Analysys Mason Research Report - FEMIP Broadband Potential 2010

Fa c i l i t y fo r Eu ro - M e d i te r r a n e a n I nve s t m e n t a n d Pa r t n e r s h i p • Fa c i l i t y fo r Eu ro - M e d i te r r a n e a n I nve s t m e n t a n d Pa r t n e r s h i p
FEMIP
Summary Report
Evaluation of the market, business and
financial aspects for the development of
broadband access for femip countries
Summary Report
EVALUATION OF THE MARKET, BUSINESS AND

FINANCIAL ASPECTS FOR THE DEVELOPMENT
OF BROADBAND ACCESS FOR FEMIP COUNTRIES
Contract: 2010/S 154-237201, TA2010014 R0 FTF
Beneficiary country: All FEMIP countries
The study/technical assistance operation is financed under the FEMIP Trust Fund. This Fund,
which was established in 2004 and has been financed – to date– by 16 EU Member States and the
European Commission, is intended to support the development of the private sector via the
financing or studies and technical assistance measures and the provision of private equity.
The authors take full responsibility for the contents of this report. The opinions expressed do not
necessarily reflect the view of the European Investment Bank (EIB).
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Contents
1 Introduction 1
2 Macro-economic overview of FEMIP countries 2

2.1 Political situation 2
2.2 Country demographics 4
2.3 Country economics 6
2.4 Impact of the macro-economic situation on broadband development in FEMIP countries 11
3 The telecoms market in the FEMIP countries 12

3.1 Importance of the telecoms sector in the FEMIP countries 12
3.2 Regulatory environment 14
3.3 The fixed and mobile market 24
3.4 The broadband market 27
4 Assessment of broadband market demand in FEMIP countries 32

4.1 Broadband take-up 32
4.2 Broadband revenues 37
5 Comparison and evaluation of the costs associated with the roll-out of different
broadband technologies 41
5.1 Scenario definition 41
5.2 Description of the methodology for terrestrial technologies 44
5.3 Assessment of commercially viable coverage by terrestrial broadband technology 47
5.4 Assessment of different cost types for a nationwide roll-out of terrestrial broadband
technologies 48
5.5 Assessment of coverage and costs for a satellite solution 55
5.6 Costs for different scenarios 56
6 Analysis of the socio-economic impact of broadband services 61

6.1 Direct economic benefits and associated costs in unviable areas in FEMIP countries 62
6.2 Indirect (non-monetary) benefits of broadband 63
7 Conclusion 68
7.1 Scenarios results 68
7.2 Barriers to, and opportunities for, broadband development 72
7.3 Investment opportunities 73
Annex A Background on the socio-economic impact of broadband

Annex B List of stakeholders interviewed
Annex C Glossary of terms
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Summary Report
About Analysys Mason
Analysys Mason is an independent strategy consultancy in telecoms, media and technology. See
www.analysysmason.com for more information about our company and the services we provide.
Key contacts for this study
• Samer Mourad (Manager) – ([email protected] and +33 1 72 71 96 55)

• Dr Matt Yardley (Partner) – ([email protected] and +44 161 772 8103)
Disclaimer
This document summarises the conclusions of work undertaken between April 2011 and
November 2011. This work was based on available quantitative data from the end of 2010 in
addition to information collected from stakeholders between May 2011 and July 2011.
Copyright
Copyright © 2011. Analysys Mason Limited has produced the information contained herein for the
European Investment Bank (EIB).
Analysys Mason
66 avenue des Champs Elysées
75008 Paris
France
Tel: +33 (0)1 72 71 96 96
Fax: +33 (0)1 72 71 96 97
[email protected]
www.analysysmason.com
Registered as Analysys Limited: 410 406 839 RCS Paris

Subsidiary of Analysys Limited, registered in England No. 1819989
St Giles Court, 24 Castle Street, Cambridge, CB3 0AJ, UK
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1 Introduction
Analysys Mason has been commissioned by the European Investment Bank (‘EIB’) to undertake
the study Evaluation of the market, business and financial aspects for the development of
broadband access for FEMIP countries (Ref.: 2010/S 154-237201, TA2010014 R0 FTF).
The ultimate objective that the EIB would like to achieve is to identify ways to reduce the digital
divide for broadband services within each of the countries in the FEMIP (Facility for Euro-
Mediterranean Investment and Partnership) region and across the region. There are nine
beneficiary countries: Algeria, Egypt, Gaza/West Bank, Israel, Jordan, Lebanon, Morocco, Syria 1
and Tunisia. Therefore, the specific objectives of this study are to:
• analyse the current status of fixed and mobile broadband services in each FEMIP country,
including demand and supply
• assess the future needs of fixed and mobile broadband services in each FEMIP country,
including demand and supply
• estimate the future demand and related investment needs for the roll-out of an economic
mixture of broadband infrastructures in each FEMIP country under different scenarios.
The European Space Agency (ESA) is undertaking a complementary study of a possible satellite
solution for the entire region, including most other countries around the Mediterranean Sea. The
results of this study will feed into ESA’s study.
This document, or Summary Report, consolidates the results from each of the nine country
reports that we have developed throughout this project.
The remainder of this document is laid out as follows:
• Section 2 provides an overview of the macro-economic situation in FEMIP countries

• Section 3 provides an overview of the telecoms market in FEMIP countries
• Section 4 carries out an assessment of broadband market demand in FEMIP countries
• Section 5 compares and evaluates the costs associated with the roll-out of different technical
options in FEMIP countries
• Section 6 analyses the socio-economic impact of broadband services in FEMIP countries
• Section 7 outlines the conclusions of our analysis.
This Summary Report includes the following annexes containing supplementary material:
• Annex A provides some background on the socio-economic impact of broadband
• Annex B presents the list of stakeholders interviewed during the course of this project
• Annex C includes a glossary of terms used throughout this report.
1
The EIB has currently suspended technical assistance operations in Syria.
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2 Macro-economic overview of FEMIP countries
This section provides an overview of the macro-economic situation in each of the nine FEMIP
countries. It is structured as follows:
• description of the political situation in FEMIP countries (Section 2.1)

• demographics of each FEMIP country (Section 2.2)
• overview of the macro- and socio-economic factors of each FEMIP country (Section 2.3)
• assessment of the macro- and socio-economic factors that are likely to have a positive or
negative impact on broadband development in FEMIP countries (Section 2.4)
2.1 Political situation

Four of the FEMIP countries (Algeria, Egypt, Morocco and Tunisia) are located in the African
continent, whereas the other five countries (Gaza/West Bank, Israel, Jordan, Lebanon and Syria)
are situated in the Asian continent.
Figure 2.1: Map of the FEMIP region [Source: Analysys Mason]
Since December 2010 a series of demonstrations and protests demanding constitutional reforms
and more democracy (the ‘Arab Spring’) have been taking place throughout the Arab world,
including in most FEMIP countries. Tunisia, Egypt and Syria have been the countries most
affected by this wave of protests. Other countries such as Jordan, Lebanon, Morocco and Algeria
have been less impacted, and Gaza/West Bank and Israel have not been affected by the recent
political turmoil facing Arab nations. The situation in some of these countries, if it lasts long, may
lead to uncertainty about future roll-out plans for broadband infrastructures both for the private
and public sectors. The unstable political situation in the FEMIP region has meant that most
FEMIP countries have been able to attract only low levels of foreign direct investment (FDI) per
capita, as shown below in Figure 2.2.
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As a comparison to Western European countries:

• Germany and Italy had an FDI per capita between USD6000 and USD8000 in 2009
• France, Spain and UK had an FDI per capita between USD13 000 and USD19 000 in 2009
• Belgium, Holland and Switzerland had an FDI per capita between USD40 000 and
USD80 000 in 2009.
10,000 Figure 2.2: Inward and

outward FDI per capita in
USD per capita
8,000 FEMIP countries in 2009

[Source: United Nations]
6,000
4,000
2,000
0
Jordan
Algeria
Israel
Morocco
Egypt
Tunisia
Gaza /west bank

Lebanon
Syria
When taking into account a wide range of risks (security, political stability, government
effectiveness, legal and regulatory, macro-economic, foreign trade and payments, financial, tax
policy, labour market and infrastructure), the level of risk in most FEMIP countries is high, with
Israel and Jordan having the lowest rate among FEMIP countries (see Figure 2.3). The risk ratings
of 30–65 compare with an average level of risk of 26 for countries in the European Union.
70 Figure 2.3: Risk rating in

FEMIP countries (2010)
[Source: EIU]
60
Note 1: Information on
50 Gaza/West Bank is not
available and therefore is
Risk score
40 not included in the chart

Note 2: The EIU quantifies
30 the risks to business
profitability by using an
20 operational risk model that
considers ten risk criteria
10 whereby 0 indicates very
little risk to business
profitability and 100
0
indicates very high risk
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Note 3 : The data is for

2010 and therefore does not
take into account the ‘Arab
Spring’
As a result of the low level of FDI and the high level of risk in most FEMIP countries, the
development of a nationwide broadband infrastructure could be challenging in these countries.
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2.2 Country demographics
The population in FEMIP countries is estimated to total around 204 million in 2010 and is expected to
reach 235 million in 2020 (see Table 2.4). The population in FEMIP countries has been growing at an
average rate of 1.7% per annum in the last three years, and is expected to continue growing at an
average rate of 1.4% per annum in the period to 2020. Egypt’s population is the largest of FEMIP
countries with 80 million in 2010, accounting for 39% of the total population in FEMIP countries.
Algeria, Morocco and Syria have a relatively sizeable population between 20 million and 40 million
(2010), whereas Israel, Lebanon, Gaza/West Bank, Jordan and Tunisia are the least populated FEMIP
countries with a population of less than 10 million each in 2010.
Population in 2010 Population in 2020 Compound annual Share of FEMIP

(in million) (in million) growth rate population in 2020
(CAGR)
Algeria 35.95 41.12 1.35% 18%
Egypt 79.56 93.07 1.58% 40%
Gaza/West Bank 4.05 4.66 1.42% 2%
Israel 7.63 8.67 1.28% 4%
Jordan 6.15 7.74 2.32% 3%
Lebanon 4.29 4.62 0.75% 2%
Morocco 32.77 36.56 1.10% 16%
Syria 23.01 26.89 1.57% 11%
Tunisia 10.48 11.46 0.90% 5%
Total 203.89 234.78 1.42% 100%
Table 2.4: Population growth and share in FEMIP countries [Source: Euromonitor]
The average number of persons per household is relatively high in all FEMIP countries, ranging
from 3.4 in Israel to 6.9 in Gaza/West Bank, as shown in Figure 2.5. Identifying the number of
households in each country is even more important than population as broadband is mainly a
household infrastructure to which access is shared between all members of the household.
7 Figure 2.5: Average

6 number of persons per
Occupants per household
household [Source:
5
Euromonitor, 2010]
4
0
Jordan
Gaza / West Bank
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
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Population density varies significantly across FEMIP countries. It is extremely high in Gaza/West
Bank, Lebanon and Israel, with more than 300 inhabitants per square kilometre, whereas Algeria has
the lowest population density of all FEMIP countries with around 15 inhabitants per square kilometre.
It should be noted that the weighted average of FEMIP countries is lower than eight FEMIP countries
due to the significant land area of Algeria (2.4 million square kilometres, 2 which is around half the size
of all FEMIP countries). It should be noted that the results of our analysis in section 5 is not based on a
simple density average across the country but is rather based on a distribution population curve taking
into account the different levels of density on a regional basis within a country.
800
Figure 2.6: Population
700 density in FEMIP
600 countries [Source:
Inhab. per sq.km
500 This line represents the Euromonitor, 2010]

overall density of all
400
FEMIP countries taken
300 together
200
100
0
Jordan
Gaza / West Bank
Israel
Algeria
Egypt
Morocco
Tunisia
Lebanon
Syria
Using the maximum level of data available for each country, we extrapolated a curve for the
population distribution across the country, by dividing existing (real) divisions into (artificial) sub-
divisions and assuming that population in a given division was exponentially distributed across
sub-divisions. The results show that a large proportion of the population is concentrated in only a
small part of the total land area in most of these countries. For example, Figure 2.7 shows that 90%
of the total population live in less than 50% of the total land area in all FEMIP countries, except
for Lebanon where 90% of the population live in 52% of the total land area.
60% Figure 2.7: Proportion
50% of the total land area
that concentrates 90%
40% of the population
% of area
30% [Source: Analysys

Mason]
20%
10%
0%
Jordan
Algeria
Israel
Gaza / West Bank

Morocco
Egypt
Tunisia
Syria
Lebanon
2
Source: CIA’s World Factbook.
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2.3 Country economics
2.3.1 Macro-economic indicators

Israel and Lebanon have the highest GDP per capita (in nominal terms) of FEMIP countries, at
EUR21 800 and EUR6900 in 2010, respectively. The other FEMIP countries have a GDP per
capita between EUR3500 and EUR1500, with Egypt and Gaza/West Bank standing in last position
with approximately EUR1500 and EUR220 per capita in 2010 and 2008, respectively (see
Figure 2.8).
25,000
Figure 2.8: GDP per
capita in nominal terms
20,000 in FEMIP countries
[Source: Euromonitor,
GDP per capita (EUR)
2010]
15,000
Note: Gaza/West Bank

10,000 had a GDP per capita
of EUR221 in 2008
5,000
0
Jordan
Algeria
Israel
Morocco
Egypt
Tunisia
Lebanon
Syria
When using the purchasing power parity (PPP) equivalence, all FEMIP countries have a higher
GDP per capita than in nominal terms, as shown in Figure 2.9. It is also worth noting that:
• Israel’s GDP per capita at PPP is at the lower end of the Western European countries in our
benchmark, alongside Spain, Italy or Greece, higher than neighbouring Cyprus, and significantly
higher than other countries in East Asia, Africa and Eastern Europe.
• Lebanon’s GDP per capita at PPP is in the upper range of international benchmarks at
EUR12 600, including Malaysia, African and East European countries.
• Algeria’s GDP per capita at PPP is higher than in the Eastern European countries in our
benchmark, such as Ukraine and Georgia.
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35,000
FEMIP countries Other countries
30,000
25,000
EUR at PPP
20,000
15,000
10,000
5,000
0
Jordan
Algeria
Botswana
Ukraine
Israel
France
Morocco
South Africa
Egypt
Germany
Thailand
Tunisia
United Kingdom
Spain
Italy
Cyprus
Georgia
Lebanon
Syria
Malaysia
Greece
Figure 2.9: GDP per capita at PPP in benchmarked countries [Source: Euromonitor, 2010]
Note: Information on Gaza/West Bank is not available and therefore is not included in the chart
The informal economy plays an important role in most FEMIP countries, contributing between
31% and 35% to the overall economy in Tunisia, Egypt, Morocco, Algeria and Lebanon, whereas
it represents between 17% and 21% of the overall economy in Jordan, Syria and Israel.
40% Figure 2.10: Importance

of the informal economy
35% in FEMIP countries in
30% 2007 [Source:

Schneider]
25%
% of GDP
Note: Information on
20%
Gaza/West Bank is not
15% available and therefore
is not included in the
10%
chart
5%
0%
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Lebanon
Syria
Inflation rates have remained relatively low (between 0% and 5%) in FEMIP countries between
2007 and 2010, with the exception of the year 2008 where the inflation increased significantly in
countries such as Egypt, Syria, Jordan and Lebanon. In addition, the inflation in Egypt was higher
than all other FEMIP countries reaching a maximum of 18% in 2008 before decreasing to 11% in
2010 due to the rising food and oil prices, and exacerbated by the depreciation of the Egyptian
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Pound as a result of the political crisis. Going forward, Euromonitor expects inflation to stabilise
in practically all FEMIP countries at around 2–3%, except for Syria and Egypt, where the inflation
rate is forecast to be 5% and 6%, respectively, in the long term.
20%
15%
Inflation rate (%)
10%
5%
0%
-5%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Morocco Algeria Egypt

Gaza / West Bank Israel Jordan
Lebanon Syria Tunisia
Figure 2.11: Historical evolution and forecast of inflation [Source: Euromonitor]
The VAT rate in FEMIP countries ranges from 10% to 20%. Syria is the only FEMIP country
where VAT has not yet been introduced (see Figure 2.12).
Figure 2.12: VAT rate in

20%
FEMIP countries
VAT rate (%)
[Source: Public
15%
sources]
10%
Note: VAT has not yet
been introduced in
5%
Syria, hence that it is
excluded from the chart
0%
Jordan
Algeria
Gaza / West Bank

Morocco
Israel
Egypt
Tunisia
Lebanon
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2.3.2 Socio-economic indicators
The Human Development Index (HDI) is an indicator used by the World Bank which measures the
level of human development in terms of individual and collective welfare (e.g. life expectancy,
literacy, education and standards of living). With the exception of Israel, which has a rate
comparable to Western European countries, all other FEMIP countries are in the middle range of
the HDI rating as shown in Figure 2.13.
Figure 2.13: HDI for

various countries in the
Middle East and North
Africa (MENA) and
Europe region [Source:
United Nations
Development
Programme]
The GINI coefficient measures inequality of income or wealth between various segments of the
population. A GINI coefficient of 0 indicates perfect equality, while an index of 100 indicates
perfect inequality. The GINI coefficient for most FEMIP countries is between 35% and 40%, as
shown in Figure 2.14. The GINI average for the European Union (EU) is 33%.
100% Figure 2.14: GINI index

as a function of the HDI
90% Israel
in some FEMIP
Human Development Index (HDI)
80% countries [Source:

70% Algeria Tunisia World Bank, 2010]
Jordan
60%
Egypt Note: Information on
50% Morocco
Gaza/West Bank,
40% Lebanon and Syria is
30% not available and
therefore they are not
20%
included in the chart
10%
0%
30% 35% 40% 45%
inequality index (GINI)
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Private consumption is very high in Jordan, Lebanon, Gaza/West Bank and Egypt) at approximately
75% of nominal GDP. Countries like Syria, Tunisia, Israel and Morocco have a private consumption as
a percentage of nominal GDP similar to the EU average, as shown in Figure 2.15. Private consumption
in Algeria is around 36% of nominal GDP, which is the lowest among FEMIP countries. This is
primarily due to Algeria being a major gas and oil exporter, which means that public expenditures
represent the stronger share of the country’s GDP (versus private consumption).
90% Figure 2.15: Private
80% consumption in FEMIP
70% countries [Source: EIU]
FEMIP average
60%
% of GDP
50%
40%
30%
20%
10%
0%
Jordan
Gaza / West Bank
Algeria
Israel
Morocco
Egypt
Tunisia
Lebanon
Syria
EU average
In terms of education levels, in all FEMIP countries except Morocco more than 74% of the population
aged above 15 is literate (Figure 2.17). The literacy rate is particularly high in Israel, Jordan and
Lebanon (97%, 96% and 91%, respectively), which is likely to lead to sustainable high levels of
demand and consumption of broadband services in these countries. On the other hand, Morocco has the
lowest literacy rate among FEMIP countries at 59%, which may hinder broadband take-up.
100% Figure 2.16: Adult
90% literacy rate in FEMIP
FEMIP average countries [Source:
80%
Euromonitor]
% of pop. aged 15+
70%
60% Note: Information on
50% Gaza/West Bank is
40% not available and
therefore is not included
30%
in the chart
20%
10%
0%
Jordan
Algeria
Israel
Morocco
Egypt
Tunisia
Lebanon
Syria
The electricity household access rate measures the share of households in a country that are
connected to the electric grid and that are able to use electric appliances. This rate is extremely
high and does not represent a major issue for broadband development in most of the FEMIP
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countries except Morocco, where the electricity household access rate stood at 82% of households
at the end of 2010. However, in some of these countries, such as Lebanon and Syria, the reliability
of the power supply is often also a major issue in certain areas, as electricity may be cut for several
hours a day during certain periods of the year.
100% Figure 2.17: Electricity
90% household access rate
80% in FEMIP countries
% of households
70% [Source: Euromonitor,

