Annual Report 2005

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Annual Report 2005

  1. 1. 1 Telecommunications Regulatory Authority Sultanate of Oman July, 19, 2006
  2. 2. 2 CHAIRMAN OVERVIEW I really feel privileged to present to you the second Annual Report of TRA, focusing the key activities of the Authority during 2005. Last year has been a landmark year in terms of liberalization of the telecommunications sector culminating in the introduction of competition in mobile sector. The competition between Oman mobile and Nawras was conducive to a decline in prices and customers were able to base their choice on many aspects such as quality of service, customer care, tariff and network coverage. Another remarkable achievement due to competition was the country’s mobile teledensity reaching up to 56.4 percent, where the number of total subscribers reached 1.333.225 in December 2005 with growth of 65 percent since the previous year. One of the major functions of the Authority is to safeguard the interests of beneficiaries of the telecommunication services in respect of the prices of the telecommunication equipment, quality and efficiency of the telecommunication services provided by its licensees. With this objective in view, the Authority had examined different tariff proposals filed by operators and ensured fairness of the prices and facilitation of market movement towards a competitive tariff regime. TRA is also responsible for efficient management of the national numbering resources. TRA implemented a new 8 digits numbering scheme for both Fixed and Mobile services to cater for numbering requirements for next 20 years. During the previous year, the old 3 digits short codes were changed to 4 digits short codes. These short codes are used by telecommunication network operators to provide particular services exclusively to their subscribers and also used for public services such as emergency services etc. TRA had also instructed the mobile operators to implement Mobile Number Portability (MNP) and these directives are expected to be an impetus to further competition in the Mobile Market.
  3. 3. 3 One of the major issues that were dealt with by TRA in the foregoing year was the preparation of the National Frequency Allocation and Assignment Plan to ensure the efficient management and use of radio spectrum. On the other hand, TRA played a dynamic role by participating in Arab, regional and international meetings and conferences. TRA actively participated in FTA negotiations that were held between Oman and USA in the fields of telecommunications sector, electronic commerce and cross border trade services. I am proud to acknowledge the hard work and efforts done by members and employees of the TRA to fulfil its objectives. We appreciate the cooperation of the management of all telecom service providers to bring about TRA’s efforts to a success in executing the tasks assigned to it. On behalf of the members, I feel honoured to express our sincere gratitude to His Majesty Sultan Qaboos Bin Said for his revolutionary vision and support to expand telecom sector throughout the Sultanate effectively and efficiently.
  4. 4. 4 The Organization The Telecommunications Regulatory Authority is a body corporate established under the Telecommunications Regulatory Act issued under the Royal Decree No. 30/2002 as a result of Government's initiative to liberalize the telecom sector in Oman and transform the monopolistic telecommunications market into a competitive one. Until 2002, the national telecommunications network and services in Sultanate of Oman were owned by the Government (formerly known as the General Telecommunications Organization, GTO) and the Ministry of Transport and Communications preformed the role of telecommunications policy maker, where the Minister acted as the Chairman of the Company. Such transformation required regulatory intervention to permit viable competition to emerge and to facilitate transparency in the liberalization process. As a separate entity, TRA implemented the Government policies in an objective and impartial manner, and as competition in the telecom market proceeded, the ability of TRA to act towards all market participants independently from the Government and operators was enhanced. The Staff and Management Team When first commenced its operation in 2002, a minimum of three members of a temporary committee were appointed in TRA with the Minister of Transport and Communication the Chairman of the Authority. In 2002, as TRA was established, there were few employees recruited, and as the responsibilities and functions of the Authority grew, the number of staff increased. By the end of 2005, there were five (5) directorates with 17 departments in TRA and a total of 62 staff working under the organization. 1. The Telecommunications Regulatory Authority
  5. 5. 5 In selecting its team, TRA paid a great attention on the qualification level, professionalism, efficiency and independency of the individuals selected and the degree of proficiency and expertise of the managerial working party. The management team in TRA comprises individuals with many years of experience in the field of telecom in all its technical, economical, financial as well as legal aspect.
