Calling for Liberalisation

Qatar

Economic News

22 Jul 2010
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This month, Qtel, the public telecommunications company, has introduced a series of tariff reductions on international calls, which has sparked reactions throughout the sector.



Reduced rates for international calls have done little to stifle criticism of Qtel's monopoly position in Qatar's telecommunications sector. Many observers have pointed out that the market is long overdue for liberalisation.



Overall, the new tariff plan aims to offer consumers up to a 36% reduction on international calls.



However, the general response to rate cuts has not been entirely positive. Most consumers have acknowledged the reduction to their international calls but many have voiced their disappointment, with a view that the reductions are long overdue and do not go far enough. Expatriates from the Indian subcontinent, who make up a large proportion of Qtel's customer base, have been the most vocal, complaining that calling home from Qatar is still unreasonably expensive. Even at the reduced rates, calls to South Asian locations are QR2.64 ($0.73) per minute and QR1.92 ($0.53) per minute off-peak time periods.



Qtel has also received criticism for fixing the pulse-rate at 15 seconds instead of charging costumers for the call time they use.



Many observers feel call charges will only be sufficiently reduced when the Qatar market is opened to competition. Currently, Qtel holds a monopoly across all products in the Qatar telecoms market. As of August 2006 the company supplied 217,501 fixed telephone lines and supported 848,147 GSM subscribers in a country with total population of roughly 863,000.



Qtel listed on the Doha stock market in 1998 and has subsequently also listed on exchanges in London and Bahrain.



The company has said repeatedly that it would welcome competition in the market but that this is a consideration best left to the government.



Qatar's supreme council of information and communication technology (ictQatar) is responsible for the development of the country's information and communication technology (ICT) policy and infrastructure. The council has also been tasked with developing the platform for new operators to enter the market and there has been speculation among observers that liberalisation will occur after the Asian Games in December. "In a competitive market, telecommunications operators have an incentive to be more efficient cost-wise and to innovate both in terms of services and delivery technologies," said William Fagan, the executive director of ictQatar regulatory authority, in a statement released to OBG.



While Qtel remains the sole player in its home market, the company has been taking advantage of liberalisation elsewhere to further develop its business. In Oman, Qtel is the majority shareholder in Nawras, the country's second mobile telecoms operator.



Any competitor coming into the Qatar market might well face low-brand recognition and have to overcome consumer inertia - especially regarding the portability of existing phone numbers. These are issues that the Qtel vehicle, Nawras, faced when entering the Omani market.



Nawras is the only competitor to Oman's state-owned Omantel and has already achieved an approximate 20% market share.



The markets, however, are different. Competitors would have to develop entry strategies in line with the fact that Qatar telecoms market is already well served. In a recent survey undertaken by the Arab Advisor Group, Qatar achieved the highest score on the total country connectivity measure score (TCCM) in the Arab region. TCCM rates the country's total connectivity through fixed lines, GSM or internet. Qatar's TCCM score stood at 234%, rated number one, just ahead of Bahrain at 231%.

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