60%
UNDP, 2010]
50%
40%
30%
20%
10%
0%
Jordan
Algeria
Israel
Gaza / West Bank
Morocco
Egypt
Tunisia
Lebanon
Syria
2.4 Impact of the macro-economic situation on broadband development in FEMIP countries

In Table 2.18 below we present the main macro-economic factors in each FEMIP country that
have a positive or negative impact on broadband development.
Morocco Algeria Egypt Gaza/ Israel Jordan Lebanon Syria Tunisia

West
Bank
Political stability/ risk - - - - -
FDI - + - + + + - +
Population density - - - + + - + + -
Topology + + + - +
International
+ + + - +
connectivity
Disposable income/
- - - + + - +
GDP per capita
Exchange rate
+ - - + -
stability and inflation
Literacy rate - - - + + + -
Availability of
- - + + + + + - +
electricity
Table 2.18: Main macro-economic factors promoting and hindering broadband development [Source:
Analysys Mason]
Note: + means factor promoting broadband; - means factor hindering broadband
This assessment shows that the most favourable macro-economic environment for broadband
development appears to be in countries like Israel and Lebanon. On the other hand, the least
favourable environment appears to be in countries like Algeria and Syria.
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3 The telecoms market in the FEMIP countries
This section provides an overview of the telecoms market in the FEMIP countries. It is structured
as follows:
• Section 3.1 highlights the importance of the telecoms sector in FEMIP countries
• Section 3.2 provides an overview of the regulatory framework and environment governing the
telecoms sector in FEMIP countries
• Section 3.3 describes the fixed and mobile markets
• Section 3.4 describes the broadband market.
3.1 Importance of the telecoms sector in the FEMIP countries
Telecoms revenues in FEMIP countries account for 2.5–6.7% of GDP , which is higher than in
Europe where the figure is 1.5–4% in Western European (WE) countries and 3–5% in Eastern
European (EE) countries.
7% Figure 3.1: Importance

of telecoms revenues
6% as a share of GDP in
3-5 % FEMIP countries
5% [Source: ITU, 2009]
1.5-4 %
% of GDP
4%
Note: Data for Israel is
6.5% for 2008 and data for
3%
Lebanon is for 2007
4.9% 4.6%
2% 4.2% 4.0%
3.6% 3.5% Note: Information on
1% 2.2% Gaza/West Bank is not
available
0%
Jordan
Algeria
Morocco
Israel
WE
Egypt
Tunisia
EE
Lebanon
Syria
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Telecoms operators in FEMIP countries invest between 10% and 25% of their revenues in their
respective countries (Figure 3.2), which is similar to the level in the benchmarked Western and
Eastern European countries.
Figure 3.2: Telecoms

50%
investments as a
45% proportion of telecoms
revenues [Source: ITU,
40% 2009]
35% Note: Data for Egypt is

for 2008 and data for
30% Algeria is for 2007
10-25 %
25% Note: Information on
45% Gaza/West Bank, Israel
20% and Lebanon is not
available
15%
Note: The figure for
10% 20% 18% Egypt is high due to the
17% 16% 16%
acquisition of 3G
5% licences in 2007 and
2008 and the extensive
0%
roll-out of 3G networks
Egypt Syria Algeria Morocco Jordan Tunisia Europe
by operators
The share of employees working in the telecoms sector ranges from 0.25% to 1.25% of the total
workforce, as shown below in Figure 3.3. In European countries this figure ranges from 0.25% to
1.27% in 2009, and the majority of the countries lie between 0.35% and 0.69%.
1.4% Figure 3.3: Share of

1.25% employees in telecoms
Share of employees in telecommunications
1.2% [Source: Euromonitor,

ITU]
1.0%
Note: Data for Algeria
and Syria is for 2007;
0.8%
data for Tunisia and
Egypt is for 2008; data
0.6%
0.48% for Jordan is for 2009
0.40%
0.4% 0.31%
0.27% Note: Information on
Gaza/West Bank,
0.2%
Israel, Morocco and
Lebanon is not
0.0%
available
Algeria Syria Jordan Tunisia Egypt
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The share of international bandwidth used for Internet lies between 80% and 87% (Figure 3.4),
indicating that Internet is becoming an important means of communication even if the broadband
take-up is still relatively low in some of these countries. Furthermore, international bandwidth
usage in these countries has been increasing dramatically in recent years.
200 100%
87% 86% 87% 85% 85% 86%
180 81% 90%
% of bandwidth used by internet

kbit/s per broadband subscriber
80% 80%
160 80%
140 70%
184 120
120 60%
100 88 50%
80 69 40%
60 59
60 49 49 30%
40 20%
17
20 10%
0 0%
Morocco Egypt Tunisia Syria Israel Gaza / Jordan Algeria Lebanon
West
Bank
International bandwidth usage % of bandwidth used by internet
Figure 3.4: International bandwidth usage in FEMIP countries [Source: TeleGeography, 2010]
3.2 Regulatory environment
In Table 3.5 below we present an overview of telecoms regulation in each FEMIP country.
Countries with the most advanced national broadband strategies are listed first.
Ranking of most advanced Existence of an Fixed market Mobile market

national broadband strategy independent regulator liberalised liberalised
Israel ×  
Morocco   
Algeria   
Lebanon  × ×
Jordan   
Tunisia   
Egypt  × 
Gaza/
× × 
West Bank
Syria In progress × ×
Table 3.5: Overview of telecoms regulation [Source: Analysys Mason, regulators]
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In Table 3.6 below we present the status of the broadband market in each FEMIP country.
Ranking of most Existence of HSPA HSPA+ Existence Efficient Roll-out of Expected date for
advanced national 3G service service of LLU use of NGA award of spectrum for
broadband strategy operators availability availability LLU mobile broadband
Israel   × × ×  2.6GHz in
short term
Morocco     × × Unknown
Algeria × × × × × In 2015 for 800MHz
deployment
Lebanon Launched ×  × × In progress 2015 for 800MHz
end 2011
Jordan  ×  Expected × Limited to 2.6GHz available
in late school and 2015 for 800MHz
2012 universities
Tunisia  ×   × × 2014 for 800MHz
Egypt      Very limited Unknown
Gaza/West Bank × × × × × × Unknown
Syria   × × × × 2014 at the earliest
Table 3.6: Status of the broadband market [Source: Analysys Mason, regulators]
Table 3.7 provides an overview of the regulatory framework and environment governing the
telecoms sector in FEMIP countries. 3
Country Existence of an independent Mobile market Fixed market

regulator
Algeria The ARPT (Autorité de The market is liberalised. There The second fixed national
Régulation de la Poste et des are three 2G operators (Algérie licence was awarded to Lacom
Télécommunications) was Mobile Network launched the (a subsidiary of Orascom
established in August 2000 as country’s the first GSM network Telecom and Telecom Egypt) in
the regulatory authority in 1999, and two other mobile March 2005. However, it was
responsible for administering, licences were awarded to subsequently liquidated by its
monitoring and developing the Orascom Telecom and shareholders in November
telecoms sector in Algeria Wataniya Telecom in August 2008
2001 and December 2003,
respectively). Award of 3G
licences is expected in 2012
Egypt The National The market is liberalised. The fixed-line market was
Telecommunications There are three 2G operators officially fully opened up to
Regulatory Authority (NTRA) (Mobinil, which launched competition on 31 December
was established in 2003 as the mobile services in 1996; 2005. However, Telecom Egypt
independent regulatory Vodafone Egypt, which remains the sole provider of
authority overseeing the launched the second GSM fixed-line voice services after
telecoms sector in Egypt network in 1999; and Etisalat the NTRA decided to postpone
Misr, which was awarded the the auction of the second fixed-
third mobile licence in 2007). line licence in mid-2009
There are also three 3G
operators
3
For more details please refer to the relevant country report.
Ref: 18398-282
Summary Report | 16

regulator
Gaza/ The Ministry of Telecom and The market is liberalised. The market is not liberalised.
West Information Technology PalTel is the country’s only
There are two 2G operators
Bank (MTIT) is responsible for the fixed-line telecoms provider
(PalTel, which is also the
regulation of the telecoms
incumbent fixed-line operator,
market in Palestine. A decree
and Wataniya)
issued by the President in
June 2009 calls for the
establishment of a regulator in
the form of the Palestine
Telecommunication
Regulatory Authority (PTRA)
with clear separation of
responsibilities from the MTIT
Israel The telecoms market is The market is liberalised. The market is liberalised.
regulated by the Ministry of There are two fixed operators
There are four 2G operators
Communications (MoC). The (Bezeq, which owns the PSTN
(Pelephone, Cellcom, MIRS
creation of an independent infrastructure, and HOT
and Partner, which were
national regulatory body, the Telecom, which owns the
awarded four mobile licences
National Telecommunications cable infrastructure)
between 1986 and 1998)
Authority (NTA), was There are also other service-
proposed in 2003 but has There are also five 3G based providers
fallen off the agenda primarily operators, but only three have
as a result of the high turnover already launched services
of communications ministers
Jordan The Telecommunications The market is liberalised. The market is liberalised
Regulatory Commission There are three 2G operators There are five fixed wireless
(TRC) was established in (Zain Jordan, which obtained operators in addition to the
1995 as the independent the country’s first GSM licence wireline incumbent Jordan
regulatory body for the in 1994; Orange Mobile, which Telecom
telecoms sector in Jordan was awarded the second
licence in 1999; and Umniah,
which started operations in
2004)
Two of these operators also

hold 3G licences
Lebanon The Telecommunications The market is not liberalised The Lebanese government
Regulatory Authority (TRA) has expressed its intention to
There are two state-owned 2G
was established in March privatise the incumbent
operators (Alfa and MTC
2007. However, in June 2011, wireline provider Ogero
Touch)that provide services
the Ministry of Telecom but this has not yet
on a build-transfer-operate
Telecommunications (MoT) materialised
(BTO) basis
announced that a government There are seven licenced data
legal authority had suspended 3G is expected to be launched service providers (DSPs)
the powers of the TRA, thus later this year owning fixed wireless
making the Ministry of infrastructure, of which only
Telecoms the sole body four have rolled out a network
authorised to set new rules and launched services
and guidelines for the sector
Ref: 18398-282
Summary Report | 17

regulator
Morocco The ANRT (Agence Nationale The market is liberalised. The market is liberalised.
de Réglementation des There are three 2G operators The ANRT awarded two ‘new
Télécommunications) was (Maroc Telecom, which generation’ licences in July
established in February 1998 launched services in 1994; 2005 to Medi Telecom and
as the regulatory authority Medi Telecom, which was WANA, ending the monopoly of
responsible for administering, awarded the second GSM Maroc Telecom in the fixed
monitoring and developing the licence in 1999; and WANA, market
telecoms sector in Morocco which obtained the third GSM
licence in 2009)
There are also three 3G

operators
Syria The Telecommunications The market is not liberalised The market is not yet
Regulatory Authority (TRA) liberalised. Syrian
There are two 2G operators
was established as an Telecommunication Company
(Syriatel, controlled by
independent regulatory (STC) continues to have the
Orascom Telecom, and
authority in June 2010. monopoly on the fixed
Lebanese-owned Investcom
telecoms market, retaining a
The TRA is now taking over (later acquired by MTN Syria)
five-year exclusivity both for
all regulatory tasks previously providing services on a BOT
the provision of fixed-line
entrusted to incumbent Syrian basis)
telecoms services and the
Telecommunication
There are also two 3G operation of the international
Establishment (STE). The
operators providing services gateway
TRA, however, yet is still in
on a BOT basis
the process of setting itself up
operationally The creation of a proper
licencing scheme has been
delayed due to the political
unrest sweeping the country
Tunisia The National Authority of The market is liberalised. There The market is liberalised with
Telecommunications of Tunisia are three 2G operators and two two operators: Tunisie
(Instance Nationale des 3G operators Telecom, the incumbent, and
Télécommunications or INT) Orange Tunisie, which was
was established in January awarded a unified fixed and
2001 as the financially and mobile licence in June 2009
administratively independent
regulatory authority in Tunisia
Table 3.7: Overview of the regulatory situation in FEMIP countries [Source: Analysys Mason, regulators]
Ref: 18398-282
Summary Report | 18
Table 3.8 provides an overview of the most recent policies governing the telecoms sector in each
FEMIP country, as well as a summary of the plans and objectives set for national broadband.4
Country Main recent policies and plans National broadband strategy Universal service and access
published and objectives status
Algeria Strategic plan e-Algérie 2013, The plan is articulated around The law encompasses the
published in January 2009, 13 main streams including, notion of universal service
sets the vision, goals, strategic including: (which includes the provision
priorities and accompanying • accelerating the use of of 512kbit/s Internet since
measures with regards to the ICT in public 2009). However, it is only in
development of ICT in Algeria administrations and 2011 that the government has
private companies created a universal service
• improving the fund
development of high-
speed and very-high-
speed networks
• updating the ICT legal
and regulatory framework
Egypt The MCIT has recently In December 2009 it was Information not available
announced the government’s announced that Egypt was
strategy for the next six working on a national plan to
months (i.e. until January develop broadband services
2012) in urban and rural areas,
committing USD1 billion
[EUR700 million] of
government funds for the
infrastructure needed.
Although it was indicated at
the time that a national
broadband plan would be
published in the first quarter
of 2010, no plan has yet been
released by the government
Gaza/ A Statement of National The Statement of National A universal service/access
West Telecommunication Policy Telecommunication Policy scheme is included among
Bank roadmap was issued in 2010 identified a number of topics the main regulatory measures
with the main objectives of which require work in the next that need to be implemented
implementing a new regulatory two to three years, including: in the next two to three years
authority; creating a • LLU/bitstream services
comprehensive legal • national backbone policy
framework; introducing
• award of WIMAX licence
wholesale broadband services;
and establishing a sound • direct access to
interconnection and pricing international connectivity
regime • access to rights of way
and municipal consents
for operators
• licensing for the provision
of a broad range of
services, including
Internet and VoIP
4
Ref: 18398-282
Summary Report | 19
Israel The Gronau Committee, one of Fibre and DOCSIS3 cable are The current universal service
the several expert committees being rolled out extensively in scheme imposes coverage
commissioned by the MoC to Israel without the need for obligations on Bezeq and
recommend policies and future government intervention HOT Telecom, but it is not
regulatory measures, is really enforced
arguably the one whose
recommendations have had
the strongest impact in the
Israel telecoms market:
• LLU and wholesale line
rental (WLR) should be
introduced in the fixed
(wireline) market
• new licences for WiMAX
and MVNOs in the wireless
market
The MoC is considering the
creation of a wholesale
market, which would allow
ISPs to package infrastructure
products with ISP products on
one single bill
Jordan In 2007, the MoICT published The National ICT Strategy The universal service is
the Statement of Government 2007-11 sets the following defined as including access to
Policy 2007, which defines main goals for Jordan by telephony and “data
guidelines for the regulatory 2011: communications sufficient for
developments and future • Internet usage penetration functional access to Internet
policies in the telecoms sector to reach 50% services [.., i.e. with a] data
Int@j, a voluntary non-profit, • ICT sector revenues to rate, reliability and continuity
private organisation reach USD3 billion of service [equivalent] to that
representing, promoting and used by a majority of
• ICT sector employment to
advancing the Jordanian subscribers taking account
reach 35 000 jobs
software and IT services technical factors that may limit
The Strategic plan through the performance of such
industry in the global market,
2012 sets the following technologies in certain
published its own view on the
objectives: geographic locations”.
development of ICT in Jordan in
a document National ICT • implementation of LLU However, the TRA finds that it
Strategy 2007-11, which has • stimulation of the is not necessary at this time to
been accepted by both the affordability and also include broadband
government and the private accessibility of broadband access in the definition of the
sector, which have been working services by setting universal service
towards achieving the targets performance indicators to
set out in this document monitor fixed wireless
The TRC published in late broadband providers’
2010 its own strategic plan performance
until 2012 TRC Strategic plan
through 2012, identifying a
number of tasks to achieve the
strategic objectives set out in
both the Statement of
Government Policy 2007 and
the National ICT Strategy
2007–2011
Ref: 18398-282
Summary Report | 20
Lebanon In November 2010 the TRA Main priorities and objectives: No universal service scheme
and the MoT gave a joint • expand and modernise the is currently in place in
presentation on broadband national fibre backbone Lebanon
objectives for Lebanon • connect 300 local
exchanges nationwide via
fibre-optic networks
• roll out FTTP/FTTB to
1000 corporate sites and
enable FTTC+VDSL to
350 street cabinets
• roll out mobile broadband
services based on HSPA+
in 2011
• ensure the timely
introduction of digital
terrestrial television (DTT)
before the deadline of
2015, in the process
freeing up digital dividend
spectrum to be reallocated
for mobile services
Morocco Maroc Numeric 2013 strategic Main targets set for 2013: In 2005, a new amendment to
plan for the Digital Economy, • 35% broadband the Telecoms Act broadened
published in mid-2008, household penetration the definition of universal
presents the vision, goals, • 100% of public schools service to cover value-added
strategic priorities and connected to broadband services, including Internet
accompanying measures with Internet services. This universal
regards to the development of service fund is used to finance
• 100% of Science students
ICT in Morocco two projects:
equipped with broadband
Policy paper, published at the Internet • the GENIE project
beginning of 2010, aims to (GENeralization of
achieve a social transformation, Information Technologies
develop more public services and Communication in
towards citizens, increase Education), which aims at
SMEs’ productivity, develop the installing computers in
ICT industry (including the schools in 2008–2013
telecoms industry), increase the • the PACTE programme
digital trust and improve the (Programme d’Accès aux
digital governance by 2013 Télécoms), aimed at
encouraging network
operators to roll out
infrastructure in rural
areas
Syria A new Telecommunications Law No formal broadband strategy No universal service scheme is
came into force in 2010 which has been identified currently in place
established the TRA as the
independent regulatory authority
in Syria. In 2004 the Syrian
government, in co-operation
with the United Nations
Development Programme
(UNDP), issued its National ICT
Strategy for Socio-Economic
Ref: 18398-282
Summary Report | 21
5
Development in Syria. This is
still the reference document for
development of the country’s
telecoms sector even though it
is now significantly outdated
Tunisia In May 2011 Infocom released The draft action plan aims to: The draft action plan includes
for consultation its draft action • consolidate ICT aspects such as defining
plan Plan d’action pour infrastructures in regions schemes similar to the
6
l’Economie Numerique, which • strengthen access to the universal service to finance the
presents the government’s Internet and improve usage roll-out of mobile broadband in
vision, goals, strategic priorities of ICT rural areas
and accompanying measures • stimulate the development
with regards to the development of digital services and
of ICT in Tunisia digital contents that
generate local employment
Table 3.8: Overview of recent policies and broadband strategy and objectives in FEMIP countries
[Source: Analysys Mason, regulators]
Relevant and specific aspects to broadband regulation and national broadband strategy are
provided in Table 3.9. 7
LLU status NGA status Satellite Spectrum for mobile

broadband status broadband status
Algeria LLU is not yet As part of the e-Algérie Satellite The Algerian government
introduced 2013 strategic plan, the broadband was planning to leapfrog
government requires that operators need to directly to 4G; however,
a secure, high-quality pay a licence fee recent announcements
infrastructure be set up. to the ARPT. suggest that 3G licences will
The strategic plan There is currently be awarded by the end of
considers that this will three licenced 2011
include the upgrade of VSAT operators DTT is expected to be
the existing national launched in 2011. According
telecoms infrastructure to the local press, the digital
switch-over is not expected
to occur before 2015
Egypt Shared LLU No concrete actions There are three No plans to award LTE
introduced in 2002 have yet been taken VSAT operators licences and spectrum
and made
effective in 2003
According to the
NTRA, full LLU will
not be introduced
until the licensing
of the country’s
second fixed-line
provider
5
Available at http://www.undp.org.sy/publications/national/E-Strategy/ICT_Strategy_en.pdf.
6
Available at http://www.mincom.tn/index.php?id=1600.
7
Ref: 18398-282
Summary Report | 22

