The Role of the ISP in MENA: The Lebanese Perspective

ITU ConferenceITU Conference

Oman, May 2001Oman, May 2001

Rami MajzoubRami Majzoub

ReutersReuters

*Any opinion in this presentation represents the speaker’s personal views

=>ISPs in MENA<==>ISPs in MENA<= ISPs in LebanonISPs in Lebanon Case Study (Lebanon-Cyberia)Case Study (Lebanon-Cyberia) Future Role of ISPs in the RegionFuture Role of ISPs in the Region

Agenda

Current Internet Users - MENA

3,538,000 1.29 

Total 938,000

12,500 0.06

17 Sudan

18 Iraq 500 25***

7,000 4

32,000 0.18

14,000 0.08

28,000 0.08

16 Yemen 3,500 4

15 Syria 8,000 4

20,000 0.4

13 Algeria

14 Libya 4,000 5

45,000 4

560,000 0.82

220,000 0.73

180,000 0.6

12 Morocco 55,000 4

11 Egypt 70,000 8**

570,000 2.59

9 Tunisia

10

Saudi Arabia 190,000 3

70,000 4

60,000 3.53

84,000 3.36

280,000 2.89

8 Oman 28,000 3

7 Palestine 12,000 5

210,000 4.57

5 Lebanon

6 Jordan 35,000 6*

75,000 3.5

75,000 10.27

165,000 8.25

262,500 6.56

4 Kuwait 55,000 3

3 Qatar 25,000 3

660,000 24.44

2 Bahrain 35,000 3 105,000 16.67

1 UAE 220,000 3

Number of Internet subscribers and users in the region -

Rank CountryNumber of Subscribe

Number of Users per

Number of Users

% of Population

UAE

Bahrain

Qatar

Kuwait

Lebanon

Palestine

Jordan

Oman

Tunisia

Saudi Arabia

Egypt

Morocco

Algeria

Lybia

Syria

Yemen

Sudan

Iraq

Source: ajeeb.com

ISPs in MENA: Enlarging the Targeted audience

Some ISPs have decided to develop strategy only Some ISPs have decided to develop strategy only by focusing on the community of their by focusing on the community of their “connected” subscribers.“connected” subscribers.

More ambitious ISPs are targeting the 3.5 More ambitious ISPs are targeting the 3.5 million Arab Internet users.million Arab Internet users.

A minority targeting triple that figure with the A minority targeting triple that figure with the convergence of mobile usersconvergence of mobile users

Strategic stakes“A Triangular Edge for a Successful ISP”

CONTENT

CONNECTIVITYTECHNOLOGY

Connectivity & Access

SpeedSpeed:Dial-up (still the most frequent),Leased :Dial-up (still the most frequent),Leased Lines (almost all countries), ISDN, ADSL Lines (almost all countries), ISDN, ADSL

CostCost (Still high in most MENA countries ex. (Still high in most MENA countries ex. Most Moroccan Internet users go online in a cybercafé (58.3 percent) or at work (53 percent). Only 29% have home connection)

Content key to ISPs

Portals (real time information section & building Portals (real time information section & building communities )communities )

Creates stickiness to a site =>more traffic and/or Creates stickiness to a site =>more traffic and/or airtime revenue, Advertisingairtime revenue, Advertising

Easy to program into web sites (XML delivery)Easy to program into web sites (XML delivery)

Incorporating Media Content in ISP

Media, especially newspapers, are investing in Media, especially newspapers, are investing in e-versions to win new readership and e-versions to win new readership and advertising revenue. advertising revenue.

Inter-generated (Hiring internal team)Inter-generated (Hiring internal team) Outside providerOutside provider Mix of the two- using editorial teams to Mix of the two- using editorial teams to

supplement and expand on content from wires supplement and expand on content from wires and other providersand other providers

Incorporating Financial sites content in ISP

Tapping e-trading through partnerships with Tapping e-trading through partnerships with financial institutionsfinancial institutions

Online banking in MENA still lacks many Online banking in MENA still lacks many services because of lack of financial services because of lack of financial regulations in the area or weak e-commerce regulations in the area or weak e-commerce infrastructure provided by ISPinfrastructure provided by ISP

Capitalizing on content

Capitalize on content sections to raise Capitalize on content sections to raise capital from incubators in Europe.capital from incubators in Europe.

