government 9.8.2 E-health 9.9 Digital broadcasting ...... 52 9.9.1 Overview of the broadcasting market 9.9.2 IPTV 9.9.3 Al Jazeera 9.9.3.1 Al Jazeera on mobile phones 9.9.4 Qatar Cable Vision

10. SAUDI ARABIA ...... 54 10.1 Overview of the broadband access market in Saudi Arabia ...... 54 10.1.1 Censorship 10.1.2 Broadband statistics 10.2 ISP market ...... 55 10.3 ADSL ...... 56 10.4 Broadband powerline (BPL) ...... 56 10.5 Wireless broadband ...... 56 10.5.1 WiFi 10.5.2 WiMAX 10.5.3 Mobile broadband 10.5.4 Internet via satellite 10.6 Digital Economy/Digital media ...... 57 10.6.1 Services

10.6.1.1 E-government 10.6.1.2 E-health 10.6.2 Digital media 10.6.2.1 Overview 10.6.2.2 E-commerce 10.6.2.3 OneCard 10.6.2.4 Social media 10.7 Digital Broadcasting ...... 58 10.7.1 Overview of broadcasting market 10.7.1.1 MBC/Al Arabiya 10.7.2 Satellite-based digital Pay TV 10.7.2.1 ART 10.7.2.2 OSN Orbit Showtime 10.7.2.3 Kingdom Holding Co/Rotana Media Group

11. SYRIA ...... 60 11.1 Overview of the broadband access market in Syria ...... 60 11.1.1 Censorship 11.1.2 Internet and broadband statistics 11.2 Broadband subscriber forecasts ...... 61 11.3 ISP market ...... 62 11.3.1 Major ISPs 11.4 Wireless broadband ...... 62 11.4.1 Mobile broadband 11.5 Digital economy/digital media ...... 62 11.5.1 Overview 11.5.2 Services 11.5.2.1 E-government 11.6 Digital broadcasting ...... 63 11.6.1 Overview of the broadcasting market

12. TURKEY ...... 64 12.1 Overview of the broadband access market in Turkey...... 64 12.1.1 Internet and broadband statistics 12.2 Broadband subscriber forecasts – 2014; 2019 ...... 66 12.2.1 Scenario 1 – higher broadband subscriber growth 12.2.2 Scenario 2 – lower broadband subscriber growth 12.3 ADSL ...... 66 12.4 Cable modems ...... 67 12.5 Fibre-to-the-Home (FttH) networks ...... 67 12.6 Wireless broadband ...... 67 12.6.1 WiFi 12.6.2 Mobile broadband 12.6.3 Mobile broadband (Access) 12.7 Digital Media / Digital Economy ...... 68 12.7.1 Overview 12.7.2 Services 12.7.2.1 E-government 12.7.2.2 E-health 12.7.2.3 E-education 12.7.3 Digital broadcasting 12.7.3.1 Overview of broadcasting market 12.7.3.2 Turkish Radio and Television Corporation (TRT) 12.7.3.3 Broadcasting regulation 12.7.3.4 Digital TV 12.7.3.4.1 Digital Terrestrial TV (DTTV)

