The UAE's long and winding road to VoIP

When the UAE's Telecom Regulatory Authority held a press conference last month to unveil a change in its VoIP policy, many hoped for a relaxation of the rules

Tags: Emirates Integrated Telecommunications Company Etisalat International - UAEUnited Arab Emirates
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By  George Bevir Published  April 6, 2010

Skype has been hard at work lobbying in the Middle East, with a team of senior executives visiting the UAE for a round of interviews that made sure the subject of VoIP forced its way back to the top of the telecoms news agenda.

So when the UAE's Telecom Regulatory Authority (TRA) announced last month it would be holding a press conference to unveil a change in its regulation of voice over internet policy, it seemed for a brief moment as though Skype's efforts might have resulted in a breakthrough.

But after what one journalist described as a "confusing" round of announcements, it transpired that any consumers in the UAE that were hoping for easier access to cheaper calls over the internet to fixed lines and mobiles around the world would have to go on hoping.

More information on the announcement can be found here, but basically, companies that want to offer telecom services must be licensed by the TRA. Otherwise, these ‘outsiders' will have to enter into a partnership with one of the four existing licensees (Etisalat and Du, and two satellite providers).

Residents of the UAE already use VoIP software for free PC to PC calls, but Skype will want a slice of the more lucrative international calls market: Skype out and Skype in calls, which it charges for.

Given the glacial pace at which the UAE's TRA moves, it is unlikely to update or amend its position on VoIP any time soon, so the only way that Skype will get unrestricted access to the residents of the UAE is if it teams up with Etisalat or Du.

A few months ago, Etisalat chairman Mohammed Omran was asked when Etisalat would allow unfettered access to VoIP, and he said the operator first needed to find a way to monetise it (even though Etisalat and Du already charge hefty amounts for access to the internet, with both telcos charging an identical US$97 per month for 2Mbps).

One option for the UAE's operators could be to team up with Skype and bundle VoIP across fixed line and mobile. Indeed, Skype is not averse to striking deals with telecom operators, as it demonstrated a few years ago when it teamed up with UK network 3, and more recently when it announced a deal with US operator Verizon.

By the US telco's reasoning, while it may lose a little revenue from long distance calls, it expects an overall gain from an increase in the amount of customers signing up for data packages for their mobiles.

This could provide the monetisation that Omran spoke of. But with such a large proportion of the UAE population comprised of expats or migrant workers, there is a large pool of people calling friends and family abroad that generates a significant chunk of revenue. The Etisalat chairman has said that local calls are heavily subsidised by international calls, so for UAE operators, a major slashing of international calling charges would demand a more radical overhaul of their businesses than for operators in many other parts of the world.

Although a partnership would result in a dilution of revenue, there would be a benefit in terms of brand recognition. Skype is the firm that most consumers associate with internet calls, having reached the lofty position occupied by a handful of other brands, such as Hoover, or Google, where the brand name has become part of the common vernacular and a verb in its own right.

It remains to be seen if Skype will strike any kind of deal with the UAE's operators, but it seems unlikely that Etisalat or Du would want to split any revenue with an outside party when they could potentially launch their own VoIP service and keep the lot. Agreeing retail tariffs could be a problem; Skype offers extremely low cost international calls of a few cents a minute, and there is no reason to assume that just because the calls would be made over the net that Etisalat or Du would want to do the same.

The UAE has the highest mobile penetration rate in the world. Etisalat's project to connect the all of the country's homes to a fibre optic network a truly groundbreaking undertaking. And Du's video on demand service, heavily marketed around Dubai, is one of the region's most advanced home entertainment offerings.

Set against that background of progress and innovation, it makes the country's attitude towards VoIP seem even more archaic.  

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