New technology and spectrum allocation stoke telecoms growth in Bahrain

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One of the most significant telecommunications growth drivers in Bahrain in recent years has been the launch of fourth-generation long-term evolution (4G LTE) services. The kingdom’s three main operators – Batelco, Zain Bahrain and VIVA Bahrain – had been working to roll out 4G LTE services for nearly five years, although limited access to new frequency bands had inhibited growth until recently. With the opening of new spectrum allocation initiatives, all three operators have been able to launch 4G LTE services, with data usage and demand expanding significantly as a result.

However, spectrum allocation remains a challenge in the kingdom, as does access to incumbent operator Batelco’s expanding fibre-optic network. Although the Telecommunications Regulatory Authority (TRA) has received international accolades for its regulation of the sector, recent decisions have led to criticism that the market is becoming imbalanced. Timely allocation of the 2600-MHz spectrum and improved access to fibre infrastructure will be critical for 4G LTE expansion.

The Future Of 4G

Bahrain’s mobile broadband market was dominated by 3G technology until late 2011, with operators trying to cope with increasing demands for faster data speeds under limited spectrum allocation. Batelco was the first to launch 4G LTE service in Bahrain, introducing services on the 1800-MHz frequency band in February 2013. The operator initially offered services for a limited selection of smartphones, specifically the LTE-ready Samsung I9305 Galaxy S III, Nokia Lumia 920 and Nokia Lumia 820.

The company has been quick to expand coverage since then, announcing in March 2014 that it had signed an agreement with the multibillion-dollar Bahrain Bay development to supply fibre-optic broadband access as part of an initiative to extend its high-speed fixed services to new residential and commercial areas. Batelco told media that the company will use Gigabit Passive Optical Network fibre technology.

Zain Bahrain became the second operator to offer 4G LTE coverage in the kingdom, launching its own 4G LTE services in April 2013 and announcing in October that year that it had signed a contract with Ericsson for a 4G network transformation, including deployment of LTE technology across its existing network. Under the agreement, Ericsson replaced 2G and 3G radio network equipment and added 4G functionality via its RBS 6000 base stations, while Zain implemented Ericsson’s charging system for pre-paid subscribers.

VIVA was the third operator in Bahrain to launch commercial 4G LTE offerings, promising data speeds of up to 100 Mbps when services rolled out in January 2014. VIVA announced it would offer both mobile and home/office wireless broadband LTE data plans that would be activated via an add-on package that was free for one month as part of a promotional package.

In February 2014 wireless broadband provider Menatelecom announced the launch of its own 4G LTE services, following a switch to a TD-LTE 3500-MHz network in November 2013, as well as an earlier unsuccessful attempt to bid in a spectrum auction for bandwidth.

Although device compatibility had been a challenge, with many of the most popular smartphone devices initially incompatible with 4G services, coverage has since expanded substantially. In March 2014, Batelco activated 4G LTE mode for subscribers with Apple’s iPhone 5 devices, including the iPhone 5S and other models. Prior to this, VIVA Bahrain had been the only operator to grant iPhone 5 users access to LTE services. In May 2014 Zain Bahrain expanded its LTE offerings to cover smartphones and tablets via 4G LTE.

Broadening The Spectrum

Spectrum allocation remains the most significant challenge to 4G LTE roll-outs. According to the government’s 2008 National Spectrum Planning and Allocation Policies, management of the radio spectrum should be in the public interest, with the goal of creating a predictable environment for current and future spectrum usage.

However, spectrum constraints have slowed rollouts, and questions about the market’s capacity to deliver true 4G services linger. “Bahrain is a compact space, and the number of users you can get on a base station is pretty high. There’s 80 MHz of spectrum available for LTE, and that is it. With the limited amount of spectrum available and lower amount of bandwidth, you generally do not get a lot of high throughput to the customer. They advertise up to 20-Mbps downloads, but you would be lucky during peak hours to get one or two, which is not much better than 3G,” Ian Plamondon, the COO at Condor Technology, told OBG.