12.7.3.4.2 Cable TV 12.7.3.4.3 Satellite-based digital pay TV developments 12.7.3.4.4 Broadband TV (IPTV)

13. UNITED ARAB EMIRATES ...... 72 13.1 Overview of the broadband access market in UAE ...... 72 13.1.1 Censorship and site blocking 13.1.2 Dubai Internet City (DIC) 13.2 Broadband Statistics ...... 72 13.3 Internet access locations ...... 75 13.4 ISP market ...... 75 13.5 VoIP ...... 75 13.6 Fibre to the Home (FttH) ...... 75 13.7 ADSL ...... 75 13.8 Cable modems ...... 76 13.9 Wireless broadband ...... 76 13.9.1 WiFi 13.9.2 WiMAX 13.9.3 Mobile broadband 13.9.4 Internet via satellite 13.9.4.1 Thuraya 13.10 Digital Media / Digital Economy ...... 76 13.10.1 Overview 13.10.2 Services 13.10.2.1 E-Government 13.10.2.2 E-health 13.10.2.3 E-learning 13.10.3 Smart cities/smart communities 13.10.3.1 Overview 13.10.3.2 Masdar City – a smart city using smart infrastructure and smart grids 13.10.4 Digital media 13.10.4.1 Overview 13.10.4.2 Tejari 13.10.4.3 Bayt.com 13.10.5 Digital broadcasting 13.10.5.1 Overview of broadcasting market 13.10.5.2 Media Zones 13.10.5.3 Dubai Media Incorporated (DMI) 13.10.5.4 Arab Media Group 13.10.5.5 Abu Dhabi Media Company 13.10.5.6 Digital TV 13.10.5.6.1 Satellite-based digital pay TV developments 13.10.5.6.2 Cable TV – e-vision 13.10.5.6.3 High Definition TV (HDTV) 13.10.5.6.4 Broadband TV (IPTV)

14. YEMEN ...... 82 14.1 Overview of the broadband access market in Yemen ...... 82 14.1.1 Internet and broadband statistics 14.2 Broadband subscriber forecasts ...... 83 14.3 ADSL ...... 83 14.4 Digital broadcasting overview ...... 84

15. GLOSSARY OF ABBREVIATIONS ...... 85

LIST OF TABLES Table number: on page number: Table 1 – Internet users and penetration estimates in Bahrain − 1995 - 2011 ...... 1 Table 2 – Internet subscribers in Bahrain − 1999 - 2009 ...... 2 Table 3 – Broadband subscribers in Bahrain − 2005 - 2009 ...... 2 Table 4 – Broadband subscribers by access method in Bahrain – 2004 - 2009 ...... 2 Table 5 – Dial-up Internet subscribers in Bahrain − 2005 - 2009 ...... 2 Table 6 – Market share of Internet and broadband by access method in Bahrain – 2004 - 2009 ...... 3 Table 7 – Broadband subscribers by access speed in Bahrain – 2007 - 2009 ...... 3 Table 8 – Household fixed broadband penetration rate in Bahrain – 2007 - 2009 ...... 3 Table 9 – Business broadband subscribers by access method in Bahrain – 2004 - 2008 ...... 3 Table 10 – Broadband monthly ARPU in Bahrain – 2007 - 2008 ...... 3 Table 11 – Internet users and penetration estimates in Iran – 1996 - 2011 ...... 7 Table 12 – Internet subscriber estimates in Iran – 1999 - 2010 ...... 7 Table 13 – ADSL subscribers in Iran – 2000 - 2010 ...... 7 Table 14 – Internet user and subscriber estimates in Iraq – 2001 - 2011 ...... 12 Table 15 – Internet users, penetration and household penetration estimates in Israel – 1997 - 2011 ...... 14 Table 16 – Broadband subscribers, annual change and household penetration in Israel – 2001 - 2009 ...... 14 Table 17 – ADSL and cable networks – subscribers and market share in Israel – 2005 - 2010 ...... 15 Table 18 – Bezeq ADSL subscriber ARPU – 2005 - 2010 ...... 15 Table 19 – ISP market shares in Israel – 2005 - 2009 ...... 16 Table 20 – NetVision broadband subscribers – 2006 - 2009 ...... 16 Table 21 – Walla! Communications revenue and profit – 2005 - 2010 ...... 17 Table 22 – Broadcasting market statistical overview in Israel – 2009 ...... 18 Table 23 – HOT cable TV subscribers – 2007 - 2009 ...... 19 Table 24 – YES revenue and profit – 2007 - 2010 ...... 20 Table 25 – YES satellite TV subscribers, market share and ARPU – 2002 - 2010 ...... 20 Table 26 – Internet users and penetration rate in Jordan – 1995 - 2011 ...... 22 Table 27 – Internet subscribers and penetration rate in Jordan – 1999 - 2009 ...... 22 Table 28 – Internet subscribers by access method in Jordan – 2009 ...... 23 Table 29 – DSL subscribers in Jordan − 2001 - 2009 ...... 25 Table 30 – JRTVC revenue – 2005 - 2007 ...... 28 Table 31 – Internet user and penetration estimates in Kuwait – 1995 - 2011 ...... 30 Table 32 – Internet subscribers in Kuwait − 2003 - 2011 ...... 31 Table 33 – Broadband subscribers in Kuwait − 2001 - 2011 ...... 31 Table 34 – Internet user and penetration estimates in Lebanon – 1995-– 2011 ...... 35 Table 35 – Internet subscribers in Lebanon – 2001 - 2011 ...... 35 Table 36 – ADSL subscribers in Lebanon – 2008 - 2011 ...... 36 Table 37 – Cable modem Internet subscribers in Lebanon – 2002 - 2009 ...... 39 Table 38 – Internet users and penetration estimates in Oman – 1998 - 2011 ...... 43 Table 39 – Fixed-line Internet subscribers in Oman – 2000 - 2010 ...... 44 Table 40 – Internet sector ARPU in Oman – 2005 - 2009 ...... 44 Table 41 – Leased-line subscribers in Oman – 2004 - 2010 ...... 44 Table 42 – ADSL subscribers in Oman – 2005 - 2010 ...... 44 Table 43 – Internet users and penetration estimates in Qatar – 1995 - 2011 ...... 48 Table 44 – Internet subscribers in Qatar − 1999 - 2011 ...... 49 Table 45 – ADSL subscribers in Qatar – 2003 - 2011 ...... 49