Gaza/ LLU is not yet The MTIT is planning to There is no Although operators have the
West introduced award a telecoms licensed provider required licence to launch 3G
Bank wholesale licence to the of broadband over services, it is quite unlikely that
Palestine Electricity satellite mobile broadband services are
Company (PEC) to launched in Gaza/West Bank
provide FTTx services. until Israel frees up the
The licence is expected to required spectrum. However,
be granted by 2012 the MTIT intends to enter into
negotiations with the Israeli
authorities in the next two to
three years so that they free
up the required spectrum, thus
enabling mobile operators in
Gaza/West Bank to launch
mobile broadband services
such as 3G and LTE.
Israel LLU is not yet Bezeq is currently Satellite broadband The MoC plans to release
introduced upgrading its DSL has not yet been spectrum in the 2.6GHz band
network to fibre launched in Israel for LTE in the short term, but
Israel Electric Corporation because no no firm timetable has yet
(IEC) will form a new operator has been released. Analogue TV
venture to leverage its expressed an switch-off has been delayed
existing fibre backbone interest for such a till the end of 2011. However,
and lay a wholesale licence to date there is some spectrum in
FTTH network covering the 800MHz band currently
every home in the country being used for CDMA and
the full digital dividend band
will not become available for
LTE immediately after the
analogue switch-off
Jordan LLU has been finally A national broadband There are three One of the goals of the
imposed by the network provides VSAT operators National ICT Strategy 2007-
TRC as a result of broadband access using 11 is the development of a
its market reviews, fibre to schools and national policy for digital
but still remains to universities. According to broadcasting including the
be implemented, the TRC, if there were development of policies and
which is expected to extra capacity on the a timetable for the digital
happen in late 2012 network, it would make it switchover and the re-use of
available to operators freed-up spectrum
However, the TRC The TRC plans to start the
pointed out that operators analogue TV switchover in
invest themselves in NGA 2012, which will free up
plans. The government spectrum in the 800MHz
provides incentives and band. This spectrum will be
facilities such as reduced allocated to mobile services
taxes on Internet, but no in 2015. According to the
direct funding is TRC, spectrum in the
envisaged at this stage 2.6GHz band is also
currently available to the
existing mobile operators
even though none of them
has shown any interest in
this spectrum yet
Ref: 18398-282
Summary Report | 23

Lebanon LLU is not yet To remove any potential Satellite The government wants to
introduced barrier to broadband broadband is launch 3G by the end of
development, the provided by only 2011, despite resistance
Ministry announced in one VSAT from both market players
2010 that it would invest operator, which and the TRA
around USD170 has managed to The TRA has developed a
[EUR120] million in the gain a very limited plan whereby DTT would be
domestic local Internet number of introduced in 2012 and
backbone, by deploying subscribers analogue switch-off would
a 4400km fibre-optic occur by June 2015. After the
transmission network analogue switch-off, the TRA
connecting all major plans to allocate some of the
locations in the country freed up spectrum to LTE
Morocco Shared and full Currently developing a Several VSAT No plans to award LTE
LLU introduced in national broadband operators are licences and spectrum. The
2007 and 2008, strategy aimed at licenced and digital switch-over is
respectively. stimulating the roll out ofsatellite underway, but its timing is
However, LLU is NGA infrastructure broadband unknown. Also, importantly
not yet used due Considering the award of operators need to enough, a part of the
to its high prices new licences for the roll- pay landing rights 800MHz band has already
and operational out of NGA networks by to the ANRT, been awarded to WANA for
difficulties the end of 2011 to new which differ its limited-mobility services
wholesale-only operators according to the in 2007
such as ONE – the frequency band
National Office of used
Electricity – or ONCF –
the National Railway
Company
Syria LLU is not yet No concrete actions Only one operator DTT is due to be launched in
introduced have yet been taken provides satellite 2012. The date and process
broadband in for the switch-off of analogue
Syria, which has TV has not been defined
managed to In addition, spectrum in the
acquire a limited 800MHz and 2.6GHz bands
number of is currently occupied.
business Therefore, a decision on
subscribers spectrum refarming for LTE
is likely not to happen before
2013
Tunisia Shared LLU and The draft action plan for Only one VSAT The draft action plan for the
full LLU are the digital economy licence was digital economy includes
provided by the includes aspects with awarded in 2004 aspects such as re-
incumbent. regards to the stimulation organising the spectrum to
However, due to of broadband roll-out, facilitate convergence and
operational such as accelerating the create a favourable
difficulties it has roll-out of fibre and environment for wireless
been reported that considering new broadband
no lines have financing schemes such Tunisia intends to switch-off
been unbundled as public–private analogue TV in 2014, but
so far partnerships (PPP) for has no plans to award the
the roll-out of fibre-based digital dividend spectrum
fixed broadband soon
Table 3.9: Overview of broadband regulation in FEMIP countries [Source: Analysys Mason, regulators]
Ref: 18398-282
Summary Report | 24
3.3 The fixed and mobile market
Below we provide an overview of the fixed and mobile market in the FEMIP countries.
3.3.1 Overview of the fixed market
Fixed-line penetration varies significantly across countries in the FEMIP region, as shown below
in Figure 3.10. It worth noting that:
• Fixed-line penetration as a share of households is higher than 100% in Israel, Syria and
Lebanon, which is comparable to, and even higher than, penetration in the Western European
countries in our benchmarks. Fixed line penetration of households in the EU was around 89%
in 2009.
• Fixed-line penetration in the other FEMIP countries ranges from 42% to 65% of households,
which is at the lower end of benchmarks but still higher than in countries such as Thailand,
South Africa and Botswana.
160%
% of households
120%
80%
40%
0%
Georgia
Botswana
MA (only fixed)
Spain
Greece
Germany
Ukraine
Syria
Tunisia
Cyprus
United Kingdom
France
Gaza / West Bank
Algeria
Jordan
Malaysia
Lebanon
Thailand
Israel
MA (fixed + limited mobility)
Egypt
Italy
South Africa
8
Figure 3.10: Benchmark of fixed-line penetration [Source: GlobalComms, Euromonitor, 2009]
8
In reality, 100% household penetration does not mean that each household will have access to a fixed line as the
number of lines includes business lines (penetration is calculated as total lines including fixed and business lines
divided by the total number of households).
Ref: 18398-282
Summary Report | 25
3.3.2 Overview of the mobile market
Mobile penetration has been growing rapidly in all FEMIP countries (see Figure 3.11):
• mobile penetration as a share of the population has exceeded 100% in Israel, Jordan and
Tunisia, and is approaching the 100% mark in Morocco and Algeria
• mobile penetration is lower in Lebanon, Gaza/West Bank and Syria at 66%, 64% and 48% of
the population, respectively.
160%
140%
120%
% of population
100%
80%
60%
40%
20%
0%
Jordan
Algeria
Israel
Gaza / West Bank
Botswana
Ukraine
Morocco
South Africa
France
Egypt
Germany
Tunisia
Cyprus
Italy
Thailand
Spain
United Kingdom
Georgia
Lebanon
Syria
Malaysia
Greece
Figure 3.11: Benchmarks of mobile penetration by population in 2010 [Source: Wireless Intelligence,
Euromonitor]
The mobile market is more than 80% prepaid in most FEMIP countries, except for Israel where prepaid
subscribers accounted for only 21% of the total mobile subscriber base in 2010 (Figure 3.12).
100% Figure 3.12: Share of

Prepaid as % of total subscribers
90% prepaid subscriptions in

80% FEMIP countries in
70% 2010 [Source: Wireless
60% Intelligence]
50%
40%
30%
20%
10%
0%
Jordan
Algeria
Gaza / West Bank
Israel
Egypt
Morocco
Tunisia
Syria
Lebanon
Ref: 18398-282
Summary Report | 26
The number of 3G mobile subscribers is still very low in all FEMIP countries (accounting for less
than 10% of total mobile subscribers) except Israel, where 3G subscribers as a share of total
mobile subscribers grew steadily from 41% in 2007 to 55% in 2010. 3G is expected to be launched
in Algeria and Lebanon in 2012 and 2011, respectively, whereas there are no plans to launch 3G in
Gaza/West Bank (Figure 3.13).
60% Figure 3.13: Share of

3G mobile subscribers
3G as % of total subscribers
50% in FEMIP countries in

2010 [Source: Wireless
40%
Intelligence]
30%
20%
10%
0%
Jordan
Algeria
Israel
Gaza / West Bank

Morocco
Egypt
Tunisia
Syria
Lebanon
In 2010, mobile average revenue per user (ARPU) was less than EUR12 per month in all FEMIP
countries except Lebanon and Israel, at EUR28 and EUR29 per month, respectively. The
comparatively higher ARPU in Lebanon and Israel is primarily due to their higher share of
postpaid subscribers. Mobile ARPU is extremely low in Algeria and Egypt at EUR6 per month.
Mobile ARPU in most Western European countries is above EUR30.
35 Figure 3.14: Mobile

Mobile ARPU (EUR per month)
market ARPU in FEMIP

30
countries in 2010
25 [Source: Wireless
Intelligence]
20
15
10
0
Jordan
Algeria
Israel
Gaza / West Bank
Morocco
Egypt
Tunisia
Lebanon
Syria
Ref: 18398-282
Summary Report | 27
3.4 The broadband market
Below we describe the key features of the broadband market in FEMIP countries.
3.4.1 Market overview
The broadband market is still in its early stages of development in all FEMIP countries except
Israel, where fixed broadband 9 penetration stood at 81% of households in 2010. Penetration in all
other countries except Jordan and Lebanon is still lower than 20% of households, as shown below
in Figure 3.15.
Compared to benchmarks, penetration in Israel is higher than in Western European countries,

whereas other FEMIP countries have penetration levels that are comparable to, and even higher
than, countries such as Georgia, Thailand, Ukraine, South Africa and Botswana.
90%
80%
70%
% of households
60%
50%
40%
30%
20%
10%
0%
Jordan
Ukraine
Botswana
Israel
Gaza / West Bank

Algeria
France
Morocco
South Africa
Egypt
Germany
Thailand
Tunisia
Cyprus
United Kingdom
Spain
Italy
Georgia
Lebanon
Syria
Malaysia
Greece
Figure 3.15: Fixed broadband penetration of households in benchmark countries in 2010 [Source:
TeleGeography, Euromonitor]
Penetration of mobile broadband 10 has been growing rapidly in recent years in most FEMIP countries,
reaching 36% and 17% of households in Israel and Jordan in 2010, respectively (Figure 3.16). Mobile
broadband penetration in Morocco, Egypt and Syria has exceeded the penetration of fixed broadband.
Mobile broadband has not yet been launched in Lebanon, Algeria and Gaza/West Bank.
9
Fixed broadband includes DSL, cable, fibre (FTTC, FTTH), fixed WiMAX and satellite technologies.
10
Mobile broadband includes HSPA, HSPA+ and LTE technologies.
Ref: 18398-282
Summary Report | 28
40% Figure 3.16: Mobile

35% broadband penetration
% of households
30% of households in FEMIP
countries in 2010
25%
[Source: Operators,
20% Regulators, Analysys
15% Mason, Euromonitor]
10%
5%
0%
Jordan
Algeria
Israel
Gaza / West Bank

Morocco
Egypt
Tunisia
Syria
Lebanon
The total number of fixed and mobile broadband subscribers in all FEMIP countries reached
approximately nine million in 2010, with Egypt and Israel respectively accounting for 31% and
28% of total broadband subscribers. Broadband penetration reached 117% of households in Israel
and 41% of households in Jordan in 2010, whereas it remains extremely low in Syria at 5% of
households (Figure 3.17).
3.0 120%
2.5 100%
Subscribers (million)
% of households
2.0 80%
1.5 60%
1.0 40%
0.5 20%
0.0 0%
Egypt Israel Morocco Algeria Tunisia Jordan Lebanon Syria Gaza /
West
Bank
Fixed broadband subscribers Mobile broadband subscribers Broadband penetration

Figure 3.17: Broadband subscribers and penetration in FEMIP countries in 2010 [Source: TeleGeography,
operators, regulators, Analysys Mason, Euromonitor]
Prices for a fixed broadband subscription of up to 1Mbit/s range from EUR9 per month in
Morocco to EUR63 per month in Lebanon (see Figure 3.18 below). Syria and Lebanon are at the
upper end of FEMIP countries in terms of fixed broadband prices, whereas Morocco, Egypt,
Tunisia and Gaza/West Bank have the lowest prices. Note that the broadband packages available
in Algeria, Israel, Morocco and Tunisia offer unlimited data usage, whereas the other FEMIP
countries have imposed usage caps on their broadband offers.
Ref: 18398-282
Summary Report | 29
Figure 3.18 also illustrates the price for the cheapest mobile broadband packages available in each
FEMIP country, ranging from EUR3 per month in Egypt to EUR25 per month in Syria. Note that
mobile broadband is in direct competition with fixed broadband in most of the FEMIP countries,
and sometimes the prices for mobile broadband are cheaper than for fixed broadband such as in
Egypt, Jordan and Syria.
70 Figure 3.18: Prices for

fixed broadband offers
60 of up to 1Mbit/s and for
the cheapest mobile
50 broadband offers in the
EUR per month
FEMIP countries
40
[Source: Operators]
30 Note: Prices include
VAT
20
Note: Mobile broadband
10 is not available in
Gaza/West Bank,
0 Lebanon and Algeria
Jordan
Jordan
Algeria
Israel
Israel
Gaza / West Bank
Morocco
Morocco
Egypt
Egypt
Tunisia
Tunisia
Lebanon
Syria
Syria
Fixed offers Mobile offers
Computer penetration is low in all FEMIP countries except Israel and Lebanon, where computer
penetration as a share of households stood at respectively 119% and 78% in 2010, as shown in
Figure 3.19. Notwithstanding the low computer penetration in countries such as Syria, Jordan and
Tunisia compared to Western European countries, it is still higher than in other benchmarked
countries such as Thailand, South Africa, Georgia, Botswana, Ukraine and Greece.
250%
200%
% of households
150%
100%
50%
0%
Jordan
Algeria
Botswana
Ukraine
Israel
France
Morocco
South Africa
Egypt
Germany
Tunisia
Italy
Thailand
United Kingdom
Cyprus
Spain
Georgia
Lebanon
Syria
Malaysia
Greece
Figure 3.19: Computer penetration in FEMIP and other benchmark countries [Source: Euromonitor,
public sources]
Note: Information on Gaza/West Bank is not available and therefore is not included in the chart
Ref: 18398-282
Summary Report | 30
Satellite broadband has not yet been launched in some FEMIP countries, or has managed to gain
only a very limited number of subscribers. However, satellite TV penetration is extremely high at
more than 60% of households in six countries, and it is closely reaching 90% of households in
Gaza/West Bank and Algeria (Figure 3.20).
100%
90%
80%
% of households
70%
60%
50%
40%
30%
20%
10%
0%
Jordan
Gaza / West Bank
Algeria
France
Ukraine
Morocco
Israel
South Africa
Egypt
Germany
Thailand
Tunisia
Italy
United Kingdom
Spain
Georgia
Lebanon
Malaysia
Greece
Figure 3.20: Penetration of satellite TV in benchmarked countries [Source: Euromonitor, Analysys
Mason] Note: Information on Syria is not available and therefore is not included in the chart
3.4.2 Existing operators and infrastructure
Table 3.21 summarises the characteristics and coverage of the existing broadband networks in
each of the FEMIP countries.
Country Operator Technology Maximum Coverage (end of 2010)

headline
download speed
Algeria Algérie Télécom ADSL2+ 8Mbit/s 70% of the population for DSL
technologies
Algérie Télécom FTTH 8Mbit/s <1% of households
Algérie Télécom WiMAX 2Mbit/s 10–15% of the population
Egypt Telecom Egypt ADSL2+ 24Mbit/s 99% of the population for DSL
technologies
Mobinil HSPA 7.2Mbit/s 60% of the population
Etisalat Misr HSPA+ 42Mbit/s 87% of the population
Vodafone Egypt HSPA+ 21Mbit/s 25% of the population
Gaza/West PalTel ADSL 8Mbit/s 72% of the population
Bank
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Summary Report | 31
Country Operator Technology Maximum Coverage (end of 2010)

headline
download speed
Israel Bezeq ADSL2+ 5Mbit/s 99% of households for DSL
technologies
Bezeq FTTC 100Mbit/s 50% of households
Pelephone HSPA 7.2Mbit/s 90% of households
HOT Telecom Cable (hybrid 100Mbit/s 85% of households
fibre-coaxial)
Partner HSPA 7.2Mbit/s 80% of the population
Cellcom HSPA 2.8Mbit/s 95% of the population
Jordan Jordan Telecom ADSL2+ Up to 24Mbit/s 70% of households for DSL
technologies
Jordan Telecom HSPA+ 21Mbit/s 60% of the population
Zain HSPA+ 21Mbit/s 0% of the population
Umniah WiMAX 3Mbit/s 34% of the population
Mada WiMAX 2.4Mbit/s 37% of the population
Communications
wi-tribe WiMAX 3Mbit/s 15–20% of the population
Kulacom WiMAX 2Mbit/s 11% of the population
Lebanon Ogero Telecom ADSL2+ 20Mbit/s 70% of households for DSL
technologies
Cedarcom WiMAX 1Mbit/s 60–70% of the population
GDS WiMAX 1Mbit/s 60–70% of the population
PESCO FWA 512kbit/s Data unavailable
Cable One WiMAX 1Mbit/s 50% of the population
Morocco Maroc Telecom ADSL2+ 20Mbit/s 30% of households for DSL
technologies
Maroc Telecom HSPA+ 7.2Mbit/s Not available
Meditel WiMAX Up to 8Mbit/s 10% of the population
Meditel HSPA 1.8Mbit/s to 40–60% of the population
7.2Mbit/s
Meditel HSPA+ 21Mbit/s A few areas in Casablanca and
Rabat
Wana CDMA EVDO 1Mbit/s 40–50% of population
Rev A (3G)
Syria STC ADSL 8Mbit/s 50% of the population
Syriatel HSPA 7.2Mbit/s 50% of the population
MTN Syria HSPA 7.2Mbit/s 60% of the population
Tunisia Tunisie Telecom ADSL2+ 20Mbit/s 99% of the population for DSL
technologies
Orange Tunisie WiMAX 3Mbit/s 50% of the population
Orange Tunisie HSPA+ 7.2Mbit/s 70% of the population
Table 3.21: Characteristics and coverage of existing broadband networks in FEMIP countries [Source:
TeleGeography, operators, Analysys Mason]
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Summary Report | 32
4 Assessment of broadband market demand in FEMIP countries
This section provides an assessment of broadband market demand in FEMIP countries. It is laid out as
follows:
• Section 4.1 outlines the results of our assessment of the evolution of broadband take-up by
technology
• Section 4.2 outlines the results of our assessment of the evolution of broadband revenues.
4.1 Broadband take-up

Below we estimate the proportion of households in FEMIP countries that will subscribe to
broadband services by different technologies over the forecast period, if these services were
available. Our assessment of broadband take-up does not include the costs associated with rolling
out new networks (e.g. fibre); therefore, the expected increasing demand for broadband services in
these countries may not be satisfied if the business case for the roll-out of broadband technologies
(e.g. HSPA, WiMAX) is not viable or if no public funding is available to support these
deployments.
4.1.1 Broadband penetration

