Neighbours watching as UAE opens up network

Gulf countries will be watching how the UAE opens up its telecommunications network to other operators using a technology that has yet to be employed in the region but has shown promise in modernising the European market. The telecommunications operator du will tap into the network of Etisalat, its older and larger UAE rival, by using a technology called "bitstream". The technology will give du limited access to Etisalat's network but it will not be able to control how much capacity or bandwidth du can obtain.

The UAE is an interesting case study for deploying bitstream because the technology is being introduced in a nearly saturated internet market, said Julian Herbert, a broadband analyst with Informa Telecoms and Media. There were 68.8 internet users per 100 residents of the UAE in April, figures from the Telecommunications Regulatory Authority show. "It's a very unusual situation," Mr Herbert said. "But it's a proven way of getting alternative operators interested in investing in broadband markets."

Other operators with similar internet use statistics are likely to be monitoring how the bitstream technology will fare when opening up an incumbent's network to other providers. In April, Bahrain's telecoms regulator gave its approval for other operators to begin field tests in accessing the network of Batelco, the country's principal telecoms operator, but that connection uses a different technology.

Elsewhere in the Gulf, incumbent operators have designed separate telecoms networks while rivals have opted to offer wireless broadband packages. Oman Telecommunications (Omantel) has had a monopoly on the country's broadband internet service, but its main rival, Nawras, won Oman's second fixed licence in November 2008. Nawras plans to invest 150 million rials (Dh1.43 billion) over the next two years to build its own broadband network, but it could also tap into Omantel's network to minimise costs.

Similarly in Qatar, the country's broadband service is currently offered by its dominant operator, Qatar Telecom. Vodafone Qatar, which launched a mobile service last year, was recently awarded a licence for a fixed-line service but has not announced how it plans to build its own network. Mr Herbert said that while bitstream reduced an incumbent's market share, the technology was a disadvantage for operators, preventing them from upgrading to faster infrastructure.

In the UK, bitstream has been used to liberalise the telecoms market since 2001. About 65 per cent of the country's internet users signed up to a service using the technology. In 2005, British Telecom (BT) was instructed to give other operators greater access to its network through a technology called "local-loop unbundling" (LLU). "It was used in the early days of the UK's broadband, and BT was allowed to present itself as a wholesale operator that supported competition in the UK," Mr Herbert said.

"But because the amount of investment required upfront was small, the number of players in the UK market was consolidated because more upfront investment is required to use LLU." [e-mail]