Nov 20 2011
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Connecting the world at a breathtaking pace
Sunday, Nov 20, 2011
Dubai: With 4G technology on the horizon, UAE nationals could be forgiven for thinking they have lived through four generations in a generation as the country’s communications sector continues to grow at a rapid pace.
From the early days of wireless telephone networks to the highly anticipated introduction of Long Term Evolution (LTE) technology, the UAE’s telecoms market has witnessed a remarkable transformation.
According to data released by the Dubai-based Pan Arab Research Centre earlier this year, the UAE has a mobile penetration rate of 97.1 per cent with 3.5 mobiles per average household.
“The UAE has a very advanced telecoms market. The country’s two operators are already offering high speed mobile broadband and we are about to see the introduction of LTE, the next generation mobile data network,” said Matthew Reed, a senior analyst at Informa Telecoms and Media.
Reed said the arrival of du brought competition to the UAE’s telco sector for the first time and gave UAE residents the choice between two different providers, which he believes is essential for a mature marketplace.
“One of the key milestones in the history of the UAE’s telco sector was the move towards a semi-private sector; it was no longer all about a single state-owned company. The introduction of du was the single most important development as it heralded the introduction of competition,” he said.
“Etisalat and du compete on several levels, including customer service and the introduction of new services. There is no doubt the dynamics of the market changed upon du’s arrival. There is no magic formula to say how many telcos a country should have, but there are ways to improve the capacity of the UAE market.
“Etisalat is expected to launch LTE very soon whilst du also has plans to introduce the service. Initially it will be quite a niche product and priced at a premium; it will be of interest to a relatively small market such as high-end consumers,” he added.
The competition between etisalat and du has intensified in recent years, especially as the latter continues to eat into the former’s home market share.
Du’s CEO Othman Sultan said in August that it accounted for almost 44 per cent of the UAE’s mobile market and was almost at full parity with its rival in terms of pre-paid customers. However, etisalat, which operates in 18 countries, has enjoyed sustained growth this year across its international operations.
“We now have a market where the services offered by both etisalat and du have evolved successfully,” said Sami Raffoul, general manager of the Pan Arab Research Centre in Dubai.
“The arrival of du brought the challenge to a higher level. Etisalat felt the fever as is always the case when a newcomer shows its face; many people believe the grass is greener on the other side and like to try other options. As a result, there was a lot of gossip and discussion in both offices and at street level,” he added.
According to Raffoul, the arrival of the Telecommunications Regulatory Authority in 2003 marked a key milestone in the development of the UAE’s telco sector. He says etisalat operated to the best of its abilities within the regulatory framework despite a lack of competition.
“When the TRA was established, it conveyed there would be multiple operators in the UAE. Etisalat realised the situation and was made to think beyond its normal front and back yards. The company took action to upgrade and enhance its services, which have become some of the best in the world,” he said.
“The TRA was given a scope of work by the authorities and told to ‘go and perform’. It was a decision taken at a federal level; all new services had to be implemented successfully across the UAE.
A key bone of contention, however, in the UAE’s burgeoning telco sector has long been the country’s policy on Voice over Internet Protocol, or VoIP, which allows communications over Internet Protocol networks. Currently only du and etisalat are licensed to offer such services in the UAE and operate under federal law 3 of 2003.
In its revised regulatory policy on VoIP, released on December 30, 2009, the TRA stated that du and etisalat had the right to block any unlicensed party believed to be providing illegal VoIP services, such as Skype, in the UAE.
“Services for internet calls provided by third parties fall within the scope of this policy. As voice calls provided by Skype are considered to be a regulated activity, such services have to be provided by a licensee,” the TRA said in a statement earlier this year.
However, it will be interesting to see how the country’s telcommunications sector develops.
Dubai The Emirates Telecommunication Corporation was established in August 1976 as a joint stock company between International Aeradio Limited, a British company, and local partners.
Several years later, the UAE Cabinet decided to turn the company, also known as Emirtel, into a completely UAE-owned establishment. This move followed amendments that stipulated the government should hold 60 per cent of the company’s share capital, with 20 per cent subscribed by UAE nationals and the remaining 20 per cent by foreign partners.
The UAE took over Emirtel from British companies Cable and Wireless and International Aeradio, which held 20 per cent of the firm’s shares, on New Year’s Day 1981. The telco’s rapid progress continued thereafter and it launched the Middle East’s first mobile network in 1982. The ownership structure changed the following year with the UAE government retaining its 60 per cent share and the remaining 40 per cent publicly traded.
A key milestone was reached in July 1984 when Emirtel became etisalat, the name we all know today. The board of directors approved the usage of the word etisalat, which translates as communication, in all of the corporation’s certificates and official transactions. A month later, the UAE Cabinet approved the change in accordance with a resolution adopted by the Supreme Council to give Arabic names to national companies.
As new technology began to sweep the world in the early 90s, the UAE government issued Federal Law No 1, which gave etisalat the right to provide wireless telecommunication services in the UAE. In the mid-90s, the UAE ventured into the field of satellite communication with the launch of Thuraya , which along with Satellite Systems International, conducted the preliminary design review of the company’s first mobile satellite system.
Regulation of the UAE’s telecoms sector came about in 2003 with the introduction of the Telecommunications Regulatory Authority, which was established according to UAE Federal Law by Decree No 3 of 2003. Etisalat launched its multimedia messaging services (MMS) in July 2003 before launching 3G services later that year. Until that point the company had held a monopoly on the UAE telecommunications market.
However, that all changed in December 2005 when Emirates Integrated Telecommunications Company was established as the country’s second telecoms operator.
The company rebranded as du launched mobile services across the UAE in February 2007.
By Kevin Scott, Staff Reporter
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