Table 46 – Forecast broadband subscribers in Qatar – higher growth scenario – 2011, 2012; 2015 ...... 50 Table 47 – Forecast broadband subscribers in Qatar – lower growth scenario – 2011, 2012; 2015 ...... 50 Table 48 – Qtel triple play subscribers – 2008 - 2010 ...... 51 Table 49 – Internet users and penetration estimates in Qatar – 1995 - 2011 ...... 55 Table 50 – Broadband subscribers and household penetration in Qatar – 2001 - 2009 ...... 55 Table 51 – Mobily mobile broadband subscribers – 2007 - 2010 ...... 56 Table 52 – Internet user and penetration rate estimates in Syria – 1999 - 2011 ...... 60 Table 53 – Internet subscribers and penetration rate in Syria – 1999 - 2009 ...... 61 Table 54 – ADSL subscribers in Syria – 2004 - 2009 ...... 61 Table 55 – Internet user and penetration rate estimates in Turkey – 1998 - 2011 ...... 64 Table 56 – Internet subscribers and penetration rate in Turkey – 2003 - 2009 ...... 65 Table 57 – Broadband subscribers and penetration in Turkey – 2001 - 2009 ...... 65 Table 58 – Broadband subscribers by access technology in Turkey – 2004 - 2009 ...... 65 Table 59 – Broadband market shares in Turkey – 2007 - 2009 ...... 65 Table 60 – Forecast broadband subscribers – higher market growth scenario – 2014; 2019 ...66 Table 61 – Forecast broadband subscribers – lower market growth scenario – 2014; 2019 .....66 Table 62 – Turk Telekom ADSL ARPU and proportion of total fixed-line revenue – 2007 - 2010 ...... 67 Table 63 – Electronic certificate and mobile electronic certificate ownership in Turkey – 2005 - 2009 ...... 68 Table 64 – Audience share by channel in Turkey – 2006 - 2008 ...... 69 Table 65 – Internet user and penetration estimates in UAE – 1995 - 2011 ...... 73 Table 66 – Internet subscribers and penetration in UAE – 2000 - 2011 ...... 73 Table 67 – Internet and broadband subscribers by access method in UAE – 2000 - 2010 ...... 74 Table 68 – Residential and business Internet and broadband subscribers in UAE – 2007 - 2009 ...... 74 Table 69 – Broadband subscribers by operator in UAE – 2000 - 2010 ...... 74 Table 70 – Total Internet revenue and Internet and broadband ARPU in UAE – 2007 - 2009 ...... 74 Table 71 – du IPTV subscribers – 2008 - 2010 ...... 81 Table 72 – Internet user and penetration estimates in Yemen – 1997 - 2011 ...... 82 Table 73 – Internet subscribers in Yemen – 2001 - 2011 ...... 83 Table 74 – ADSL subscribers in Yemen – 2007 - 2011 ...... 83