  6. 6. 6 In its successive third year, TRA has accomplished a great deal in terms of regulating and monitoring the telecom sector in the Sultanate. In 2005, TRA continued to fulfill its objectives and duties that lie in ensuring that telecommunications services are supplied in a manner consistent with national perceptions of the public interest, fostering competitive markets to promote good quality of services, new technologies, affordable prices and efficient supply of telecommunications services. As part of its responsibilities, TRA aims at creating a favorable climate to promote public confidence in telecommunications markets through transparent regulatory and licensing process. TRA as well, persist in protecting consumer right and considers it as a vital objective, it therefore strives to ensure customers' satisfaction in the quality of telecom service and the availability of services for all users. In order to execute its objectives, TRA attempts progressively to remove all barriers to market entry and allow interested investors to enter the Omani telecom market. It is not the objective of TRA to be involved in detailed management of the sector; instead it is mainly involved in maintenance of a regulatory environment conducive to the efficient supply of telecommunications services to the public. Among its diverse responsibilities, TRA is accountable for monitoring the telecom market in its economical aspect, which constitutes reducing barriers to entry, creating strong market growth, rapid innovation, and ensuring no unfair cross subsidy of services. Apart from the economical aspect of regulatory basis, technical and radio spectrum management are two other main areas of Authority's operations, ensuring efficient use of natural and scarce resources of radio spectrum, numbers and rights of way. 2. TRA Regulatory Framework
  7. 7. 7 Duties and Functions TRA implements the approved general policy for the telecommunications sector in accordance to the programs prepared by the Authority for this purpose, and particularly, it is liable to propose policy implementation strategies regarding Universal Access in the Sultanate of Oman to expand telecommunication access networks to cover a wider proportion of the population and geographical areas. The Authority also prepares all necessary programs and plans to develop the general policy of the telecommunications sector. The policy , international representation and legal affairs directorate of the Authority assists in this regard by identifying the policies for the telecommunications sector, proposing suggested changes on the existing policies necessary for the betterment of the telecom sector, and reports on the long term effects of alternative policies on domestic and international telecom industries and services. The TRA in managing the radio spectrum prepares national frequency allocation plan and determines the telecommunications systems and services that can be undertaken by radio licensee. It also prepares proposed amendments to radio licenses, and allocates and monitors the provisions of the use of radio spectrum in accordance with international treaties to which the Sultanate is a party. All telecommunications equipment are administrated by TRA, who issues approvals for the use of telecommunications equipment for which no technical specifications or standards have been determined, and prepares the necessary technical specifications and standards for import and use of telecommunications equipment besides setting obligations of such equipment. TRA ensures that operators execute the terms and conditions as per their licenses, and all proposed interconnection agreements between the operators should be approved by the Authority. Furthermore, national numbering plan allocated to operators beside domain name allocation all are set and supervised by the Authority.
  8. 8. 8 Sultanate of Oman realized the importance of a liberal telecom market regime in developing the economy and enhancing the private sectors. As part of the national strategy and Oman's commitments to the WTO, the liberalization plan was set in action in 2003 under the regulation of TRA. Seeing the growth trend of mobile services around the world and the excessive demand for it, it was important for TRA to initiate competition in mobile services. The benefits of competition will facilitate efficiency, reduction of prices, increase investment in infrastructure and better customer choices. The competition introduced in the mobile sector created a healthy market environment where resources were allocated appropriately and fairly. The instigation of competition between Oman Mobile Company and Nawras allowed prices to decline and customers could base their choices on many aspects such as quality of service, customer care, tariffs and network coverage. Issuance of Telecom Licenses In the course of liberalization and open market reform, licensing process is generally regarded as one of the most important regulatory processes undertaken by the Authority. The TRA is responsible for the preparation of licenses, and qualification criteria, analysis of the requests for licenses and to monitor the obligations of the service providers. In order to form a liberal telecommunications sector, TRA intends to open competition for other telecom services gradually. Currently there is one Basic Public Fixed Telecommunications operator and two Basic Public Mobile Telecommunications operators in the market. TRA is considering introducing competition in the Basic Public Fixed Telecommunications Services for local access, long distance and international carriage. TRA had announced its intention to appoint a consultant to 3. Liberalization of the Telecom Sector
  9. 9. 9 assist in the introduction of competition and preparation of licenses for Basic Fixed Public Telecommunications Services, and Public Data Network services. As well, TRA will soon open the telecom market for Class II those who meet the qualifying criteria. TRA is also in the process of formulating regulations and procedures for issuance of Class III licenses. The objective is to introduce new sort of technologies and services in the market and provide customers with greater range of choices at lower prices.
