Fixed focus

With Bahrain’s TRA having set this week as the deadline for feedback to its draft document on Local Loop Unbundling, telecom professionals in the region are now eager to see just how the country will go about unbundling its network – a course of action that now looks almost certain.

Bahrain is not the first country in the region to take a serious look at LLU, with Kuwait and Egypt having implemented partial LLU to allow competition in the broadband sector. Other countries, including Saudi Arabia and Jordan, are also looking at LLU, with the latter having appointed a team of independent specialists to assess the potential of such a move.

But so far, Bahrain’s LLU plans appear to be commanding the most attention, perhaps owing to the frequent sparring between incumbent operator Batelco and the country’s TRA, which serves to highlight the familiar disagreements that tend to arise over LLU in most countries.

Put simply, Batelco’s natural tendency as an incumbent operator is to recoil from LLU, a process that would mean increased competition for fixed voice and internet services.

The company’s outspoken CEO, Peter Kaliaropoulos, argues that Bahrain’s population is too small to sustain more fixed operators and also points out that interest in bit stream – a partial form of unbundling – has attracted little interest from the private sector.

Batelco also faces significant competition from new technologies such as WiMAX, VoIP and 3G. Fixed line services are stagnating amid competition from wireless services, Kaliaropoulos argues.

On the other side of the fence, the TRA argues that LLU will increase competition, providing greater choice and lower prices for the end user, particularly for internet services. This seems difficult to dispute, particularly given that 3G services remain too expensive for most people, who still view mobile data as a luxury and simply want greater choice from fixed broadband services.

Fixed operators relying on WiMAX also struggle to compete with incumbent operators, partly because the technology has certain limitations owing to the narrow frequency it relies on. Many WiMAX operators would relish the option of being able to offer bundled services using fixed infrastructure.

Independent analysts also state that Bahrain’s relatively small population of about 750,000 people should be able to sustain greater competition in the fixed sector. LLU operations are scaleable, and customers would be likely to benefit from a greater choice of bundled packages and more tailored internet services.

Overall, the additional competition is likely to help develop the market, which will be able to absorb smaller operators.

But certainly, Bahrain’s TRA would be well advised to note some of Kaliaropoulos’ objections to LLU. The regulator will need to look carefully at pricing structures and the type of bundled packages that operators can offer, and the incumbent should be able to command a fair wholesale price for the huge investments it has made in its fixed infrastructure in recent years.

As with almost every part of the telecoms sector, true competition in the fixed line sector is a positive development when regulated properly. With Bahrain likely to become a test case for the region of how to implement unbundling, it is in everyone’s interests that the regulator gets it right.

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