Until 2006 a majority owned government company Etisalat had a monopoly on the telecom infrastructure in the country. Although a monopoly Etisalat has been fairly progressive in the implementation of new technology, and especially so compared to most other providers in the Middle East. Penetration of new technology has been realized at a fairly progressive pace. In 2006 the government began the process of liberalization and a second telecom provider du entered the market. It is really to early in April 2007, to make an assessment of how successfully to telecommunications providers will operate in the market.
Founded on August 30, 1976, the Emirates Telecommunications Corporation, know now as Etisalat provides telecommunication services to the United Arab Emirates, and is one of the leading service providers in the Middle East. Etisalat is owned 60% by the EAU government.
Historically Etisalat has led the way in Telecommunications Development in the region.
- 1982 – First Telecom operator in the region to introduce a mobile phone
- 1984 – One of the earliest adaptors of GSM technology in the world
- 1995 – Began Internet service
- 2003 – Introduced 3G network and MMS
- 2006 – Introduced the BlackBerry service
Currently Etisalat is in the process of upgrading their entire fixed line service architecture to a Next Generation Network, allowing the company to offer voice, video and data over a single source connect. The migration is slated to be completed by the end of 2007. (9)
Mobile subscribers exceeded 4.5 million by the end of 2005, up 23% from 2004. This represents penetration of nearly 100%. Internet and broadband penetration also witnessed huge growth during 2005, with penetration at almost 51%. Etisalat has concluded roaming agreements with over 265 operators, and even Etisalat’s prepaid mobile subscribers can roam in many of these networks. (10)
The table below provides more information from the World Bank about the Telecom Infrastructure in the country. In the chart infrastructure rankings are compared again Israel one of the leaders in the Middle East region in term of telecommunications infrastructure.
Variable |
United Arab Emirates |
Israel |
||
(Group: All) |
(Group: All) |
|||
actual |
Normalized |
actual |
normalized |
|
Total Telephones per 1,000 People, 2004 |
1127.5 |
7.27 |
1498.6 |
9.09 |
Main Telephone Lines per 1000 People, 2004 |
274.9 |
6.67 |
441.3 |
7.95 |
Mobile Phones per 1,000 People, 2004 |
852.6 |
7.95 |
1057.3 |
9.7 |
Computers per 1,000 People, 2004 |
115.7 |
6.03 |
741 |
9.52 |
International Internet Bandwidth (bits per person), 2004 |
351.2 |
6.52 |
2500.9 |
8.09 |
Internet Users per 1,000 People, 2004 |
320.6 |
7.35 |
470.7 |
8.18 |
Price Basket for Internet (US$ per month), 2003 |
13.1 |
8.56 |
29.8 |
3.41 |
Extent of Business Internet Use (1-7), 2006 |
4.1 |
6.26 |
5.4 |
8.7 |
ICT Expenditure as % of GDP, 2005" |
3.58 |
1.62 |
8.27 |
8.51 |
(4)
Until 2006 Etisalat had a monopoly over ICT services in the EAU. Several years earlier Federal Law by Decree No. 3 of 2003 called for Telecom reform and liberalization. In May 2005, the UAE Telecommunications Supreme Committee, the entity empowered by the UAE government to oversee the telecommunications sector, issued a decision awarding a second license to a new telecommunications company allowing it to operate as a full service provider of telecom services in the UAE, offering video, video and data services to individuals and businesses. This was a first step in the liberalization of the telecommunication infrastructure market in the UAE. There is a central Telecommunications Regulatory Authority (TRA). That oversees the telecommunications industry in the country. (11)
The new Telecom company which was formed in 2006 to compete against Etisalat is called du (http://www.du.ae/). During 2006 the company was getting it’s operations in place and by December 27, 2006, du and Etisalat signed an Interconnection agreement allowing their networks to co-exist and communicate with each other. (12)
Given that Etisalat's market penetration is very high across the country for du to survive it will need to take market share away from Etisalat. To combat this Etisalat is pressing hard to complete their Next Generation Network, and position its service offerings to technology savvy buyers who seek the latest technology. Etisalat is also continuing to diversify outside of the UAE through acquisitions and new telecom ventures in other countries in the Middle East and Africa.
As part of the process of liberalization, the TRA has allowed for the entry of a new telecommunications company in the UAE. The companies actual name is Emirates Integrated Telecommunications Company (EITC) but it is marketing itself as "du". The new company is 40% owned by the UAE government, 20% owned by Mubadala Development, and 20% owned by the Emirates Telecommunications and Technology Ltd a new subsidiary of Dubai Technology & Commerce and Free Zone Authority (TECOM). The remaining 20% of the company is owned through publicly traded shares on the Dubai Financial Market (DFM)
du has set itself the target of acquiring 30 per cent of the UAE market within three years. The company has already acquired the assets, resources and customer base of DIC telecom (providing telecommunications services to media free zones and The Palm, a new man made island) and Sama Communications Company FZ LLC (a vertically integrated
satellite services provider) and has linked to FLAG Telecom’s FALCON submarine cable system, which stretches from Suez to Mumbai and links to the global FLAG (Fibre Link Around the
Globe) submarine cable. (FLAG accepted handover of the FALCON segments from UAE to Oman and from UAE to Qatar and UAE to Bahrain in March 2006.) (13)