  10. 10. 10 0 200000 400000 600000 800000 1000000 1200000 1400000 NumberofSubscribers Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Month Figure 1. Number of Mobile Subscribers in 2005 Telecom sector is one of the most important sectors of the economy. Over last year, the sector has witnessed significant changes such as competition in mobile that helped in bringing efficiency and good quality of services at competitive prices. As to date, there are three leading telecom service providers in the Omani telecom market; Oman Telecommunications Company; the sole provider of basic access services and internet, Oman Mobile and Nawras are basic mobile communications services operators. The following sections discuss growth of telecommunications in these services. Mobile Communication As the new operator; Nawras commenced its services during 2005, radical transformation was observed in the Omani mobile market, due to competition resulting decline in prices of services offered and enhancement in their quality of services. The two mobile operators witnessed several developments during the year reflected in their mobile usage, tariffs, quality of service as well as traffic. Mobile Usage: Although competition in the cellular mobile sector is still in its infancy stages, yet it has created a wave of transforms in the mobile sector. Figure 1 shows the trend of monthly mobile subscribers in 2005. Source: Oman Mobile and Nawras 4. Telecommunication Market Statistic
  11. 11. 11 Figure 2. Number of Post-Paid and Pre- Paid Subscribers in 2005 0 200000 400000 600000 800000 1000000 1200000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Month NumberofSubscribers Post Paid Pre Paid There were 1,333,225 subscribers for both pre-paid (1,080,113) and post-paid (253,112) by both operators by the end of the year 2005. The annual comparison of mobile market performance shows that the number of mobile subscribers increased by 65 per cent from 806,280 in December 2004 to 1,333,225 subscribers in December 2005. The entry of Nawras has no doubt increased the demand for mobile services as prices declined due to competition. Prepaid and Postpaid Analysis shows that the demand for pre-paid exceeded the demand for post-paid in the Sultanate, which could be due to the convenience use of pre-paid services compared to the post-paid. As revealed in Figure 2, the number of mobile pre-paid subscribers increased by 97 per cent whereas the number of post-paid subscribers decreased by 1.6 per cent compared to the last year. The pre-paid subscribers represented 81 per cent of the total market by December 2005, while post-paid subscribers constituted around 19 per cent, which is in line with the international trend. Source: Oman Mobile and Nawras Figure 2 shows the trend of in both pre-paid and post paid subscribers from January to December 2005.
  12. 12. 12 Market Share With 1,089,355 mobile subscribers, the Oman mobile share in the market was 81.7 percent by the end December 2005 and it continued to have dominant market power. This is naturally expected in the first few years of competition as Oman Mobile was the sole and dominant mobile service provider under the roof of the incumbent. By December 2005, the market share of Nawras was 18.3 percent and its total number reached at 243,870. On average, the monthly average growth in number of mobile subscribers was 23,590 and 27,100 for Oman Mobile and Nawras respectively. Mobile Teledensity Teledensity is an important indicator widely used to describe the mobile subscribers as a percentage of population. The mobile teledesity was 56.4 per cent in december 2005 comapred to 34.1 per cent in December 2004. Although increasing, the penetration rate in the Sultanate still remains low compared to regional countries. Mobile Tariffs As competition intensifies, the movement of mobile tariffs is in continuous decline and each operator is striving to offer attractive prices to its customers. Oman Mobile has made several changes in its tariff plans. The most significant change was the introduction of flat rates for pre-paid voice tariffs in March 2005. Prior to the flat rate tariff, the tariff was distance-based ranging from 12.5 baiza per minute to 100 baiza per minute depending on the distance slab. The new system came in line with the launch of Nawras on 16th of March 2005. Pre-paid Tariff Both operators have reduced their activation fee from R.O 19 to R.O 14. Oman Mobile has reduced its off-peak voice tariffs from Bz.55 per minute to Bz.45 per minute while Nawras has reduced its tariff from Bz.55 per minute to Bz.39 per minute. In addition, SMS charges became standard one at Bz.10 per massage for both Oman Mobile and Nawras, whereas prior to that, SMS during peak hours was costing Bz.20 and Bz.10 during off-peak hours by both the operators.
  13. 13. 13 It is perceptible that competition between Oman Mobile and Nawras instigated review of pricing. Competition between the two operators is not only based on price reduction strategy where one has greater advantage in prices; it is also based on the differentiated products they offer. Each company attempts to make additional offers and introduce new technology-based services to stimulate more customers, such as offering promotions on regular basis. Post-paid Tariff In terms of post-paid products, Oman Mobile's average price per minute is Bz.40, while Nawras offers Bz.39 per minute for calls to Oman Mobile and Omantel and Bz.19 per minute on calls from Nawras to Nawras. Operator's tariffs depend on interconnection cost. Nawras, for example, is charging more for calls made off- network seeing that it involves higher cost for interconnecting to other networks. Customers' choice between the two products should be based on cost-effectiveness. An average per minute call from Oman Mobile network to other networks would be Bz.40, while a call from Nawras to other network such as Oman Mobile and Omantel will cost Bz.39 per minute and will cost Bz.19 per minute for calls within Nawras network. For customers with regular calls within Nawras network, it would be economical to subscribe to Nawras network, and for customers with regular calls to Oman Mobile and Omantel, there would be minimum differences between the two products (average of Bz.40/ min for Oman Mobile compared to Bz.39/min for Nawras), noting that both Nawras and Oman Mobile offer identical monthly rental fee of R.O 3 per month (Nawras reduced its monthly fee from R.O 3.9 per month to R.O 3 per month). Oman Mobile introduced two approaches to attract more customers into its market, one is the "Mada Plan", which facilitates customers to budget their monthly calls and enables them to plan in advance accordingly. The plan was introduced in April 2005 as an attempt to make the post-paid service attractive and compatible to pre-paid services. The second strategy was the "Family and Friends discount" concept, which offers 10 per cent discount for calls made by an Oman Mobile subscribers to two
  14. 14. 14 Figure.3 Fixed-line Post Paid and Pre Paid Subscribers in 2005 0 50,000 100,000 150,000 200,000 250,000 300,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Post Paid Pre Paid specified lines within Oman Mobile's network. Nawras, on the other hand introduced the Bz.19 for On-network calls to attract more customers. Both Nawras and Oman Mobile tactics aim to entice more customers into their network. Both the operators are striving for expanding their respective subscriber-base and are offering promotion tariffs. The promotions have become a permanent feature of their marketing strategy and throughout the year there is some promotion going on by each operator. Fixed Line Service Although the number of fixed line subscribers has been increasing, the growth rate on the other hand has been steady. Figure.3 shows the monthly change in post-paid and pre-paid fixed line subscribers from January to December 2005. Source: Oman Telecommunication Company The number of subscribers has been growing on average 1500 per month from January to December 2005. By end of December 2005 the total number of fixed line subscribers were 265,237 compared to 246,978 subscribers in December 2004 (7.4 per cent increase). Figure.4 shows the fixed line subscribers by region. As seen in the graph, Muscat has the largest fixed line subscribers followed by Batinah and lastly is Wusta.
