Changes ahead: The regulatory authority has a new national sector plan in the works

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Those looking to grow businesses in Bahrain’s highly competitive telecoms sector will find their prospects much affected by near-term regulatory moves on the part of the Telecommunications Regulatory Authority (TRA). The regulator has a strong track record of encouraging growth in the sector through liberal policies and judicious intervention in the market when necessary. The TRA has also managed to create a culture of transparency, largely thanks to national telecommunications plans it has published since its establishment.

SERIES OF PLANS: The focus of the first national telecoms plan, announced in 2002, was on creating the infrastructure to ensure universal access to telecoms for all people living in the country. The second plan, launched in 2008, introduced regulatory reforms aimed at stimulating competition and driving innovation in the sector. It has been remarkably successful at this. Bahrain grew its economy with the developmental heft added by its state-subsidised telecoms, then liberalised the market by inviting increasingly more competition into the sector, driving further market penetration and lower pricing. In 2010 it mandated mobile phone number portability, which has brought about a substantial increase in competition between the Kingdom’s three mobile operators, and ordered Batelco to reduce the rate it charges other telecoms companies to use its broadband infrastructure.

The TRA announced in October 2011 it was collaborating with the British consultancy Intercai Mondiale to develop a new outlook for telecoms development. As past regulatory changes demonstrate, the outcome of the plan looks certain to affect the opportunities for growth in the sector over the short and medium term. While official pronouncements about the shape of the document had not been published at the time of writing – the only openly stated guideline is the desire to square any strategy with the economic goals espoused in the Bahrain Economic Vision 2030 – it is possible to foresee the most pressing regulatory issues at stake for the sector. Chief among them is the licensing of the wireless spectrum. Mobile broadband penetration is relatively limited in the Kingdom compared to similar economies, representing a significant avenue for growth in an otherwise saturated market.

IN DEMAND: Access to 4G-capable radio frequencies will be a significant advantage for operators looking to court data-hungry customers. The TRA has announced that the coveted 2.6 GHz radio band, the band of choice for long-term evolution mobile broadband technology, will be awarded in two tranches – the first in the first quarter of 2013 and a second in the fourth quarter of 2014. The award mechanism has not been determined as yet, but many major players have already expressed interest in bidding, including Batelco, Lightspeed, Menatelecom, STC-Bahrain (VIVA), and Zain Bahrain; international satellite operators Société Européene des Satellites (SES) and Thuraya; and manufacturers Ericsson, Intel, Motorola and Qualcomm.

The second major issue to be tackled in future regulation is the prospect of easing regulations which prohibit service consolidation among the information and communications technology branches of major domestic players. The current regulatory environment keeps wireless broadband, mobile broadband and fixed-line services separate, with distinct licences for each service. However, allowing providers to bundle internet, fixed-line and wireless services would square well with the TRA’s stated goal of driving down prices and improving service. While this change in regulation might favour Batelco, the only firm with substantial hands in both the mobile telephony and fixed wireless broadband markets, it might entice other fixed wireless broadband operators to compete in the telephony market.

With mobile operators such as Batelco looking outside of the domestic market for growth, the Bahraini market will likely focus on the ongoing regulatory changes related to the provision of next-generation mobile broadband. The TRA’s reputation for transparency should give potential investors hope that the auction will provide opportunities for all serious claimants.

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The Report: Bahrain 2012

Telecoms chapter from The Report: Bahrain 2012

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The Report

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