The Power 2Connect


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Fahad Al Shirawi, Managing Director of 2Connect in Bahrain discusses national and regional aspirations for economies and communications providers in the Middle East and concludes that more competition and lower prices are needed in the region

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The Power 2Connect

  1. 1. The Power 2Connect
  2. 2. National and Regional Realities
  3. 3. Cost Comparison
  4. 4. Facts • The price range for the Arab countries (cheapest to most expensive) is wider than for the OECD countries • The cheapest OECD country is below the cheapest Arab country • The most expensive Arab country is significantly more expensive than the most expensive OECD country • Most of the Arab countries have fixed costs well below the OECD countries, causing the usage element to dominate. This makes the overall cost grow quicker with increasing usage. What does this mean? • Even with significantly lower fixed cost the overall cost of using the service is higher in the Arab countries than in the OECD countries. • There is a clear lack of rebalancing in most Arab countries, where the usage revenue covers a significant portion of the fixed line cost for the operators. • International calls are significantly more expensive than in OECD countries
  5. 5. More Cost Comparison
  6. 6. Got the Point? • Our prices are high and our usage is low • We can potentially take a central stage in global economics and politics • We cannot communicate. Costs too much.
  7. 7. EU Data – Internet Growth A look at Internet Growth through LIR Data for the RIPE Region: Number of Existing LIRs by age 900 800 No of LIRs 700 600 500 400 300 200 100 0 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Age (years)
  8. 8. Where Does the ME Growth Rank Parts of the ME are in the RIPE Region. Looking at RIPE NCC Date: Top Ten Countries LIR History 1000 ru 900 uk 800 de 700 it 600 nl 500 se 400 fr 300 es 200 ch 100 at 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08
  9. 9. Here’s Another Point We’re not even top Ten!
  10. 10. National and Regional Aspirations
  11. 11. Aspirations • Attracting FDI into the Country • Higher Employment Levels • Improved Skill Levels • Availability of Communication Infrastructure to Support and Improve Education, Health, National Security, and Other at a Reasonable Cost CONFIDENTIAL
  12. 12. • Monopolies are NOT Efficient. High cost, low incentive to evolve, NO incentive to improve services or introduce value added! • Duopolies… Just the same. • Oligopolies… A little better but not by much! • Competition: Here is a word I like to hear! CONFIDENTIAL
  13. 13. Bahrain • Fully Deregulated • A few hurdles left for the TRA to deal with but overall managed to promote aggressive competition • Three Mobile Operators • Two Fixed Line Operators (?) • Six active ISPs • More than enough Calling Card Operators CONFIDENTIAL
  14. 14. Saudi • Another Great Story • WTO induced deregulation but… • Three DSPs • Four Fixed Line Operators • Three Mobile Operators • More than Enough ISPs (?) • Technically More Licenses are Available
  15. 15. Other Countries • UAE has two operators – no immediate deregulation plans • Qatar has granted second mobile and second fixed – no immediate deregulation plans • Oman has two mobile operators and has started granting licenses. However, complicated process, several changes in direction and a few failed launches Note: Sorry but restrictive deregulation is not deregulation.
  16. 16. What we are All trying to do • Those who deregulated and those who didn’t have the same goal • Country First! • Different ideas dominated by the question of how to deal with the National Incumbent • Concern that Deregulation can lead to loss of income for a nation without taxation • Telecommunication has traditionally been a contributor to national wealth
  17. 17. Why Limited or no Deregulation • Fear that smaller operators will lead to degradation in overall service • Fear that smaller operators will not have the resources to deliver on promises • Fear that smaller operators will, through price competition, wipe out communication revenues leading to downsizing and high unemployment
  18. 18. Reality • Just look at Bahrain • Smallest country in the Region • Least Wealth • Yet market supports so many players and even more setting up shop every day. • Overall employment grew significantly • Overall outbound traffic (in minutes) grew significantly • Size of the market grew significantly – Suggest that Regional Aspiration be Driven by the Bahrain Model for Achieving Them!