  15. 15. 15 Figure.4 Number of Fixed-Line Subscribers by Region 204 2766 39164 14351 18321 23212 17126 109776 -20000 0 20000 40000 60000 80000 100000 120000 Muscat Dhofar Dakhaliya Sharqiya Dhahira Batinah Musandam Wusta Regions NumberofSubscribers Penetration rate In terms of teledensity, basic access service still maintains low penetration rate compared to regional countries. In December 2005, the rate was 11 per cent, and remained low as compared to Source: Oman Telecommunication Company the regional countries and not improved much since December 2004, where the rate was approximately 10.65 per cent. Low teledensity could be due to limited coverage within the Sultanate areas, or it could be due to low demand for the service due to substitution of mobile. Post-Paid and Pre-paid The pre-paid service "Sahl" for fixed line has been increasing over the year, reaching 25,422 subscribers in December 2005, as compared to 10,019 in December 04 showing an increase of 54 per cent. While post-paid still remains static increasing at a lower rate as shown in figure.3 above. Internet Services Internet service is also provided by Oman Telecommunication Company. There are four main types of internet service that Omantel provides; pre paid Ufaq, dial-up subscription, ADSL, other broadband and leased line services. Omantel introduced the ADSL service in December 2004; however the service was available for residential customers in January 2005. Internet subscribers were 49,425 in December 2005 compared to 47,732 in December 2004 (3.5 Per cent increase). On average, the number of dial-up internet subscribers has been decreasing over the months, which is mainly due to prepaid Ufaq and higher demand for ADSL than dial-up service.
  16. 16. 16 Figure.5 Internet subscribers in 2005 dial-up 41,086 ADSL 8,339 dial-up ADSL & Leased Line Nevertheless, the market share for dial-up subscribers is higher since ADSL was only introduced recently in December 2004 and relatively expensive for those who have limited use. The number of ADSL subscribers has increased by an average of 680 subscribers per month from January to December 2005. Figure.5 demonstrates the number of internet subscribers for dial-up, ADSL and leased line in the third quarter of 2005. Internet Prepaid “Al-Ufaq” Another major access to the internet is through prepaid cards called Al-Ufaq. This allows customers to access internet with a duration determined by the value of the card. Prepaid internet cards are good for budget conscious consumers. Omantel offers two types of cards with a value of RO 6 and RO 10 having duration of 20 and 41 hours respectively. Omantel sold approximately 594, 400 hours through 16,600 cards for RO 6 denomination (332,000 hours) and 6,400 for RO 10 denomination (262, 400 hours) in December 2005. The number of hours sold in December 2005 is 35 percent higher than the December 2004 which indicates that the use of prepaid internet cards is increasing substantially over the period of time. Cyber café Cyber Café is a popular source of internet use. Most of the people who do not have PC at home use Cyber café for internet, being cheaper and convenient. There is increase in the growth of internet Café from 80 in December 2004 to 124 in December 2005. Most of the cyber cafes are in urban areas (more than 100 in Muscat only). There is need to expand this facilities to other cities and rural areas too.
