Bahrain’s operators are being hampered from competing with OTT rivals, partly because they are limited by regulation, according to a report from the country’s Telecommunications Regulatory Authority
In a report jointly prepared with Detecon Consulting, the regulator noted “if competition was working, the telcos would change their tariff plans in line with market demand”. The fact this is not happening demonstrates competition is “dysfunctional”.
“The research shows that this is a situation found throughout the world and for which there is not yet a patent solution – although the root cause apparently lies in the combination of flat rate tariffs based on business plan assumptions that no longer hold true in combination with apparently non-sustainable competition from OTT players and regulatory obligations which make it impossible for the telcos to react freely to the commercial changes demanded of them,” said the strongly worded conclusion to the report.
“It must be a central regulatory task to analyse this dysfunctionality thoroughly and to introduce measures to eradicate the problem,” it concludes.
However there is a tendency, said the regulator, to label OTT players as “free riders”. This is “not entirely accurate”. Operators are paid for data transport, it points out, albeit by a flat rate from the user.
But the loss-making models of OTT players puts pressure on operators’ margins. One model is to encourage alternative business models for OTT firms, such as working with local ISPs, an approach backed in the UAE, as a means of bringing more regulatory control
Nevertheless the Bahrain regulator argues that OTT applications should remain licence-free. It said the “destructive nature” of their competition will reduce as investor pressure forces them to purse profits.
“A ban would destroy competition and limit innovation – in a functional market it should absolutely not be necessary”, it said.
The three mobile operators in Bahrain are Batelco, Viva and Zain. Many of the report’s conclusions also apply to the country’s fixed market.