High cost of phone calls

Customers in the Arab world pay five times more for international phone calls than their counterparts in western economies. The figure, released in a report commissioned by the Arab Regulators Network (AREGNET), showed UAE customers pay three times higher than the western average, and more than 20 times as much as users in Germany. But the report also underlined the positive effects of competition in other segments of the telecommunications industry. In the mobile market, which has been carefully opened to competition across the region in the past decade, prices are now approaching the western average.

For broadband internet, to which less than 20 per cent of the Arab world currently subscribes, prices are almost five times higher than the European average, with UAE customers paying almost three times as much. Unlike mobile and local calls, both areas where Arab customers pay prices vaguely in line with the western average, internet access and international calling depend heavily on connections to the outside world. These connections, typically via undersea fibre-optic cable, remain in short supply in the region and are often monopolised by state-owned incumbent operators.

Alan Horne, the president of AREGNET, said the ability to connect cost effectively to the outside world represented a cornerstone of economic competitiveness that must be addressed by regulators and network operators in the region. "In a world where nations compete to attract businesses to promote economic development, it is paramount to offer competitively priced services," said Mr Horne, who is also the head of Bahrain's Telecommunications Regulatory Authority. "This study enables us to know how we compare. In particular, it highlights that prices for broadband services, which provide high-speed internet access, have remained unreasonably high during the study period."

While high prices may boost the bottom line at the region's telecommunications companies, they are causing consumers to have little affinity or loyalty to their providers, said Syed Abdul Karim, the strategy director of Luciola DDB, a telecommunications branding consultancy. That will hurt many companies in the long run, he said. "There's obviously some mistrust building there, because as the prices drop, people realise that the premiums were not justified," Mr Karim said. "We're at the stage now where consumers just say 'who will give me the lowest price', which is not a great place to be.

"There is a need to invest in greater brand value, because price cutting reaches a point when you can't take it further. And then, the brand that has more affinity will pull the consumers." @Email:[e-mail]