Regulation in Bahrain is preventing operators from competing with OTT providers, causing them to lose out on revenue, according to the country’s regulator.
The Bahraini Telecommunications Regulatory Authority has stated that “if competition was working, the telcos would change their tariff plans in line with market demand”, and goes on to note that since operators are unable to do so, competition is “dysfunctional”.
The regulator’s report, conducted with Detecon Consulting, described Bahrain’s situation as one “found throughout the world and for which there is not yet a patent solution – although the root cause apparently lies in the combination of flat rate tariffs based on business plan assumptions that no longer hold true in combination with apparently non-sustainable competition from OTT players and regulatory obligations which make it impossible for the telcos to react freely to the commercial changes demanded of them.”
It concluded that: “It must be a central regulatory task to analyse this dysfunctionality thoroughly and to introduce measures to eradicate the problem.”
The regulator also highlights that the perception of OTT providers as “free riders” is “not entirely accurate”, noting that they receive a flat rate payment for data transport from the consumer. However, the fact that their business models are currently loss-making means that operators are feeling the strain on their margins.
This could be addressed by regulation that incentivised the exploration of new OTT business models, possibly via partnerships with local providers. This would also grant the regulator more control over OTT firms.
Despite the need for greater control over OTT providers, the regulator does not believe that they should require licences, noting that their “destructive” effect on operator revenues cannot continue indefinitely as investors will begin to demand that they turn a profit. “A ban would destroy competition and limit innovation – in a functional market it should absolutely not be necessary”, it said.
