Bahrain Telecom Market – Bahrain Telecommunications Regulatory Authority (TRA)

Bahrain Telecom Market, Telecommunications Regulatory Authority (TRA), General Director, Alan Horne
I think Bahrain Telecom Market is well down the road of liberalization. Bahrain Telecom Market started in 2003 following the issuance of the Telecommunications Law, it’s a law based upon international best practice, which gives a lot of strength and teeth to the regulator.

Bahrain rose once again in the World Economic Forum’s Global Competitiveness Index. Out of 134 countries ranked, Bahrain moved up to 37th position from 43rd position, this was in 2008. Part of the index is also infrastructure and technological readiness. TRA was established in 2002, how important was the role played by TRA in this achievement?

I think it is significant and indeed I predict that Bahrain ranking will improve even further next year.  The ranking is based upon factors such as speed of internet, accessibility of the internet, and ICT knowledge.  Generally Bahrain is still at very low speeds, averaging at 256 -512, however we have recently seen higher speed broadband services (up to 10 Mb/S) on offer to consumers.  This in return will increase the usage of e-government, e-health, and e-education applications.  So I would say we will see further improvements, and TRA has played a significant role in creating the environment which has given more choice to the consumers and businesses.

According to Zawya, “Bahraini telecom market is the most liberalized in the region,” how do you assess the current regulatory environment in Bahrain Telecom Market and what makes it the most liberalized market in the region?

Well fundamentally anyone can come and apply for a license to provide telecommunications services here in Bahrain Telecom Market, which is not the case in any of the neighbouring countries,  with one exception for the mobile license which is subject to the limitation and availability of the radio frequencies. We have 2 operators providing mobile services and we recently licensed Saudi Telecommunications Company to operate in Bahrain.  Further we currently have 10 ISPs. , 8 fixed line providers and 14 companies providing international Calling.

What are the specifics of this GCC or Bahrain Telecom Market when we compare it to for instance, European market? How does it compare to American market or European market?

I think we are well down the road of liberalization. Liberalization in US and Europe started well before the region. Bahrain Telecom Market started in 2003 following the issuance of the Telecommunications Law, it’s a law based upon international best practice, which gives a lot of strength and teeth to the regulator. TRA Bahrain is considered as an exemplar regulator in the region.  In Bahrain Telecom Market we have developed a regulator which I would say is world class, we’ve got a mix of expats and Bahraini staff highly trained who fight our corner and set appropriate regulation to enable Bahrain Telecom Market to develop and work to the benefit of customers and the Kingdom.

You mentioned you have some particular competence to enforce the legislation, can you mention some of these?

As we collect money from the licensees themselves and this the money comes directly to us, as opposed to the finance ministry, we are financially independent.  This financial independence enables us to recruit the best staff and consultants to support us in our work and pay commercial rates.  Further the law is strong in that it enables us to fine Licensees if they fails to meet their obligations.  We have a board of Directors which is a supervisory board that oversees what we do and how we do it.. In conducting our duties we are very precise in following the telecommunications law which is based on international best practices.

For instance, what was the response of Batelco to this newly created regulator?

Batelco’s response was like every other operator’s response whether that was AT&T or France telecom or British telecom, they fought very hard. but progressively the incumbent operator sees that they are not going to get away with some of the behavior they exhibit in the early days with a strong regulator and then they start to look at “How do we collaborate and cooperate with these new investors?”. Experiences show that the competition benefits the incumbent operator in term of increased revenues, quality of service being increased and overall improvments in efficiency and creativity.

According to Xavier Anglada, an associate partner at Delta Partners, an investment company and consultancy specializing in telecoms, “There is a clear intention of the regulator, to do two things to make significant steps forward. First, to open Bahrain Telecom Market to different players, and then to make the services much more appealing to the customers.” What are some of new guidelines and regulatory framework you have created to offer better protection for the customers and to tackle the growing industry trends?

It’s the licensing conditions themselves that give the rights and obligations that the licensee has to follow.  One of the key areas for the consumer is ensuring that licensees’ codes of practice and terms & conditions are fair, reasonable and transparent. In addition we have established a consumer advisory panel and a business advisory panel to work with us in producing better regulations but also work with the operators themselves in giving them constructive feedback on how they can do better.   We have recently launched a consumer awareness campaign to educate the consumers and businesses about their rights and obligations and how they can benefit from the available choice to them.

Could you elaborate more on your relationship between TRA and the final customer?

Fundamentally through customer complaints, When a consumer faces a problems with his telecommunications service and he is not able to solve it with his provider they can refer to TRA to intervene and solve any issues between them. Following TRA consumer awareness campaign it is clear that there has been an increasing level of knowledge among consumers of TRA role.

What are some of the new initiatives that are in the pipeline that you have not yet announced?

Probably nothing that we haven’t announced. Some of the initiatives that we have going on  include number portability, it came out in our survey two years ago that many people were reticent about changing operators because they can’t keep their mobile or fixed line number. Another initiative is unbundling the local loop, the copper pair between the customer and the telephone exchange and making that available to other operators at a particular charges based on cost, which will increase the competition for broadband services.

