With a population of 9.3 million, the United Arab Emirates (UAE) is one of the smaller markets in the MEA region, but it has one of the most developed telecoms sectors in the Middle East. At the start of 2011, expatriates were nearly 84% of the population in the UAE, according to a study by the Kuwaiti-based Diplomatic Centre, which creates a demand for operators to raise their standards to match international markets.
Etisalat and du are the two operators working in the country. There was some scepticism as to what actual choice the new competitor du would offer customers, when it launched in the UAE in 2005, according to BuddeComm, but the company has managed to take a considerable piece of the market. In October 2013 du had 46% market share of the mobile sector, down from 47% a year earlier. This decline was attributed to an increased focus by Etisalat on its domestic market after a period of international expansion.
“du has managed to gain more than a foothold in the market,” Kylie Wansink, analyst at BuddeComm, said in his research.
Both operators in the UAE have witnessed a decline in mobile voice revenue and both companies have turned their attention to mobile data services and applications. Both operators offer LTE to their customers.
“LTE can bring significant opportunities to both consumers and businesses in the UAE. Extremely improved broadband fire power, whether indoor or outdoor, opening up the possibilities for several applications which we might not know now they will be a hit in the future. LTE will enable several bandwidth hungry, low latency applications which the consumer would love to have (HD video on the move or at home, interactivity, etc.),” said Abdulrahman Addas, partner at Bain & Company.
According to Paul Black, director of Telecoms and Media, Middle East, Africa and Turkey at IDC, the UAE has a perfect balance of high per-capita income, low inflation, low unemployment, and high literacy which has resulted in continuously growing smartphone penetration.
“The connected culture, with anytime-anywhere connectivity is reality in the UAE and consumers are constantly demanding bandwidth intensive applications such as video and music. The resultant rise in mobile data traffic has encouraged operators to future proof their network through investments in LTE. Besides, smartphone bundles are increasingly becoming common making even high end LTE enabled handsets easy to own. These factors indicate that LTE will continue to grow in prominence,” Black noted.
In 2013 the UAE introduced mobile number portability (MNP), however, the United Arab Emirates Telecommunications Regulatory Authority (UAE TRA) has blamed negligence when filling in MNP applications, for the low completion rates for number transfers. Since the launch of MNP at end of 2013, 134,222 applications have been rejected out of 190,185 mobile number porting requests received, according to figures from the TRA published at the end of May.
Like many operators in the region, du and Etisalat have seen a decrease in their revenue streams because of the Over The Top players (OTTs). The regulator has licensed both operators to offer VoIP services, while OTT providers such as Skype and Viber are not licensed.
“Both du and Etisalat have been slow to embrace the technology, for commercial services to home users, primarily due to the threat of cannibalisation of traditional fixed line services revenues. The OTT providers such as Skype and Viber that offer peer-to-peer VoIP services have not been licensed in the country and hence are not allowed to interconnect with PSTN and / or PLMN networks,” said Black.
Fixed line is a hot topic for Etisalat and du, as Etisalat holds a monopoly on fixed line services in most localities. The UAE TRA has been pushing for a network sharing agreement and believes that by the end of the year, both operators will compete on equal conditions. There are no technical barriers to networking sharing, said Majed Al Mesmar, acting director general of the UAE TRA, and the regulator has not interfered in discussions between the two operators, meaning it is just a question of the parties reaching an agreement on network sharing.
"I am sure that by the end of this year, they will open up to each other. The only issue is agreeing on the prices among themselves," Al Mesmar told CommsMEA.
Analysts believe that the regulator needs to step up and impose the commercial, legal and quality of service framework on both operators.
“Sharing infrastructure will eliminate a lot of investment in duplicate fixed infrastructure and also potentially open the door for competitive Virtual Fixed Service Operators," said Addas.
Black believes that a policy framework that results in equitable opportunities for all players and eliminates any duplication of infrastructure is essential in markets like the United Arab Emirates.
The UAE is using a spectrum management system that was the first of its kind in 2011 when it was launched. Tariq Al-Awadhi, executive director Spectrum Affairs at the UAE TRA, told CommsMEA that the country’s regulator published the first white paper on channel plans for the 800 and 700MHz bands.
“This channel plans provides an optimum use of spectrum. The majority of the countries in MEA are expected to adopt this channel plan while some may adopt the APT plan,” he added.
Black believes that spectrum is a scare resource and should be optimally managed and utilised taking into account both current and future needs of the market.
“The TRA's advanced spectrum management system with an online portal and an advanced spectrum monitoring system have enabled effective spectrum management. Furthermore, TRA's spectrum policies follow ITU's recommendation and spectrum allocations are globally harmonised,” he added.
Recognising the potential of applying ICT to improve both social and economic development, the UAE has taken steps to develop a digital economy. Businesses, governments and private citizens have been instrumental in creating the online content and services that make up the digital economy.
“ICT is the key pillar for UAE's government plan to diversify its economy. The government is investing in eGovernment and mGovernment systems and accelerating efforts to integrate various department on a single ICT network called 'FedNET', capable of providing high speed connectivity, shared services and secure hosting services, among others. These measures have contributed to rise the in UAE's position on Global Network Readiness index from 25th position in 2013 to 24th position in 2014. Furthermore, investments in ICT have also helped UAE to significantly improve it global competitive position from 19th in 2013 to 12th in 2014,” noted Black.Addas believes that there are good opportunities for ICT and knowledge-based industries to leverage the broadband network in the country. He also expects more development in education and health care sectors.