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Syria: Gearing up for IT
[December 16, 2010]

Syria: Gearing up for IT

(Daily News Egypt Via Acquire Media NewsEdge) Although tourists might head straight to Souk Al-Hamidiyya, in fact, one of the biggest souks in Damascus these days is unquestionably Souk Al-Bahsa. It might lack the former's picturesque charm, but here you'll find talented young merchants selling software and hardware at knock-down prices. In many ways Souk Al-Bahsa is a testament to the vitality of the Syrian Information Technology (IT) sector.

The IT sector has huge potential in Syria. Internet usage has mushroomed over the past few years. The population is young, increasingly well-educated, urbanised and these days - thanks to the economic reform process - slowly becoming more affluent. On the downside, however, the industry suffers from over-regulation of the telecoms sector that impedes growth, as do sanctions and consequently a high rate of piracy.

Internet penetration rates remain relatively low. According to Internet World Stats, there were 3,935,000 Internet users as of June 2010, a 17.7 percent penetration rate. Figures from the Syrian Telecommunications Establishment (STE) put the figure much lower, at 744,000, or 3.68 percent, at the end of 2008, but this number represented the number of subscribers, rather than users. As with many other emerging markets, both IT and telecoms in Syria remain primarily a value-driven industry, with profits to be made through high volume, rather than high-spending individuals.

Subscription is still mostly by diAl-up, and here the quality of the landline network hinders the sector. Landlines remain a monopoly of the STE, which hitherto combined the functions of an operator and a regulator.

However, under Law 18 of 2010, which was issued in June, the STE will be split into a regulator, the Telecommunications Supervisory Authority, and an operator, the Syrian Telecommunications Company. Although the landline monopoly will remain for the time being, the impact of the new regulatory environment, which is being introduced in anticipation of the award of a third mobile licence, should help to improve standards.

The STE now has cheaper access to the international gateway, and since 2009 has reduced its broadband tariffs in response. These are now calculated either by volume of download or at a flat rate allowing unlimited downloading. In 2009 monthly tariffs ranged between a 1,450 SP ($31) to 2,300 SP ($50) flat rate depending on connection speed, or from 900 SP ($20) to 1,200 ($26) according to download volume, with extra downloading charged at 200 SP per extra GB. Also commencing in 2009, third-generation (3G) technology has been available through the two mobile operators, Syriatel and South Africa-based MTN.

Although initially each firm was limited to 12,000 subscribers each, anecdotal evidence suggests take up has been very good. There is also increasing interest in mobile Internet, although certain devices (such as Blackberry) do not function in Syria due to sanctions.

US sanctions do damage the Syrian IT sector, with basic programs such as Microsoft and Oracle unobtainable legally. Since almost all big IT firms globally are US-based, this means many local IT firms rely on the government for business, with industry insiders estimating that 80 percent of business is accounted for by government spending. A culture of using IT is not yet widespread in Syria, with the private sector often the first to introduce new initiatives.

Syria's large informal sector acts as a further brake on private IT development. Syria still has relatively few large private firms, although the opening of private banks and insurance companies over the past five years is starting to change this. E-commerce remains in its infancy, mostly limited to e-banking. Syria continues to be a largely cash culture, and as with elsewhere, many consumers have been reluctant to trust Internet banking. Moreover, buying over the Internet is requires a bank account and credit/debit card - which a majority of Syrians still do not have.

Small family firms, which may operate on the margins of legality and often at a very low technological level, do not see IT as indispensable to their operations. This is not to say that the informal sector is an entirely bad thing - software piracy allows Syrian consumers access to programs that would otherwise be unavailable due to sanctions. Over the long run however, a lack of copyright protection hurts local Syrian programmers, and IT specialists regularly cite it as one area where better regulation is necessary.

Historically, the public sector has accounted for the bulk of the Syrian economy, and the sector is still not as adept as it might be at adopting IT solutions. Given the IT industry's dependence on government contracts, an improvement in the management of public IT systems could provide a big boost. Syria is slowly starting to introduce e-government, with certain services now available online. Another area of potential is digital content in Arabic. Although Arabic speakers account for 5 percent of the world population, Arabic content on the Internet is less than 1 percent.

Syria has historically played a leading role in the Arabisation of modern terminology, and in 2009, the country played host to the first National Conference on Arab Digital Content. The inventiveness of Souk Al-Bahsa's young software engineers is testament to the vitality of the IT sector even in the face of a challenging environment. As obstacles and restriction are removed, the sector is likely to respond to new opportunities well.

(c) 2009 Daily NewsEgypt Provided by an company

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