As part of ongoing efforts to stimulate growth in the digital economy, the Telecommunications Regulatory Authority (TRA) launched a new Innovation Licence in October 2022, encouraging companies to experiment with next-generation services using wireless technologies. By eliminating lengthy regulatory approval processes, companies can test and deploy new technologies more quickly, fostering greater innovation.
Regulatory Sandbox
As of March 2023 the TRA had issued five Innovation Licences to mobile network operators and satellite service providers, allowing them to test different radio technologies without having to pay frequency licence fees. The regulatory sandbox provided to TRA Innovation Licence holders enables them to obtain quick access to radio spectrum for wireless testing. The licence was conceived along similar lines to the regulatory sandbox that the Central Bank of Bahrain introduced in 2017 to promote digital innovation in the financial services sector. The sandbox enabled financial technology (fintech) start-ups to test innovative products and services in a safe environment, without being subject to the usual regulatory requirements. Its success encouraged the TRA to introduce the new licence, with hopes that it will have a similar impact on the telecommunications sector.
“While there are signs that the start-up ecosystem is developing, regulation will continue to drive innovation across different industries,” Bader Sater, CEO of Bahrain FinTech Bay, told OBG. “Regulations have the potential to serve as a catalyst for innovation, offering start-ups a platform to address industry challenges and devise innovative solutions. An example of this impact can be seen in the financial services sector wherein regulations pertaining to crypto-assets fostered the establishment of a thriving, well-regulated crypto-asset market in Bahrain,” he added.
While the Innovation Licence is a significant development for the telecommunications industry, it is also part of a wider trend of governments creating regulatory sandboxes to foster innovation in their economies. For example, the UK introduced a fintech regulatory sandbox in 2016, and has since expanded the concept to include areas such as energy, health care and transport. Meanwhile, in 2021 Colombia became the first country to launch a telecommunications sandbox.
The Innovation Licence aligns with the Telecommunications, ICT and Digital Economy Sector Strategy 2022-26, which prioritises enhancing broadband services, supporting 5G deployment and developing the internet of things ecosystem, among others. Additionally, the licence is intended to drive innovation in other emerging technologies such as Wi-Fi 6; blockchain; augmented, virtual and extended realities; and millimetre wave and digital twin technologies, helping Bahrain become a regional leader in digital innovation.
Prospects & Benefits
The Innovation Licence allows telecoms operators to launch new services and technologies quickly, which is expected to encourage more experimentation and innovation in the domestic market. The licence should also serve to enable sectors such as health care, agriculture and transport to benefit from wireless technologies.
For example, the health care sector could employ wireless technologies in the form of remote patient monitoring systems and telemedicine services. The use of wireless technologies in agriculture could help farmers monitor crop health, optimise irrigation and reduce water consumption. In transport, wireless technologies could be used to improve traffic management systems and reduce congestion.
The Innovation Licence is expected to have multiple benefits for local industries. The regulatory framework could help to attract new foreign investment, which will also enable the country to gain valuable insight into the workings of new products and services by engaging closely with global players. Moreover, the licence is expected to contribute to job creation and economic growth by expanding opportunities in the ICT sector.
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