Middle East Challenges: Arabic Content Gap, Digital Divide

The Mideast telecom sector is a top growth area, though even rich economies there have a high percentage of poor people, Vogeleer said. Jordan, with 7 million people, has a fully open market with 10 or more fixed competitors and 4 mobile operators -- but 65% of residents make less than 65 a month, he said. Bahrain, with 700,000 residents, has one incumbent telco, 3 active new entrants and more than 110% mobile penetration, but 25% of its people have very low incomes, he said. The 2 countries’ markets differ dramatically, but both need to serve the very poor as well as the wealthy, he said.

The market is getting “crazy” as service providers swing between conflicting ambitions to become “world-class groups” or to have “national” identities, Vogeleer said. But firms hesitate to merge, meaning growth must come from outside the region, he said.

Regulatory developments have occurred the past year, Vogeleer said. Jordan has a new regulator -- with the old staff -- but no apparent proposal on what to do with its telecom market. Bahrain’s regulator is new, as is the staff, and it has a reasonable plan for new services such as bitstream access and mobile virtual network operators, he said. Dubai remains “disappointing” in its reluctance to open its market to competitors, and Lebanon, despite its unsafe conditions, has shown willingness to devise a clear plan, Vogeleer said: If you can’t walk or drive, you call.

Sustainability of business models is a challenge. Some regulators seem more interested in cashing in on license auctions than on getting services to most of the population, Vogeleer said. It’s ego, he said: If 1/2 a country’s addressable market has less than 5 to spend on telecom services, you can bring in the best services in the world but consumers won’t come. Regulators must choose the right way to allocate and reallocate spectrum or risk hampering development, he said.

Ensuring access to Internet and broadband services is also a problem, Vogeleer said. Only 8% of Jordanians have Internet access (3% broadband); only 30% of Bahrainis do. Jordan this year let operators provide universal service via whatever technology they choose. Other nations, however, are so enthralled with fancy services they're not even considering universal service or digital divide issues, he said. Among Jordanians, 80% have 3G-enabled handsets but there’s no 3G. A 3rd challenge is lack of Arabic content. Many operators mistakenly assumed they could bring services translated from English to their markets, but it didn’t work, said Vogeleer.

Telcos are responding to the situation in Jordan by integrating their companies into one-stop shops for all services, and by branding themselves, Vogeleer said. Regulators could help by thinking more about what they want to achieve for their countries than on how much cash they can get from licensing, he said.

Many Middle Eastern telecom regulators were created the past 5-7 years, said Dorward. But Kuwait, Syria and Yemen still lack stand-alone authorities, relying instead on telecom ministries that may not balance market liberalization against their countries’ needs, she said.

Dorward disputed Vogeleer’s suggestion that regulators are to blame for some extreme prices paid for licenses. Investors tend to favor “beauty contests” because they leave more money free for building network, but regulators know that process can be seen as less open than auctions, she said. They also weigh considerations such as social concerns and other govt. objectives before issuing tenders, she said. -- Dugie Standeford

Mobile Regulation Conference Notebook…

Price caps on mobile data roaming services may be inevitable, regulators and others said Wed. at the mobile regulation and competition law conference. Under the international mobile voice roaming rule, soon to be final, the EC has 18 months to decide whether such a regulation is needed, but the European Parliament and regulatory and consumer pressure could force the issue even if mobile operators voluntarily cut rates, they said. Many national regulators want an SMS regulation, perhaps making it difficult for the EC to balk, said Christian Hocepied of the Competition Directorate-Gen. Denmark’s National Information Technology & Telecom Agency believes it’s needed but the mobile industry has time to prove it wrong, said Market Div. Head Jakob Willer. Industry tried in vain to avert the international voice roaming rule, a process less about interconnections and prices than about what “Europe can do for its citizens,” said GSM Europe Dir. Eirini Zafeiratou. The same could occur with data roaming, said Robert Mourik, O2 Ireland regulatory affairs head. Will it make any difference if operators lower SMS rates? he asked. “I'm a bit cynical” after firms dropped voice roaming rates 40% and still are being regulated, he said. The roaming regulation is likely to kill mobile firms’ zeal for trying voluntarily to meet political demands, said Mourik, adding that it could mean more political regulation. The rule will appear June 29 in the EU Official publication, taking effect the next day, Hocepied said.