In what ways do you cooperate on the international level and how do you facilitate the exchange and adoption of the best international practices?

TRA is a member of the International Telecommunications Union, the ITU, we participate in all the different major work streams of the ITU.  We are regularly looking at other regulators’ experiences so in anything that we do we are doing some checks and balances. We are also recruiting consultants from the U.S, Europe and Australia, who have completed a particular projects of the same nature the we want to undertake, so we’re bringing the best practice to Bahrain Telecom Market in that respect.  On a regional level, we are members of the Arab Regulators Network of 22 countries.  Last year I was the president of that group and the whole purpose of that group is to share knowledge between us and to learn from the experiences, not only internationally in applying them to the region but also on a regional basis.

Is there any particular regulator you would like to benchmark against in another country?

Generally Ofcom in the United Kingdom is considered as a good exemplar.  However we at TRA feel ourselves are leading the world in some of the areas, one of those areas is setting a regulatory framework for the deployment of telecommunications infrastructure in new property developments and the availability of choice to businesses and residence of these developments. We think this is leading and indeed we were interested to see that Ofcom was looking at what we were doing.

In your opinion, what is the outlook for the Bahrain Telecom Market?

I would say strong. It’s strong for the economy in that we will have ubiquitous and competitive broadband communications, both using wireless and fixed technologies. Through the actions we took in Bahrain Telecom Market, Bahrain is  the first country with two nation wide WiMax networks in the world. It is strong, but we mustn’t look at Bahrain Telecom Market on its own because Bahrain Telecom Market is a very good base to do business on throughout the whole of the region. So many of the companies coming here are not just looking at the national communications but they are looking at the international pipes and the regional pipes. And again we have a whole host of actions going on with two new under seas cables coming onto the island plus new capacity going across the causeway to Saudi, and the new causeway going to be developed to Qatar.

Can you tell us more about your licensing procedures in Bahrain Telecom Market; who are the companies and services you are licensing? What are the companies you are trying to attract their coming to Bahrain Telecom Market ?

As defined in the Telecommunications Law there is a set of licenses for providing different telecommunications services; value added services, ISPs, fixed line, mobile, wireless, spectrum, and international. For instance Batelco has twelve different types of licenses, while some companies have just applied for specific licenses such as an ISP or value added service. With the development of Bahrain Telecom Market and the convergence of services and technologies we will be replacing all of those licenses by a single unified licence which is technology neutral and has a standard set of terms and conditions. The types of companies that we have attracted are international companies and regional companies. France Telecom for instance has bought in to a company in Bahrain Telecom Market and is now offering broadband communications. Zain itself from Kuwait has relocated here and is operating in around 22 countries out of Bahrain. Companies like Cisco have come here. So Bahrain Telecom Market is attracting some very major names because of its well regulated, good governance, its clarity about its regulations and its road map.

Do you see a lot of interest from international companies in establishing themselves here in Bahrain Telecom Market and who would you like to see come to Bahrain Telecom Market? What kind of companies would you like to attract?

We do see a lot of interest and I think the good work of the Economic Development Board, (EDB) in promoting Bahrain as business friendly is working. We have a lot of companies coming to Bahrain, they also visit us to get information about the telecommunications which is vital for them because there’s no point in being here, unless they’ve got very good communications internationally to connect their international VPNs. The types of companies coming here, I wouldn’t wish to mention any name, but I think there is a lot of high technology companies which are very interested in being based here out of Bahrain, we already have all the major banks here in Bahrain so we are very much a financial center. If we could also be a technology center but what I would like to see is content development because I think that there is a big role still for developing Arabic content. Another area I would personally like to see is that a greater amount of alternative energy research, R&D in wind farming and other forms of energy other than oil being used. And I think we have a good opportunity in the area to put some of the oil and gas money into the development of alternative energy technology and then exporting that technology from here. We have lots of sun but are we using it? 

With the most liberalized
Telecom Market in the region, how are you going to prevent too many companies and technologies from competing against each other?

We are not. The market is open to any company to provide services and compete.

What would you say to some of the companies that say “the market is too small and there are no limits, it is difficult for us to get some returns”?

There are a number of trends, one is the cost of technology is going down. The cost of bandwidth is rapidly falling. So as of the cost per megabyte gets less and less and the pipes are getting fatter what we can now get over those communication pipes is a lot more. So we can get IPTV, we can get gaming, we can get lots of information, lots of value added services. And so the telcos are now not just in voice but they are in internet, they’ll be in IPTV, they’ll be into gaming, they can have a greater diversity and economies of scope even if they don’t have economies of scale. So the technology prices are going down yet the scope of what they can offer is going up.  The cost of entry into Bahrain Telecom Market is going down and so Bahrain Telecom Market can cope with more players because the cost of entry is lower. And then I think there is a natural balancing of how many players will succeed, there will be mergers and acquisitions but then again we can’t just look at Bahrain Telecom Market as a market in its own right because of course within the city of Manama here, the cost of providing the services, the incremental cost is the same as in New York City or in London. If a headquarters group and a marketing group are regional or international players then some of their back office costs shared across regional and international operations.  So anybody that says cost are high as the market is small, well I believe it actually has less and less relevance because in fact most companies are working on a regional international basis and are sharing some of those costs.

