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High broadband prices hold back UAE Internet revolution

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219112_FullBy international standards broadband Internet connection prices are very high in the UAE, and bringing down these charges would stimulate a business sector that should be employing many more young people.

It is a mistake to think that allowing the local telecoms duopoly to fix high prices is a good way forward for the Internet sector. That is one reason why initiatives like the ‘.ae’ roll-out are not very successful, and how many Internet sites with a ‘.ae’ suffix do you use?

Mass broadband

In order to create a dynamic sector for Internet users the whole population needs to have access to cheap broadband, not a minority of the rich. Then Internet companies, services and e-commerce can develop to the full.

People often ask why are there not more local services online, why can I not obtain more online as I do in the West? But without a fast Internet connection none of these services works well enough to win customers, and those potential customers will only come if the Internet is cheap.

Perhaps broadband Internet – and with it Internet telephony – should be more clearly seen as a national infrastructure, like roads and bridges, not an expensive luxury.

One answer would be to get the duopoly to raise mobile phone call prices to cross-subsidize broadband prices. A more radical solution would be to break up the local duopoly and allow market forces more room to operate.

But we know from many examples internationally that keeping the old telecoms structure does not work, and the UAE duopoly is operating like a monopoly. This inhibits innovation and slows down the Internet revolution.

Look at what happened in the twenty years after AT&T was forced to break up. Would the information age and the internet have developed as quickly in a less competitive environment?

Big employer

Such commercial revolutions are great for employment. The telecoms duopoly is a big employer, but who is to say the Internet free market will not be bigger? And in addition, these are going to be jobs in the private sector fostering entrepreneurship, not life-time employment in bureaucracies.

So it is not just a matter of keeping the UAE competitive internationally – which should also be a goal for the trading centre of the Middle East – lower broadband prices would open up a whole new vista for entrepreneurial activity.

In the year 2000 the Dubai Internet City led the technology revolution in the UAE but almost a decade later is it not time to think again?


Written by Peter Cooper

November 2, 2009 at 8:22 am

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