The Middle East is behaving very differently from other developing markets. On the one hand, we see some liberalisation and an increase in competition. However, new licences are being bought by incumbents and government-funded investment companies (with very deep pockets, thanks to booming oil economies) at prices that seem well above market value. These high prices have kept most 'foreign' investors away, making the Middle Eastern market very much a local affair.
This investment activity has also spread outside the region. Middle Eastern companies have paid similarly inflated prices for new opportunities in Asia and Africa, and at the edges of the European markets.
Monopolies still exist in fixed-line services in many Middle East countries, extending to a ban on VoIP services. The cultural environment creates problems for development of other new services in the digital media area, with YouTube, for example, frequently being banned. The market potential however is significant, due to the fast-growing young populations, in many cases with money to spend. Consequently locally produced services are developing in Arabic music and film distribution, and blogs are very popular.
Operators are spending freely on new infrastructure, looking particularly at corporate markets and e-government services and not necessarily to gain immediate competitive advantage. Countries in the region are aware of the need to diversify out of oil and gas and see excellent infrastructure as a lure for investment.
Comparing this 'controlled' situation with China, which is equally heavily controlled by government regulation, the outcomes in the Middle East are very different. At regular intervals the Chinese clamp down on Internet cafes, websites and satellite use, only to see the companies re-emerging a street away a day or so later. This also happens in the Middle East but to a lesser extent as control and censorship are more easily achieved and the cultural environment makes it more acceptable.
For more information, see BuddeComm's:
2007 Telecoms, Mobile and Broadband in The Middle East
Gulf region report
2007 Telecoms, Mobile and Broadband in The Middle East - Mediterranean & Levant countries
2007 Middle Eastern - Convergence, Broadband and Internet Market
2007 Middle Eastern Mobile Communications and Mobile Data Market
2007 Middle Eastern - Telecoms Statistics and Market Overview report
2007 Middle East - Telecoms Statistics - tables only report
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