According to Mahmoud Hashimi, acting CEO of Neutel Communications, TRA could do more in terms of ensuring regulations are enforced.  He is a representative of the smaller market players.  How do you respond to such a criticism?

Yes, it works both ways. It is important to enforce laws and regulations but that takes due process, it takes time. And as a regulator, we have got to be very certain of any claims which are put in regards to anti-competitive behavior of the incumbent. And what we have seen over the years, is there’s plenty of complaints but often the complaints are not well-founded, they are not backed up by good information, and without good information, well documented complaints, the regulator can do very little. If it attempts to use its powers without such backup, basically we are doomed to failure, we will be taken to court.  So we have a due process to go through, we have had to really see in the new entrance a greater degree of understanding of what they’ve got to do if they indeed wish to move the regulator to support them in particular cases.

The TRA has recently licensed a third mobile operator, Saudi Telecom Company, but with penetration rate reaching 140% what are your expectations from this move and how will this impact the Bahraini telecom market?

The penetration at the moment is measured in the number of SIMs per head of population, whereas now you have a SIM increasingly used in your camera, in your telephone, in your car, in many different devices. So every type of device will have some kind of communications to a network through radio to for example download music and information, give access to the internet, and all of us have many different types of devices. In some countries the penetration has reached more than 200 %, it is no longer the relevant measure.  On top of that, it’s what you now put over those communication pipes. A third player coming may take some of Bahrain Telecom Market off the existing players but as individuals we’ll be buying new devices which will have SIMs in it but also we’ll be spending more money for more services over those devices, so there is a market for STC. STC particularly has a very close link with Bahrain, with the causeway, there are many millions of visitors from Saudi every year to Bahrain, many of those customers are existing Saudi Telecom customers. So they had probably one of the biggest synergistic reasons for coming to Bahrain. They are not only operating in Saudi but they are operating in many other countries throughout the region so they bring real economies of scale to Bahrain. They are not constrained by the small population because they are sharing many of their agreements whether that’s IPR agreements, or agreements for information, they are sharing these over a very large customer base which Bahrain Telecom Market is going to take advantage of.

You just mentioned other energy and alternative energy; this is a matter we would like also to touch on with you. We are delivering a green award to the greenest company that we are interviewing and we would like to know what your policy is in terms of sustainable development.

We have just rebranded ourselves to these three blocks indicating the consumer, the licensee and the regulator. Now the red is from the Bahrain flag but the two green is that we see very much telecommunications as being a significant supporter of becoming carbon neutral and carbon friendly. So the more communications we’re doing, the more video conferencing that we’re doing, the more we’re doing over the electronic highways is considerably helping and saving energy.  So this is the biggest contributor the telecommunications industry can do for the environment.

In what ways does TRA fit into the 2030 Bahraini economic vision?

The 2030 economic vision for Bahrain recognizes that the electronic highways are fundamental to economic growth, as well as fundamental to social inclusion and social development, education, e-government, e-health. Out of the 2030 Vision there is a strategy document of which there is one particular action line which is to do with telecommunications and that is to develop and ensure there is a ubiquitous broadband communications at competitive rates and that there isn’t government intervention into supporting that development unless there’s a market failure. In other words, the government doesn’t step in and potentially distort competition unless the market is not working. Now that particular mandate is then placed on the telecom’s regulator to ensure that that happens and we have a set of actions which have been going on in fact for a number of years and are in our work plan. We are now working on our work plan for 2010, 11 and 12; a three year work plan which will further enhance the development and the success of that particular work stream which supports the 2030 Vision.  We are already well advance and we are going to go a lot further very quickly in achieving that objective.

How do you see Bahrain’s economic development in the future and also its interactivity with the foreign companies.  How do you see the Bahraini future generally in the region?

I think the vision is very bright, as long as some of the main themes which are currently set out in the 2030 Vision are followed through. And the country being tolerant and open to many different nationalities and religions is very precious and has to be maintained. Falling back from that will I think potentially hinder achieving this vision. Now when you look at the tens of billions of dollars which are going into all of these new developments, I think 20% are new houses, lots of new offices, high tech offices, and it’s only by continuing with this vision that those properties are going to be sold and people attracted.  Because to fill those offices, you are going to need a lot of expatriate labour and, a lot of new businesses coming in. And it is a spiral, I think we can feed off success. Success in different industries will create new employment, creating new-found wealth, new expenditures, new success and we are on that spiral up. But it takes a lot of hard work, a lot of vision and we have to thank His Majesty the King, the Crown Prince, the Prime Minister and the government for this drive. It takes a lot of hard work and push, push, push to make sure we stay on the right road.

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