BAH Special Zones and Economic Cities (page 3 of 3)

"This model would be difficult to implement in most MENA countries, as it conflicts with market liberalization practices" explains El-Darwiche.

Exclusive

In the exclusive model, infrastructure operator and commercial service providers are selected by the developer and given exclusivity rights within the zone. This has similar challenges to those of the private model, but might be possible in markets that are still closed to competition.

Managed

Under this model, infrastructure development and operations are exclusive to an operator or a consortium of operators, which oversees a single network, but commercial service provision within the zone is open to all authorized operators. "Taking into account the sector liberalization approach adopted in many countries in the MENA region, the Managed model could be the right solution for balancing between regulators, developers, and operators objectives" commented El-Darwiche

Open

The open model allows any licensed network operator and service provider to compete for service users. Distinctions are not made between economic zones nor between zoned and non-zoned areas. "The open model is in line with market liberalization and fair competition. It encourages greater economic efficiencies than models based on exclusivity," El-Darwiche stated.

Lessons Learned for Stakeholders

"Economic zones will be a significant driver for telecom revenue growth over the next 10 years in the MENA region," stated Karim Sabbagh, a Vice President from Booz Allen Hamilton heading the firm's Communication & Technology practice in the Middle East. "In the GCC alone, economic zones are expected to generate more than 15 percent of telecom revenues by 2018" added Sabbagh.

Developers are instrumental in raising the expectations for ICT service standards and availability in the region.

Operators should take advantage of liberalization policies to capture the new customer bases and should be aware of risk to scope and scale of their operating and service provision activities.

Policymakers might have to relax restrictions on market-entry authorizations and reduce obligations such as geographical coverage requirements, while regulators should review the status of property owners in terms of access to potential new infrastructure installation, and any obligations in enabling access to a new service provision.

Economic zones or economic cities should not initially be looked at as warranting exemptions to liberalized telecommunications regulatory frameworks.

Exemptions would in fact run counter to the principles of economic zones, which include creating liberalized environments. "Regulators need to engage with developers and all licensed providers, ensuring national ICT policies are successful in zones and that various opportunities are available to meet the demands by market participants for advanced ICT infrastructure and services, without obstructing other policy objectives" concluded Sabbagh.

Booz Allen Hamilton's Jonathan Fiske, Bahjat El-Darwiche, Karim Sabbagh and Chady Smayra are the authors of "The Rise of Economic Cities in the MENA Region: A Telecommunications Perspective"
This recent study examines the key factors for enabling advanced telecommunications infrastructure and service provision within special zones and economic cities in the MENA region, while taking into account the differences between developers, existing telecommunications operators, sector regulators and policymakers' perspectives.