For a full ov erview o f o ur i nformation on t he M iddle E ast, s ee a t www.budde.com.au, o r o ther BuddeComm reports on the Middle Eastern market: Bahrain Iran Iraq Israel Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Syria Turkey United Arab Emirates Yemen

For a full overview of our vertical and statistical market reports on the Middle East, see: • Middle Eastern Mobile Voice and Operators Market; • Middle Eastern Regulatory, Infrastructure and Fixed-line Market; • Middle East - Telecoms, Internet, Broadband and Mobile Statistics (tables only).

For a full overview of our Technology Library, see our other BuddeComm reports: • Broadband Technologies Handbook; • Digital Media Technologies Handbook - Digital TV, Mobile TV, IPTV, MPEG;

• Internet Technologies Handbook Volume 1 - Infrastructure; • Internet Technologies Handbook Volume 2 - Web Development & Audio-Visual Coding; • Internet Technologies Handbook Volume 3 - IP Techniques; • Internet Technologies Handbook Volume 4 - IPv6; • Internet Technologies Handbook Volume 5 - Routing & Addressing Crisis; • Mobile Communications and Mobile Data Technologies Handbook; • Telecoms Infrastructure Technologies Handbook - Volume 1 - Last Mile; • Telecoms Infrastructure Technologies Handbook - Volume 2 - Long Distance & Data; • Wireless Broadband Technologies Handbook.

1. BAHRAIN

1.1 OVERVIEW OF THE BROADBAND ACCESS MARKET IN BAHRAIN Bahrain has always been at the forefront of Internet penetration in the region but since the introduction of greater c ompetition, a nd t he c onsequent f all i n pr ices, s ubscriber numbers have gr own r apidly. Broadband services are now nearly ubiquitous. WiMAX services have been hugely popular and mobile broadband subscriber numbers also grew quickly initially but have now plateaued.

Bahrain i mplements I nternet f iltering a nd has blocked s ome s ites but the l evel of bl ocking i s l ow compared with many countries in the region. However, the regulatory and technical infrastructure in Bahrain i s s uch t hat m ore e xtensive f iltering c ould be s wiftly i ntroduced, should t he g overnment choose to do so. In March 2002, the Ministry of Information stated that it would ‘take all necessary measures to protect society from websites that are against the general ethics, morals and the principles of Islam and which harm social unity and values’. Enclosed opaque-walled booths in Internet cafes are illegal but the law is frequently flouted.

1.1.1 Broadband statistics

Table 1 – Internet users and penetration estimates in Bahrain − 1995 - 2011 Users Year Penetration (thousand) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Source: BuddeComm based on ITU data)

Note: Users are those accessing the Internet from their school, university, work account as well as from their individual household or business accounts. Subscribers are the number of individual paid Internet access account, eg a work account is just one subscription but can have many users within that one subscription.

A number of trials have taken place, with Bezeq launching a pilot network as long ago as September 2005. 012 Smile.Communications conducted more extensive WiMAX trials in Siderot and a high-tech business centre in Tel Aviv.

