Bahrain Region - Telecommunication and Internet Services Sector - Case Study Example

Introduction Although Bahrain is the smallest region in the Middle East by population and area, it is one of the most competitive regions in the telecommunication and Internet services sector. It has an excellent regulatory authority along with adequate documentation standards in the region. The major player in the market, Batelco shares the market of fixed telephone lines with fourteen different service providers (Research, 2011). The infrastructure is excellent, as Batelco has completed the roll out of the next generation networks in January 2009. The international call minutes are around 70 % and the consumers use prepaid calling cards for making international calls. However, the rate has considerably fallen down due to the introduction of VoIP based calling cards. Likewise, they are of low cost and the majority of the population in Bahrain is expatriates (Research, 2011). Moreover, in 2008 -2009, Wimax was launched by two different service providers and in the mid 2009, Wimax demonstrated a 30% share in the broadband services sector (Research, 2011). The telecommunication industry is continuously evolving due to up gradation of next generation networks. Moreover, the industry has its own significance in the context of human communication regardless of time, location and environmental factors, however, call rates may vary due to roaming services. Apart from advances in human communication, the industry has contributed to provide a carrier of digital transmission, for providing Internet to the people. The telecommunication and Internet industry in Bahrain has emerged as one of the fasting growing market. As per the telecommunication regulatory authority (TRA), a report was published indicating the rapid increase in revenue by 74% in between 2003 – 2006. Likewise, the industry contributed $194 Million in 2003, as compared to $342 Million in 2006. Both these figures demonstrates considerable rise in revenue by 28%. Moreover, the working force also increased to 2,322 from the total number of employees in 2003 i.e. 1,808 (Telecommunications market in bahrain one of the fastest growing.2007). The figures are from the first quarter of 2006. Moreover, the report also concluded an internet connection in almost half of the houses as compared to the two third percentages of fixed landline users. Furthermore, director of the telecommunication regulatory authority (TRA) praised the competitive marketing strategy of the government that resulted in a rise of the growth rate for the telecommunication and Internet markets (Telecommunications market in bahrain one of the fastest growing.2007). Economic Trends The telecommunication sector in Bahrain has provided less opportunity to the foreign companies who wish to launch telecommunication providers. However, regional companies are welcomed whole-heartedly. The reason behind this strategy is the monopoly that has surrounded the telecommunication sector by party public owned operators knows as Bahrain telecommunication company (Batelco). The government has shows less efforts to modify the strategy in order to make competitors in the market. However, opportunities for foreigners are in terms of tenders of an investment program launched by Batelco (Noticiasdot.com ). Moreover, development of telecommunication infrastructure is up to the mark in spite of a non-competitive environment. This is mainly because the enlightened policy of modernization and diversification of Batelco is facilitated by its close resemblance with a strategic partner, named as Cable and Wireless, sharing a 20% stake in the company (Noticiasdot.com). The priority is given to the implementation of a latest hardware equipped network that is compatible with wireless networks, high tech multimedia, and data services. These high tech services play an important role for the country as Bahrain is considered as a financial and regional hub. The government has shows some positive factors for the foreign investors in order to make a competitive environment. As Shaikh Ahmed bin Ateyatala al-Khalifa, who is the minister of state of cabinet affairs has announced that the government is reviewing the policy on the developing telecommunication sector in order to develop a solid competitive environment by implementing advanced services on affordable prices (Bahraini telecom sector for "economic vision 2030" plan ). Likewise the ministry said “One of the key factors that has been identified to achieve the aspirations of the kingdom’s Economic Vision 2030 is the information communications technology, considered a catalyst for economic growth, increased productivity and social development in the future through the provision of advanced telecommunications services for all.” (Bahraini telecom sector for "economic vision 2030" plan). Furthermore, the economic vision 2030 of Bahrain illustrates the contributing factors to the economy of the country. Foreign investments will increase, as the economic vision 2030 will transform the country in to an innovative and competitive environment (Bahraini telecom sector for "economic vision 2030" plan). Bahrain has created investment opportunities for the supplies due to its high demands for high tech equipments and skills. In the year 2006, the major player Batelco joined hands with Cisco, for standardizing the telecommunication infrastructure consisting of voice, mobile and Internet services. Chief executive of Batelco Mr. Peter Kaliaropoulos said, “Our collaboration with Cisco is part of Batelco's commitment to providing world-class service and technological capacity throughout its network” (Bahrain: Investments in the region and customer focused strategy pay dividends for leading telecom operator.2007). He added, “By joining forces and aligning our market knowledge with Cisco's global expertise, we can ensure the rollout of cutting-edge services and solutions tailor-made to our market." (Bahrain: Investments in the region and customer focused strategy pay dividends for leading telecom operator.2007).The expansion of some of the areas due to demand includes the banking sector and the