With a population of 3.3 million in 2013, according to the World Bank, Kuwait has a well-developed telecommunications sector. The country has three mobile operators: Zain, Saudi Telecom Co affiliate Viva and Wataniya, a subsidiary of Qatar’s Ooredoo. Customers are enjoying LTE, ADSL, FttP and WiMAX services.
In April, Kuwait’s parliament approved a bill to create an independent telecom regulator, which should end a conflict of interest as the Ministry of Communications regulated the industry and operated the fixed-line network.
Kuwait’s National Assembly passed a draft law to establish an independent telecoms commission to oversee the country’s communications sector in June. Kuwait was the only Gulf Arab country without a telecom regulator and the creation of such a body may indicate that the government will revive plans to privatise the fixed network, which has been under consideration for more than 20 years.
The draft law has reportedly been the subject of much deliberation by the government and the previous assemblies for the past decade.
The new commission will regulate the mobile, landline and broadband sectors, although the exact scope of supervisory powers it will be given remains unclear.
The regulator is facing numerous challenges to solve, as the telecommunications market in Kuwait requires some improvements to promote healthy competition between operators and to address future investments from the telcos.
Mohamad Twaishi, senior research manager of Telecoms and Media at IDC said that there are many issues that the new regulatory body in Kuwait can address; for example, the spectrum allocation practises, dialling plans of the carriers, industry governance standards, competitiveness of the market, telecommunication strategy and blueprint, engagement with the key stakeholders (carriers, government , ISP), and quality of services.
“However, the success of these regulations will depend on how the regulator will present itself as an active player in a market that was not familiar to have a regulatory body before, so collaboration and power are essential ingredients in this recipe,” he added.
“Increasing the level of competition within the telecom market is definitely a reasonable goal, but this has to be done based on a well thought strategy, primarily set by the regulator. Different models would apply to the different telecom sector, where a balance between increasing competition vs. ensuring synergetic growth between the various sectors is needed. Things would apply differently for licensed mobile, unlicensed wireless, ISPs and fixed broadband,” said Riad Hartani, partner at Xona Partners.
According to Buddecomm, mobile represents the majority of total broadband connections in Kuwait and fixed broadband penetration is low, blamed on underinvestment in infrastructure and lack of competition in the fixed sector. In regards to home broadband penetration, Kuwait is falling behind other leading Middle Eastern countries.
There are two plans to enable greater fixed penetration, according to Twaishi. “The first will be acquiring an existing ISP or setting up its ISP operation for quick roll out and deployment; However the long strategy should be on deploying fibre in Kuwait, and the best way of doing is by a collaboration among the carriers, regulator and government to design and plan a country-fibre-strategy that will drive the telecom services penetration and innovation, and in turn contribute to the national economy of Kuwait and market competitiveness in GCC.”
“A combination of things is required. This would include regulations around the development of alternative fixed broadband operators, the re-allocation of broadband wireless access spectrum given the latest developments around fixed/nomadic LTE and WiFi, and the development of alternative infrastructure sharing models that would accelerate fixed broadband penetration,” said Hartani.
Twaishi said that the fixed line market offers opportunities as it enables bundled services (double pay, triple pay services), managed, and cloud services, and it can be a part of a country-wide-strategy to adopt innovation in the telecom sector. “The carriers will have to enhance their partnership ecosystem and create a unique value proposition for their bundled offerings rather than trying to compete with other players like OTT and in-country ISPs on squeezing revenue margins; this partnerships will be vital for fast rolls out with high quality of services.”
“The number one priority is fibre broadband investment, it will drive services innovation and quality of services to consumers and enterprises. Down the road, the new infrastructure will enable and stimulate the market for economic and community telco services like Smart City projects and digital services. Providing value-added entertainment content with high-speed connectivity will attract the customers’ appetite to opt for fixed-broadband based services and turn on the wheel for rich innovation services,” said Twaishi.
Hartani believes that growth will be around the development of data centre eco-systems that would form the backbone for the development of content and applications solutions in Kuwait, but also in the region, given the regional nature of such services. “This in turn, has a direct impact on the development of the alternative fixed broadband market, and the leverage of new wireless access models in both licensed and unlicensed spectrum.”
“Providing value-added entertainment content with high-speed connectivity will attract the customers’ appetite to opt for fixed-broadband based services and turn on the wheel for rich innovation services,” Twaishi added.