TRA price-control policy 'ensures fair competition'

Abu Dhabi: Telecommunications Regulatory Authority (TRA) director-general and board member Mohammad Nasser Al Ganem spoke to Gulf News about the current situation in the telecom market in the UAE.

He said the authority's price-control policy (PCP) ensures fair competition, and the only price reductions the TRA does not approve are those which have the potential to have anti-competitive effect.

GULF NEWS: Why does the TRA have a price-control policy for the two telecom operators -etisalat and du. Isn't this against consumer interest, as lower tariffs help consumers?

Mohammad Nasser Al Ganem: The purpose of the PCP is to prevent anti-competitive pricing behaviour. This means that telecom operators cannot put prices into effect that have the potential to harm or prevent competition.

One example is a proposal to price a service below the actual cost of providing the service.

In the short term this sounds appealing, but if this is allowed to happen, competitors could be driven out of the market, thus leaving fewer competitors or even a monopoly in the telecom sector.

After the competitors are driven from the market, the price of the service will increase, which is not good for consumers in the long term.

How long has the PCP been in place, and how long does TRA intend to continue with it?

The TRA issued the Price Control Policy on March 1, 2005, before a second operator was lic-ensed to make the environment ready for competition.

For example, the TRA prevented long-term contracts so that consumers could have freedom of choice after the second operator entered the market.

What do you want to achieve with PCP? Don't you think it is against the spirit of free market where competition allows the customer to get the best value for his money?

The TRA always approves price reductions which are not anti-competitive. In fact, the TRA approved 1,565 price reductions in 2007.

How long will TRA continue to protect du? du has said it is going to turn around and become a profitable company soon, so don't you think you can now allow market forces to take over, now that the company has established a sizable customer base?

The TRA protects competition and not the competitors. Both operators are treated equally by the TRA in every aspect.

You have said the TRA is in the process of declaring the Internet Penetration Policy before the end of 2008. What will it entail, what are its objectives and who will it benefit?

Actually the right name is Internet Access Management (IAM).

It will be released much earlier, where it will also be published in the TRA website for all to read. Then, any discussion on the matter will be more appropriate and accurate.

Please comment on the operations of etisalat and du. Are you satisfied with the way the two companies are operating currently? If not, what changes as a regulator would you want them to bring about in the way they conduct their business?

The TRA regulates etisalat and du by setting a regulatory framework (regulatory policies and procedures, regulations, etc, which can be seen on the TRA's website). The TRA monitors to make sure the telecom providers comply with the regulatory framework. Both licensees take their regulatory obligations seriously, and the TRA appreciates this.

What steps is TRA taking for greater transparency in the UAE telecommunications sector?

The TRA is highly advanced in matters of transparency. For example, the TRA issued a Price Transparency Policy mandating certain obligations on telecom pro-viders so that consumers are better informed of the prices they pay for telecom services.

Also, the TRA issued Directive No (3) of 2007 ordering etisalat and du to send an SMS to their customers roaming outside the UAE so they know the roaming prices.

Also, the TRA has recently directed etisalat and du to develop and publish a Code of Practice to cover the relationship between themselves and their consumers, which should be made public very soon.

Additionally, the TRA is currently developing other regulatory policies and awareness campaigns to improve transparency.

What are the TRA's short-term and long-term objectives?

The TRA recently completed its Strategic Plan for 2008-2010, which was approved by the prime minister. This plan will be published on the TRA's website in the near future.

Looking ahead, is there a possibility of a third telecom operator in the UAE, or will there just be etisalat and du?

It is premature to discuss at this time. Once anything is known, it will be made public.

However, before 2015, nothing is discussed with respect to a third operator similar to the two licensed ones with services related to ISP, mobiles or fixed lines.

Fact file: Regulatory framework

The Telecommunications Regulatory Authority (TRA) of the UAE was established in accordance with the UAE Federal Law by Decree No 3 of 2003 - Telecom Law.

Its objectives include ensuring adequacy of telecommunications services throughout the UAE, ensuring quality of service and adherence to terms of licences by licensees, resolving any disputes between the licensed operators and establishing and implementing a regulatory and policy framework.

The TRA finalised the licensing of the two telecommunication operators of the UAE, etisalat and du.

The TRA regulates etisalat and du by setting a regulatory framework (regulatory policies and procedures, regulations, etc, which can be seen on the TRA's website).

The TRA monitors to make sure the telecom providers comply with the regulatory framework.