Who Is Holding Up 3G?
On May 28 2013, Agence Ecofin reported that the delay on tenders for 3G licences in Algeria is due to incumbent broadband provider Algérie Télécom's fear of competition. Previously, it has been widely assumed that the Algerian regulator had been delaying issuing 3G licences until an agreement can be reached for the government buyout of mobile operator Djezzy from Russia-based VimpelCom. As talks have come to a standstill, though, a new perspective has come to light. BMI maintains the view that delays in the launch of 3G networks and government influence over the regulator are curbing the Algerian mobile market's growth potential.
Agence Ecofin reports that Algérie Télécom fears the launch of 3G mobile broadband will dry up demand for fixed ADSL broadband services, which is the company's main source of revenue. According to the news source, it has 1.6mn broadband subscribers and employs 26,000 people. The Algerian regulator faces the difficult decision of allowing the country to lag ever further behind its neighbours in the development of advanced broadband technology or forcing the largest ICT employer to innovate and likely cut jobs.
BMI believes that issuing 3G licences is the only viable option. It is in the best interest of mobile operators and consumers and will serve as a necessary catalyst for innovation for Algérie Télécom. As technology and industry needs continue to develop, depending on retail fixed line broadband services will become a less and less sustainable business model. The incumbent could look to the UAE's du and Etisalat as examples of how to adapt: it could focus on the corporate segment, move towards the wholesale of broadband services and diversify towards other IT services such as cloud computing.
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