Advertising (will reach $70 million in Advertising (will reach $70 million in 2004)2004)

Partnerships (Wanadoo in Morocco & Partnerships (Wanadoo in Morocco & Lebanon)Lebanon)

Technology Challenge

Broadband access (DSL, Cable, etc…)Broadband access (DSL, Cable, etc…) WEB services & “E-infrastructure”WEB services & “E-infrastructure” GPRS/3G introducing new ISP challengeGPRS/3G introducing new ISP challenge ConvergenceConvergence

Strategic stakes“A Triangular Edge for a Successful ISP”

CONTENT

CONNECTIVITYTECHNOLOGY

Obstacles for ISP Development

Non availability of developed infrastructure which leads to:Non availability of developed infrastructure which leads to:

Higher basic necessary investment values; thus High Higher basic necessary investment values; thus High

subscription pricesubscription price

Lower Service Standard (traffic on Access lines which is not Lower Service Standard (traffic on Access lines which is not

abundant, Bandwidth, etc..)abundant, Bandwidth, etc..)

Limited no. of Domicile computer installations. Limited no. of Domicile computer installations.

Non encouragement of Authorities to enter the Internet for Non encouragement of Authorities to enter the Internet for

censorship reasonscensorship reasons

Non availability of clear legalization for what concerns the wide Non availability of clear legalization for what concerns the wide

and developed services that Internet provides (ex. Voice over IP)and developed services that Internet provides (ex. Voice over IP)

ISPs in MENAISPs in MENA =>ISPs in Lebanon<==>ISPs in Lebanon<= Case Study(Lebanon-Cyberia)Case Study(Lebanon-Cyberia) Future of ISPs in the RegionFuture of ISPs in the Region

Agenda

Why Lebanon?

Lebanon has been one of the pioneers Lebanon has been one of the pioneers of the ISP market with DM in 1995of the ISP market with DM in 1995

Lebanon is witnessing one of the most Lebanon is witnessing one of the most active ISP mergers & acquisitionsactive ISP mergers & acquisitions

Lebanon anticipates the ISP trends in Lebanon anticipates the ISP trends in the Arab world (move towards portal & the Arab world (move towards portal & ISP business, etc..)ISP business, etc..)

Statistics

UAE

Saudi Arabia

Bahrain

Libya

Sudan

Qatar

Oman

Kuwait

Egypt

Yemen

Lebanon

Syria

Jordan

Morocco

Tunisia

Israel9%

46% 15%

UAE 160,000 15%Bahrain 15,000 1%Egypt 55,000 5%Israel 500,000 46%Jordan 25,000 2%Kuwait 40,000 4%Lebanon 100,000 9%Libya 1,500 0%Morocco 15,000 1%Oman 20,000 2%Qatar 18,000 2%Saudi Arabia 100,000 9%Sudan 2,000 0%Syria 4,000 0%Tunisia 22,000 2%Yemen 3,000 0%TOTAL 1,080,500 100%

Number of Subscribers / country Lebanon/MENA

Source: Inconet

Lebanon: Current Situation

30 Licensed ISPs30 Licensed ISPs Only 15 operationalOnly 15 operational Five Controlling the marketFive Controlling the market The leading ISP (Cyberia) owning The leading ISP (Cyberia) owning

almost 50% of the marketalmost 50% of the market 350,000 users and 125,000 350,000 users and 125,000

subscriberssubscribers

ISP Ventures

Cyberia (#1) acquired Intracom (ex #4) in Cyberia (#1) acquired Intracom (ex #4) in Spring 2000Spring 2000