stock market. The requirements expand the supply of multimedia and data transmission services at rapid pace. Similarly, the hydrocarbon sector in Bahrain has increased its demand in satellite communication, cellular and data services. Moreover, the demand of new technology including cellular telephony, broadband and Internet has made Batelco to revise its tariff rates to a minimum so that the demand can be increased among the middle and low-income families. The youth that is the major part of Bahrain’s population has proved to be a contributing factor to the telecommunication sector equipped with new technologies. Moreover, the youth is educated on the usage of new services. Conversely, the limitations to the growth factor are the small population of Bahrain. As revealed by the consumer survey that was conducted in 2007, a fixed line number, or a mobile number is an essential factor when any consumer wishes to change the service provider in the region. The Telecommunication Regulatory Authority is focusing on the telecommunication environment in the region to encourage service providers for providing low barriers to the consumers, who wish to change the service providers (Bahrain regulator to appoint consultant for study on number portability - business intelligence middle east - bi-me.com - news, analysis, reports). As the TRA's General Director Alan Horne said "One method of removing a key barrier to change is to allow customers to keep their telephone number through enforcing number portability. Such a facility will encourage operators to offer better prices, quality and services to encourage customer to stay with them. This tender we are launching is to seek international experts to advise TRA on the most cost effective method of implementing number portability and the conditions under which services should be offered” (Bahrain regulator to appoint consultant for study on number portability - business intelligence middle east - bi-me.com - news, analysis, reports). Moreover, one more survey was illustrated by TRA indicating that 93 % of people running business in the region want to keep the same number in spite of changing their service providers. Moreover, 71% of the population said it is essential and 36% people indicated that their current service provider does not satisfy them but they cannot change it because they do not want to lose their number. Furthermore, the survey also indicated 41% mobile users indicative of keeping their mobile numbers and 40% residential users were also reluctant to keep the same numbers is important (Bahrain regulator to appoint consultant for study on number portability - business intelligence middle east - bi-me.com - news, analysis, reports). Due to existence of large number of expatriates living in the region, telecommunication added a higher annual growth rate in terms of revenue. The major contributors that catch the attention of major telecom companies in the region includes, high average revenue per user (ARPU), infrastructure development, real estate and successive demand of advanced services of Gulf Cooperation Council (GCC). Consequently, the top five companies have expanded across 46 countries in Middle East, South East Asia, Asia pacific and Africa. The focus of these companies was the high population and low penetration factor in the region and markets. Bahrain’s, telecom sector is an attractive region as it provides high profitability by provisioning latest technology. In the period of 2002 – 2007, there was a significant rise of 52.9 % of cell phone users in the MENA region. It was comparatively the highest rate as the worldwide increase was 23.3% (taib100509ev.pdf (application/pdf object)). In the mid 2008, mobile penetration rate of 163% was recorded and considered as one of the highest in the GCC. Moreover, the broadband sector has also contributed effectively in the communication sector but has broad implications for the contribution in the economy. After reviewing the industry data, expectations are from $ 28 million that were in 2007 to $ 41 million in 2013 (taib100509ev.pdf (application/pdf object)). The growth is due to the increase in service providers eliminating Batelco’s monopoly in the sector (taib100509ev.pdf (application/pdf object)). As in January 25 2009, Saudi telecom made a success for gaining mobile network operating license with a bid of $ 86.7 million and aimed to hold 20% market share in the period of 10 years (taib100509ev.pdf (application/pdf object)). Conclusion The future is bright if the factors included in the economic vision 2030 are followed in a positive manner. As Bahrain welcomes expatriates from all over the world, the country must be maintained. The monopoly of Batelco is no longer in strength as many foreign competitors are available in the market. The investment in terms of new technology are up to the mark, as Bahrain’s telecommunication infrastructure is equipped with latest technology, providing opportunity for the top supplier to be active in the region. Consumers faced number portability issues while switching to another service provider. The regulatory authority has handled this issue. · References Telecommunications market in bahrain one of the fastest growing. (2007). Arabia 2000, Noticiasdot.com | el diario del mundo digital Retrieved 6/3/2011, 2011, from http://www.noticiasdot.com/ >Bahraini telecom sector for "economic vision 2030" plan | viva bahrain Retrieved 6/3/2011, 2011, from http://vivabahrain.com/?p=177 Bahrain regulator to appoint consultant for study on number portability - business intelligence middle east - bi-me.com - news, analysis, reports Retrieved 6/3/2011, 2011, from http://www.bi-me.com/main.php?id=18264&t=1&c=14&cg=3 Bahrain: Investments in the region and customer focused strategy pay dividends for leading telecom operator. (2007). Middle East & North Africa Business Report, The (Jordan). taib100509ev.pdf (application/pdf object) Retrieved 6/3/2011, 2011, from http://www.menafn.com/updates/research_center/Bahrain/Equity_val/taib100509ev.pdf Research, a. M. (2011). Research and markets: Bahrain - telecoms, mobile and broadband - 2011. Business Wire (English), Read More