High speed broadband prices in Bahrain

"However price proposals must not be anti-competitive. In approving prices TRA must ensure the promotion of sustainable competition for the long term benefit of the Kingdom and the compliance with legal and regulatory obligations," he added.

He went on to express deep concern at the approach taken by Batelco to try to circumvent the regulatory process and to mislead the general public. More Specifically Mr Horne indicated that:
• Batelco has been in a position to offer higher speed broadband services for more than a year and has chosen not to do so; Why?
• by international standards the prices proposed by Batelco for higher speed services (speeds in excess of 2Mb) where competition has yet to be developed are excessive
• where competition exists in the lower speeds (2Mb and below) the proposed retail prices are below those sustainable in the market given the current equivalent wholesale service charges
• no cost based wholesale products have been proposed by Batelco for the higher speed services which would allow companies that do have an access infrastructure to compete.
Mr Horne continued by stating that Batelco could have resolved these issues by introducing cost based higher speed wholesale services in June last year but chose not to do so. TRA still awaits appropriate proposals from Batelco.
Note to editors.

The basis of the licensing and regulatory framework in Bahrain is the Telecommunications Law which establishes principles of oversight for conduct within the sector.

Batelco as the incumbent operator determined dominant in the provisions of some services within Bahrain is subject to certain regulatory obligations. These are designed to safeguard against anti-competitive practises and to ensure that the actions of Batelco are in the interest of end users and compatible with development of sustainable competition.

By virtue of the Law and its licenses Batelco is required to submit its proposed tariffs to TRA for approval. Whilst the grounds for approval are clear, TRA has over the last 18 months invested time to work with Batelco to assist them to better understand their compliance requirements.

To be approved retail tariffs must as per the applicable legal framework be fair, reasonable and based on forward looking costs, contain complete calculations, be free from mathematical error, be fully documented and do not violate any other provision of the licence, any regulation on tariff controls or any applicable law.

The Broadband market is crucial to the development of the communications sector in Bahrain and has wider implications for the development of the Bahrain economy. Whilst Batelco has had the ability to offer higher speed packages at lower tariffs for a considerable period of time it has chosen to wait and see the introduction of broadband services by Zain and Mena Telecom.

As a consequence Batelco has deprived the general public from receiving the benefits of the capabilities of Batelco's network and prevented other operators such as Lightspeed from offering higher speed services.

In May 2008 Batelco requested tariff approval for higher speed broadband services to business users. TRA was at that time concerned about the competitive issues related to this tariff and approved the Batelco request upon fulfilment of certain conditions, specifically the provision of equivalent wholesale products to allow the development of competition by operators which do not have their own access network (i.e. the copper connection to the premises over which the service is run).TRA were also concerned that the tariffs proposed by Batelco were extremely high by international standards.

In December 2008, cognisant of the requirement to provide wholesale inputs, Batelco eventually proposed to introduce higher speed broadband tariffs for residential customers. However, they chose not to take into account the previous advice and conditions relating to the approval given for Business Broadband tariffs in June 2008. The concerns of TRA with respect to this particular request are numerous including anti-competitive pricing for the reduced price lower speed products and a lack of wholesale products at the higher speeds effectively preventing competition from developing for the long term interest of consumers.

Once again TRA had concerns that the prices proposed for higher speed packages were significantly above international benchmarks. Despite these shortcomings TRA chose to work with Batelco to correct the inadequacies and lack of regulatory and legal compliance in order to facilitate a more-timely introduction of these services.