  17. 17. 17 Tariffs One of the major functions of the Authority is to safeguard the interests of beneficiaries of the telecommunication services in respect of the prices of the telecommunication equipment and quality and efficiency of the telecommunications services provided by its licensees. With this objective in view, the Authority had examined different tariff proposals filed by operators during the year 2005. The main thrust of the Authority while examining such proposals was to ensure fairness of the prices and facilitation of market movement towards a competitive tariff regime. The approved tariff proposals ranged from marketing promotions to new service tariffs. However during the period under report most of the proposals focused on the promotional offers. For instance Wireless Hotspots Internet service was approved during the year as a new service to be offered by Omantel. Any filed proposal is assessed based on the possible market outcomes, impact on competition and consumer welfare. The year under report was the first year of competition in the cellular mobile sector in Sultanate of Oman. After launch of Nawras in March 2005, a number of competitive offers were introduced by the new operator. In response to the competitive offers of the new entrant the incumbent operator also tried to come up with matching new options and better offers for the subscribers. Major focus of the operators remained on attracting the new customers and increasing their customer base. Most of the offers were of promotional nature restricted to 2-3 months in order to test the grounds. However, this year witnessed quite innovative and non traditional pricing offers from both the operators. Interconnection In the telecom market, the interconnection is a corner stone of competition. Since the introduction of competition in the Omani telecom market, the Authority had realized that Interconnection will be a central and essential factor for facilitating 5. Economic Activities
  18. 18. 18 competition. To this end, the Authority is doing its best to ensure that interconnection between operators is based on fair and judicious arrangements and the dominant operator does not take undue advantage of its market power. In order to achieve this objective, the Authority put a lot of stress on developing a regulatory framework, which can ensure quick and smooth interconnection agreements between the parties. As a common practice world over, use of Reference Interconnect Offer (RIO) is considered a very useful tool for this purpose. The incumbent operator was thus mandated to produce RIO for its interconnection services. The draft produced has been shared with the new entrant and other potential licensees and stakeholders for their input. The new entrant has been given the opportunity to negotiate the terms and conditions of RIO. Although these negotiations are not yet conclusive, however, these are a step forward to achieve a balanced and fair interconnection regime in the telecom market in the Sultanate Oman. Since the final agreement could not be reached between the operators, the service providers are operating under Interim Interconnection Agreements, awaiting the determination to be given by the Authority mainly on the level of interconnection charges for different interconnection services. In order to be fair and transparent and to use international experience for this very critical and complex issue, the Authority decided to engage an international consultancy. The consultant has been hired, which will advise the Authority on a number of interconnection pricing issues. The consultant’s report will be of vital importance in issuing the determination and setting the basis for fair Interconnection in the market. The report of the consultant is expected to be finalized by the second quarter of next year. The Authority will then issue a determination on the issues in dispute between Nawras, Omantel and Oman Mobile. Consumer Affairs Under the Telecom Act 2002, TRA has statutory role to protect consumers interest. In carrying out this responsibility , the TRA seeks to ensure access of telecommunication services to all citizens at affordable prices. The ideal mechanism to achieve this objective is competition. However, 100% achievement of this
  19. 19. 19 objective cannot be ensured and all administrations through out the world undertake a number of policy and regulatory initiatives towards this end. The TRA try to achieve these objectives by providing relevant information to the consumers and handling complaints against operators. The consumer complaints are given high priority and the operators are directed to address the complaints within the shortest possible time. Most of the consumer complaints pertained to billing accuracy and un-solicited SMS messages. The Authority has directed all operators to ensure that their systems are capable of providing detailed billing information upon request from a consumer. USO Universal Service ensures that basic fixed line services are available at affordable price to all citizens across the Sultanate. However, it is not possible to provide basic telecom services to citizens on commercial terms because of non-viability of business potential in far flung and sparsely populated areas. As a part of the TRA’s responsibilities; in 2005 the Authority initiated the process of formulating Universal Service Policy. This policy would be aimed at creating suitable mechanism in the Sultanate, whereby the Government can ensure Universal Access to all its citizens. If required, the help of international consultants would be sought. This policy will create a mechanism for providing universal services, participation by the operators and service providers, and ensuring sustainability of such projects in the long run. There is a plan to test the framework through implementing a pilot project. In -house Studies The TRA conducts in-house studies periodically to assess and evaluate market performance; these studies included among others mobile, fixed and internet services. In 2005, the Authority through the Internal Planning, Control and Statistics department carried out a study in collaboration with Sultan Qaboos University (Communications and Information Research Centre) to investigate the gender's usage and access to Information and Communications Technologies (ICTs). The result of the study was presented in WSIS exhibition "ICT 4 All" in Tunis in November 2005.
