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Executive SummaryThe telecoms industry in the Middle East region is slowly but surely shedding its status as an underdeveloped, overprotected or closed market. The region is a jigsaw of countries at various stages of economic development and market liberalisation.This level of development and liberalisation is reflected in the telecom industry of countries in the region, ranging from Qatar’s total monopoly of the telecoms market until 2013, to Israel’s total market liberalisation, to conservative Iran’s shaky attempts at market reform to cater for the massive unmet demand for mobile services. However the rate of change, particularly in market liberalisation, is gaining momentum, driven by a combination of factors: World Trade Organisation (WTO) and other international body requirements, the desire to improve the quality of services and the desire to improve the standard of living through economic investment. The initial wave of liberalisation was in the mobile market. The result of this is evident today as there are 11 countries with two or more mobile operators. The first wave was sometimes either accompanied or followed by liberalisation of data markets such as those in Lebanon and Saudi Arabia. The third and final wave, liberalisation of fixed-line voice markets has already swept over Israel, Bahrain and Jordan and will soon occur in Saudi Arabia.Bahrain and Jordan have recently created a regulatory environment conducive to competition. With the exception of mobile voice, both countries have opened all sectors of the market to unlimited competition. New operators will enter the markets and, like in most countries that have just opened their markets, go for the most profitable sectors such as international voice and data. Saudi Arabia is set to follow down the path taken by Israel, Bahrain and Jordan soon when it announced plans to liberalise fixed-voice markets two years earlier than anticipated.Apart from regulatory developments, the upcoming increase in wholesale international bandwidth will have a major impact on affordability of services in the region. SEA-ME-WE 4 and the FLAG Falcon cable, both set to go live in late-2005, have landing stations in a number of Middle East countries. The sudden influx of wholesale international bandwidth should lead to a drop in wholesale prices and result in cheaper prices for end-user services. |