Time is right for GCC states to set up universal internet access

Bahjat El Darwiche, Rawia Abdel Samad and Jad El Mir January 28, 2016 No Comments
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GoogleKayvan Shoaye RadkayvanshrHi-Tech Development Group LLCTime is right for GCC states to set up universal internet access2016-01-28 23:00:02Author Google+ Page

In the space of the last 20 years internet penetration has increased from 1 per cent of the world’s population to about 40 per cent today.

In the Middle East alone, more than half of the population now has online access, with the figure in the GCC at 75 per cent.

This impressive expansion of internet use and its ability to create jobs and stimulate economic growth is particularly important for the GCC, which is seeking sustainable growth despite low oil prices.

The GCC model of economic growth is already shifting from large government spending to economies driven by innovation. The internet should be at the centre of this new approach, given its ability to create new businesses and jobs. We estimate that bringing everyone online in the Middle East could add $380bn to regional economies, with about $40bn in the GCC alone.

To understand how to achieve universal digital inclusion, Strategy& undertook a major study on behalf of Facebook. We identified three markets that enable the internet to function: the connectivity market, which provides affordable and reliable ways to get online; the content market, which provides reasons for people to go online; and the retail market, the internet’s sales and service arm. Within these markets, we need mechanisms to remove obstacles to digital inclusion, by providing people with better-priced internet access, stronger reasons to go online, and education about how to use and benefit from the services on the internet.

The connectivity market needs to reduce prices while increasing and better-using capacity. Infrastructure related to spectrum and technology choices is the largest cost for connectivity market suppliers – such as internet providers and telecom operators. These suppliers need to invest in expensive infrastructure to cope with growing data demand, but also have to cut data prices substantially to make the internet universally affordable. To compound the challenge, data is unprofitable in some markets.

The first mechanism to meet the connectivity challenge is modernising the technology base by replacing obsolete second generation (2G) networks, a project that is already under way in the GCC.

The second is to lower the pressure on scarce spectrum resources by routing data through other channels, such as Wi-Fi. For example, the WiFi UAE initiative offers basic free online access at hundreds of locations, including the Dubai Metro. This is appropriate for the highly-urbanised GCC, which has some of the highest smartphone penetration rates in the world.

The third mechanism is to create more national and international data infrastructure, making the internet cheaper and data speed and quality better.

The content market needs to generate relevant material and services that will encourage people to go online, which means oversupplying content in an economically sustainable manner.

One mechanism is to provide more educational material, for which consumers are often willing to pay. Another is targeted e-government services, whether by moving government services online or through the smart city initiatives being introduced across the GCC. A third mechanism is economic opportunity content, such as enabling small businesses to reach more customers through online markets.

While the GCC has the most developed e-commerce in the Middle East, more can be done to facilitate the growth of online markets by ensuring regulations are appropriate to the digital age, and that there is a strong cybersecurity regime.

The retail market should educate and enlighten the digitally excluded about how the internet can transform their lives economically and socially. Mechanisms that enable people to experience the internet for the first time include learning centres that impart technology literacy through shared devices and pooled access.

In the GCC, the last significant segment of the population to connect to the internet, migrant workers, is increasingly going online thanks to cheaper and easier-to-use smartphones. Another mechanism is free or low-cost discovery of the internet through brand- and subscriber-subsidised access. The final retail mechanism is to combine access and usage through simplified value propositions, such as bundled access or pay-per-app plans.

GCC countries’ efforts to connect the whole region are an important step towards creating the universal internet access that will result in employment, improved incomes for those who are currently offline, and sustained growth. By removing barriers to digital inclusion, the result will be an internet very different from today’s, with far more users from lower-income groups. Internet content in the future will be as much about edification as gratification, providing education and opportunities for income generation.

The writers are with the consultancy Strategy&


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