Business | Telecoms
TRA initiative likely to bring down UAE phone tariffs in 2009
The UAE Telecommunications Regulatory Authority (TRA) said on Saturday it expects lower phone tariffs in 2009 as it has directed service providers du and etisalat to make network adaptations in order to provide Carrier Pre-Selection Service (CPS) in the fixed line telephone.
- By Shakir Husain, Staff Reporter
- Published: 23:14 July 5, 2008
- TRA has directed service providers du and etisalat to make network adaptations in order to provide Carrier Pre-Selection Service in the fixed line telephone.
- Image Credit: Gulf News archive
Dubai: The UAE Telecommunications Regulatory Authority (TRA) said on Saturday it expects lower phone tariffs in 2009 as it has directed service providers du and etisalat to make network adaptations in order to provide Carrier Pre-Selection Service (CPS) in the fixed line telephone.
The service allows phone users to have their calls automatically routed through a network offering lower call cost, but without the need to dial a prefix or use special equipment.
This will increase competition in the UAE telecom sector, reduce prices, and enable consumers to freely choose their provider of national and international fixed line call services, TRA said in a statement.
Mohammad Nasser Al Ganim, TRA board member and director-general, pointed out that since 2007 many consumers in the UAE were able to choose their provider of national and international fixed line calls via a technology called Carrier Selection Service (CS).
However, CS has some technical limitations, which prevented competition from reaching 100 per cent of the population of the UAE, he said.
"After the introduction of limited competition, retail prices for fixed network international calls have decreased between 35 per cent and 80 per cent for those customers who took advantage of such services. We expect to see further price decreases when competition is available via CPS throughout the UAE," Al Ganim said.
TRA said it aims to give consumers freedom of choice and increase competition in order to cause price reductions.
"The TRA aims to accomplish and achieve this goal in the beginning of 2009. We are confident to say that the service providers will work diligently to put into place the necessary measures and implement the TRA directives," Al Ganim said.
Penetration
The UAE telecom market has a high rate of penetration, but du and etisalat mainly compete on services rather than price, resulting in high tariffs.
According to an industry report by investment bank Al Mal Capital, mobile penetration last year was 166.4 per cent, while internet user penetration was 44.7 per cent. The rate for fixed-line penetration was 30 per cent.
The report noted that once carrier pre-selection service is fully implemented, users could take advantage of du's cheaper peak time international charges, and this should encourage etisalat to lower its international call rates.
It said annual population growth of about five per cent will be the key driver of the UAE telecom over the next few years. Al Mal expects a combined annual growth rate of 8.6 per cent for etisalat and du's revenue from UAE operations, reaching Dh35.27 billion by 2012 from Dh21.68 billion in 2007.
Former monopoly etisalat commands an 80 per cent of the UAE mobile market and is aggressively expanding its international operations, the Al Mal report pointed out, adding that du is still at an early stage of growth as it builds out its UAE network and operations.
du commenced operations in December 2005, launched mobile services in February 2007 and aims to have a 30 per cent market share by 2010.
"Once du completes its mobile network roll-out, we expect genuine increased competition within the UAE between the two players, although it will be based less on direct price competition and more on special offers and promotions," the report said.
Al Mal projects the number of fixed-line subscribers will grow from 1.39 million in 2007 to 1.5 million this year and 1.63 million in 2009.
"The modest fixed-line net additions are driven by population growth. However, we still expect penetration to remain constant at around 30 per cent from 2008 to 2012," it said.
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