Annual Report 2008 - TRA - Telecommunication Regulatory Authority

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General Director’s Statement TRA Annual Report 2008 7 First I would like to take this opportunity of thanking the Chairman, Dr. Mohammed Ahmed Al Amer, and the Board for their support and active interest in the work of TRA. I know that they share my optimism for the telecommunications market in the Kingdom and its potential in the long term, despite the current global economic situation. The outcome of the Strategic and Retail Market Review - a major piece of work for TRA last year - resulted in nine measures to further enhance the competitive environment, encourage investment in alternative services and improve the user experience. These ranged from offering a third mobile licence and introducing number portability to enhancing data collection and issuing competition guidelines. Excellent progress was made on a number of these measures during 2008. Some of the measures, such as reforming and relaxing tariff regulation, call for a more mature relationship both between TRA and licensed operators, and between the operators themselves. We are drawing up competition guidelines that will pave the way for the transition to this more devolved approach. In particular, as the regulator, we need to be confident that Batelco and any other operator dominant in a market will act fairly to its wholesale as well as retail customers. They must abide by the spirit of any rules, not just the rules themselves. This is essential because other licensed operators need to purchase wholesale services and obtain access to customers on other networks in order to run their telecommunications business. As regulation becomes lighter touch, the behaviour of the dominant operator can greatly affect competition in the market, the consumer experience and the economy. In the early years of a competitive market the role of the regulator is, through prescriptive rules and appropriate intervention, to ensure that new entrants have fair access to the market and the dominant operator allows that access. As the market matures the role is more about facilitating the market forces, being the catalyst for progress and acting as the well-informed, demanding consumer. Our key task is to ensure that there is a sustainable supply of a wide range of innovative services - and effective competition is the driving force for this. Our benchmark for success is the experience of consumers here compared to the leading international markets for telecommunications. In 2008 we were able to work constructively with Batelco on a new combined Reference Access and Interconnection Offer, setting out the terms and conditions for wholesale services offered by Batelco to other licensed operators. This is the cornerstone for ensuring effective competition. The Offer included many reductions in the prices of wholesale services, in particular for leased lines and broadband services. Prices for national leased line circuits were reduced by 35 per cent and for international circuits by 25 per cent. The new broadband charges are over 20 per cent lower in the residential market and 30 per cent lower in the business market. During our presidency of the Arab Regulators’ Network (AREGNET), which ended in June 2008, TRA - Bahrain, in cooperation with other regulatory authorities in the Arab region, commissioned a report benchmarking retail prices in the region against international standards. Users in Bahrain are certainly enjoying competitive prices in comparison to elsewhere in the region. On an international basis mobile rates compared well, but both leased line and broadband services were still high. A consequence in Bahrain is that the vast majority of the Kingdom’s broadband users subscribe to relatively low-speed services. This is of great concern because of the extraordinary development of innovative and exciting high-speed broadband services currently taking place around the world.
8 TRA Annual Report 2008 General Director’s Statement The facilitation of competition, including reduction in wholesale prices of broadband services, should benefit consumers and help to increase the take-up of higher speed services. Customers in the Kingdom must not miss out because of unwarranted cost barriers, nor any other types of barrier. The National Telecommunications Plan sets out clearly our objective of increasing the use of internet and broadband services at internationally competitive prices. The lag in broadband access and cutting-edge keenly-priced services can also deter inward investment and our potential to attract new businesses to the Kingdom. As a general rule, incumbent operators need to act responsibly towards new entrants and internet service providers in order to ensure that a country offers diverse choices, high bandwidth and low cost international connectivity. These are major contributors to the country’s overall economic competitiveness. The new Numbering Plan, for example, has already opened up ranges of numbers for services that could be delivered by any technologies without the need to fit these services into traditional descriptions of ‘fixed’ or ‘mobile’ technologies. This will enable a progressive introduction of converged services. For instance, a mobile customer could move into an office or home location while making a call and seamlessly be transferred to the fixed line there at a lower tariff. Regulation should never stand in the way of innovation but act as a gateway enabling customers’ access to world-class services while ensuring the integrity of those services. Although the benchmarking project showed mobile prices within national boundaries were competitive, a particular concern for the Kingdom’s customers is what they are charged when travelling overseas - mobile roaming charges. I was pleased that at the final meeting of AREGNET while TRA - Bahrain held the Chair, we were able to agree a way forward and a recommendation on reducing these charges for travellers in the region. This recommendation was subsequently supported by the Arab League. TRA also introduced a requirement that operators inform customers about charges for using their mobile phone in other countries so they are aware of costs in advance. We currently have two well-established operators in the mobile market - Batelco and Zain. The outcome of the review suggested that the time was right to introduce a third mobile operator. Despite the worsening global economic climate there was a high level of interest throughout the process. We were looking for an operator that would bring a combination of international and local expertise. In the end only one bidder passed all the criteria - Saudi Telecommunications Company (STC). However, with operations in Saudi Arabia and six other countries and with over 60 million subscribers who have access to the latest mobile technologies, STC was always a strong contender and we look forward to them coming to market rapidly. This is good news for consumers. In fact there was much focus on consumer issues, particularly generated by the two very active user advisory groups set up at the beginning of the year. These met almost monthly and provided a strong voice for residential and business customers in the Kingdom. They expressed consumers’ concerns both to TRA and direct to the operators. We have made significant progress on issues raised, such as number portability - enabling customers to keep their number when changing operator - and quality of service with operators now required to publish their figures. I would like to thank Sheikha Haya bint Rashed Al Khalifa, Chair of the Consumer Advisory Group, and Mr. Ahmed bin Hindi, Chair of the Business Users Advisory Group, and all the members for their keen interest in telecommunications, active participation and commitment throughout the year.
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Annual Report 2008 - TRA - Telecommunication Regulatory Authority

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