Total broadband penetration, including fixed and mobile broadband, is expected to grow
significantly from 21% of households in 2010 to 70% of households in 2020 when summing all
FEMIP countries. Except for Israel, which already had a penetration close to 120% of households
as at the end of 2010, FEMIP countries can be grouped into three categories according to the
penetration level that broadband is expected to achieve by the end of the forecast period (see
Figure 4.1):
• Morocco, Jordan and Lebanon are expected to have a penetration close to 95–100% of
households by 2020
• Algeria and Tunisia are forecast to have a penetration close to 75–80% of households by 2020
• Egypt, Syria and Gaza/West Bank are estimated to have a penetration close to 50–55% of
households by 2020.
Ref: 18398-282
Summary Report | 33
160%
140%
120%
% of households
100%
80%
60%
40%
20%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.1: Forecast evolution of broadband penetration in FEMIP countries [Source: Analysys Mason]
The forecast evolution of broadband penetration takes into account its historical evolution,
operators’ forecasts and plans, and a number of factors such as PC penetration, availability of
electricity, literacy rate and poverty levels. We have cross-checked our penetration forecasts with
coverage forecasts for each technology which were based on the results of our coverage-viability
analysis (detailed in Section 5), announcements made or inputs provided by operators, and our
understanding of the likely evolution of the market.
The number of broadband connections, including fixed and mobile broadband, is estimated to
increase from 9.3 million connections in 2010 to 38.8 million in 2020 based on the penetration
forecasts above. Egypt is expected to continue to be the country with the largest share of
broadband subscribers in the FEMIP region, increasing from 31% in 2010 to 32% in 2020 despite
a low penetration forecast. The number of broadband subscribers in Morocco and Algeria is
estimated to outperform the number of subscribers in Israel by 2013, reaching 8.1 million and
6.5 million in 2020, respectively (see Table 4.2).
Broadband Broadband CAGR Share of total

subscribers in subscribers in (2010–2020) FEMIP broadband
2010 (million) 2020 (million) subscribers in 2020
Algeria 0.8 6.5 23% 17%
Egypt 2.9 12.6 16% 32%
Gaza/West Bank 0.1 0.4 15% 1%
Israel 2.6 4.0 4% 10%
Jordan 0.5 1.6 12% 4%
Lebanon 0.3 0.8 12% 2%
Morocco 1.3 8.1 20% 21%
Syria 0.2 2.4 30% 6%
Tunisia 0.6 2.4 15% 6%
Total 9.3 38.8 15% 100%
Table 4.2: Broadband subscribers growth and share in FEMIP countries [Source: Analysys Mason]
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Summary Report | 34
Mobile broadband is forecast to account for approximately 71% of total broadband connections in 2020
in all FEMIP countries (up from 38% in 2010), as shown in Figure 4.3. We expect the increase in
penetration to come mainly from the mobile rather than the fixed market, for several reasons:
• fixed broadband penetration has stagnated in countries such as Morocco, or has reached
saturation as in Israel
• the footprint of the existing copper network in some countries is low (e.g. 30% of households
in Morocco), and we do not foresee that the existing copper networks will be expanded further
• mobile broadband penetration has experienced strong growth in recent years in most FEMIP
countries, outperforming fixed broadband in Egypt, Morocco and Syria
• mobile broadband offers are cheaper than fixed broadband packages in most of the FEMIP
countries such as Egypt, leading to lower mobile broadband ARPUs.
Morocco, Algeria, Egypt and Syria are the countries where mobile broadband is expected to
represent the highest share of the total broadband market in the FEMIP countries, primarily due to
their relatively large size, thus making it easier and less costly to roll out wireless rather than wired
technologies. It should be noted that we expect mobile broadband to be launch in 2012 in Algeria
and 2014 in Gaza/West Bank. Our forecast for the evolution of mobile broadband subscribers as
share of broadband subscribers in FEMIP countries is shown in Figure 4.3.
100%
90%
80%
% of total subscribers
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.3: Forecast evolution of mobile broadband subscribers as a share of broadband subscribers
in FEMIP countries [Source: Analysys Mason]
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Summary Report | 35
Some parameters which are not specifically taken into account in our model may have an impact
(positive or negative) on our forecasts:
• Political instability –Major protests calling for political reform and greater freedom have been
taking place across countries in the FEMIP region since December 2010. If the political instability
persists for a prolonged period, this may have a negative impact on our forecasts as it may hinder
the inflow of foreign investment to the country.
• Stage of liberalisation of the telecoms sector and impact on future developments –

Liberalisation of the fixed market in some FEMIP countries, either through the partial
privatisation of the incumbent or by imposing on the incumbent the obligation to offer local
loop unbundling (LLU), is likely to stimulate competition in the broadband market. The
development of a framework allowing large infrastructure owners to enter the broadband
market may boost the roll-out of next-generation access (NGA) networks.
• Political considerations such as regulatory and spectrum co-ordination between countries –

The switchover from analogue to digital division will free up a significant amount of spectrum (the
so-called as ‘digital dividend’). If this happens sooner than expected, this is likely to have a
positive impact on the penetration of LTE.
• Award of 3G (and LTE) licences – 3G licences have not yet been awarded in Algeria,
Gaza/West Bank and Lebanon. Our forecasts for the launch of 3G services in these countries
are based on our discussions with relevant stakeholders. However, any further delays on the
award of 3G licences in these countries will have a negative impact on our forecasts.
Uncertainty regarding the licencing of 4G spectrum in most of the FEMIP countries could also
have an impact on our forecast (positive or negative depending on situation).
• Additional costs that may pose a barrier to network roll-out – The fees that operators will
have to pay to purchase rights of way to lay down new fibre will be a key factor incentivising
(or dis-incentivising) current operators to roll out NGA networks. Municipalities might waive
operator fees for use of rights of way in ducts, and if operators were able to use the public
rights of way free of charge, this could provide a significant boost to NGA. Licence fees for
mobile licence renewal or LTE spectrum fees could also pose a barrier to the rapid roll-out of
LTE networks.
• Provision of Internet centres in rural areas as a low-cost alternative – The implementation

of this type of initiative can contribute towards stimulating the demand for broadband services
and increasing broadband awareness among the population, ultimately boosting overall
broadband penetration (in particular mobile broadband).
• Level of censorship – A potential increase in censorship levels may have a negative impact on
the population’s interest in taking up broadband services.
• International connectivity bandwidth – It needs to be increased to take into account the rise
in demand for broadband services.
Ref: 18398-282
Summary Report | 36
4.1.2 Bandwidth demand
We forecast the increase in bandwidth demand based on benchmarks from other countries as
information was not publically available or provided to us by operators.
As shown in Figure 4.4, we estimate that:
• the average download consumption per fixed-line subscriber will increase from 6.1GB per
month in 2010 to 12.6GB per month in 2020
• the average download consumption per mobile subscriber will increase from 2.8GB per month
in 2010 to 7.7GB per month in 2020.
FEMIP countries are expected to be in the lower range of benchmarked Western European countries in
2020 in terms of fixed broadband usage (currently at 10GB to 20GB per month in Western European
countries). The opposite trend is expected in the case of mobile broadband usage, which is estimated to
be higher than benchmarks (currently at 1GB and 3GB per month in Western European countries).
However, the proliferation of applications such as video streaming and catch-up TV in FEMIP
countries could lead to a much higher usage of fixed broadband than forecast.
14 Figure 4.4: Forecast

evolution of bandwidth
12
usage for fixed and
GB per month per subscription
mobile broadband
10
users [Source:
8 Analysys Mason
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Fixed broadband Mobile broadband
Mobile broadband usage is used to drive the costs of network roll-out as it has a major impact on
the deployment of wireless networks given that capacity is the main driver of wireless networks
after a few years from launch.
Ref: 18398-282
Summary Report | 37
4.2 Broadband revenues

This section forecasts the evolution of revenues from broadband services in FEMIP countries for the
period 2011–2020.
Our starting point for forecasting the evolution of broadband ARPU is to estimate ARPU for the
different broadband technologies. Our ARPU forecasts are based on an affordability analysis
where the average revenue per broadband user (or per household) is calculated as a percentage of
GDP. As broadband penetration increases, ARPU as a percentage of GDP is expected to decrease
as the less-affluent segments of the population take-up broadband services (i.e. ARPU dilution).
ARPU for 2011 has been estimated based on public data regarding broadband offers available in
FEMIP countries, as well as input from operators.
Fixed broadband ARPU is forecast to continue its decreasing trend in most FEMIP countries in the
short term and to stabilise in the longer term (Figure 4.5):
• this forecast follows a similar trend to what has happened historically in FEMIP and European
countries
• ARPU for fixed broadband is expected to stabilise in countries such as Morocco where it has
already reached a very low figure
If we exclude Morocco, which has a very low ARPU at EUR13 per month in 2011, and Israel, which
has a very high ARPU at EUR37 per month in 2011, in all the other FEMIP countries fixed broadband
ARPU ranges from EUR19 per month to EUR31 per month in 2011. The difference between the
highest and lowest ARPU levels is expected to decrease during the forecast period, ranging from
EUR16 per month and EUR26 per month in 2020.
40
35
30
EUR per month
25
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.5: Fixed broadband ARPU forecasts in the FEMIP countries [Source: Analysys Mason]
Overall, mobile broadband ARPU is also expected to decrease in the period to 2020 in most of the
FEMIP countries, as shown in Figure 4.6 below. Mobile broadband ARPU is very low in Morocco
and Egypt at EUR8 per month and EUR11 per month in 2011, respectively, whereas it is above
Ref: 18398-282
Summary Report | 38
EUR21 per month in Syria and Israel. Mobile broadband ARPU is expected to decrease to
EUR14–24 per month in most of the FEMIP countries by 2020, except in Morocco and Egypt,
where it is estimated to be much lower at EUR6 per month and EUR9 per month, respectively.
Mobile broadband ARPUs are expected to be lower than fixed broadband ARPUs as the
competitive intensity is higher in the mobile markets in all FEMIP countries.
30
25
EUR per month
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.6: Forecast evolution of mobile broadband ARPU in FEMIP countries [Source: Analysys Mason]
Details on fixed and mobile broadband ARPU growth are provided in Table 4.7.
Fixed broadband ARPU (EUR/month) Mobile broadband ARPU (EUR/month)

2011 2020 CAGR 2011 2020 CAGR
(2011-2020) (2011-2020)
11
Algeria 31 19 -4.95% N/A 18 -5.01%
Egypt 28 19 -4.46% 11 9 -2.39%
Gaza/West 12
19 19 0.13% N/A 18 0.28%
Bank
Israel 37 35 -0.65% 25 24 -0.40%
Jordan 30 23 -3.03% 15 12 -2.40%
Lebanon 30 26 -1.60% 27 20 -3.03%
Morocco 13 13 0.11% 8 6 -2.67%
Syria 26 23 -1.34% 21 18 -1.68%
Tunisia 20 16 -2.33% 16 14 -1.53%
Table 4.7: Fixed and mobile broadband ARPU forecasts in FEMIP countries [Source: Analysys Mason]
11
CAGR calculated between 2012 and 2020.
12
CAGR calculated between 2014 and 2020.
Ref: 18398-282
Summary Report | 39
We have calculated broadband revenues based on the resulting ARPU and penetration forecasts.
Broadband revenues are expected to total EUR6.8 billion in 2020, up from EUR2.9 billion in
2011. The share of broadband revenues in Israel and Egypt is expected to decrease from 37% and
27%, respectively, in 2011 to 21% and 25% in 2020 (Figure 4.8). However, the share of broadband
revenues in Algeria is expected to increase from 11% in 2011 to 21% in 2020.
1,800
1,600
1,400
1,200
EUR (million)
1,000
800
600
400
200
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.8: Forecast evolution of broadband revenues in FEMIP countries [Source: Analysys Mason]
Revenues from mobile broadband are forecast to account for 27% and 57% of total broadband
revenues in 2011 and 2020, respectively. Mobile broadband revenues as a share of total broadband
revenues are expected to be:
• extremely high in Morocco and Algeria (around 80% of total revenues in 2020)
• high in Syria and Egypt (around 60% of total revenues in 2020)
• significant in all other FEMIP countries (40–45% of total revenues in 2020)
• modest in Israel (around 35% of total revenues in 2020)
Ref: 18398-282
Summary Report | 40
90%
80%
70%
% of total revenue
60%
50%
40%
30%
20%
10%
0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4.9: Forecast evolution of mobile broadband revenues as a share of total broadband revenues
in FEMIP countries [Source: Analysys Mason]
Details on revenues growth, share of mobile broadband revenues and split of total revenues
between FEMIP countries are provided in Table 4.10.
Broadband Broadband CAGR Share of total Share of mobile

revenues in revenues in (2011- FEMIP broadband broadband revenues of
2011 (EUR 2020 (EUR 2020) revenues in 2020 total broadband
million) million) revenues in 2020
Algeria 311.4 1412.5 18% 21% 79%
Egypt 769.7 1704.5 9% 25% 56%
Gaza/West
25.0 87.6 15% 1% 42%
Bank
Israel 1054.6 1422.4 3% 21% 34%
Jordan 167.5 299.5 7% 4% 45%
Lebanon 105.2 227.7 9% 3% 41%
Morocco 197.2 677.0 15% 10% 80%
Syria 75.1 569.7 25% 8% 60%
Tunisia 167.8 413.1 11% 6% 45%
Total 2873.4 6814.0 10% 100% 57%
Table 4.10: Broadband revenues growth and share in FEMIP countries [Source: Analysys Mason]
Broadband revenues as a share of GDP are expected to increase from 0.4% in 2011 to 0.7% in 2020
(based on a simple average of the nine FEMIP countries). As a comparison, 2010 broadband revenues
as a share of GDP in most European countries are estimated to be between 0.3% and 0.8%.
Ref: 18398-282
Summary Report | 41
5 Comparison and evaluation of the costs associated with the

roll-out of different broadband technologies
This section provides a comparison and evaluation of the costs associated with the implementation
of different broadband technologies under a range of scenarios. It is laid out as follows:
• Section 5.1 presents the different scenarios used in our analysis
• Section 5.2 describes the methodology used for the analyses carried out for terrestrial
technologies
• Section 5.3 provides an assessment of the commercial viability of broadband coverage for the
different terrestrial technologies
• Section 5.4 presents an assessment of the costs associated with implementing the different
terrestrial technologies.
• Section 5.5 assesses the costs of implementing a satellite solution
• Section 5.6 presents the results by scenario using a mix of technologies
5.1 Scenario definition

We start by defining the scenarios and cost types we have used in our analysis.
► Scenarios
We have defined three illustrative scenarios consisting of a mix of technologies that will provide the
most economical access to broadband services. As a starting point, we should use scenarios based on
the political agenda, regulatory requirements and future plans if available in each FEMIP country.
However, this would result in country-specific targets which would not allow for an easy comparison
of the results among FEMIP countries. Therefore, the scenarios defined for our analysis are similar to
those included in the Digital Agenda for Europe (DAE), 13 but with lower absolute speed targets which
we believe are more realistic for all FEMIP countries except for Israel, where we use the same targets
as in the DAE as broadband infrastructure deployment in Israel is more advanced than other FEMIP
countries. These scenarios are presented below in Table 5.1 below.
Scenario 2015 target 2020 target
Coverage target Minimum real Coverage target Minimum real
(as % of download speed (as % of download speed
population) (Mbit/s) population) (Mbit/s)
Scenario 1 50% 1Mbit/s 100% 1Mbit/s
100% 4Mbit/s
100% 10Mbit/s
Scenario 1 for Israel 50% 4Mbit/s 100% 4Mbit/s
Table 5.1: Coverage scenarios used in the costs forecasts [Source: Analysys Mason]
Note: For scenario 2 and 3, both coverage/speed targets must be met in 2020
(e.g. 50% at 10 Mbit/s and 100% at 4Mbit/s for scenario 2).
13
The Digital Agenda is Europe’s strategy for a flourishing digital economy by 2020.
Ref: 18398-282
Summary Report | 42
For each scenario, we first assess which technology may achieve the speeds required and then we
determine which technology mix is the least costly.
Table 5.2 illustrates the headline and real download speeds for the different technologies we
consider in our assessment.
Technology Headline download Real download Download speed

speed speed considered
ADSL2+ Up to 24Mbit/s Depends on line length Depends on line length
FTTP Up to 1000Mbit/s ≈ 100Mbit/s 100Mbit/s
FTTC Up to 100Mbit/s ≈ 30Mbit/s 30Mbit/s
WiMAX Up to 10Mbit/s ≈ 4Mbit/s 4Mbit/s
(in the 2.6GHz band)
HSPA Up to 14.4Mbit/s ≈ 2–3Mbit/s 2Mbit/s
HSPA+ Up to 42Mbit/s ≈ 4–6Mbit/s 4Mbit/s
LTE Up to 100Mbit/s ≈ 10–20Mbit/s 10Mbit/s
Satellite (next generation Up to 30Mbit/s ≈ 30Mbit/s 30Mbit/s
Ka-band)
Table 5.2: Headline and real download speeds by broadband technology [Source: Analysys Mason,
CDG, WiMAX Forum, Ericsson, ABI research, Qualcomm, satellite vendors]
It should be noted that, for simplicity reasons, we use one average real download speed for each
technology (with the exception of DSL). However, the real speed available to end users for one
given technology depends on several factors – especially in the case of wireless technologies –
such as the network design, the network load, the time of the day and the location of the user
(outdoors, indoors, on the move, etc.).
The speed of DSL connections is mainly dictated by the copper line length, which is mainly
dictated by how far the user is from the local exchange: the closer the user is to the local exchange,
the higher the speeds they can achieve.
As the minimum download speed targets are lower than those in the DAE, the total costs of
achieving them will be lower than in European countries, and the contribution of wireless is likely
to be greater.
Ref: 18398-282
Summary Report | 43
► Cost types
We have defined several types of cost by technology which are used in our analysis. These cost
types are presented below in Table 5.3.
Cost type Description of cost type Why we are modelling this cost type
‘50% costs’: costs associated with Cost needed to cover 50% of the Needed as an input to reach
covering 50% of the population population irrespective of scenario targets in 2015
commercial viability
‘100% costs’: costs associated Costs needed to cover 100% of Needed as an input to reach
with covering 100% of the the population irrespective of scenario targets in 2020 if
population commercial viability terrestrial infrastructure is used to
cover 100% of the population
‘Adjusted costs’: adjusted costs Costs needed taking into account Needed as an input to reach the
associated with covering 100% of that the ‘very remote’, i.e. the final targets in each scenario in 2020
the population few percentages of the population using terrestrial infrastructure,
living in the most remote areas, which will be complemented by
are unlikely to be covered by satellite to reach the remaining
terrestrial technologies. (more population not covered by
details are provided below) terrestrial technologies
‘Viable costs’: costs associated Costs based on our model results, Needed to estimate the amount of
with achieving commercially which are likely to be close to a funding required for terrestrial
viable coverage maximum of what private technologies in commercially
operators may invest in the future viable areas
‘Unviable costs’: costs associated The difference between the costs Needed to estimate the amount of
with achieving commercially for achieving the population funding required for terrestrial
unviable coverage coverage target (i.e. 50%, 100%) technologies in commercially
and the commercially viable cost unviable areas
Table 5.3: Type of costs for each terrestrial broadband technology [Source: Analysys Mason]
After calculating the different cost types by technology, we use the most cost-effective
technologies to reach the scenario targets by looking at the existing coverage of each technology,
the cost for commercially viable coverage calculated in our model, and the costs to reach the
adjusted population covered by terrestrial technologies in 2020.
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Summary Report | 44
5.2 Description of the methodology for terrestrial technologies

There are two main types of outputs to this section:
• the costs for commercial viable broadband coverage by terrestrial technology

• the different cost types as described above.
Figure 5.4 below illustrates a simplified flow-chart of the approach used to build these two outputs.
ARPU
Costs associated with

Revenue for each IRR threshold on each
achieving viable
population density level population density level
coverage
Population density curve
Costs associated with

