Bahrain TRA seeks rules review on apps
Manama, March 19, 2014
Bahrain's communications watchdog is recommending a review of telecom regulations, citing "unfair" competition from online services that allow users to make free voice and video calls.
The Telecommunications Regulatory Authority (TRA) said products like Viber, Skype and WhatsApp messaging service are making it difficult for traditional providers like Batelco, Zain and Viva to compete, reported the Gulf Daily News (GDN), our sister publication.
It has published a joint study with Detecon Consulting, which states that products that enable free communication are cutting into the profits of network operators across the region.
The report recommended that price regulations set on telecommunication providers by the government should be re-examined - which could mean either higher or lower charges for customers.
"The research clearly shows that the entry of OTT (Over The Top) providers into the market has changed the network operators' competitive situation dramatically," stated the report released yesterday called Policy and Regulatory Frameworks for Governing Internet Applications.
"In a functional market all market players would adapt their business models accordingly and a new equilibrium would be found.
"As this is apparently not happening in the current case there must be market imperfections.
"This may be because regulatory obligations (eg, tariff regulations) placed on the operators are impeding their attempts to respond appropriately to the competitive challenges they are facing.
"For this reason it is recommended that the regulatory obligations faced by the operators are reviewed in detail and appropriate adaptations made according to the results revealed."
It described competition from free service providers as "unfair" and the reason for what it described as market "malfunction".
"The basis for this hypothesis is that the competition created by the OTT providers is not sustainable, as indicated by the fact that they are often loss-making and their financing is based on extremely high stock market valuations rather than on solid business cases," it said.
The report recommended a new business model where network providers partner with application developers and share profits - or at least reduce providers' losses.
However, the report strongly recommended that online products offering free services should not be banned.
"The destructive nature of their competition will be reduced as shareholder pressure forces them to charge for services in order to make a profit," it said.
"A ban would destroy competition and limit innovation - in a functional market it should absolutely not be necessary." - TradeArabia News Service