  20. 20. 20 Numbering & Domain Names Article 8(3) of the Telecommunication Act 2002 has granted the responsibility of managing the national numbering resources and domain names to TRA. In 2004, TRA implemented a new 8 digits numbering scheme for both Fixed and Mobile services to cater for numbering requirements for next 20 years. On 17th May 2005, TRA published a Ministerial Decree No. 4/2005 stating that TRA shall charge operators for the allocation and reservation of Numbers and Short Codes. The charges were established to only cater for the cost of management of the national numbering plan. Following the entry of Nawras in the Oman mobile cellular market, Nawras was allocated a new number level (95 xxx xxx) to be used for providing services to their subscribers. A new Mobile Network Code1 (03) was also allocated to Nawras. TRA received quite a few numbering applications from telecomm operators during the year 2005. The main point of concern before the approval of such applications, were ensuring that the numbers will be used in accordance to the National Numbering Plan and will be used effectively and efficiently to preserve the numbering resources. During 2005, TRA has also changed the old 3 digits short codes to 4 digits short codes. These short codes are used by telecommunication network operators to provide particular services exclusively to their subscribers and also used for public services such as emergency services etc. 1 Mobile Network Code (MNC): The MNC is the second field of the International Mobile Station Identity (IMSI) and is two to three digits in length. The MNC, in combination with the Mobile Country Code, uniquely identifies the home network of the mobile terminal or mobile user. 6. Technical Activities
  21. 21. 21 TRA had also instructed the mobile operators to implement Mobile Number Portability (MNP) and these directives are expected to be an impetus to further competition in the Mobile Market. MNP is the ability for a GSM mobile subscriber to change the subscription network within a portability domain whilst retaining his original mobile number. In the Domain Names area and during the year 2005, TRA has been negotiating with Omantel (the incumbent Internet provider) to relinquish the registration of Domain Names to TRA as this is TRA’s responsibility according to Article 8(3) of the Telecomm Act. TRA also drafted a dispute settlement policy for any disputes between two parties in the registration of a domain name. Standardization The Authority identifies and analyzes the impact of new network technologies that will necessitate significant changes in the Authority's regulations. The effect of major Authority actions on the deployment of new technology and advanced telecommunications capabilities are also analyzed by TRA. During the year under report, TRA Developed a Code of Practice for Liability and Limitations on ISPs. It also continued the process of preparing the WLAN regulations and investigates the technical solutions for National Roaming issues between operators. Quality of Service TRA considers Quality of Service as one important aspect to be carefully monitored by the Authority. Periodically, TRA follows up with the operators on their license obligations regarding Quality of Service and carries out drive tests to verify Mobile Networks performance. In 2005, TRA obtained a test drive tool that facilitates mobile networks performance checks. There were several test drives conducted during the year and a report in this regard was issued to assess performance.
  22. 22. 22 Figure.6 Granted Approvals in 2005 177 52 82 311 0 100 200 300 400 Radio Terminal GSM Total TypeofTelecommunications Equipments Number of Granted Approvals Figure.7 Imported Telecommunications Equipments 1164 36695 62351 100210 0 20000 40000 60000 80000 100000 120000 Radio Terminal GSM Total Typeof Telecommunications Equipments Number of Imported Equipment Type Approval The type approval department of the Authority is in charge of identifying new or novel products submitted for equipment authorization and performs radio interference analysis to determine the impact of new radio equipment on users of the frequency spectrum. As dealers and users apply for certain equipment, the TRA approves and authorizes the use of these equipment subject to test results and regulations of the Authority. TRA registered 466 dealers for telecom equipment and systems including GSM during the year 2005, 82 approvals for GSM hand sets, 52 for other terminal equipment and 117 for radio equipment (Figure 6). Moreover, 36,695 terminal equipment and systems, 62,351 GSM, and 1,164 radio equipment and systems were imported through official channels during the period under review (Figure 7 refers).
  23. 23. 23 TRA is responsible for radio spectrum management. The Radio Frequency Allocation Assignment and Planning department has prepared National Frequency Allocation and Assignment Plan to ensure the efficient management and use of radio spectrum. It supports a large number of communications services, particularly for aviation, shipping, defense services, public safety and mobile telephony. The plan is prepared according to International Radio Regulations and in line with the international practices. The national frequency allocation and assignment plan will be implemented after the required approval from the Frequency Spectrum Allocation Committee that has been formulated by decision of Council of Ministers and chaired by H.E. Minister of Transport and Communications. In order to implement the plan, it is necessary to have a migration plan, where frequencies can be re-allocated according to the up-coming plan. The migration plan was also prepared during 2005 after getting the list of used frequencies with technical specifications from all users. Currently, the plan is with the Frequency Spectrum Allocation Committee for final approval. The major function of the department of Frequency Allocations is to assign appropriate frequencies to radio-communications equipments. It is the responsibility of TRA to ensure national coordination of frequencies and in cases of radio interference; it is the responsibility of TRA to provide appropriate solutions. RRaaddiioo LLiicceennssiinngg Radio frequency spectrum is available for radio based services such as cellular mobile communication, aircraft, ship & costal, HF/VHF/UHF, private land mobile/fixed radio, trunking, GMPCS, microwave, WLL, VSAT, point to point and point to multipoint radio data networks. The use of radio equipment in the Sultanate of Oman requires radio license from TRA under Telecom Act 30/2002. The Radio Licensing department 7. Radio Spectrum Management
  24. 24. 24 process all such applications/ requests and ensures that licenses are maintained in a manner which maximizes the efficient use of available spectrum. As of December 31, 2005, the total number of radio licenses issued was 8570 of these 6625 were renewed. The Aircraft Radio licenses are issued for use of radio transceivers equipment located on board aircraft and operating within the aeronautical frequency bands to airport control towers. During 2005 TRA issued 4 new licenses in this category. While 12 new licenses were issued for two way communications for ships during 2005 as compared to 18 licenses in 2004. The use of radio for ships helps passenger vessels, ships, and fishing vessels to communicate. Finally, the most of radio licenses were issued for fixed and mobile services, where 1929 new licenses were issued in 2005 as compared to 1260 licenses in 2004. Monitoring and Inspection In granting radio frequencies, the TRA verifies applicants planned location of radio equipment before installation and controls the authorized equipment for proper application in conformity with the licensing conditions. Prior and following final granting of radio licenses, the TRA carries out pre-license and post-license conformity inspections The aim is to control the frequency usage consequently to detect any illegal usage (Unlicensed) of the spectrum. The Frequency department has initiated a project to monitor frequency systems. The project is in its first phase and TRA is training its staff to familiarize them with the new system. Phase I of the project is completed during the year 2005.