Coverage costs for each Sum of all costs for all
covering 50% of the
population density level population density levels
population
Main cost drivers
per technology Input Costs associated with
covering 100% of the
Calculation
population
Output
Adjusted costs
associated with covering
100% of the population
Households
Penetration Population
SMEs
Figure 5.4: High-level methodology used in this section [Source: Analysys Mason]
Below we detail how each of these two outputs is calculated.
► Coverage commercial viability
The costs of deploying and operating a broadband network for each technology are a function of
population density in a given area. As a rule, the lower the population density, the higher the cost per
person or household. 14
The commercial viability of broadband coverage is defined as the maximum population coverage
that is likely to be commercially viable to achieve 15 for each broadband technology (i.e. excluding
public intervention or public funds) taking into account the demand assumptions (i.e. expected
revenues) described in the previous section, through the use of a revenue-density analysis. For
each level of population density, our revenue-density analysis takes into account the revenue
potential arising from serving these areas with broadband and the costs (upfront and ongoing)
required to deliver broadband to these areas. Finally, we assume that it is likely to be economically
14
This may not always be true. For instance, in the case of wireless technologies, in areas of very high population
density it is necessary to increase the capacity of the network to satisfy the increasing demand for bandwidth. Thus,
it may be more expensive to cover the higher-density areas than those areas with lower densities. However, outside
very densely populated areas, the rule applies.
15
We define an area to be commercially viable whenever the business case for covering this area provides an internal
rate of return (IRR) above 15%, as described later in this section.
Ref: 18398-282
Summary Report | 45
viable to deploy a particular broadband technology in a given area when the internal rate of return
(IRR) is at least 15% for ten years. 16
Figure 5.5 provides an example of the revenue-density approach. The chart shows that using a
threshold IRR of 15% the viability of FTTH and FTTC is lower than 5% of the population,
whereas the viability of DSL, 17 WiMAX, HSPA, HSPA+ and LTE is between 50% and 60% of the
population. The FTTH and FTTC results are driven primarily by the high costs of rollout and this
limits viability significantly. It should be noted that the IRR is very sensitive to revenues and costs
and these both vary significantly with population density, hence there is a compound effect which
drives the IRR down (i.e. in less populated areas revenues reduce and costs increase).
50% Figure 5.5: Illustration

of the revenue-density
40% Urban Rural approach [Source:
Internal rate of return (%)
30% Analysys Mason]

20%
Note: The viability
10% calculation for DSL and
0% FTTC does not take
0% 20% 40% 60% 80% 100% into account the limited
-10%
footprint of the existing
-20% copper network.
-30% Therefore, this result is
theoretical and
-40% assumes that the
-50% existing copper network
Population coverage (%) covers 100% of the
population
DSL FTTC FTTH WiMAX
HSPA HSPA+ LTE Note: The dotted red
line represents an IRR
of 15%
The methodology assumes that it is more commercially viable to deploy a network in higher-
density areas (due to the lower costs of deployment and the higher number of subscribers) – this
assumption is borne out in practice when looking at operators’ investment decisions.
Cable networks are excluded from our revenue-density analysis, as we think it is unlikely that
there will be large-scale extensions of current cable networks in the FEMIP countries, if any at all.
► Different cost types
We calculate several cost types for each terrestrial technology:
• ‘50% costs’ – The costs associated with covering 50% of the population, which is needed
to reach the scenario targets in 2015.
16
Typically, the weighted average cost of capital (WACC) for European operators is 10–12%.
17
The viability calculation for DSL and FTTC does not take into account the limited footprint of the existing copper network.
Therefore, this result is theoretical and assumes that the existing copper network covers 100% of the population.
Ref: 18398-282
Summary Report | 46
• ‘100% costs’ – The costs associated with covering 100% of the population, independently
of what is commercially viable. The population coverage would exceed the commercially
viable coverage (calculated on the basis of the revenue-density analysis described above).
• ‘Adjusted costs’ – The ‘adjusted’ costs of covering 100% of the population, taking into
account that the ‘very remote’, i.e. the final few percentages of the population living in the
most remote parts of the country, are unlikely to be covered by terrestrial technologies. In
these areas, satellite broadband tends to be the most cost-effective means to provide
broadband. We have made a simplifying assumption that where terrestrial infrastructure exists
then it could potentially be re-used to support terrestrial broadband rollout. The most extensive
terrestrial infrastructure in this market is 2G mobile base station sites, and we believe it is
reasonable to expect over the long term that these sites could be used to extend broadband
coverage, taking account of the potential for use of lower frequency (<1GHz) spectrum. The
implication of this is that satellite is used to cover those very remote areas beyond the 2G
network footprint. This simplifying assumption is reasonably consistent with what we have
seen in some developed markets where a combination of terrestrial wireless and satellite
technologies have been used to address rural broadband ‘not-spot’ areas, e.g. in Ireland. In the
case of Ireland the Government ran a competition to determine the most cost-effective way to
deliver rural broadband and our estimates suggest that satellite is being used to provide 3–5%
of the targeted premises, which equates to less than 1% of all premises in the country; this
compares with 2G population coverage in Ireland being around 99%.
• ‘Viable costs’ – The costs associated with achieving commercially viable coverage. These
costs are likely to be close to a maximum of what private operators may invest in the future.
The commercially viable coverage is derived from our revenue-density analysis and will result
in partial population coverage. However, operators may decide to fully invest in one
technology and not in another. It cannot be expected that private operators will invest in all
technologies.
• ’Unviable costs’ – The difference between the costs for achieving the population coverage
target (i.e. 50%, 100%) and the commercially viable cost. These costs are needed to cover
the commercially unviable areas and those areas may require public funding.
We also assume that operators will not expand their existing copper networks, as fibre is widely
accepted as the fixed technology for the future. Therefore, DSL and FTTC technologies cannot be
rolled out beyond the current reach of the existing copper network.
It should also be noted that the costs are calculated for the roll-out of a single network for any
given technology (i.e. we assume that several networks will not be rolled out at the same time).
This assumption is reasonable for fixed access networks. However, several mobile operators
provide services over their own infrastructure at least in the commercially viable areas.
After calculating the different cost types, we also carried out an assessment of the costs associated
with three different scenarios consisting of a mix of technologies that will provide the most
economical access to broadband services.
Ref: 18398-282
Summary Report | 47
5.3 Assessment of commercially viable coverage by terrestrial broadband technology

Table 5.6 below illustrates the current coverage of the copper network in each of the FEMIP
countries and of the different terrestrial broadband technologies that we consider in our
assessment. (LTE technology has not yet been deployed in any FEMIP country.)
Country Copper DSL FTTP FTTC WiMAX (fixed HSPA HSPA+

footprint wireless)
Algeria 85% 70% 0% 0% 13% 0% 0%
Egypt 99% 99% 0% 0% 0% 87% 87%
Gaza/
90% 72% 0% 0% 0% 0% 0%
West Bank
Israel 100% 99% 0% 50% 0% 95% 0%
Jordan 95% 70% 0% 0% 50% 60% 60%
Lebanon 90% 70% 0% 0% 63% 0% 0%
Morocco 30% 30% 0% 0% 10% 50% 10%
Syria 75% 40% 0% 0% 0% 60% 10%
Tunisia 99% 99% 0% 0% 50% 70% 70%
Table 5.6: Coverage of existing networks in FEMIP countries in 2010 [Source: Analysys Mason,
GlobalComms, and operators]
The results of our revenue-density analysis and our penetration and revenue forecasts are shown in
Table 5.7. The result for each technology shows the maximum commercially viable population
coverage, subject to the operator obtaining an IRR of at least 15%. For example, it would be
commercially viable for an operator to deploy WiMAX in Morocco to up to 55% of the population.
Country DSL FTTP FTTC WiMAX (fixed HSPA HSPA+ LTE

wireless)
Algeria 75% 8% 12% 67% 63% 59% 53%
Egypt 93% 8% 25% 68% 82% 82% 74%
Gaza/ 90% due to the limitations of
26% 62% 95% 84% 80% 78%
West Bank the existing copper network
Israel 100% 86% 96% 99% 96% 96% 96%
Jordan 95% 47% 74% 91% 74% 69% 68%
90% due to the limitations of
Lebanon 44% 82% 100% 86% 83% 81%
the existing copper network
30% due to the limitations of
Morocco 1% 1% 55% 59% 59% 56%
the existing copper network
Syria 66% 9% 10% 53% 55% 54% 48%
Tunisia 84% 7% 29% 75% 57% 57% 51%
Table 5.7: Commercially viable coverage by technology based on demand forecasts [Source:
Analysys Mason]
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Summary Report | 48
It should be noted that this analysis is done per technology on a standalone basis and does not take
into account the existing coverage of each technology. The results of our analysis show that Israel
has the highest commercially viable coverage for all technologies. This is mainly due to the
following factors: very high density, small area, high current and forecasted penetration of mobile
and fixed broadband, and high fixed and mobile broadband ARPU. In contrast, Morocco has the
lowest commercially viable coverage for fixed technologies, and one of the lowest commercially
viable coverage for mobile technologies. This is mainly due to the following factors: very low
density, big area, low current and forecasted penetration of fixed broadband, and low fixed and
mobile broadband ARPU.
5.4 Assessment of different cost types for a nationwide roll-out of terrestrial broadband
technologies
Table 5.8 below illustrates the costs needed to roll out DSL and FTTC technologies to 50% of the
population and to reach coverage of the copper network footprint in all FEMIP countries, as we
assume that operators will not expand their existing copper networks. Therefore, DSL and FTTC
technologies cannot be rolled out beyond the current reach of the existing copper network.
Costs for rolling out DSL to the copper footprint are high in Syria and Algeria due to the limited
coverage of DSL and the topology of the country (i.e. large countries in terms of land area and low
population densities). Regarding FTTC, costs are higher in Algeria and Egypt as they are the
largest countries in terms of area and population. On the other hand, costs are lower in small and
very densely populated countries such as Lebanon, Gaza/West Bank and Morocco due to the
limited footprint of the copper network (i.e. 30% of households).
Country Copper DSL DSL costs to DSL costs to FTTC costs FTTC costs
coverage coverage 50% of copper to 50% of to copper
(as % of (as % of population coverage population coverage
households) households) (EUR mn) (EUR mn) (EUR mn) (EUR mn)
Algeria 85% 70% N/A* 208 1219 3143
Egypt 99% 99% N/A N/A 1493 6014
Gaza/
90% 72% N/A 10 52 140
West Bank
18
Israel 100% 99% N/A 12 N/A 733
Jordan 95% 70% N/A 61 157 523
Lebanon 90% 70% N/A 20 88 269
Morocco 30% 30% N/A N/A N/A 188
Syria 75% 40% 27 124 480 1002
Tunisia 99% 99% NA NA 432 1788
Table 5.8: Costs of rolling out DSL and FTTC technologies to 50% of the population and costs to
reach full coverage of the copper footprint [Source: Analysys Mason]
*N/A = Not applicable
18
FTTC covers 50% of population at the end of 2010 in Israel
Ref: 18398-282
Summary Report | 49
Figure 5.9 to Figure 5.13 below illustrate the costs needed to roll out the different technologies
(WiMAX, HSPA, HSPA+, LTE and FTTP) to 50% of the population (i.e. costs for 50%), to 100%
of the population (i.e. costs for full coverage), and to the adjusted coverage of 100% of the
population (i.e. costs for ‘adjusted’ full coverage) in all FEMIP countries. Note that:
• the costs of rolling out the different technologies are the highest in those countries with a large
land area and low population density, such as Algeria, Morocco and Egypt
• the costs of rolling out the different technologies are the lowest in those countries with a small
land area and high population density, such as Gaza/West Bank, Lebanon and Israel
• the costs associated with rolling out the different technologies to reach full coverage represent
a large share of the total costs (between 20% and 75%) required to cover less than 3% of the
population in Algeria, Egypt and Morocco (the largest countries in terms of land area).
It should be noted that the results take into account the coverage of the existing technologies at the end
of 2010. For example, HSPA coverage in Morocco stood at 50% of the population in 2010. This means
that the costs required to achieve 50% population coverage are zero, whilst the costs required to
achieve 100% population coverage includes covering 50% of the population (from 50% to 100% of the
population and excluding the 50% of the population living in the most dense areas).
3000
2500
EUR (million)
2000
1500
1000
500
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Costs for 50% Costs for 'adjusted' full coverage Costs for full coverage
Figure 5.9: Costs of rolling out WiMAX technology to 50% of the population, ‘adjusted’ full coverage and
full coverage [Source: Analysys Mason]
Note: As a reminder, the ‘adjusted full coverage’ corresponds to the 2G actual coverage in
each country (i.e. between 97% and 99.9%)
Ref: 18398-282
Summary Report | 50
6000
EUR (million) 5000
4000
3000
2000
1000
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Figure 5.10: Costs of rolling out HSPA technology to 50% of the population, ‘adjusted’ full coverage and
7000
6000
5000
EUR (million)
4000
3000
2000
1000
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Figure 5.11: Costs of rolling out HSPA+ technology to 50% of the population, ‘adjusted’ full coverage and full
coverage [Source: Analysys Mason]
Note: As a reminder, the ‘adjusted full coverage’ corresponds to the 2G actual coverage in each
country (i.e. between 97% and 99.9%)
Ref: 18398-282
Summary Report | 51
9000
8000
7000
EUR (million)
6000
5000
4000
3000
2000
1000
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Figure 5.12: Costs of rolling out LTE technology to 50% of the population, ‘adjusted’ full coverage and
16000
14000
12000
EUR (million)
10000
8000
6000
4000
2000
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Figure 5.13: Costs of rolling out FTTP technology to 50% of the population, ‘adjusted’ full coverage and
Ref: 18398-282
Summary Report | 52
Several public sources provide additional benchmarking points for the costs of rolling out FTTH,
as shown below in Table 5.14. The unit cost of rolling out FTTH varies significantly from
EUR850 to EUR2900 per household passed. This can be explained by the different population
densities and size of the country. We have also added the results of our analysis for the FEMIP
countries which provides a cost range per household between EUR500 and EUR1700.
Country Cost of rolling out FTTH Cost of rolling out FTTH Cost as % of telecoms
per household passed per population investment for 2009
19
USA 1750 665 431%
20
France 1000 435 460%
21
France 850 372 395%
22
Germany 2900 1419 1932%
23
UK 1000 441 477%
24
Netherlands 1900 840 n.a
25
Algeria 1697 343 2194%
26
Egypt 541 152 763%
Gaza/West Bank 503 82 n.a
Israel 911 271 n.a
Jordan 1000 193 853%
Lebanon 866 164 n.a
Morocco 843 186 1379%
Syria 920 154 2438%
Tunisia 1257 340 2060%
Table 5.14: Benchmark of costs associated with rolling out FTTH to 100% of the population [Source:
Public sources, Analysys Mason, ITU, Euromonitor]
It should be noted that these figures from public sources are estimates (generally provided by
regulators and public bodies to inform the industry of upcoming investment levels) as there are
few real-life examples of large-scale FTTH deployments.
In general, the cost per household for the FEMIP countries is lower than Western European
countries and USA mainly due to lower cost of labour. However, other factors would increase
these costs as some investments are needed to upgrade exchanges and the fixed network due to
lower quality compared to Western European fixed networks. However, we note the following:
19
Federal Communications Commission (2009)
20
Autorité de Régulation des Communications Electroniques et des Postes (2010)
21
Autorité de Régulation des Communications Electroniques et des Postes (2011)
22
WIK (2009)
23
Broadband Stakeholder Group (2008)
24
JP Morgan (2011)
25
Data for Algeria is for 2007
26
Data for Egypt is for 2008
Ref: 18398-282
Summary Report | 53
• The costs per household for Morocco, Israel, Jordan, Lebanon, Syria and Tunisia are
comparable to the costs for France and UK.
• The costs per household for Egypt and Gaza/ West Bank are low compared to other FEMIP
countries as they have the lowest GDP per capita among these countries (lower labour costs
are lower). In addition, Gaza/West Bank is a very small country with a very high density (over
650 inhabitants per square kilometre), and the population in Egypt is highly concentrated next
to the Nile (90% of the population lives over less than 8% of the country’s area).
• The costs per household in Algeria are high compared to other FEMIP countries, and
comparable to the costs for the Netherlands and the USA. This is mainly due to the high costs
in getting to the large areas of low population density
Fibre roll-out in most of the FEMIP countries seems to be possible due mainly to the relative low
cost of labour, which gives a lower cost per home passed when compared to most European
countries. However, this is not always the case: Algeria is the largest country in Africa in terms of
land area and, away from the coast, it is very sparsely populated; this means that the costs of
covering the entire country with fibre will be very high. Also, the cost of labour in Israel is
comparable to European levels. The low GDP per capita in most of the FEMIP countries leads to
low broadband penetration and/or low ARPU, and this factor would likely limit the deployment of
fibre in most of these countries.
If we look at the costs of rolling out FTTH to 100% of households as a proportion of annual
telecoms sector investment in these countries, we find that in benchmark countries these costs are
around 4 to 5 times the annual investments (except for Germany where this factor is very much
higher). In contrast, for most FEMIP countries costs are around 10 to 20 times annual investments.
This could be explained by the lower level of investments in emerging economies as compared to
developed countries due to the lower level of competition and lower end user revenues.
Figure 5.15 and Figure 5.16 overleaf show the evolution of costs as coverage increases for LTE
and FTTP technologies in all FEMIP countries to reach 100% of the population. The level of costs
required to cover the last 5–10% of the population increases significantly. In addition, the
cumulative cost curve shows a steep increase when coverage reaches the last few percentages of
the population, which in our opinion would be the key market for satellite.
Ref: 18398-282
Summary Report | 54
1.0
0.9
0.8
0.7
EUR (billion)
0.6
0.5
0.4
0.3
0.2
0.1
0.0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Gaza/West Bank Israel Jordan
Figure 5.15: Evolution of total coverage costs for LTE [Source: Analysys Mason]
6
EUR (billion)
0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Gaza/West Bank Israel Jordan
Figure 5.16: Evolution of total coverage costs for FTTP [Source: Analysys Mason]
Ref: 18398-282
Summary Report | 55
5.5 Assessment of coverage and costs for a satellite solution
The FEMIP countries are currently covered by satellite using the Ku-band. In our assessment we
consider the provision of broadband services over satellite using the next generation Ka-band. The
Tooway offering over current generation Ka-band today provides a headline download speed of
10Mbit/s, and is capable technically of delivering higher speeds. In addition, in good weather
conditions (i.e. with no rain fade), satellite is technically capable of delivering the headline
download speed to end users. However, in reality, satellite operators may choose to offer lower
speeds as the economics may be more favourable given the essentially fixed cost base of satellite.
Regarding satellite technology, and based on the demand forecast for satellite broadband in the
FEMIP countries, we believe that one satellite in the Ka-band would be enough to serve all FEMIP
countries and to cope with the demand expected, which is forecast at around 234 000 subscribers
by 2020. The costs of this satellite are shared among all FEMIP countries on the basis of a simple
allocation of costs by country based on its land area and number of households (50% on each
parameter), as presented in Table 5.17 and in Figure 5.18.
Country Area (square Households in 2020 Contribution of Satellite costs allocated
km) (million) satellite costs (%) (EUR million)
Algeria 2 381 741 8 299 600 34% 121.4
Egypt 995 841 26 202 100 34% 124.0
Gaza/West Bank 6010 756 044 1% 2.7
Israel 22 070 2 574 200 3% 9.2
Jordan 88 794 1 493 600 2% 8.3
Lebanon 10 396 874 100 1% 3.2
Morocco 687 184 8 048 600 15% 53.2
Syria 185 180 4 498 000 6% 21.9
Tunisia 154 530 3 095 900 4% 16.1
FEMIP region 4 531 746 55 842 144 100% 360
Table 5.17: Allocation of satellite costs by FEMIP country [Source: Analysys Mason]
140 Figure 5.18: Satellite

124 121 cost for FEMIP
120 countries [Source:
Analysys Mason]
100
EUR (million)
80
60 53
40
22
16
20 9 8
3 3
0
Jordan
Algeria
Gaza / West
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Bank
Ref: 18398-282
Summary Report | 56
5.6 Costs for different scenarios
Finally, we have analysed the most economically viable option to provide access to broadband
services in each FEMIP country across three different scenarios.
We have identified the technologies that could potentially achieve the coverage targets set for each
scenario.
Scenario 2015 target 2020 target

