Victory for fair competition

Qtel pushed the definition of brand licencing agreements to the extreme, and may pay a hefty price

Tags: QatarQatar TelecomVodafone QatarictQATAR (www.ict.gov.qa)
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Victory for fair competition ictQatar's ruling concerning Qtel's launch of its Virgin Mobile service is a victory for fair competition.
By  Roger Field Published  July 28, 2010

Just two months after launching Virgin Mobile in Qatar under a brand licencing deal, Qtel has fallen foul of the country's telecom regulator, ictQatar.

To most industry insiders who have followed the case closely, the outcome of Qtel's attempt to circumnavigate some important telecom regulations in the way it launched the Virgin Mobile brand was not too surprising.

Vodafone Qatar, which paid $2.1 billion for the second mobile licence in Qatar in 2007, was understandably enraged when Virgin Mobile launched services in the country in May, boasting its own website, shops, and mobile packages.

The way that Qtel presented Virgin Mobile to the media and the general public was also undoubtedly ambiguous, and led to immediate speculation about whether it was an MVNO of some kind.

Soon after, Grahame Maher, Vodafone Qatar's CEO, said that his company planned to take legal action against Qtel and ictQatar. And ictQatar in turn said it would investigate whether Qtel was operating within the country's telecoms laws.

ictQatar published its conclusions in late July, and its verdict appeared to side with Vodafone, although both operators claimed victory.

The regulator's findings were balanced and fair, concluding that Virgin Mobile Qatar was a brand licencing agreement and not an MVNO or third operator. The agreement itself breached no rules, but the way it was launched, and the way Qtel presented the Virgin Mobile brand to the general public contravened three telecoms laws.

"The potential for confusion was, and remains, high," ictQatar said in a statement.
ictQatar further ruled that Qtel must "pay a penalty to the State of Qatar for its unlawful actions" and added that it had referred the case to the Office of the Attorney General for assessment of the appropriate fine.

While the outcome strengthened Vodafone's case for taking legal action against Qtel, the incumbent also declared victory, stating that ictQatar had "refuted Vodafone Qatar's misleading claims" that Virgin Mobile Qatar was an illegal mobile service provider.

Certainly, both Vodafone Qatar and Qtel had sufficient room for manoeuvre to declare a victory of sorts, but Qtel, which now stands a good chance of being hit by a big fine, appeared to be clutching at straws. The operator's claim that there were no clear guidelines about brand licencing agreements when it launched Virgin Mobile Qatar did not fully stack up, especially in the light that it broke a number of existing telecom regulations anyway.

It seems far more likely that Qtel tried to use the lack of regulations around brand licencing agreements as an excuse to stretch the definition of such agreements to the extreme, and Qtel even admitted that "it could and should have been more proactively open about the concept behind the launch" of the service.

Qtel will now have to make some significant changes to the way Virgin Mobile Qatar appears, including changing its web address to include the Qtel name, and the removal of some mobile packages.

While it will take some time to see just how much impact these changes have, it was reassuring to see ictQatar defend the country's telecoms regulations, especially when such a big investment is at stake.

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