4.5 DIGITAL MEDIA / DIGITAL ECONOMY

4.5.1 Overview While Israel is stronger on technology rather than Internet content and services, there have been some very successful companies, including Shopping.com, which was later sold to eBay. In addition to local companies, Google established Hebrew versions of its search engine, Gmail and Google News and set up two research centres in Israel in 2006.

Social ne tworking s ites a nd us er ge nerated c ontent s ites a re very popular. F acebook subscribers reached the million mark in late 2009 (from a population of million). The five most popular sites are Google, Facebook, YouTube and the dominant Israeli portals Walla! Communications and Ynet. In March 2010 Facebook signed a representation and marketing agreement with local portal Nana10 (a joint venture between NetVision and TV Channel 10). Hebrew Wikipedia reached a rticles in January 2010.

4.5.1.1 Walla! Communications Ltd Walla! Communications is a major Israeli Internet portal. Bezeq International owns a share that is over %, having increased its share from % in March 2010 with the purchase of shares previously owned by Haaretz newspapers. Some shares are held in a blind trust.

Walla launched Walla Search in late 2006. Its online retailing site, Walla Shops, had an estimated % of the Israeli online retailing market in 2006. It also operates ‘Walla Buy’, an Israeli version of eBay and launched Jobcity, a jobs classified advertisements service, in 2010.

Table 21 – Walla! Communications revenue and profit – 2005 - 2010 Revenue Net profit Year NIS (million) 2005 2006 2007 2008 2009 2010 (Q1) (Source: BuddeComm based on Bezeq data)

4.5.1.2 Nana Nana is a major Internet portal, launched by NetVision in 1999. During 2007, Channel 10 purchased % of Nana shares held by NetVision 013 Barak and now Nana operates as Nana10 Ltd. The portal offers various c ontent c hannels, i nformation, i ndexes, mail s ervice, f orums, a nd a c hat s ystem. I n addition, the site draws on the content of programs broadcast on Channel 10. Nana10 also includes the e-commerce operations of Nana Shops and has a partnership with the Ticket-Net website. In 2010 it set up Nanajobs.

Note: Internet users are those accessing the Internet from school, university, or work, as well as from individual household or business accounts. Subscribers are individuals who pay for Internet access accounts. For example, a work account is just one subscription but can have many users within that one subscription.

Table 44 – Internet subscribers in Qatar − 1999 - 2011 Subscribers Year (thousand) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Mar) 2010 (e) 2011 (e) (Source: BuddeComm based on ITU, Qtel and ictQATAR data) Note: This data does not include mobile broadband subscribers.

Table 45 – ADSL subscribers in Qatar – 2003 - 2011 Subscribers Year (thousand) 2003 2004 2005 2006 2007 2008 2009 2010 (Mar) 2010 (e) 2011 (e) (Source: BuddeComm based on Qtel data) ictQATAR’s 2008 survey found that % of all larger businesses in Qatar had Internet connections but only % of ‘micro’ businesses, giving a overall penetration of %. The survey found that % of all businesses were still using dial-up connections, most of them micro businesses. ADSL is by far the most common means of broadband connection for both households and businesses but around % of large businesses have a l eased line connection. The School Executive Survey of 2008 found that just under % of schools had a broadband connection.

9.2 BROADBAND FORECASTS Qatar’s household broadband penetration is already very high although broadband subscriber numbers are only around half fixed-line subscriber numbers. Consequently there is room for some increase. Two big factors likely to influence trends are mobile broadband, with impact likely in the next two years, and t he proposed F ttH NBN, which will ha ve a l onger-term i mpact. A DSL s ubscriber gr owth is expected to be low.

10.6.2.4 Social media Social media s ites a re po pular, w ith F acebook r eported a s ha ving million s ubscribers i n S audi Arabia i n F ebruary 2010. Co mpetitor N etlog’s Arabic v ersion i s a lso popular, c laiming m illion subscribers in June 2010.