Minimum real Technologies that Minimum real Technologies that
download speed could be used to download speed could be used to
(Mbit/s) achieve targets (Mbit/s) achieve targets
Scenario 1 1Mbit/s All technologies 1Mbit/s All technologies
except DSL except DSL
(HSPA) (HSPA and
satellite)
Scenario 2 4Mbit/s FTTP, FTTC, 10Mbit/s FTTP, FTTC, LTE
WiMAX, HSPA+, and satellite
LTE and satellite
Scenario 3 10Mbit/s FTTP, FTTC, LTE 30Mbit/s FTTP, FTTC
and satellite and satellite
Scenario 1 for 4Mbit/s FTTP, FTTC, 4 Mbit/s FTTP, FTTC,
Israel WiMAX, HSPA+, WiMAX, HSPA+,
LTE and satellite LTE and satellite
Scenario 2 for 10Mbit/s FTTP, FTTC, LTE 10 Mbit/s FTTP, FTTC, LTE
Israel and satellite and satellite
Scenario 3 for 30 Mbit/s FTTP, FTTC and 30 Mbit/s FTTP, FTTC and
Israel satellite satellite
Table 5.19: Coverage scenarios used in the cost forecasts [Source: Analysys Mason]
It should be noted that DSL technology does not allow all the objectives of scenarios 1 and 2
(i.e. 100% coverage with a minimum real download speed of 1, 4 and 10Mbit/s) to be achieved.
This is mainly due to the limitation of line lengths, and hence DSL subscribers will have access to
different speeds depending on their location (i.e. the further a subscriber is from the telephone
exchange, the lower the speed they can get). For example, it is assumed that a small share of
households (i.e. between 5% and 10%) will not be able to get a download speed of 1Mbit/s.
Therefore, DSL has been excluded from our scenario assessment as another technology would
need to be rolled out simultaneously to achieve 100% population coverage for any given download
speed that DSL can achieve.
For each of the three scenarios, we show the lowest cost required to achieve the targets set out for
each scenario. However, other technology combinations are possible, which, even though they
may be more capital intensive, operators may choose to implement them.
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Summary Report | 57
We also assume that the threshold for terrestrial coverage is the coverage of 2G networks, and that
satellite broadband will be used to cover the remaining percentages of the population not covered
by 2G. 27
The cost forecast in 2020 for scenario 1 is summarised below in Figure 5.20. This corresponds to a
target of 1Mbit/s to 100% of the population for all FEMIP countries except Israel, which has a
target of 4Mbit/s for 100% of the population. HSPA and WiMAX are the most cost-effective
technologies capable of achieving these targets in all FEMIP countries except Israel, where
HSPA+ is used to achieve the targets.
1,400
1,200
1,000
EUR (million)
800
600
400
200
0 Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Viable (terrestrial) Unviable (terrestrial) Satellite Gaza/West Bank
Figure 5.20: Costs forecast to reach 2020 targets for scenario 1 [Source: Analysys Mason]
Note: We have not made assumptions on what percentage of the costs required to deploy
satellite broadband would come from public funding
The cost forecast in 2020 for scenario 2 is summarised below in Figure 5.21 overleaf. This
corresponds to a target of 4Mbit/s to 100% of the population and 10Mbit/s to 50% of the
population in all FEMIP countries except Israel, where the target is set at 10Mbit/s for 100% of the
population. HSPA+ and LTE were the most cost-effective technologies capable of achieving these
targets.
27
It should be noted that if a satellite is launched, it is assumed that 100% of the population will be covered. Therefore,
potential satellite subscribers could also come from different areas covered by other technologies.
Ref: 18398-282
Summary Report | 58
1,400
1,200
1,000
EUR (million)
800
600
400
200
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Viable (terrestrial) Unviable (terrestrial) Satellite
The cost forecast in 2020 for scenario 3 is summarised below in Figure 5.22. This corresponds to a
target of 10Mbit/s to 100% of the population and 30Mbit/s to 50% of the population in all FEMIP
countries except Israel, where the target is set at 30Mbit/s for 100% of the population. LTE and FTTC
were the most cost-effective technologies capable of achieving these targets.
4,000
3,500
3,000
EUR (million)
2,500
2,000
1,500
1,000
500
0
Jordan
Algeria
Morocco
Israel
Egypt
Tunisia
Syria
Lebanon
Gaza/West Bank
Viable (terrestrial) Unviable (terrestrial) Satellite
Ref: 18398-282
Summary Report | 59
The results by scenario for each FEMIP country for 2015 and 2020 are presented below in
Table 5.23 and Table 5.24, respectively:
Country Scenario 1 Scenario 2 Scenario 3

Algeria 0 147 148
Egypt 0 0 53
Morocco 0 31 37
Syria 0 33 45
Tunisia 0 0 28
Jordan 0 0 9
Lebanon 0 0 3
Gaza/ West Bank 3 2 2
Israel 0 0 0
Total 3 213 325
Table 5.23: Results for the different scenarios to reach the 2015 targets in EUR million [Source:
Analysys Mason]
Country Scenario 1 Scenario 2 Scenario 3

Algeria 1161 1309 4018
Egypt 636 801 2689
Morocco 604 791 1149
Syria 340 515 1086
Tunisia 251 330 896
Jordan 171 180 478
Lebanon 24 30 122
Gaza/ West Bank 16 19 73
Israel 54 65 665
Total 3257 4040 11176
Table 5.24: Results for the different scenarios to reach the 2020 targets in EUR million [Source:
Analysys Mason]
The costs to achieve the targets in each scenario are not extremely high and therefore the different
scenario targets seem achievable in most of the countries. This is mainly due to the high reliance
on wireless technologies, coupled with the fact that the scenario targets are lower than the ones in
the DAE.
However, this assessment may be impacted by a number of factors:
• The evolution of the political situation –The political instability facing most FEMIP
countries may hinder the inflow of foreign investment, including in the telecoms sector, which
may postpone or even put at risk any national government plans on broadband development.
• The evolution of the economic context and the reduction of poverty – The economic
development in FEMIP countries based on offshoring, petrol or tourism may reduce poverty,
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Summary Report | 60
increase access to electricity and ultimately contribute to increasing the addressable market for
broadband.
• The availability of spectrum – Because mobile broadband is key to the development of

broadband in most FEMIP countries, it is crucial that a large amount of spectrum be made
available to support the launch of LTE. In particular, the re-use of digital dividend spectrum
may be key to the development of broadband as it would lower the costs for LTE roll-out.
• The review of the regulatory and legal context – There are a number of issues surrounding
the current legal and regulatory context that hinder effective competition in most of the FEMIP
markets. Further liberalisation of the telecoms market in some FEMIP countries, coupled with
a well-developed national broadband plan and the introduction of full LLU may further
contribute to promote broadband growth and stimulate investment in broadband
infrastructures.
• The continuation and extension or creation of an efficient universal service scheme – In

order to cover remote areas with broadband and allow all citizens to benefit from broadband
access, it is important that a universal service scheme be extended or implemented in the next
few years.
In any case, from a government’s point of view, subsidies for a large-scale roll-out of broadband
infrastructure needs to be assessed in view of the socio-economic benefits that broadband may
generate.
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Summary Report | 61
6 Analysis of the socio-economic impact of broadband services
Despite a large number of academics and others researching the socio-economic impact of
broadband services, there still does not appear to be a strong consensus on the quantification of the
benefits of broadband, although several suggest the impact on GDP to be of the order of 1% for a
ten percentage-point increase in broadband penetration of the population.
For the purposes of this work, we have assumed that broadband can have a maximum potential
impact of 1% of GDP for a ten percentage-point increase in broadband penetration of the
population.
From a market-development perspective, it is instructive to compare the potential benefits of

broadband in the unviable area with the costs of deployment in the unviable area. This kind of
assessment is done by governments when considering the case for intervention in the broadband
market.
From our economic viability analysis (see Section 5) we have calculated the size and cost of
deployment in these unviable areas. We then estimate the potential GDP impact in the unviable
area, adjusting for the fact that GDP per head in the unviable will be significantly lower than the
national average.
It is not possible to accurately correlate the unviable area with the geographical distribution of
GDP. Hence we have made an assumption that, firstly, GDP in the unviable area is the national
GDP scaled down by the number of households in the unviable area, and secondly, further scaled
down by a factor of 50% 28, reflecting the fact that some industry sectors contribute more to the
“rural” economy, e.g. agriculture and mining, than others, e.g. services.
We then calculate an economic ‘payback’ period, i.e. the number of years it takes for the
cumulative benefits to exceed the costs of deployment in the unviable areas.
More background and details on the methodology used is provided in Annex A.
The reminder of this section provides an analysis of the socio-economic impact of broadband services
in FEMIP countries. It is laid out as follows:
• Section 6.1 quantifies the direct economic benefits and associated costs in unviable areas in
FEMIP countries
• Section 6.2 summarises the indirect (non-monetary) benefits of broadband.
28
The factor of 50% is an assumption.
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6.1 Direct economic benefits and associated costs in unviable areas in FEMIP countries
Figure 6.1 shows the estimated direct economic benefits of broadband in FEMIP countries. The impact
is high in Israel, Algeria and Egypt at around EUR1028 million, EUR805 million and EUR791 million
per annum, respectively, whereas it is comparably modest in Gaza/West Bank, Jordan and Lebanon at
EUR12 million, EUR118 million and EUR176 million per annum, respectively.
1,200 Figure 6.1: GDP impact

per annum in FEMIP
1,000
countries [Source:
800 Analysys Mason]
EUR (million)
600
400
200
Jordan
Gaza / West Bank

Israel
Algeria
Egypt
Morocco
Tunisia
Syria
Lebanon
We have also estimated the cost of providing coverage in the unviable areas in FEMIP countries
(adjusting for the ‘very remote’, i.e. the final few percentages of the population that live in the
most remote areas, based on the 2G coverage and are removed from our analysis as we consider
that the very remote areas to be served by satellite), using HSPA technology as an illustration as
well as the associated benefits per annum, resulting in a pay-back period 29 as shown in Figure 6.2.
Lebanon
Israel
Morocco
Tunisia
Syria
Egypt
Gaza / West Bank
Algeria
Jordan
0 2 4 6 8 10 12 14
Pay-back period in the unviable area (years)
Figure 6.2: Economic impact assessment across FEMIP countries using HSPA technology [Source:
Analysys Mason]
29
Pay-back is calculated on non-discounted terms.
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Summary Report | 63
The pay-back period for fibre technologies (FTTC and FTTP) would be significantly longer than
those shown above for all countries studied because the costs are so much higher and there is little
evidence available at present to suggest that the economic benefits of fibre-based services
significantly exceed those from services delivered using other technologies, although this may
change in the long term.
6.2 Indirect (non-monetary) benefits of broadband
‘Pillar VII: ICT for Social Challenges’ of the European Commission’s (EC) Digital Agenda for
Europe (DAE) states the following:
“Digital technologies have enormous potential to benefit our everyday lives and tackle
social challenges. The Digital Agenda focuses on ICTs capability to reduce energy
consumption, support ageing citizens’ lives, revolutionises health services and deliver better
public services. ICTs can also drive forward the digitisation of Europe’s cultural heritage
providing online access for all.”
It is implicit within much of the DAE that the EC believes there to be significant indirect (non-
monetary) as well as direct economic benefits for Member States, and the same logic would hold true
for FEMIP countries.
It is difficult to accurately measure or quantify the non-monetary benefits of broadband access.
However, the Broadband Stakeholder Group (BSG) (an industry-government forum in the UK
tackling strategic issues across the converging broadband value chain) commissioned a study30
from Plum Consulting on the economic value of next-generation broadband. The study identifies
non-monetary benefits, including environmental (reduced greenhouse gas emissions), reduced
congestion and enhanced competition. The Plum Consulting study classifies the non-monetary
benefits under various headings:
• educating citizens
• informing democracy
• cultural understanding
• social inclusion.
30
Plum Consulting for the BSG (June 2008), A Framework for Evaluating the Value of Next Generation Broadband.
Available at http://www.broadbanduk.org/component/option,com_docman/task,doc_view/gid,1009/Itemid,63/.
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Table 6.3 below is adapted from the findings in relation to wider economic and social benefits.
Wider economic benefits Wider social benefits

Externality Educated citizens
(+) for reduced traffic congestion and greenhouse (++) in relation to lifelong learning, health information
gas emissions once built, (-) during network build
Competition Informed democracy & freedom of expression (++)
Neutral for telecoms market Cultural understanding (+)
(++) for wider economy Belonging to a community and inclusion
(++) large in relation to inclusion for disabled and hard
of hearing
Social capital, resilience and trust (++)
Table 6.3: Indicative estimates of incremental benefits; (+) is a benefit, (-) is a cost; number of (+)s
indicates relative magnitude of the benefit [Source: Based on the framework developed by
Consulting for the BSG]
It seems reasonable to believe that e-health (tele-care, symptom monitoring, specialist consultation) and
e-learning (which can reduce the distance impact of highly distributed communities) can deliver
significant benefits to certain groups of society who have to date been excluded.
We have identified the socio-economic impact of broadband on developed countries (i.e. Australia,
the USA and European countries), which in principle could also apply to FEMIP countries. These
are presented in the table below. However, it should be noted that the specific characteristics of the
FEMIP countries need to be taken into account when evaluating the socio-economic impact of
broadband.
Benefit Main impact

category
Finance and • According to the Columbia Telecommunication Corporation (2009), direct jobs
income related to the ‘building and manufacture of broadband networks’ pay 42% more than
the average for manufacturing jobs in other sectors. IT jobs, on average, pay 85%
more than other private-sector jobs.
• If the 1.6 million children in the UK who live in families which do not use the Internet
got online at home, their educational improvement could boost their total lifetime
earnings by over GBP10 billion (EUR11.68 billion in July 2009)
31
(PricewaterhouseCoopers, 2009).
• UK households which are offline are missing out on savings of GBP560 per annum
(EUR654 in July 2009) from shopping and paying bills online.
31
PricewaterhouseCoopers (2009), Champion for digital inclusion: The economic case for digital inclusion. Available
at http://raceonline2012.org/sites/default/files/resources/pwc_report.pdf.
Ref: 18398-282
Summary Report | 65
Benefit Main impact

category
Education and • In the USA, the estimated effect of a 5% increase in capital spending resulting from
skills second-generation broadband deployment would represent an increase of
USD4.3 billion (EUR3.5 billion in July 2010) in GDP and 43 871 jobs in education
services (Crandall and Singer, 2010).
• E-learning courses are considered to be 50% less expensive than traditional face-to-
face courses.
• Such initiatives could help to decrease the illiteracy rate which is high in most
of the FEMIP countries which is between 8% and 41% except for Israel and
Jordan
Health and • Litan (2008) estimates that the net total benefit from telemonitoring is in the order of
care USD44 billion per annum (EUR27.89 billion in July 2008) for an average
implementation cost of USD1.75 billion per annum (EUR1.11 billion in July 2008).
• Connected Nation (2008) reports that if every state were to develop initiatives similar
to ConnectKentucky, the USA could expect to reduce healthcare costs by USD662
million per annum (EUR420 million in July 2008).
• Nooriafshar and Maraseni (2007) report that the introduction of teleconsulting in rural
Queensland (Australia) saved AUD125 (EUR79 in July 2007) per visit avoided as
opposed to sending patients to the nearest city.
•
32
Darkins et al. (2009) found that reductions in hospitalisations due to telehealth were
greater in remote areas (with a 50% decrease in the number of bed-days) compared
to urban areas (a 29% reduction in the number of bed-days).
• A study undertaken by Access Economics in Australia on behalf of the Department of
Broadband, Communications and the Digital Economy in 2010 showed that a weekly
telenurse visit to patients with congestive heart failure resulted in 84% lower
readmission rates and also had significantly fewer emergency visits.
• Growth in healthcare and social assistance sectors average 7.4% due to an increase
33
in broadband availability (Kolko, 2010).
• All these initiatives could help to increase the life expectancy, decrease the
maternal mortality ratio, decrease the under-five mortality rate which are high in
most of the FEMIP countries except Israel.
Environment • A 7% increase in adoption and use of broadband could achieve savings of
USD18.2 million (EUR11.54 million in July 2008) in carbon credits.
• In 2007, 17% of broadband users regularly used computers to work at home for their
34
employers (Dutz et al., 2009); this compared to 8% of dial-up users.
• Broadband-enabled smart-grid services and devices could result in over
USD1.2 trillion (EUR850 billion in July 2009) in gross energy savings. According to
35
Davidson et al. (2009), this approach is expected to reduce end-user energy
consumption in the USA in 2020 by roughly 23% of projected demand.
32
Darkins, A. et al. (2009), ‘Care Coordination/Home Telehealth: The Systematic Implementation of Health
Informatics, Home Telehealth, and Disease Management to Support the Care of Veteran Patients with Chronic
Conditions’, Telemedicine and eHealth, Vol. (10), pp.1118–26. Available at
http://www.liebertonline.com/doi/pdf/10.1089/tmj.2008.0021.
33
Kolko, J. (2010), Does Broadband Boost Local Economic Development? Available at
http://www.ppic.org/content/pubs/report/R_110JKR.pdf.
34
Dutz, M. et al. (2009), The Substantial Consumer Benefits Of Broadband Connectivity For U.S. Households.
Available at http://www.reelseo.com/wp-content/uploads/2009/07/CONSUMER_BENEFITS_OF_BROADBAND.pdf.
35
Davidson, C. M. et al. (2009), ‘Broadband Adoption: Why It Matters And How It Works’, New York Law School’s Media Law
& Policy Journal, Vol. 19, pp.14–56. Available at
http://www.nyls.edu/user_files/1/3/4/30/84/88/Vol%2019.1%20BROADBAND%20Adoption.pdf.
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Summary Report | 66
Benefit Main impact

category
Employment • The annual average investment by broadband service providers in the USA over
and economy 2010–2015 is predicted to be USD30.4 billion (EUR24.7 billion in July 2010) in all
broadband technologies, which corresponds to over 509 000 new jobs created.
(Crandall and Singer, 2010).
•
36
Dutz et al. (2009) estimate that the benefits of an increase in broadband speed
from 100 times the typical historical speed of dial-up Internet service to 1000 times
dial-up are in the order of USD6 billion (EUR4.26 billion in July 2009) per annum for
existing home broadband users.
• Broadband has contributed a very significant proportion – perhaps 10–20% – of
37
productivity growth in some OECD countries (LECG Ltd, 2009).
• Data from 1999 to 2006 revealed that communities with new access to broadband
experienced 6.4% higher employment growth on average than before they had
38
broadband (Milano, 2010).
• The Internet is a catalyst for generating jobs. Among 4800 SMEs surveyed,
broadband access and technology created 2.6 jobs for each lost to technology-
39
related efficiencies (McKinsey, 2011).
• Kolko (2010) looked at broadband availability and economic activity throughout the
USA between 1999 and 2006 and concluded that the boost to employment growth
40
was 5.0%.
• The Internet in the USA employs 1.2 million people directly in jobs that build or
maintain the infrastructure, facilitate its use, or conduct advertising and commerce on
41
that infrastructure (Hamilton Consultants, 2009).
• Such initiatives could help to decrease the unemployment rate in the FEMIP
countries which is between 7% and 27%
Well-being • A key benefit from having access to broadband at home is the opportunity to save
time. A prime example is increased teleworking, reducing the amount of time people
spend on commuting to work. Connected Nation (2008) estimates that USD35.2
billion (EUR22.31 billion in July 2008) in value could be attributed to 3.8 billion more
hours saved per annum by accessing broadband at home (if every state in the USA
were to develop initiatives similar to ConnectKentucky).
Table 6.4: Impact of broadband for each of the benefits categories [Source: Analysys Mason]
36
Dutz, M. et al. (2009), The Substantial Consumer Benefits Of Broadband Connectivity For U.S. Households.
Available at http://www.reelseo.com/wp-content/uploads/2009/07/CONSUMER_BENEFITS_OF_BROADBAND.pdf.
37
LECG Ltd (2009), Economic Impact of Broadband: An Empirical Study.
http://www.connectivityscorecard.org/images/uploads/media/Report_BroadbandStudy_LECG_March6.pdf.
38
Milano, J. (2010), Where Jobs Come From: The Role of Innovation, Investment and Infrastructure in Economic and
Job Growth. Available at http://www.dlc.org/documents/WhereJobsComeFrom.pdf.
39
McKinsey&Company (2011), Measuring the Net’s growth dividend. Available at
http://www.mckinseyquarterly.com/Measuring_the_Nets_growth_dividend_2812.
40
Kolko, J. (2010), Does Broadband Boost Local Economic Development? Available at
http://www.ppic.org/content/pubs/report/R_110JKR.pdf.
41
Hamilton Consultants, Inc. (2009), Economic Value of the Advertising-Supported Internet Ecosystem. Available at
http://www.iab.net/media/file/flyin09-deighton.pdf.
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Finally, we highlight two references that support the idea that being online has a positive social
impact:
“Our analysis suggests that IT has an enabling and empowering role in people's lives, by
increasing their sense of freedom and control, which has a positive impact on well-being or
happiness.” 42
“The biggest uplift in life satisfaction is achieved by people getting online for the first time.
In their first couple of years online the difference that the internet makes in improving life
satisfaction is most noted. The BCS [see above] research also found the biggest benefit to
wellbeing from being online would be achieved by providing access to those on low
incomes and with fewest educational qualifications.” 43
42
BCS Chartered Institute of IT survey reported May 2010. See http://www.bcs.org/.
43
UK Online Centres (April 2011), The digital divide and happiness – a presentation of the evidence.
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7 Conclusion
This section provides our main conclusions from the study. It is laid out as follows:
• Section 7.1 presents the scenarios results
• Section 7.2 describes the main barriers to and opportunities for broadband development in the
FEMIP countries
• Section 7.3 provides an assessment of the investment opportunities in the FEMIP countries
7.1 Scenarios results

