Kuwait: Private lines


Economic News

19 Jul 2011
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Fixed-line telephone services in Kuwait are currently owned by the state, however, this may be set to change, according to recent statements by government officials. At the same time, the establishment of an independent regulatory agency for the communications sector is being considered. Both of these changes would dramatically affect the country’s internet service providers (ISPs), which have recently been subject to criticism from local internet users for their decision to implement “fair access” policies.

The Kuwait Times reported in early June that the undersecretary of the Ministry of Communications (MoC), Abdulmohsin Hasan Al Mazidi, said that the government has plans to “overhaul” the communications sector within the next two years. These comments came while Al Mazidi was attending the 10th Arab Telecom and Internet Forum, a meeting of government officials and private sector participants that was held in Beirut on June 3 and 4.

Al Mazidi explained that, as part of Kuwait’s move to become a regional financial and commercial centre, the government would give the private sector a larger role in the communications, postal and transport sectors. His comments followed an announcement made in November 2010 by Mohammed Al Busairi, then-minister of communications, that the government intended to privatise the provision of fixed-line telephone services. According to a report in the Al Seyassah daily, he said that this policy shift would be “in line with what is happening all over the world, including in the GCC countries”.

Alongside the privatisation efforts, there is the possibility that an independent regulatory agency will be created. Al Mazidi alluded to this in his June announcement, saying that the government has plans to create a communication and internet authority to support the sector. Indeed, the establishment of a regulator would open the way for additional ISPs to enter the market. The MoC ceased issuing licences to new ISPs last November, pending the establishment of a sector authority.

New entrants are expected to augment the level of competition in the ISP market. Al Mazidi recently expressed some concerns regarding the pricing of internet services and called for the MoC to license additional ISPs. In addition to pricing concerns, Kuwait’s ISPs have come under increased public scrutiny following their decision to enforce fair access policies. The Kuwait Times reported on June 7 that all four major local ISPs (FASTtelco, Gulfnet, KEMS and Qualitynet) now have such rules in place and that they are being enforced.

This type of policy establishes a bandwidth cap – a daily download limit for each user, which, if exceeded, triggers a reduction in connection speed by 75% for the remainder of the 24-hour period. This rule applies to all users, including those who have paid for unlimited internet access. The transfer of data continues without limit, however, it occurs at slower speeds until the end of the 24-hour period.

The daily download limit can vary depending on the ISP and the speed of a user’s internet connection. For example, a KEMS customer with a contract for a 1 MBps connection cannot download more than 1.7GB per day. This allowance increases with the connection speed, reaching 7.9GB for an 8 MBps connection. Gulfnet and Qualitynet have comparable usage caps, while FASTtelco had not posted its daily download limits at the time of publication.

ISPs have justified their decision by saying that it will guarantee equal access to all users, preventing abuses by a minority that affect the services of all. Gulfnet states on its website that the intent of the policy is to “provide the optimum internet experience to all customers”.

In fact, it is not unusual for an ISP to have a fair access policy. Customers typically share an internet connection that can become congested if some users are engaged in data-intensive activities, such as downloading movies. ISPs can track individual usage patterns and notify people who are considered “heavy users”, sometimes suggesting that large files be downloaded at non-peak usage times. However, these rules are not necessarily consistently enforced. It is clear from the response of internet users in Kuwait that this type of rule is indeed now in effect, prompting speculation regarding why local ISPs have acted now and largely in concert.

The MoC has not commented on the issue, but the Kuwait Times reported that the ISPs have come under pressure from the ministry. The implementation of such rules affords the government the opportunity to continue services to the largest number of customers without having to upgrade internet infrastructure, although limiting usage is only a temporary solution. In the long run, greater investment in the sector and associated infrastructure could see a return to free access. With the government in control of the fixed lines, however, ISPs currently remain constrained by the MoC’s investment decisions. The move, therefore, to privatise the fixed-line market could well expand and improve the provision of internet services.

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