Bahrain is ranked as the 12th most liberalised economy in the world, reflecting its desire to attract international investment to achieve its Economic Vision 2030. Pursuant to its National Economic Strategy, Bahrain was one of the first Gulf States to liberalise its telecoms market. While Bahrain has the smallest telecoms market in the Middle East by population, its market is now one of the most competitive.
Bahrain Telecommunications Company BSC (Batelco) is the incumbent operator in Bahrain and is subject to substantial regulation based principally on dominance designations. The Telecommunications Regulatory Authority of Bahrain (TRA-B) takes a proactive and strict approach to enforcement of that regulation, informed by competition policy concerns. The TRA-B often leads regulatory trends in the Gulf and recently won an award as the most progressive regulator in South Asia, the Middle East, and North Africa.
Bahrain is currently finalising its third National Telecommunications Plan. The second National Plan set policy objectives to increase competition, investment, and broadband usage, promote convergence and protect consumer interests. The third National Plan is expected to continue this emphasis but with a greater investment, innovation and competition focus. The TRA-B sets strategic priorities to give effect to the National Plan. For 2012, the TRA-B’s priorities are to promote competition, protect consumer interests, and address technological change.
During the last 12 months, a number of regulatory developments have occurred in Bahrain that reflect current trends and ‘hot topics’ in the Gulf region and Middle East more generally:
- New fibre deployment: In July 2010, the Government announced that the Bahrain Electricity and Water Authority would deploy a Bahrain National Broadband Network (BNBN). The BNBN is independent of Batelco and will involve the supply of wholesale bitstream services to licensees on an open access basis. However, deployment of the BNBN has been delayed and hence is not as advanced as in other Gulf States. The timing for Bahrain’s rollout will likely be determined by the third National Plan.
- Greater infrastructure access: Bahrain has more liberalised markets than other Gulf States, so has greater scope to promote competition by facilitating access to legacy infrastructure. In mid-2011, the TRA-B mandated local loop unbundling (LLU) in Bahrain with the objective of stimulating greater broadband competition via competitive ADSL deployment. ‘Other Licensed Operators’ (OLOs) may now access Batelco’s copper access network at regulated prices on a non-discriminatory basis.
- Implementation of number portability: In July and October 2011 respectively, mobile and fixed number portability commenced in Bahrain. Number portability is intended to increase competition by reducing impediments to customer churn between different licensees. Bahrain is the first country in the Middle East and North Africa to implement fixed number portability (FNP) and one of the first in the Middle East to implement mobile number portability (MNP).
- Continued economic regulation: Bahrain imposes extensive wholesale and retail price regulation on Batelco, linked to dominance designations. As competition has evolved, those designations are being progressively removed. However, determination of regulated prices has been a controversial matter. In December 2011, the TRA-B issued its final position paper on a new ‘bottom up’ cost modelling framework. The TRA expects to have completed development of its cost models by mid-2012. The framework focuses on economic costs, rather than accounting costs, as a means of determining prices and is more consistent with international best practice.
- Enhanced consumer protection: In January 2012, the TRA-B issued Consumer Protection Guidelines. The Guidelines are unprecedented in the region in their commitment to addressing consumer rights, consumer choice and consumer communications.
During 2011, the TRA-B also conducted one of the Gulf’s first complex competition investigations, again symptomatic of Bahrain’s more liberalised markets. The TRA-B deregulated Batelco’s retail mobile tariffs in early 2010. A new mobile licensee, Viva, entered the market and offered promotional “90 per cent off” pricing for calls to selected international destinations. Batelco responded by reducing its own retail mobile tariffs. Following wholesale customer complaints, the TRA-B issued an emergency order and commenced investigating an alleged vertical price/margin squeeze. The TRA-B issued notices of its investigation to Batelco and Viva in 2011. A final decision is pending.