Table 7.1 shows the costs required to achieve the coverage targets set for Scenario 1 in 2020: 100%
population coverage with a minimum real download speed of 1Mbit/s for all countries except
Israel, which has a target of 4Mbit/s.
The total costs required to achieve the Scenario 1 target ranges from EUR16 million in Gaza/West
Bank to EUR1162 million in Algeria. We believe that a significant proportion of the costs required
to deploy terrestrial technologies is likely to be unviable, with Lebanon, Israel, Gaza/West Bank
and Jordan standing at the lower end of FEMIP countries at 43%, 49%, 54% and 57%,
respectively, whereas in Egypt, Syria and Tunisia the proportion of unviable costs is expected to
be 100% of total costs required to achieve the scenario targets.
Viable Unviable % of Satellite Cost per Costs as a % of Total

terrestrial terrestrial terrestrial (EUR population/ telecoms sector (EUR
(EUR (EUR unviable million) household in investments in million)
million) million) 2020 (in EUR) 2009
44
Algeria 246 794 76% 121 28/140 181% 1162
45
Egypt 0 512 100% 124 7/24 34% 636
Morocco 21 530 96% 53 17/75 123% 604
Syria 0 318 100% 22 13/76 200% 340
Tunisia 0 235 100% 16 22/81 133% 251
Jordan 70 93 57% 8 22/115 98% 171
Lebanon 12 9 43% 3 5/29 n/a 24
Gaza/ 3/21 n/a
6 7 54% 3 16
West Bank
Israel 23 22 49% 9 6/21 n/a 54
Total 378 2520 87% 359 14/58 n/a 3257
Table 7.1: Results for Scenario 1 for all FEMIP countries to reach 2020 targets [Source: Analysys Mason]
Table 7.2 shows the costs required to achieve the coverage targets set for Scenario 2 in 2020: 100% and
50% population coverage with a minimum real download speed of 4Mbit/s and 10Mbit/s, respectively,
for all countries except Israel, which has a target of 10Mbit/s for 100% population coverage.
44
45
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Summary Report | 69
to deploy terrestrial technologies is likely to be unviable, with Lebanon, Jordan, Israel and
Gaza/West Bank, standing at the lower end of FEMIP countries at 46%, 52%, 52% and 56%,
respectively, whereas in Egypt the proportion of unviable costs is expected to be as high as 92%
(the highest among FEMIP countries).

46
Algeria 394 794 67% 121 32/158 204% 1310
47
Egypt 53 624 92% 124 9/31 44% 801
Morocco 93 645 87% 53 22/98 161% 792
Syria 82 411 83% 22 19/114 303% 515
Tunisia 28 286 91% 16 29/107 175% 331
Jordan 82 90 52% 8 23/121 103% 180
Lebanon 14 13 46% 3 7/35 n/a 31
Gaza/
7 9 56% 3 4/25 n/a 19
West Bank
Israel 27 29 52% 9 8/25 n/a 65
Total 780 2901 79% 359 17/72 n/a 4040
Table 7.2: Results for scenario 2 for all FEMIP countries to reach 2020 targets [Source: Analysys Mason]
Table 7.3 shows the costs required to achieve the coverage targets set for Scenario 3 in 2020:
100% and 50% population coverage with a minimum real download speed of 10Mbit/s and
30Mbit/s, respectively, for all countries except Israel, which has a target of 30Mbit/s for 100%
population coverage.
to deploy terrestrial technologies is likely to be unviable, with Lebanon, Gaza/West Bank and
Israel standing at the lower end of FEMIP countries at 15%, 17% and 22%, respectively, whereas
in Morocco the proportion of unviable costs is expected to be as high as 95% (the highest among
FEMIP countries).
46
47
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48
Algeria 288 3609 93% 121 98/484 626% 4019
49
Egypt 674 1891 74% 124 29/103 145% 2688
Morocco 54 1042 95% 53 31/143 234% 1150
Syria 70 994 93% 22 40/241 640% 1086
Tunisia 201 679 77% 16 78/290 475% 897
Jordan 177 293 62% 8 61/320 272% 478
Lebanon 101 18 15% 3 26/140 n/a 122
Gaza/ 16/97 n/a
58 12 17% 3 73
West Bank
Israel 513 143 22% 9 77/258 n/a 665
Total 2136 8681 80% 359 48/200 n/a 11176
Table 7.3: Results for scenario 3 for all FEMIP countries to reach 2020 targets [Source: Analysys Mason]
The level of investment required to achieve the coverage targets set for Scenario 3 is 1.5–4 times
higher than for Scenario 2 in all FEMIP countries except Israel, where it is 10 times higher. This is
because the deployment of broadband networks in Israel is already very advanced and actual
broadband coverage levels in the country are quite similar to the coverage targets set for Scenario
2. Likewise, the investment required to achieve the coverage targets for Scenario 2 is 1.05–1.5
time higher than for Scenario 1as very similar technologies in terms of cost are used to achieve the
targets for 100% population coverage in Scenarios 1 and 2. The large difference between the level
of investment required for Scenario 3 and that required for Scenario 2 is due to the use of fibre in
addition to wireless technologies to be able to achieve the Scenario 3 targets (as the cost of rolling
out fibre is much higher than the cost of rolling out wireless technologies). Therefore, the
government and operators in each FEMIP country will need to assess which one would be the
most economically viable option to provide access to broadband services.
In general, under all scenarios, countries are similarly ranked in terms of the investment required:
• The level of investment required in countries like Algeria, Egypt and Morocco is higher than
in the other FEMIP countries due mainly to the large size of these countries and their low
population density.
• The level of investment required in countries like Lebanon, Gaza/West Bank and Israel is
lower in the other FEMIP countries due mainly to the small size of these countries and their
high population density. In addition, the broadband infrastructure in Israel is at a relatively
advanced stage of development , which results in a very low cost to reach the targets for each
scenario (even taking into account that the target for Scenario 3 for Israel is much higher than
for other FEMIP countries and similar to the DAE target).
48
49
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The proportion of unviable costs is also similar across scenarios. Several factors other than those
related to the size of the total investment required have an impact on the viability of technologies,
which in turn has an impact on the proportion of unviable costs:
• Actual and expected evolution of broadband penetration – high penetration in countries such
as in Israel, Lebanon and Jordan has a positive impact on the cost viability, whereas low
penetration in countries such as in Syria, Gaza/West Bank and Egypt has a negative impact on
the cost viability.
• Actual and expected evolution of ARPU – high ARPU in countries such as in Israel and
Lebanon has a positive impact on the cost viability, whereas low ARPU in countries such as in
Morocco, Algeria, Tunisia and Egypt has a negative impact on the cost viability.
We believe that wireless technologies will be the main driver of broadband growth in most FEMIP
countries due to the limited footprint of the existing copper network, the quality-of-service
provided over the copper network, and the cost of rolling out fixed broadband technologies in rural
areas, among other factors.
Therefore, governments in FEMIP countries should consider very carefully the role that wireless
technologies should play in their national broadband plans. This may be different to European
markets where it is likely that wired technologies will play a more significant role.
It should be noted that if more ambitious scenario targets were defined for the FEMIP countries,
then we may expect the reliance on wireless technologies to decrease, unless there were policy
changes that would have a material impact on the supply side, e.g. significant amounts of new
spectrum at suitable frequencies being made available.
We also believe that satellite broadband will play a role in FEMIP countries, especially to cover
the last few percentages of the population living in the most remote parts of the country where the
roll-out of other broadband technologies would be economically unviable.
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7.2 Barriers to, and opportunities for, broadband development

Table 7.4 presents the main macro-economic factors that have a positive or negative impact on
broadband development in each FEMIP country.
Morocco Algeria Egypt Gaza/ Israel Jordan Lebanon Syria Tunisia

West
Bank
Political stability/ risk - - - - -
FDI - + - + + + - +
Population density - - - + + - + + -
Topology + + + - +
International
+ + + - +
connectivity
Disposable income/
- - - + + - +
GDP per capita
Exchange rate
+ - - + -
stability and inflation
Literacy rate - - - + + + -
Availability of
- - + + + + + - +
electricity
Table 7.4: Main macro-economic factors promoting and hindering broadband development [Source:
Analysys Mason]
Note: + means factor promoting broadband; - means factor hindering broadband
Israel and Lebanon appear to have the most favourable macro-economic environment for
broadband development, whereas Algeria and Syria appear to be at the opposite end.
Table 7.5 presents the status of development of the broadband market in each FEMIP country.
Ranking of Existence HSPA HSPA+ Existence Efficient Roll-out of Expected date for
most advanced of 3G service service of LLU use of NGA award of
national operators availability availability LLU spectrum for
broadband mobile broadband
strategy
2.6GHz in short
Israel   × × × 
term
Morocco     × × Unknown
Algeria × × × × × In deployment 2015 for 800MHz
Launched
Lebanon ×  × × In progress 2015 for 800MHz
end 2011
Expected Limited to
2.6GHz available
Jordan  ×  in late × school and
2015 for 800MHz
2012 universities
Tunisia  ×   × × 2014 for 800MHz
Egypt      Very limited Unknown
Gaza/WB × × × × × × Unknown
2014 at the
Syria   × × × ×
earliest
Table 7.5: Status of broadband market development [Source: Analysys Mason, regulators]
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Israel and Morocco have the most developed broadband markets of all FEMIP countries, whereas
the broadband market is in its very early stages of development in countries like Syria and
Gaza/West Bank. The main factors that could boost the development of broadband in these
countries include:
• liberalisation of the telecoms market and privatisation of operators (e.g. Lebanon, Syria)
• launch of HSPA/HSPA+ mobile networks in countries where mobile broadband is not yet
launched (i.e. Algeria, Gaza/West Bank)
• emphasis on the efficient provision of LLU to alternative operators at reasonable prices
• implementation of a national broadband strategy over the short and long term
• availability of spectrum for 4G services as soon as possible (mainly in the lower bands – i.e.
800MHz)
• allowing the provision of broadband over satellite under reasonable conditions.
7.3 Investment opportunities

Table 7.6 presents the main indicators that need to be taken into account in order to assess any
potential opportunity for broadband development in FEMIP countries.
Countries with more opportunities Countries with less opportunities for

for broadband investments broadband investments
Macro-economic indicators
Population Egypt, Algeria and Morocco, with a Gaza/West Bank, Lebanon, Jordan
population of over 30 million and Israel, with a population less
than 10 million
Density Gaza/West Bank, Lebanon and Algeria and Morocco, with a density
Israel, with a density higher than lower than 50 inhabitants per
300 inhabitants per square square kilometre
kilometre
GDP per capita Israel and Lebanon, with a GDP per Gaza/West Bank, Egypt, Syria and
capita above USD6000 Morocco, with a GDP per capita
around or less than USD2000
Key broadband indicators
Broadband penetration Israel, with a broadband penetration Syria, Algeria, Egypt and
of households above 100% Gaza/West Bank, with a broadband
penetration of households below
20%
Broadband subscribers Egypt and Israel, with more than 2.5 Gaza/West Bank, Syria and
million broadband subscribers Lebanon, with less than 300 000
broadband subscribers
Broadband market outlook
Broadband penetration Israel, Jordan, Morocco and Gaza/West Bank, Syria and Egypt,
forecast Lebanon, with a broadband with a broadband penetration of
penetration of households estimated households estimated at less than
at above 95% in 2020 55% in 2020
Broadband subscribers Egypt, Morocco, Algeria and Syria, Gaza/West Bank and Lebanon, with
forecast with more than 4 million broadband less than 1 million broadband
subscribers estimated in 2020 subscribers estimated in 2020
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Countries with more opportunities Countries with less opportunities for

for broadband investments broadband investments
Broadband revenues forecast Egypt, Israel and Algeria, with Gaza/West Bank, with broadband
broadband revenues estimated at revenues estimated at less than 100
more than 1 billion in 2020 million in 2020
Cost associated with
rollout of broadband
Viability of broadband Israel, Lebanon, Jordan and Morocco, Syria and Algeria, which
technologies Gaza/West Bank, which have high have low coverage viability (e.g.
coverage viability (e.g. above 60% below 12% coverage for FTTC)
coverage for FTTC)
Cost of rolling out broadband Algeria and Egypt, with high levels Gaza/West Bank and Lebanon, with
technologies of investment required to cover low levels of investment required to
100% of the population (e.g. more cover 100% of the population (e.g.
than EUR14 billion for FTTP) less than EUR800 million for FTTP)
Socio-economic benefits
Impact of broadband on GDP Israel, Egypt and Algeria, with an Gaza/ West Bank, with an impact of
impact above EUR700 million per less than EUR20 million per annum
annum
Pay-back period in non- Lebanon and Israel, with a pay-back Algeria and Jordan, with a pay-back
economic areas period of less than one year period of more than nine years
Table 7.6: Broadband outlook in FEMIP countries [Source: Analysys Mason]
Overall, taking into account the macro-economic situation in each FEMIP country, as well as the
dynamics in, and the outlook for, their respective telecoms markets, we expect that Israel and
Egypt are the two FEMIP countries that will present the biggest opportunities for broadband
investment, whereas the opportunities for broadband investment in Gaza/West Bank and Syria
would be significantly lower.
Table 7.7 presents the main investment opportunities that we are aware of, either based on public
information or identified based on interviews we have had with stakeholders in FEMIP countries.
Country Type of activity Timing Probability of

implementation
within the
timescale
Algeria Award of 3G licences leading to roll-out of 3G networks 2011-2012 ++
Algeria Algérie Telecom announced several investment plans since 2011-2012 +
2009:
- Around EUR5 billion in network upgrades
announced in late 2009 and work undertaken in
2010 and still in progress in 2011
- Roll-out of FTTH to 250 000 households by end of
2011
Egypt In December 2009, the Minister announced that Egypt was Not -
working on a national plan to develop broadband services in available
urban and rural areas, promising EUR700 million of
government funds for the infrastructure needed
Ref: 18398-282
Summary Report | 75

implementation
within the
timescale
Egypt Telecom Egypt is involved in many submarine cable Not -
systems including the EIG, organised around a 16-member available
consortium connecting the UK to India, at an anticipated cost
of EUR560 million
Egypt In 2010 Etisalat Misr announced that it had made cumulative 2011-2013 ++
network investments of EUR1 million between 2007 and
mid-2010, and that it expects to invest an additional EUR1
million by 2013 to expand its network
Gaza/ West PalTel announced that it will soon connect a fibre-optic cable 2012 +
Bank from Jerusalem to Jordan which it will then use for the
transmission of international traffic
Gaza/ West The Ministry is planning to assign a telecoms wholesale 2012 +
Bank licence to the Palestine Electricity Company (PEC) as it has
an existing fibre-optic network that can be used as a
backbone by ISPs to provide FTTx services
Israel Spectrum in the 2.6GHz and 800MHz to be allocated for 2011-2013 ++
LTE use leading to operators rolling out 4G networks
Israel Partner is upgrading its 3G network to HSPA+ and has also 2011-2012 +++
announced an LTE deployment plan worth EUR20 million in
2012
Israel A new high-speed submarine cable is announced to be 2011-2012 +++
deployed by Bezeq and Alcatel
Israel MIRS (an existing operator) and Golan Telecom (a new 2011-2013 +++
entrant) will invest in deploying 3G networks after being
awarded licences in mid-2011
Israel Potential investment in the national FTTH project to be set 2011-2013 +++
up as a JV with the Israeli Electricity Company. IEC will use
its existing 3000km of fibre backbone and install an
estimated 20 000km of new fibre
Jordan The regulator plans to start the analogue TV switchover in 2015 +++
2012, which will free up spectrum in the 800 MHz band,
suitable for LTE. This will be allocated to mobile and useable
from 2015
Jordan Umniah is expected to get a 3G licence for around EUR50 2012 +++
million and to roll out a 3G network
Lebanon Mobile operators are planning to roll out 3G infrastructure 2011-2013 +++
and to start trials for LTE
Lebanon The Ministry announced in 2010 that it would invest around 2010-2012 +++
EUR120 million in the domestic local Internet backbone, by
deploying a 4400km fibre-optic transmission network
Morocco A national broadband strategy aimed at stimulating the roll- 2012 +++
out of NGA infrastructure is being developed by the regulator
and expected to be published end of 2011. This study will
include potential development plans for broadband
infrastructure and potential public subsidies and financial
levers to help achieve the plan
Ref: 18398-282
Summary Report | 76

implementation
within the
timescale
Morocco Potential award of new licences for the roll-out of NGA 2012 ++
networks by the end of 2011 to new wholesale-only
operators such as ONE – the National Office of Electricity –
or ONCF – the National Railway Company – as they both
own a nationwide fibre network
Morocco The government’s ICT strategic plan ‘Maroc Numeric 2011-2013 ++
2013’ sets the target of 400 large Internet centres being
created in rural areas in Morocco by 2013
Syria The award of a third mobile licence was expected to 2012 +
happen in 2011
Syria STC plans to invest approximately EUR300 million to 2011-2012 +
deploy a wireless network using CDMA in the context of
the ‘Third Rural Telecom’ project
Syria STC is considering the roll-out of an FTTH network, 2013 ++
restricted to industrial areas in Damascus, Homs and
Alep
Tunisia Orange Tunisie has plans to install and operate its own Not -
400km fibre-optic backbone available
Table 7.7: Investment opportunities in FEMIP countries [Source: Analysys Mason]
Note: +++ means high probability of implementation; ++ means medium probability of
implementation; + means low probability of implementation
Ref: 18398-282
Summary Report | A–1
Annex A Background on the socio-economic impact of broadband
Many studies in the literature do not make a distinction between ICT, internet, broadband, and
high-speed broadband, and this makes estimating the specific benefit of broadband difficult. The
majority of studies also tend to be focussed on the USA rather than Europe which are arguably less
useful for comparisons with FEMIP countries.
There is a general lack of disclosure in the studies on the technologies used to deliver broadband,
although we expect most studies to have mainly considered fixed broadband. However, we do not
believe this to be a key concern: broadband services rather than technologies deliver benefits to
end users, and in the case of basic broadband, these can easily be delivered over fixed or mobile
technologies, so the fact that we expect mobile to be prevalent in many FEMIP countries does not
preclude us from drawing some conclusions from the existing, fixed-dominated, literature.
There is also little or no hard evidence for the benefits of high-speed broadband, mainly due to the
fact that these networks have not been in existence for very long. However, this is less of a
concern for the FEMIP countries, at least in the near- to mid-term, as the availability of ‘basic
broadband’ is still at a relatively early stage (with the exception of Israel).
The results presented in our analysis on socio-economic impact of broadband should be viewed
with caution as it is our view that isolating the true incremental impact of broadband remains very
difficult and subject to potential significant error due to the complex, cross-sectorial interactions
that occur in all markets.
A.1 International benchmarks of broadband take-up
We should not overlook indicators such as take-up as a useful guide of the benefits of broadband
to end users. In Western Europe, the Internet dial up in the late 1990s increased to over 50% in
some markets, but then fell off dramatically as basic broadband became available in the early
2000s as shown in the figures below. This is a clear demonstration of users valuing the incremental
benefits of broadband over dial-up, namely higher speed, and better user experience by virtue of its
‘always on’ nature.
Ref: 18398-305
60%
Dial-up as % of households and business sites 50%
40%
30%
20%
10%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Austria Belgium Denmark France