  25. 25. 25 TRA is the main jurisdiction in charge for follow up of legal and regulatory issues of the telecommunications sector, when necessary, TRA arbitrates disputes between operators, solves conflicts, and identifies possible illegal actions of the operators / service provider's enablers for possible development of enforcement actions. TRA actively participated in the FTA negotiations and contributed its input issues related to it especially on the chapter dealing with telecommunications, and Electronic Commerce and Cross Boarder Trade Services. A committee was formed by the Ministry of National Economy to look into Electronic Commerce legislation and TRA played an active role in it. The inputs of TRA on the legislation draft were substantial especially in the gap analysis document of Electronic Transaction and Commerce Act. Drafts on dispute regulations to be instigated by operators as well as on licensing framework for Arab network were prepared by TRA during 2005. In later stages, TRA initiated a proposal to play an active role in Telecom Policy and Legislation Committee of Arab/GCC countries. 8. Legal Activities
  26. 26. 26 Global Symposium of Regulators and World Summit on Information Society (WSIS) The most prominent events of the year were the Global Symposium of Regulators and the World Summit on Information Society (WSIS) both held in Tunis. The Global Symposium of Regulators is a meeting held annually by regulators that is evolved in size, scope and importance. During the Symposium, experts discusses array of issues related to telecommunications and allow countries to present their opinion and point of views on various issues related to telecommunications. The World Summit on Information Society (WSIS) on the other hand was held under the high patronage of the United Nations Secretary-General, Mr Kofi Annan, with the International Telecommunication Union (ITU) taking the lead role in its preparation. The objective of the summit was to develop and foster a clear statement of political will and take concrete step to establish foundations for an information society for all, reflecting all the different interests at stake and find solutions and reach agreements in the field of internet governance and financing mechanism. Delegates from Sultanate of Oman attended these meetings and TRA actively participated as a part of the delegation and gave political support to the Tunis Commitments and Tunis Agenda for the information society that was adopted on 18th November 2005. More than 19,000 participants from 174 countries attended the Summit. International Telecommunication Union (ITU.D)'s Development Sector Study Groups 1 & 2 For the third year in a row, TRA contributed in the workings of the International Telecommunication Union (ITU.D)'s Development Sector Study Groups 1 & 2. The study groups were developed in order to allow telecom experts, regulators and other interested bodies to make authoritative recommendations related to the technical work of the ITU through extensive studies. Eng. Naashiah Al-Kharusi, TRA's temporary committee Member is the Vice-Chairman of ITU-D Study Group 1 for 9. International Events
  27. 27. 27 Telecommunication Development Strategies and Policies. The study group will accomplish the tasks by the end of the year 2006. Meetings and workshops During 2005, TRA participated in various meetings, workshops and conferences at regional and international level notably those which were conducted by the ITU and the GCC. Some of the regional workshops/meetings were ITU/IBDT Arab Regional Workshop on Universal Access and Universal Services Policies (Amman, Jordan), General Assembly Meeting of Arab Centre of Excellence CoE/ARB (Cairo, Egypt), The Pan Arab Conference on WSIS-Phase II, An Arab Regional Dialogue (Cairo, Egypt), and Regional Information Meeting and Workshop related to the Administration of the Arab Group of Countries (Damascus, Syria). They covered almost every aspect of telecommunication, the most significant issues were frequency spectrum, standardization, interconnection and price regulations, access to broadband, universal service opportunities, core statistical indicators for Information and Communication Technology (ICT) and cyber and network security. Visit to Regulatory Bodies In order to enhance the skill and expertise of TRA’s employees, seniors and juniors staff of TRA visited the Telecommunications Regulatory Commission Jordan to gain knowledge from their experiences which are at advance stages of liberalization process. Moreover employees also visited to TRA Telecommunications Regulatory Authority, UAE for exchanging experiences. ITU/BDT Regional Workshop on "Interconnection and Price Regulation at Muscat In addition, TRA also hosted a workshop on "Interconnection and Price Regulation". The workshop was seen as an important event as to gain experience from other national and international expertise in the field of interconnection and Pricing methods.