Inconet (top 3) teamed up with Bank Audi to Inconet (top 3) teamed up with Bank Audi to offer Unlimited Internet “for free”offer Unlimited Internet “for free”

Lynx (# 5) was bought by PSINET before Lynx (# 5) was bought by PSINET before buying back again & becoming Fiberlinkbuying back again & becoming Fiberlink

Terranet & Data Management teamed up with Terranet & Data Management teamed up with other banks (Credit Libanais) or Telcosother banks (Credit Libanais) or Telcos

ISP = “multi business”

Intracom launched a very successful call back Intracom launched a very successful call back business before government restriction and business before government restriction and being bought by Cyberiabeing bought by Cyberia

Many ISPs focus on selling leased linesMany ISPs focus on selling leased lines ISPs doing web design & Internet consultancyISPs doing web design & Internet consultancy ISPs providing ASPs serviceISPs providing ASPs service

ISP = Portal?

Cyberia => www.thisiscyberia.comCyberia => www.thisiscyberia.com Data Management=> www.yalla.com.lbData Management=> www.yalla.com.lb Inconet portalInconet portal Terranet: A bilingual portal (English, French)Terranet: A bilingual portal (English, French) No one has Arabic yet!No one has Arabic yet!

The branding of ISP

Inconet => corporate imageInconet => corporate image Data Management => pro internetData Management => pro internet Terranet relying on telco infrastructureTerranet relying on telco infrastructure Fiberlink => high speed networkFiberlink => high speed network Cyberia => “Internet for everyone”: 96% Cyberia => “Internet for everyone”: 96%

identify Cyberia as “the ISP” in Lebanonidentify Cyberia as “the ISP” in Lebanon

b

ISPs in MENAISPs in MENA ISPs in LebanonISPs in Lebanon =>Case Study (Lebanon-Cyberia)<==>Case Study (Lebanon-Cyberia)<= Future of ISPs in the RegionFuture of ISPs in the Region

Agenda

Cyberia case: Company profile

In 1995 Transmog Inc. SAL was established to offer Telecommunications services to the Lebanese market and later that year it began its work by deregulating the Lebanese wireless data communications market.

In 1996 Transmog Inc. SAL obtained licenses that grant it the right to offer VSAT communications and Internet Services. Cyberia is a Transmog Inc. SAL trademark that was subsequently created to provide the Lebanese market with Internet Access, Online Publishing and Online Services. After its launch in the fourth quarter of 1996, Cyberia quickly established itself as the leading Internet services provider.

In 1998 Cyberia launched a Consulting group to offer turnkey services to other Telecommunications companies in the region

Cyberia case: Milestones

1996: Cyberia is licensed to offer Internet 1996: Cyberia is licensed to offer Internet services and connect to the International Internet services and connect to the International Internet backbonebackbone

1997: Cyberia launches real-time user activation 1997: Cyberia launches real-time user activation using Internet Starter-kits and Cyber creditsusing Internet Starter-kits and Cyber credits

1998: Cyberia launches online daily news1998: Cyberia launches online daily news 1999: Cyberia wins turnkey consulting contract 1999: Cyberia wins turnkey consulting contract

to set-up an internet provider operation in KSAto set-up an internet provider operation in KSA 2000: Cyberia acquires Intracom, the 4th largest 2000: Cyberia acquires Intracom, the 4th largest

ISP in Lebanon, launches its portal ISP in Lebanon, launches its portal www.thisiscyberia.comwww.thisiscyberia.com

Cyberia: Customer Growth

05

101520253035404550

1997 1998 1999 2000 2001

Subscribers

Cyberia case: value added services

Internet Starter Kit, Cyber credits solds in Internet Starter Kit, Cyber credits solds in pharmacies (equivalent of prepaid cards)pharmacies (equivalent of prepaid cards)

Software download centerSoftware download center WebmailWebmail Interactive voice servicesInteractive voice services Free faxFree fax Live broadcasting of music eventsLive broadcasting of music events Online news center (Reuters, Daily Star, Online news center (Reuters, Daily Star,

weather, etc…)weather, etc…)

