A recent price hike by one of the UAE's telecoms companies served to highlight the lack of competition in the country, with consumers and businesses having little or no choice in which providers they use.
Du, one of the UAE's two operators, said last week that it is putting its prices up (by about 20 percent in some cases) from September for its broadband services. Customers quickly complained and the telco's response highlighted how the lack of competition can cloud a company's judgement. After complaints, the company tweeted replies of: "Hey! If you don't want to continue with the services, you can cancel your account at one of our stores."
The tweets later disappeared and the company apologised on Twitter, saying: "We've been guilty of a Social Media fail today. We're really sorry about that inappropriate tweet. And we want you to know the person responsible for that tweet will no longer be handling our Social Media."
We've been guilty of a Social Media fail today. We're really sorry about that inappropriate tweet (cont)— du (@dutweets) August 6, 2013
Its poorly-worded and very public suggestion that disgruntled customers should go somewhere else was made in full knowledge that customers are essentially powerless to do so. The choice between the two mobile operators (Du or its larger rival, Etisalat) in reality dwindles to the acceptance of one when it comes to fixed line voice and data services for consumers and businesses alike.
Which operator home and company users opt for is dictated by location rather than choice, so when a Du employee tells a fixed-line customer they are free to cancel, they know that customer won't really be pushing business to a rival.
The shame in this is it overshadows the fact that the UAE telcos have been ambitious with schemes such as rolling out fibre to the home. Approximately 65 percent of the county's residential properties now have a fibre connectivity (mine included), with services such as IPTV offered by Du and Etisalat (although in Du's case, this was the source of customer complaints, after they were told their higher fee would include access to on-demand movies, whether or not they wanted them).
The UAE is not the only country pushing fibre into the premises plans. In Qatar, state operator Ooredoo plans to have fibre to the home throughout the country by the end of next year, as part of a $274m project, and in Saudi Arabia, mobile operator Mobily is concentrating on fibre to the business.
It has been argued by regional telcos that these sorts of plans happen because there is a lack of competition among fixed-line telecoms, giving them higher revenue streams in markets smaller than the likes of European countries and the US. But while that lack of fixed-line competition is endemic across the Middle East, mobile network choice is slowly increasing, as are the services on offer.
Any company entering the market will find there is still plenty of headroom for data services growth. There are approximately 90 million internet users across the Middle East (both fixed and mobile) and internet penetration ranges from just seven percent in Iraq up to 86 percent in Qatar, according to figures from the World Bank.
Mobile revenues are expected to grow at a compound annual rate of five percent a year to 2017 across the Middle East, rising from approximately $70.3bn in 2011 to $96.4bn in 2017. The authors of that forecast, Analysys Mason, also predict that during that period, it will be mobile data offerings that grow fastest, with a compound annual growth rate of 17.9 percent between 2012 and 2017.
This growth makes the Middle East attractive for new entrants, and in June, Saudi Arabia became one of the few countries in the region to give licences to mobile virtual network operators (MVNOs), awarding three, to Axiom Telecom, JawraaLebara and Virgin Mobile. The telecoms regulatory authority said the licences were granted in an effort to stimulate competition, improve service levels and reduce prices, although on that latter point, existing operators are allowed to approve prices offered by the MVNOs. Its hope is that, with MVNOs generally able to be more nimble than mobile network operators, these new licence holders can quickly begin to offer innovative services.
Likewise in Egypt, there is a push to increase competition, although for different reasons. Here, the country's fixed line operator Telecom Egypt wants to run a mobile licence, and in return the regulator plans to allow competition in the fixed line market. It already has three mobile networks, so the decision will add a fourth. It isn't yet clear how many fixed-line network licences will beawarded, but with the country eyeing a 4G release potentially for next year, it would seem that mobile will be the more attractive option for telcos.
It is unlikely that governments will rush to relax their policies on the number of fixed line operators in Middle Eastern countries, but mobile offers hope that there will be far greater competition. And after years of minimal choice, that will be a welcome addition to the telecoms market, bringing more service innovation, more transparency around prices and a bigger focus on keeping customers happy.