  28. 28. 28 Free Trade Agreement (FTA) The Government of Sultanate of Oman decided to enter into Free Trade Agreement (FTA) with the United States of America. Negotiation lasted about one year. The agreement was finalized and awaited for formal legislative approval. TRA fully participated in the process and contributed to various areas such as market access to goods, cross border services, intellectual property rights etc. However, the most important for TRA was Chapter 13 which deals with telecommunications. Eng. Naashiah Al-Kharusi, Member of Temporary Committee of TRA led the telecommunications and ICT Group. This field is most flourishing for economic activities and both sides negotiated on each and every aspect. Therefore, it took considerable time and several rounds of discussions were held before agreement was finalized. TRA did it best to protect safeguards and interest of the state and telecommunication business. However, it must be pointed out that the starting point of these negotiations was the Sultanate of Oman commitments to WTO. Thus protection could not be given to those concerned which were already conceded under WTO agreement. Arab Centre of Excellence (CoE) The Centers of Excellence concept was established in order to develop and strengthen the capability to generate the expertise in developing countries around the world. The Arab Center of Excellence is playing unique role in the development of attractive telecommunication markets and the rendering of telecommunication services for the development of society in Arab Region by: 1- Developing and strengthening the capability to generate advanced level policy, regulatory, managerial and requirement of technical expertise to address the needs of the telecommunication sector in Arab States Region 2- Introducing and enhancement of application of communication and information technology in education, commerce and other fields of importance in the Region.
  29. 29. 29 The Center is an ITU project run by a Steering Committee representing the stakeholders in the Region. The Steering Committee decided to transfer the office of the CoE from Damascus to Oman. TRA is hosting the office of the CoE for coming 3 years and providing all the logistic and man power support to facilitate the activities of the Center besides a contribution of RO 23130 per annum. CoE office is located at Telecommunication Regulatory Authority’s premises.
  30. 30. 30 Liberalization of telecommunications is an on going process and it has embarked TRA to come up with an ambitious drive to fulfill its objectives stipulated in Telecom Act 2002. In order to accomplish its goals, TRA has prepared a strategic plan and is in the process of implementing through its staff, by developing legal framework and procedures, ensuring transparency in its decision making and following customer care strategies. TRA has planned following priorities to achieve its objectives Competition One of the major responsibilities of TRA is to foster competition in all areas of telecommunications. Competition is best guarantee of other key objectives such as the improvement of services and facilitation of a wider choice. A competitive market cannot be created without the need for regulatory intervention to ensure that resources are allocated appropriately and fairly. During the period under review competition was promoted in mobile sector and its fruits are reaching to the end users. TRA intend to introduce competition in fixed line as well as in value added services sectors in near future. USO Currently teledensity in rural areas is very low due to difficult terrain of the country. It is the prime concern of the Government and the TRA to ensure access of basic telecommunication services to all the citizens at affordable prices. Due to unattractive market in rural areas for the operators from return on investment point of view, it is challenge for regulator. The Authority intends to address this issue on top priority through a program in coming year by identifying and formulating the basic requirements for telecom services in the Sultanate, whereby the Government can ensure Universal Access in rural and remote areas for such services. 10. Forward-Looking Activities for 2006
  31. 31. 31 Radio Spectrum TRA is well aware of future needs of the radio spectrum, therefore the department of Frequency Planning and Allocation has planned to vacate the 1800 MHz and 2 GHz bands from the concerned government bodies and make it available to new operators or licensees, and also intends to vacate the 450-470 bands to make it available for mobile services for rural areas and other frequency bands which are important for safety and for the use of aeronautical and maritime services. As for Radio Local Area Network (R LANs) operating in 2.4 and 5.8 MHZ, the regulations in this regard have been prepared and awaited for approval. TRA intends to complete all technical data and to implement Phase II and III of monitoring network system. Voice over Internet Protocol (VoIP) VoIP is growing at twice the rate of traditional switched voice and now accounts globally for 11 percent of international calls. The impact of VoIP technology is greatest on routes into developing markets, where continuing high international settlement costs make VoIP an attractive alternative. VoIP will be an area of high priority for TRA and developing and articulating a longer term view of VoIP and increased liberalization in light of global developments. Broadband Broadband penetration in the Sultanate is very low as compared to regional countries. The main reasons for low penetration include lack of competition, high prices and lack of awareness of general public. TRA recognizes the importance of broadband proliferation in the country since it is directly associated with the social and economic uplift of the country. TRA is devising strategy to introduce competition in the broadband resulting reduction in prices and making measures to ease broadband delivery mechanism and users equipment facilitations.
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