du relies on network sharing to compete

Firm cannot yet offer broadband service in most parts of country.

Competition in the broadband internet market will emerge only when the UAE's two telecommunications companies can share each other's networks, du said this week. The country's second telecom operator has made value for money and price-based competition a hallmark of its offerings since its launch in early 2007. But it remains unable to offer broadband internet or landline telephone services outside of a handful of property developments in Dubai, where it owns the physical telephone network.

"It is going to take a little more time to extend our fixed line services like internet and data," said Farid Faraidooni, du's executive vice president for commercial operations. "We're not going to dig the streets of Abu Dhabi or Sharjah. We are awaiting further regulations to see how we can expand into those areas without duplicating infrastructure." As a byproduct of 30 years as the country's sole telecommunications company, Etisalat owns the national telephone network, based on both copper wire and new fibre-optic cables.

The two companies are working with the Telecommunications Regulatory Authority to create a system in which each can serve customers through the other's network. All three parties have publicly committed to the concept, but it remains unclear when the regulations will be announced and implemented. "The catalyst for competition on internet and broadband prices is being able to provide broadband services in the rest of the UAE," Mr Faraidooni said. "Once that happens, once the regulations come out and are implemented, that's when you will see a catalyst to drive prices down."

The price of broadband internet is a frequent complaint among UAE telecommunications customers, with individuals and businesses often singling it out as a major shortcoming of the telecommunications market. A report commissioned last year by the telecommunications regulator in Bahrain showed that UAE customers pay more than double the average European price for internet access. A survey of UAE internet users, by the local firm Real Opinions, showed more than half of all respondents did not believe they were getting value for money.

Mr Faraidooni said du was focusing on offering better value in the markets in which it can compete. This week, it launched a package targeting business users that incorporates a number of firsts for the market, including a fixed rate for all international calling and roaming. It also lowered the monthly cost of its BlackBerry mobile service to almost half the price of its competitor. Mr Faraidooni said the service was now "unbeatable", and would help companies to attract business customers, even though they cannot subscribe for bundled packages that include broadband internet.

"They won't restrict themselves from receiving these benefits by saying 'we only want to deal with one company'," he said. "We have not experienced that as an obstacle." [e-mail]