Focus on infrastructure sharing

Soon after Bahrain's Telecommunications Regulatory Authority (TRA) imposed its biggest ever fine on Batelco for engaging in anti-competitive behaviour, Batelco hit back saying it had at all times complied with its legal obligations regarding access to the kingdom's international landing station.

TRA alleges that Batelco has refused to allow other licensed operators (OLOs) to access Reliance Globalcom's (formerly FLAG Telecom) submarine landing station in their building, which it says is unacceptable.

Alan Horne, TRA's general director, says the fine is in the 'single millions of dinars', and is the biggest ever issued by the country's telecom regulator.

"TRA had hoped that Batelco would honour its obligations to provide the services necessary to allow other licensed operators direct access to Flag. Unfortunately this has not happened," Horne says. "Having considered the gravity of the situation TRA has decided to impose a substantial fine on Batelco which, should Batelco further delay the provision of these services, will increase. It should also be stated that the fine will be decreased if through Batelco's swift actions the services are provided in advance of the ordered date," he says.

"The country needs superhighways on and off the island, and those superhighways are very important to the economy. Anything that constrains those artificially is totally unacceptable. Overnight, other operators will be able to gain direct access to that international pipe, and that opens up international access to competition. International capacity coming on to the island is only 50 per cent used. At the same time, operators are struggling to buy international capacity because of the price," Horne says.

Batelco says the TRA had approved in 2004 a 15-year contract the company signed with the operator of the landing station, as a result of which the company invested $50 million in the infrastructure.

"Now the TRA is seeking to arbitrarily change a commercial contract and mandate new arrangements in an unjustified manner," Batelco chairman Shaikh Hamad bin Abdulla Al Khalifa says.

TRA says the fine could increase or decrease depending on Batelco's response to an order to provide access to other operators, for which it has 30 days.

Batelco also says it was in talks with two consortia over additional international cables but that the draft order issued by TRA and the fine were no incentive to go ahead with these investments.

Telecom operators and their regulators around the world have been waging pitched battles as regulators, as a result of market liberalisation, provide new players with access to an incumbents' infrastructure.

But there is no denying the fact that telecom liberalisation has been having particularly marked effects in developing countries.

One study of six emerging markets by consultants Deloitte estimates that a 10 per cent increase in mobile penetration can boost GDP growth rates by 1.2 percentage points.

Rapidly growing mobile phone use fostered by liberalisation as new companies, domestic and foreign, enter the market creates jobs and rising revenues for telecom companies.

That in turn provides tax revenues for governments, raises the incomes of other businesses through enhanced productivity and creates yet more jobs and revenues as the telecom companies and other businesses buy more services.

Recent average annual growth of mobile subscribers in Ukraine of 70 per cent has boosted productivity by nine per cent a year.

The example of Ukraine can be mirrored by dozens of developing and transition economies around the world.

Access to mobile phones has empowered poor people in developing countries, and boosted their incomes.

Farmers can find the best price at different markets before they set off, and are not dependent on middlemen, for example.

And yet the market is far from perfect. Companies still face restrictions on access or ownership in many countries.

At the same time, operators say existing rules on liberalisation in telecom need to be enforced and broadened to ensure continuing growth in the sector as it readies for billions of dollars of investment in next-generation networks.

That transformation will simply not occur without a global move to removing the remaining barriers to foreign investment in trade in telecommunications.

And as telecoms converge ever faster with information technology, media and content, it must wrestle with new issues such as free speech, hate speech, pornography, public safety and national security.

The liberalisation of Bahrain's telecom industry can enable economic growth across various sectors, but its success depends on regulatory policies that are conducive to the development of competition.

One element of such a policy would be the creation of regulatory and economic incentives that encourage the sharing of infrastructure among telecom companies as a key lever to foster competition and optimise investments.

Operators may perceive the economic benefits and adopt a collaborative approach autonomously; however, a clear policy, a commercially friendly price-regulation mechanism, and tailored regulatory safeguards may be necessary to successful infrastructure sharing.

These measures are especially necessary now. While liberalised markets with effective regulatory structures have traditionally observed several forms of infrastructure sharing, including co-location and national roaming, more advanced forms are emerging.

They involve various passive and active network components, provide significant revenue-generation opportunities for incumbent operators, and facilitate the development of virtual operators and next-generation service providers. International experience suggests that favourable regulation and economic incentives have enabled such developments in infrastructure sharing.