Allocation Process

In the wake of unprecedented levels of data demand in 2011 and 2012, operators began calling for new spectrum allocation. While reallocating their existing spectrum was an option, it would have been detrimental to other services.

The TRA announced in 2012 that it would release the spectrum necessary for 4G services in 2013 via a competitive auction process, partnering with Frontier Economics, a European microeconomics consultancy, to design the bidding process. An auction of mobile licences in the 900-MHz, 1800-MHz, 2100-MHz and 2600-MHz frequency bands was launched in January 2013 but cancelled by the TRA in late June, reportedly in the public interest, after being suspended in March. The move came in the wake of the government’s amendment to the third National Telecommunications Plan, which required the TRA to allocate the spectrum to the three mobile service licensees. This was met with strong resistance from other players, especially Menatelecom.

Telecoms market research firm TeleGeography reported that Menatelecom’s exclusion from the new licensing process came as a surprise. Earlier indications from the TRA, including the fact that the authority included licensing conditions for new entrants, such as rollout stipulations, in the original tender documents, had led the company to believe it would qualify for the auction. Additionally, the regulator had officially amended Menatelecom’s original fixed-wireless 3500-MHz operating licence, removing all mobility restrictions in February 2012 and seemingly opening the door to 4G development. In March 2013 Menatelecom took legal action against the TRA in an effort to participate in the bidding process, leading the authority to cancel the initial auction that was scheduled for June.

License Awards

In September 2013 the TRA finally awarded new frequency licences in the 900-MHz, 1800-MHz and 2100-MHz bands to the country’s three existing mobile network operators. VIVA received six lots of spectrum, Batelco four and Zain two. In a statement, the TRA said it had launched a revitalised frequency award process. As 4G LTE rollouts represent a critical facet of the third National Telecommunications Plan, the spectrum award is a national priority.

While the release of the new spectrum has enabled Bahrain’s operators to expand 4G LTE coverage, existing spectrum remains limited and stakeholders are hoping the government will move forward on additional auctions in the coming years. The 2600-MHz band remains the most promising spectrum for future 4G LTE expansion, as the government did not award any of that spectrum in 2013, although no plans for future auctions have yet been announced.

Another Auction

However, in its 2012 announcement of spectrum allocation, the government mentioned that 30 MHz of spectrum on the 2600-MHz bandwidth was scheduled for auction in late 2014, following the 2013 auction of the 900-MHz, 1800-MHz, and 2100-MHz bands. The 2600-MHz auction could conceivably take place within the next year, in line with the government’s original two-year target timeline.

“Everyone knows with the way data is heading we will need more spectrum, and there is not enough spectrum. The 2600 MHz, which was evacuated two years ago, is ready to be used for 4G, and there is the 3100 MHz as well, which could be used in the future,” Hamad Al Romaihi, network director at Zain Bahrain, told OBG.

At the same time, limited access to fibre-optic networks has also constrained 4G LTE expansion. “This is one of the major challenges; only Batelco is allowed to dig fibre infrastructure in Bahrain, so it can be a challenges to access fibre networks,” said Al Romaihi.

In March 2014 the TRA issued a significant market power (SMP) determination to deregulate markets for fixed broadband internet access, ruling that Batelco was no longer an SMP operator in the retail or wholesale consumer fixed broadband segment (see IT overview). In addition to removing restrictions on the rates Batelco can charge for consumer broadband, the decision also freed it from offering both its copper and equivalent fibre infrastructure to competitors for local loop unbundling, bitstream access, or wholesale digital subscriber line resale. However, in April 2014 the TRA found Batelco dominant in respect to domestic data connectivity services providing guaranteed bandwidth.

“With data evolution and growth, you cannot operate without fibre. A significant proportion of base stations and towers must be connected by fibre, because data demands are growing too quickly. Today we use microwave technology, which is two dishes from two sites, to carry that out, but the laws of physics have certain limitations. You cannot carry more data and give customers more speed without fibre,” said Al Romaihi.

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The Report: Bahrain 2015

Telecoms & IT chapter from The Report: Bahrain 2015

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