A ‘ clean’ a lternative t o YouTube was l aunched i n A ugust 2 009. N aqaTube ( Naqa means ‘ pure in Arabic) i s a c ollection of c lean a nd e dited c lips from YouTube. T he s ite c ensors videos deemed negative t o t he g overnment, s cholars o r c itizens i n g eneral. I mages o f w omen an d m usic ar e al so banned.

10.7 DIGITAL BROADCASTING

10.7.1 Overview of broadcasting market Television i n the M iddle E ast i s generally received b y D irect-to-Home ( DTH) s atellite. T he g reat majority of households in Saudi Arabia have satellite TV reception, much of it free-to-air (FTA) – Arab Advisors reported penetration at nearly % in January 2007. In addition, illegal decoders to receive and decrypt the signals from Pay TV channels are common. Terrestrial TV is still watched but has a smaller market. Arab Advisors reported around % of Saudi Arabian households watched terrestrial TV in early 2007.

The state Broadcasting Service of the Kingdom of Saudi Arabia (BSKSA), broadcasting as Saudi TV, is responsible for broadcasting and is directly controlled by the Ministry of Information. There are four main c hannels, S TV1, S TV2, a s ports c hannel a nd t he Al-Akhbariya a ll-news b usiness ch annel. I n addition five new channels were launched in December 2009, including two religious channels.

As the footprint of satellites in the area covers the entire Arab region, much TV broadcasting in the Middle E ast is p an-regional i n a vailability, ownership a nd content pr oduction. M iddle East Broadcasting Centre (MBC) launched from London in 1991 as the first independent Arab satellite TV station a nd c ompletely c hanged the M iddle E ast T V market. M BC w as f ollowed t wo y ears l ater b y Arab Radio and Television (ART). ART entered the multi-channel pay-TV market in the mid-1990s. MBC, in contrast, remained FTA.

There a re n ow h undreds of F TA c hannels av ailable b y s atellite ac ross t he M iddle E ast. A gain according to Arab Advisors, MBC1 is the most watched TV channel, followed by MBC2, Al Arabiya and Al Jazeera. Saudi companies and individuals own or partly own several of the biggest players in the regional satellite TV industry. In mid-2009 nearly % of TV channels had their headquarters in Saudi Arabia. Satellite channels based in Saudi Arabia are required to obtain licences.

10.7.1.1 MBC/Al Arabiya MBC is privately owned and operated by a group of businessmen and shareholders, including Saudi Arabian chairman and CEO Sheikh Waleed Bin Ibrahim Al Brahim. It is based in Dubai Media Centre, having moved from London in 2001. In February 2003, MBC launched a 24-hour news channel called al-Arabiya as a competitor to Qatar-based al-Jazeera. Al Arabiya is reported to be financed by Saudi, Kuwaiti and Lebanese investors and is also based in Dubai Media Centre.

10.7.2 Satellite-based digital Pay TV Two m ain P ay T V o perators, ART (with distribution h andled b y i ts s ister c ompany, A rab Digital Distribution – ADD) a nd OSN S howtime O rbit, share the M iddle E ast market b ut t he i ncreasing availability and quality of FTA satellite channels has led to them cutting prices and expanding offerings in a bid to maintain a differentiated service. In addition their market is further squeezed by the signal piracy rife across the Middle East. The January 2007 survey by Arab Advisors Group indicated that some % of urban households subscribe to Pay TV.

The ANKABUT network is funded jointly by the TRA’s ICT Fund and Khalifa University of Science, Technology a nd R esearch. I n m id-2010, p ublic universities a nd further e ducation establishments were taking part in a pilot phase.

13.10.3 Smart cities/smart communities

13.10.3.1 Overview There are numerous examples of smart infrastructure in the UAE, with the most ambitious being Abu Dhabi’s Masdar City.