Germany Ireland Italy Netherlands
Norway Spain Sweden UK
Figure A.1: Evolution of dial-up Internet take-up in a number of European markets [Source: Analysys
Mason]
Broadband connections as % of households
90%
80%
70%
60%
and buisness sites
50%
40%
30%
20%
10%
0%
Jul-02
Jan-05
Jun-05
Jul-07
Jan-10
Jun-10
Mar-04
Mar-09
Feb-02
Feb-07
Sep-01
Dec-02
Aug-04
Nov-05
Sep-06
Dec-07
Aug-09
Nov-10
May-03
Oct-03
May-08
Apr-06
Oct-08
Austria Belgium Denmark France

Germany Ireland Italy Netherlands
Norway Spain Sweden UK
Figure A.2: Evolution of broadband take-up in a number of European markets [Source: Analysys Mason]
There is less data for next generation broadband take-up. Outside of the Nordic States, Western
European next generation broadband take-up benchmarks to date are low. This is partially due to
the existence of good copper networks (e.g. ADSL2+) and the ‘sweating’ of copper assets by
incumbents and local loop unbundlers. In addition, the delay in provision of wholesale access in
fixed networks in Eastern Europe has meant that in some areas new fibre networks were built by
Ref: 18398-282
alternative providers; this has served to increase take-up relatively quickly. Due to these country
differences it is much harder to benchmark how next generation broadband penetration increase;
however, additional analysis does indicate that reaching 20% take-up after 5 years to be possible
as shown in the figure below, although this could be changed significantly by a wide range of
factors including pricing, competition and potentially regulation.
Connections as a share of FTTx homes passed
100%
90%
80%
70%
Czech Republic South Korea
60%
50%
Ukraine Lithuania
40% Norway Romania Japan
Russia Sweden
Estonia Slovenia
30%
Bulgaria Slovakia Denmark
20% USA Netherlands

Italy
Canada Spain Switzerland
10% France Austria
Portugal Belgium
Germany
UK Finland
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
FTTx homes passed as a share of total households
Austria Belgium Bulgaria Canada Czech Republic Denmark Estonia
Finland France Germany Italy Japan Lithuania Netherlands
Norway Portugal Romania Russia Slovakia Slovenia South Korea
Spain Sweden Switzerland UK Ukraine USA
Figure A.3: FTTx take-up against FTTx availability (homes passed) [Source: Analysys Mason, 2010]
A.2 Quantifying the direct economic benefits of broadband
The direct economic benefits of broadband are diverse, ranging from businesses being able to:
• access new, cheaper and better suppliers

• reach wider markets, and service them more cost effectively
• research new methods of working
• seek partners and joint ventures
• reach potential employees and help retain existing ones by enhancing opportunities
• use online education and e-training
• access applications, such as online banking
• implement general productivity improvements – e.g. simpler file/information sharing.
The balance of the above depends on the business itself, though there are strong similarities within
a given sector, and for companies of a similar size. In addition, it is expected that connectivity can
deliver benefits for government, for example through e-procurement and other process
efficiencies.
Ref: 18398-282
However, despite a large number of academics and others researching this topic there still does not
appear to be a strong consensus on the quantification of the benefits of broadband, although
several suggest the impact on GDP to be of the order of 1%:
• Looking at a panel of 25 OECD countries in 1996–2007, Czernich et al. (2011) find that a 10
percentage-point increase in broadband penetration raised annual GDP per-capita growth by
0.9–1.5 percentage points
• Zhen-Wei Qiang and Rossotto (2009) 50 (writing for the World Bank), concluded that a 10%
increase in broadband penetration increased GDP growth by an additional 1.21% when
looking at 66 high-income countries; and by an additional 1.38% in the remaining 120 low-
and middle-income countries.
• Milano (2010) 51 suggested that investment in ICT (like broadband) contributed almost 0.8% to
the average annual real GDP growth in the USA from 1994 to 2000.
McKinsey 52 recently estimated that the Internet (if considered as a ‘sector’) contributed to between
0.8% and 6.3% of GDP, with the lower figure being Russia and the upper figure being Sweden.
France, Germany and India were all in the middle of the range at 3.2% contribution, although a
much larger proportion of India’s contribution was due to trade balance (exports). Whilst this
study focussed on the contribution of the ‘Internet’ it seems reasonable to assume that this is
closely related to broadband as this has been the key driver of the mass market take-up of Internet-
delivered services in the last decade. McKinsey also concluded that as markets mature the
contribution of the Internet to GDP growth increases; for example, in France the contribution
increased from 10% in 1995-2009, but in the later period 2004-2009, it was 18%. Across the range
of mature countries they considered, the Internet contributed 21% to GDP growth, so for
economies growing at 5% per annum, the impact of the Internet (assuming it is closely related to
the impact of broadband) would be around 1%.
However, there are ‘benefits sceptics’. Some claim that GDP growth is a cause of higher
broadband penetration and not vice-versa, and it is apparent that much of the work in this area fails
to address this cause and effect problem satisfactorily. Others claim that broadband plays a role in
actually destroying jobs by negatively impacting traditional industries. We are not aware of any
studies that have undertaken a robust analysis of the net impact on jobs at anything more than a
local level.
50
Qiang, C. Z. and Rossotto, C. M. (2009), Economic Impacts of Broadband, Information and Communications for
Development: Extending Reach and Increasing Impact. (World Bank: Washington, D.C.), pp. 35–50.
51
Milano, J. (2010), Where Jobs Come From: The Role of Innovation, Investment and Infrastructure in Economic and
Job Growth.
52
McKinsey Global Institute, May 2011. Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity.
The countries covered were: Sweden, UK, South Korea, Japan, USA, Germany, India, France, Canada, China, Italy,
Brazil and Russia.
Ref: 18398-282
It is our view that broadband is likely to play a larger role in maintaining (protecting) jobs rather
than creating large numbers of new jobs in many economies. Nevertheless, this still provides a
useful reference point for comparing the potential order of magnitude benefits against the costs of
deployment, and for Governments and others who aim to promote market development, the case
for intervention still holds whether jobs are being maintained or created.
For the purposes of this work, we have used the studies listed above as a guide to assessing the
potential benefits of broadband. We have assumed that broadband can have a maximum potential
impact of 1% of GDP for a ten percentage-point increase in broadband penetration of the
population.
From a market development perspective, it is instructive to compare the potential benefits of

broadband in the unviable areas, i.e. where the market is not expected to invest itself, with the
costs of deployment in those unviable areas. This kind of assessment is done by governments
when considering the case for intervention in the broadband market.
From our economic-viability analysis (see Section 5) we have calculated the size and cost of
deployment in these unviable areas. We then estimate the potential GDP impact in the unviable
area, adjusting for the fact that GDP per head in the unviable area will be significantly lower than
the national average.
It is not possible to accurately correlate the unviable area with the geographical distribution of
GDP. Hence we have made an assumption that, firstly, GDP in the unviable area is the national
GDP scaled down by the number of households in the unviable area, and secondly, further scaled
down by a factor of 50% 53, reflecting the fact that some industry sectors contribute more to the
“rural” economy, e.g. agriculture and mining, than others, e.g. services.
We then calculate an economic ‘payback’ period, i.e. the number of years it takes for the
cumulative benefits to exceed the costs of deployment in the unviable areas.
53
The factor of 50% is an assumption.
Ref: 18398-282
Summary Report | B–1
Annex B List of stakeholders interviewed
This annex includes a list of the stakeholders interviewed in each FEMIP country in the context of
this project. Note that we did not interview any stakeholders in Algeria, and in the case of Egypt
we only interviewed EgyptSat, a VSAT (very small aperture terminal) operator.
Organisation Type Title

MTIT Ministry of Telecom and Information Acting General Director of Telecom
Technology Regulation administration
PalTel Fixed and broadband (DSL) and mobile CEO
(GSM)
Table B.1: List of stakeholders interviewed in Gaza/West Bank

Partner Mobile operator Head of Strategy and Competitive
Communications Intelligence
(trading as
Orange Israel)
HOT Telecom Broadband operator (cable TV) CTO, Marketing Director
Bezeq ISP (and international voice service Regulation & Business Development
International provider) Manager, Economist
Bezeq Broadband operator (fixed) Head of Research & Planning
MoC Ministry of Communications Director General, Senior Advisor to the
Director General
Table B.2: List of stakeholders interviewed in Israel

Umniah Mobile operator (GSM, EDGE, HSPA+ Director of Government Relations and
planned) and broadband operator (DSL, Regulatory Affairs, Regulatory Affairs &
WiMAX) Carriers Relations Manager, Enterprise
and IP Solutions Manager, Broadband
Marketing Department, Mobile department
TRC National regulatory authority Advisor (former Vice Chairman), Director of
Economic Department, Director of
Regulatory Department, Director of Radio
Spectrum Management Department
Wi-tribe Broadband operator (WiMAX) CEO
Figure B.3: List of stakeholders interviewed in Jordan
Ref: 18398-305
Summary Report | B–2

TRA National regulatory authority Commissioner, Board Member, Head of
Market and Competition Unit, Senior policy
& universal service expert, Policy analysis
expert, Market analysis expert, Cost
accounting analysis expert, Tariffs analysis
expert, Tariffs expert
MOT Ministry of Telecommunications Advisor to the Minister
Terranet and Broadband operators (DSL and fixed CEO, General Manager Terranet, General
Cable One wireless) Manager Cable One
GDS and IDM Broadband operators (DSL and fixed General Manager GDS, General Manager
wireless) IDM
Cedarcom Broadband operator (fixed wireless) Chairman & CEO
Alfa Mobile operator (GSM, EDGE, HSPA+ CMO, CTO
planned)
Figure B.4: List of stakeholders interviewed in Lebanon

ANRT Regulatory authority Competition Regulation Director, Technical
Director, Regulation Director
Meditel Mobile (GSM, EDGE, UMTS) and Strategy Director
broadband (WiMAX)
Inwi/Wana/Bayn Mobile (GSM, EDGE, EVDO rev A) Strategy and Regulation Director, Chief
Broadband (WLL – CDMA) Marketing Officer
Nortis VSAT service provider CEO
Table B.5: List of stakeholders interviewed in Morocco

TRA and MoCT Ministry of telecommunications and Head of TRA
national regulatory authority
STE Fixed and broadband (DSL) CCO
Syriatel Mobile (GSM, GPRS, EDGE, HSPA, CEO, Head of product development &
HSPA+) services management, Head of products &
services marketing Unit, Head of data
marketing section, Radio technical
department
MTN Mobile (GSM, GPRS, EDGE, HSPA, CMO, Consumer segment senior manager,
HSPA+) Product development analyst, Strategic
Marketing Senior Manager, Head of research
Table B.6: List of stakeholders interviewed in Syria

INT Regulatory authority Director of Studies
Orange Mobile (GSM, UMTS) Chief Marketing Officer, Regulatory and
Tunisie Broadband (WiMAX) Wholesale Officer
Table B.7: List of stakeholders interviewed in Tunisia
Ref: 18398-282
Summary Report | C–1
Annex C Glossary of terms
ADSL Asymmetric digital subscriber line

ANRT Agence Nationale de Réglementation des Télécommunications
ARPT Autorité de Régulation de la Poste et des Télécommunications
ARCEP Autorité de Régulation des Communications Electroniques et des Postes
ARPU Average revenue per user
BOT Build operate transfer
BSG Broadband Stakeholder Group
BTO Build transfer operate
CAGR Compound annual growth rate
CCO Chief Commercial Officer
CDMA Code division multiple access
CEO Chief Executive Officer
CMO Chief Marketing Officer
CTO Chief Technical Officer
DAE Digital Agenda for Europe
DOCSIS Data over cable service interface specification
DSL Digital subscriber line
DSLAM Digital subscriber line access multiplexer
DSP Data service provider
DTT Digital terrestrial television
EC European Commission
EE Eastern Europe
EIB European Investment Bank
EIU Economist Intelligent Unit
ESA European Space Agency
EU European Union
EUR Euro
EVDO Evolution data optimised
FCC Federal Communications Commission
FDI Foreign direct investment
FEMIP Facility for Euro-Mediterranean Investment and Partnership
FTTB Fibre to the building
FTTC Fibre to the cabinet
FTTH Fibre to the home
FTTP Fibre to the premises
FTTx Fibre to the x
FWA Fixed wireless access
Ref: 18398-305
GBP Pound Sterling

GDP Gross domestic product
GENIE GENeralization of Information Technologies and Communication in Education
GPRS General packet radio service
GSM Global system for mobile communications
GSMA GSM Association
HDI Human development index
HH Households
HSPA High speed packet access
ICT Information and communication technology
IEC Israel Electric Company
INT Instance Nationale des Télécommunications
IP Internet Protocol
IRR Internal rate of return
ISP Internet service provider
ITU International Telecommunications Union
Km Kilometre
LLU Local loop unbundling
LTE Long Term Evolution
MENA Middle East and Africa
MoC Ministry of Communications
MoCT Ministry of Communications and Technology
MoICT Ministry of Information and Communications Technology
MoT Ministry of Telecommunications
MTIT Ministry of Telecom and Information Technology
MVNO Mobile virtual network operator
NGA Next generation access
NTA National Telecommunications Authority
NTRA National Telecommunications Regulatory Authority
OECD Organization for Economic Cooperation and Development
PACTE Programme d’Accès aux Télécoms
PACTE Programme d'action communautaire sur le terrain de l’éducation
PEC Palestine Electricity Company
PPP Public-private partnership
PPP Purchasing power parity
PSTN Publish switched telephone network
PTRA Palestine Telecommunications Regulatory Authority
RAN Radio access network
SME Small and medium enterprises
STC Syrian Telecommunications Company
Ref: 18398-282
STE Syrian Telecommunications Establishment

TRA Telecommunications Regulatory Authority
TRC Telecommunications Regulatory Commission
UMTS Universal Mobile Telecommunications System
UNDP United Nations Development Programme
USA United States of America
USD United States Dollar
VDSL Very high bit-rate digital subscriber line
VoIP Voice over Internet Protocol
VSAT Very small aperture terminal
WACC Weighted average cost of capital
WCDMA Wideband code division multiple access
WE Western Europe
WiMAX Worldwide interoperability for microwave access
WLL Wireless local loop
WLR Wholesale line rental
Ref: 18398-282
FEMIP for the Mediterranean
Facility for Euro-Mediterranean Investment and Partnership
The study evaluates the market, business and financial aspects for the development of Telecom broadband access for
the Mediterranean Partner Countries. To do so the current status for access to Telecom broadband services among
the people in the region is analysed. Based on this analysis the study identifies the investment needs to increase the
number of people having access to broadband. All in all, the study estimates the investment need for the rollout of
broadband infrastructure in the Mediterranean Partner Countries based on a common target scenario for broadband
service coverage by 2020.
Operational contacts External Offices in Mediterranean

partner countries
Claudio Cortese
Deputy Director General, Egypt: Tom Andersen
Directorate for Operations outside Head of Regional Office
the European Union and Candidate Countries 6, Boulos Hanna Street - Dokki, 12311 Giza
3 (+352) 43 79 - 86836 3 (+20 -2) 3 336 65 83
5 (+352) 43 79 - 66898 5 (+20 -2) 3 336 65 84
U [email protected] U [email protected]
Alain Nadeau Morocco: Guido Prud’homme

Head of Maghreb Division Head of Office
3 (+352) 43 79 - 86816 Riad Business Center, Aile Sud
Immeuble S3, 4e étage
5 (+352) 43 79 - 66799
Boulevard Er-Riad, Rabat
U [email protected]
3 (+212) 537 56 54 60
Javier Gutiérrez Degenève 5 (+212) 537 56 53 93
Head of Near East Division U [email protected]
3 (+352) 43 79 - 84820 Tunisia: Robert Feige
5 (+352) 43 79 - 66899 Head of Office
U [email protected] 70, avenue Mohammed V
TN-1002 Tunis
Angus Macrae 3 (+216) 71 28 02 22
Head of Division – Special Operations 5 (+216) 71 28 09 98
3 (+352) 43 79 - 86406 U [email protected]
5 (+352) 43 79 - 66897
U [email protected]
Press contacts and general information
Ioannis Kaltsas
Head of Policy and Trust Funds Division Anne-Cécile Auguin
3 (+352) 43 79 - 86425 3 (+352) 43 79 - 83330
5 (+352) 43 79 - 61000
5 (+352) 43 79 - 66798 U [email protected]
U [email protected]
European Investment Bank
98 -100, boulevard Konrad Adenauer
L-2950 Luxembourg
3 (+352) 43 79 – 1
5 (+352) 43 77 04
© E IB – 0 7 / 2 0 1 2 – © EI B G rap hi cTe am www.eib.org/femip – U [email protected]

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Fa c i l i t y fo r Eu ro - M e d i te r r a n e a n I nve s t m e n t a n d Pa r t n e r s h i p • Fa c i l i t y fo r Eu ro - M e d i te r r a n e a n I nve s t m e n t a n d Pa r t n e r s h i p

EVALUATION OF THE MARKET, BUSINESS AND

Contract: 2010/S 154-237201, TA2010014 R0 FTF

Beneficiary country: All FEMIP countries

2 Macro-economic overview of FEMIP countries 2

3 The telecoms market in the FEMIP countries 12

4 Assessment of broadband market demand in FEMIP countries 32

6 Analysis of the socio-economic impact of broadband services 61

Annex A Background on the socio-economic impact of broadband

About Analysys Mason

Key contacts for this study

• Samer Mourad (Manager) – ([email protected] and +33 1 72 71 96 55)

Registered as Analysys Limited: 410 406 839 RCS Paris

The remainder of this document is laid out as follows:

• Section 2 provides an overview of the macro-economic situation in FEMIP countries

2 Macro-economic overview of FEMIP countries

• description of the political situation in FEMIP countries (Section 2.1)

2.1 Political situation

Figure 2.1: Map of the FEMIP region [Source: Analysys Mason]

As a comparison to Western European countries:

10,000 Figure 2.2: Inward and

8,000 FEMIP countries in 2009

Gaza /west bank

70 Figure 2.3: Risk rating in

40 not included in the chart

Note 3 : The data is for

2.2 Country demographics

Population in 2010 Population in 2020 Compound annual Share of FEMIP

7 Figure 2.5: Average

500 This line represents the Euromonitor, 2010]

30% [Source: Analysys

Gaza / West Bank

2.3 Country economics

2.3.1 Macro-economic indicators

Note: Gaza/West Bank

40% Figure 2.10: Importance

30% 2007 [Source:

Morocco Algeria Egypt

Figure 2.11: Historical evolution and forecast of inflation [Source: Euromonitor]

Figure 2.12: VAT rate in

Gaza / West Bank

2.3.2 Socio-economic indicators

Figure 2.13: HDI for

100% Figure 2.14: GINI index

80% countries [Source:

Gaza / West Bank

70% [Source: Euromonitor,

Gaza / West Bank

2.4 Impact of the macro-economic situation on broadband development in FEMIP countries

Morocco Algeria Egypt Gaza/ Israel Jordan Lebanon Syria Tunisia

3 The telecoms market in the FEMIP countries

3.1 Importance of the telecoms sector in the FEMIP countries

7% Figure 3.1: Importance

Figure 3.2: Telecoms

35% Note: Data for Egypt is

1.4% Figure 3.3: Share of

1.2% [Source: Euromonitor,

% of bandwidth used by internet

International bandwidth usage % of bandwidth used by internet

3.2 Regulatory environment

Ranking of most advanced Existence of an Fixed market Mobile market

Country Existence of an independent Mobile market Fixed market

Country Existence of an independent Mobile market Fixed market