Cyberia case: Social role

Sponsored many car rallies and contributed to Sponsored many car rallies and contributed to enhance the idea of a dynamic connected society enhance the idea of a dynamic connected society (Internet in buses and pharmacies)(Internet in buses and pharmacies)

Provided at a certain period in time a window to Provided at a certain period in time a window to the Internet world for Syrian citizenthe Internet world for Syrian citizen

New dimension of journalism with “online New dimension of journalism with “online journalism” allowing itself to tackle with journalism” allowing itself to tackle with sometimes censored topics.sometimes censored topics.

Building communities: Launching of forums and Building communities: Launching of forums and debates on many controversial issues.debates on many controversial issues.

Internet for Education: Widening Internet Internet for Education: Widening Internet presence in schoolspresence in schools

Cyberia case: The Government

Legal framework forbids VOIP & callback Legal framework forbids VOIP & callback systemsystem

Might play a role in E-government, which Might play a role in E-government, which needs a boost from private sectorneeds a boost from private sector

Trying new logistics with Libanpost, Mailboxes Trying new logistics with Libanpost, Mailboxes etc...etc...

Pushing for ADSL.Pushing for ADSL.

Cyberia case: Projects & plans

E-Commerce system tailor made to the E-Commerce system tailor made to the requirement of each Arabic countryrequirement of each Arabic country

Expansion in Jordan & SyriaExpansion in Jordan & Syria Prospective deals with GSM operators in Prospective deals with GSM operators in

LebanonLebanon Moving to be an ASPMoving to be an ASP Consultancy services: services for billingConsultancy services: services for billing Public key infrastructure once legal framework Public key infrastructure once legal framework

is thereis there

ISPs in MENAISPs in MENA ISPs in LebanonISPs in Lebanon Case Study(Lebanon-Cyberia)Case Study(Lebanon-Cyberia) =>Future of ISPs in the Region<==>Future of ISPs in the Region<=

Agenda

The Future: Catering to an ever growing user base

0

5

10

15

20

25

'2001 '2002 '2003 '2004 '2005

Subscribers(millions)

Source: ajeeb.com

Back to our Roots?

As Internet use widens in the Arab world the rate of users capable of thoroughly benefiting from English-language web sites drops, and that’s more the case in Saudi Arabia.

Today more than 45 percent of Internet users in the Arab world lack the English language skills required for full understanding of English web sites.

By 2004 this group will constitute more than 60 percent of the entire Internet user community in the region.

Heterogeneous User Base

GCC users asking for ArabicGCC users asking for Arabic North Africa divided between English/Arabic (Egypt) & North Africa divided between English/Arabic (Egypt) &

French (Morocco)French (Morocco) Middle East divided user patterns (Syria closer to GCC)Middle East divided user patterns (Syria closer to GCC)

Mobile Content for M-ISP?

Business ServicesBusiness Services (e-mail fax, Intranet, (e-mail fax, Intranet, Extranet)Extranet)

Transaction ServicesTransaction Services (purchasing, banking) (purchasing, banking) Location ServicesLocation Services (using GIS, cell location, (using GIS, cell location,

etc..)etc..) InformationInformation (newspaper portals, business (newspaper portals, business

directories, cinema, weather...)directories, cinema, weather...) Entertainment (Entertainment (games, horoscopes, lottery, games, horoscopes, lottery,

sports)sports) SMS HeadlinesSMS Headlines

Future Consolidation for ISPs in MENA?

The industry is undergoing rapid The industry is undergoing rapid consolidation towards a more mature consolidation towards a more mature market with the emergence of regional market with the emergence of regional players that can leverage the economies players that can leverage the economies of scale, and provide a solid service” of scale, and provide a solid service” (AAG)(AAG)

Under capitalization of ISPsUnder capitalization of ISPs

Will ISP still exist in the future?

ASPASP M-ISP?M-ISP? ?? ……The debate is on!...The debate is on!...