Dubai h as i mplemented a green b uildings i nitiative u nder which a ll r esidential a nd c ommercial buildings must be designed and constructed to strict environmental standards. Apartments and offices are being built with IP-based smart meters installed. When tenants pay for their own electricity rather than as a charge as part of rental costs, it has been found that overall consumption drops %-%.

13.10.3.2 Masdar City – a smart city using smart infrastructure and smart grids Masdar C ity i s b ased i n A bu D habi an d ai ms to b e t he w orld’s f irst zer o car bon, zer o w aste ci ty powered entirely b y r enewable en ergy sources. I t is part of Abu Dhabi’s Masdar Initiative, a multi- faceted investment in the development and commercialisation of innovative technologies in renewable and sustainable energies as well as sustainable design. Masdar, also known as the Abu Dhabi Future Energy C o, is a w holly ow ned s ubsidiary of government-owned investment firm Mubadala Development Company.

The project was launched in April 2006 and construction began in January 2008. Abu Dhabi announced it would invest US$ billion in Masdar, the largest single government investment of its kind. One key objective of Masdar was to position Abu Dhabi as a world-class research and development hub for new energy t echnologies, a ssisting e conomic di versification a nd t he development of k nowledge-based industries.

Masdar C ity w as s elected t o h ouse t he s ecretariat o f t he I nternational R enewable Energy A gency (IRENA), the first time an international organisation had chosen a Middle East city for its headquarters.

The first stage is centred on the Masdar Institute of Science and Technology (MIST), which opened with its inaugural intake of graduate students commencing a two-year Master’s program in September 2009. Powering t he t emporary s ite a dministration facilities, t he ongoing c onstruction a ctivities o f Madar City and the Masdar Institute, is a 10MW solar plant, inaugurated in May 2009. Phase one of the Masdar City construction is due for completion in 2013 and was reported in January 2010 as being on track.

Further development was planned over six stages. The city was originally planned to be completed by 2016 but this wa s put ba ck a nd more recent projections a nticipate a c ritical mass o f residents a nd businesses by 2020. A smart grid is integral to the project’s energy supply and demand co-ordination and management. The electricity distribution network consists of a series of semi-independent grids (micro-grids) that align with the phases of development. Its success requires extensive use of advanced metering infrastructure.

13.10.4 Digital media

13.10.4.1 Overview The UAE leads the region in digital media development. It was reported in early 2010 that more than % of the population was using social networking tools. By May 2010 it was reported that % of the population w as registered o n Facebook, around million r esidents. Ne tlog is a lso p opular in t he

