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Oman - Expanding internet penetration

Thursday, 19 November 2009 20:11

As 2009 draws to a close, Oman's relatively underserved IT sector is preparing for the introduction of competition to the internet-service-provider (ISP) market, as QTel's local subsidiary Nawras prepares to launch the Sultanate's second fixed-line telecoms service.

Currently, internet service provision in the country remains the monopoly of Omantel, the predominantly state-owned national telecoms company. This is not for want of trying by the Telecommunications Regulatory Authority (TRA), the national telecoms watchdog. In 2007 it attempted to open the ISP market to competition by announcing the sale of licences to newcomers. However, perhaps as a result of the terms offered (which required potential new ISPs to lease infrastructure and bandwidth from the incumbent Omantel), no takers were found in the private sector.

As a result, a more ambitious approach towards introducing liberalisation and competition to the telecoms network was attempted. In April 2008 the auction of a second fixed-line telecoms licence was announced by the TRA, with the eventual winner, Nawras, announced in November of the same year.

Nawras has already proved extremely successful in Oman's mobile telecoms market. A joint-venture between Qatar's QTel, Danish operator TDC and a number of local investors, the company has captured around half the market share in Oman since launching services in 2005. Nawras has also served to shake up the market, often being the first operator to launch new services, and recently winning "superbrand" status in the Sultanate.

Having been awarded the contract for the second fixed-line telecoms network, Nawras will begin offering services in 2010. The company is building a backbone infrastructure of over 5000 km and will be providing fixed broadband coverage to more than 80% of the Omani population.

The government and regulator, not to mention the average consumer, will be hoping that Nawras' entry to the fixed-line market will inject some dynamism to the ISP sector in particular. While Oman's internet penetration figures have picked up in recent years, they still lag in comparison with the wider Middle East. According to internetworldstats.com, a website which monitors penetration rates by country and region, Oman's current internet penetration level places it near the bottom of the regional table, with only Yemen and Iraq posting lower figures. There are currently an estimated 469,000 internet users in the Sultanate, representing penetration of 13.7%, compared with a regional average of 23.7%. Moreover, the majority of connections remain dial-up, with the government estimating a single subscription is shared between four or five people.

Some analysts and commentators have argued that there is an underlying antipathy towards the internet in parts of Omani society. As Jawad Sultan, the director of Jawad Sultan Enterprises, a private e-solutions company, told OBG, "We still occasionally read articles in local newspapers and magazines about how the internet is a bad influence. This needs to change." However, it is possible to overstate such antipathy - other statistics seem to prove conversely that there is great potential for internet services in Oman, with a recent Arab Advisors report claiming 40% of Oman's adult internet users spent a combined $236m via e-commerce in 2008. When analysed on a per-user basis, this comes to nearly $1500 - an impressive figure.

Oman naturally presents some challenges to expanding internet penetration - not least its sheer size, and the relatively low density of its population outside of major urban centres. However, with GDP per-capita figures of just under $20,000 at purchasing power parity, it is clear that Oman's current level of internet penetration is well below potential. The entry of a second fixed-line network should go some way towards remedying that - both increasing the number of subscribers and the quality of provision, thus opening Oman's economy to an e-future.

Global Arab Network

This article is published in partnership with Oxford Business Group

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