Editorial in Telecom Finance Magazine April 2010
The growth of the Middle Eastern telecommunications sector over the last 10 years has been no accident. Early trails into Africa, Asia and then Europe blazed by Orascom, Wataniya were followed by Etisalat and others. Zain may recently have seen fit to withdraw into its Middle Eastern Heartland with the sale of its African unit – at a substantial multiple of the price it paid – but this is an exception, and the Middle East’s network operators continue to have a strong and growing presence in Africa, Asia and Europe. But while business cases and balance sheets will generally drive commercial ventures, the success of the Middle Eastern operators has been supported by another important pillar: sustained government support.
Unique policy issues
Regulating wireless services in the Middle East – and managing the spectrum which forms the lifeblood of such services – falls under the remit of the Arab Spectrum Management Group or ASMG. Like any other area, governments and regulators in the Middle East are met with their own set of challenges in trying to promote growth in the telecoms sector. These, including sharp demand in internet and broadband take off, low fixed-line penetration and the need to negotiate with neighbours to coordinate the use of wireless services, are problems in most countries in the world.
However, the Middle East has a number of challenges which set it apart. The sharp contrast between urban and deserted areas, for example, set discrete problems distinctive to those caused by the slow drift from urban through semi-rural to rural geographies that is true in many other regions. The Middle East has huge variation in terms of telecoms development, and at the same time sits at the crossroads between three other continents, further increasing diversity. By contrast, Europe, even outside of the EU, is used to considerable uniformity.
The ASMG thus has two complex roles. Firstly it must coordinate across the MENA region and secondly it must represent this region – and its distinct needs – to the rest of the world. Historically, the ASMG has been a tight-knitted unit, aware of its members’ interests and at odds with a need to make sure they are represented as well as any other region. The policies of the region have therefore been characterised by what some have called an “insular approach,” one wary of betraying family secrets to other countries and regions, and reluctant to bend to outside pressure. Where other regional meetings would be open to international observers and industry, the ASMG would hold its meetings behind closed doors. Negotiations were kept private. The outside world, in passed times, was kept out.
New agenda softens stance: UAE leads the way
Times have changed. A slow liberalisation of the working practice of the ASMG was, perhaps, inevitable over time. However, the group has been able to benefit far more quickly than if old ways had simply been allowed to thaw out. This is, in part, because the global expansion of the region’s mobile operators has given it a crucible of expertise on global best-practice from which the ASMG is able to cherry-pick.
What is more, the multi-national celcos, which are headquartered in the Middle East, have not tended to expand into the liberalised regimes of Western Europe, but have moved into some of the tougher markets in Africa and Asia. They have needed to encourage regulation for the rapid promotion of competition against monopolies, ensure that their vital spectrum is protected from encroaching services and face down unhelpful calls for unregulated openness. The Middle East’s mobile operators are battle-hardened experts in the vicissitudes of telecoms policy making.
The reaction of the ASMG to this has been entirely positive. Over recent meetings, its doors have opened and it has embodied a collaborative approach. By listening to both its own multinational operators and resident experts alongside professionals from non-Arab governments and industry, it has been able to take on the best pieces of outside experience. This new approach has been championed in part by the current ASMG chairman, Tariq Al Awadhi, of the UAE’s Telecommunications Regulatory Authority (TRA). Awadhi, whose full-time job is as a Director at the TRA, has long been a keen follower of international trends and a significant player on the international stage. He has represented his country for many years at the UN agency charged with communications – the ITU – and has used his substantial diplomatic know-how to ensure a collaborative approach has been taken between the ASMG and its sister organisations such as CEPT, CITEL, and others.
The ASMG’s partnership with industry, and its new-found commitment to an open-door policy, have been vital to broadening its scope, and the increased liberalisation of the telecoms sectors in many areas, including spectrum management, licensing of broadband services, and even the development of national broadband policies such as those emerging in Oman, Jordan, and Qatar. This liberalisation has seen intense development of the telecoms sector in a number of instances, and especially the rapidly increasing proliferation of broadband in the region. While Qtel, Orascom and Etisalat continue to seek out the best assets to cherry-pick from the market, their national regulators have been able to do the same with policy and regulation. This, above all, has led to a renewed optimism about the growth prospects of the Middle East, for the present, and the medium-term future.