COW Call On Wheels DigiTAG Digital Terrestrial TV Action Group CPAN Customer Premises Area Network DITARD Department of I ndustry, T echnology a nd CPE Customer Premises Equipment Regional Development CpHC Cost per Home Connected DLD Domestic Long-Distance CpHP Cost per Home Passed DMF Decision Making Framework CPP Caller Pays Paging DMO Data Mode of Operation CPP Calling Party Pays DMT Discrete Multi-Tone CPRM Content Protection for Recordable Media DMV Digi-Media Vision CPS Carrier PreSelection DNS Domain Name System CPU Central Processing Unit DNSO Domain Name Supporting Organisation CRC Cooperative Research Centre DNSP Distribution Network Service Provider CRC Cyclic Redundancy Check DOC Department of Communications CRCT Canadian R adio-television an d T elecommuni- DOCSIS Data Ov er C able Sy stem Interface Sp ectrum cations Committee Standard CRM Customer Relationship Management DPD Digital Package Delivery CRS Computer Reservation Systems DPE Distributed Processing Environment CS-1 Capability Set 1 DPL Digital Power Line CSA Callpath Services Architecture DPNSS Digital Private Network Signalling System CSD Circuit Switched Data DPSK Differential Phase Shift Keying CSG Customer Service Guarantee DQDB Distributed Queued Dual Bus CSMA/CD Carrier Sen se Multiple Acces s / DRAC Digital Radio Advisory Committee (Australia) Collision Detection DRB Digital Radio Broadcasting CSO Community Service Obligations DRCS Digital Radio Concentrator System CSP Carrier Service Provider DRM Digital Rights Management CSS Cascading Style Sheets DRMASS Digital R adio M ultiple Acces s Su bscriber CST Computer Supported Telephony System CSTA Computer Supported Telecommunications DSB Digital Sound Broadcasting Applications DS-CDMA Direct Sequence CDMA CSU Channel Services Unit DSI Digital Speech Interpolation CT Cordless Telephone DSL Digital Subscriber Line CTA Card Technology Australia DSLAM Digital Subscriber Line Access Multiplexer CTC Scheme Commercial T elevision C onversion DSM Demand Side Management Scheme DSM-CC Digital Storage Media Command and Control CTI Computer Telephony Integration DSP Data Service Provider CTIA Cellular T elecommunications I ndustry DSP Digital Signal Processing Association (USA) DSRR Digital Short Radio Range CTS Cable Television Services DSSS Direct Sequence Spread Spectrum CTs Computer Tomograph DSU Data Services Unit CTS Cordless Telecommunications Services DS-UWB Direct Sequence Ultra-Wideband CTV Connect Television DSVD Digital Simultaneous Voice and Data CTW Chong Thai Wireless DTH Direct-to-Home CUG Closed User Group DTMF Dual Tone Modulation Frequency CWDM Coarse Wave Division Multiplexing DTT Digital Terrestrial Transmission CWIX Cable & Wireless Internet Exchange DTT Digital Terrestrial Television Broadcasting CYTA Cyprus Telecommunications Authority DTTV Digital Terrestrial TV DAB Digital Audio Broadcasting DTV Digital TV DACS Digital Access Communication Systems DVB Digital Video Broadcasting DAMA Demand Assigned Multiple Access DVB-C Cable DAMPS Digital Advanced Mobile Phone Service DVB-H Digital Video Broadcasting-Handheld DARC Data Radio Channel DVB-RCS Return Channel Satellite DART Digital Audio Radio Transfer DVB-S Satellite DASS2 Digital Access Signalling Services 2 DVB-T Terrestrial DAVIC Digital Audio Visual Council DVC Digital Video Compression DAVID Digital Audio/Video Interactive Decoder DVCC Digital Verification Colour Code DBA Digital Broadcasting Australia DVD Digital Video Disc DBS Direct Broadcasting Services DVI Digital Video Interactive DBS Digital Broadcast Satellite DVR Digital Video Recorder DCCH Digital Control Channels DVSP Domestic Voice Service Provider DCF Discounted Cash Flow DWDM Dense Wavelength Division Multiplexing DCITA Department o f Communications, Information DWMT Discrete Wavelet Multi-Tone Technology and the Arts EAC East African Cooperation DCN Data Communications Network EAP Extendable Authentication Protocol DCP Digital Channel Plan EBES European Board for EDI Standardisation DCS Digital Crossconnect System EBF Electronic Benefit Funding DCTS Digital Cordless Telephone System EBIT Earnings Before Interest and Tax DDAS Digital Data Access Service EBITA Earnings B efore I nterest, T axes, D epreciation DDN Dedicated Digital Networks and Amortization DDS Digital Data Service EBN Experimental Broadband Network DDT Digital Television Transmission EBPP Electronic Bill Presentation and Payment DECT Digital Enhanced Cordless Telephone EBRD European B ank f or R econstruction a nd DEIWG Digital Economy Industry Work Group Development DF-SDB Deep Fibre Switched Digital Broadband EBSW Electronic Banking Services for Windows DGPS Differential Global Positioning System EBU European Broadcasting Union DGT Directorate General of Telecommunications ECAT E-commerce Action Team (New Zealand) DHCP Dynamic Host Configuration Protocol