The Benefits Of A Regulator...If It Ever Comes

On June 10 2013, less than a week before a court ruling on an amendment of electoral law that could prematurely shut down Kuwait's National Assembly, the house voted unanimously in favour of a law to establish an independent telecommunications regulatory authority. Kuwait is the only country in the GCC that does not yet have a separate telecoms regulatory body, and BMI believes this is a crucial step for the development of the country's telecoms sector, especially in terms of encouraging investment in the country's underperforming fixed broadband segment.

Although Kuwait first announced its intention to establish a telecoms regulator in 2001, until now there had been little news on the subject. According to the Kuwait Times, the regulator will be responsible for organising the mobile, fixed-line and internet sectors. The government has not revealed any more details on the commission's powers and responsibilities.

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Since 1962, when it was first established, the Ministry of Communications (MoC) has been responsible for regulating the telecommunications sector in Kuwait. While the MoC has allowed competition to develop in the mobile and broadband sectors, as the owner of the national fixed-line operator, Kuwait Public Telecoms (KPT), it has maintained a monopoly in the fixed-line sector. This has had a negative impact on the development of advanced fibre-optic infrastructure in Kuwait's fixed-line and fixed broadband sectors.

In other GCC countries, regulators retain strong ties with the state and governments hold large stakes in incumbent operators. However, GCC regulators have opened up fixed-line sectors to competition, which has encouraged investment in advanced fixed-line and broadband infrastructure in those countries. Qatar, UAE, Saudi Arabia, Bahrain and Oman's telecoms operators have been investing heavily in fibre to the home (FTTH) infrastructure since 2010. This has helped slow the decline of the fixed-line sector and allowed internet service providers to diversify into high value broadband services such as IPTV.

In contrast, limits imposed by the MoC on Kuwait's fixed-line sector have stifled investment in fibre-optic cabling. Although the MoC signed an agreement with Saudi Arabia's Mobily to connect Kuwait to the operator's fibre-optic network in 2012, this is a far cry from the country-wide fibre-optic networks that have been built in other GCC countries.

While BMI notes that a separate and, possibly, independent telecoms regulator in Kuwait would maintain close ties with the MoC, it would likely have the power to open up Kuwait's fixed line sector and enable it to attract investment and catch up with GCC standards of fibre connectivity. However, given the lack of progress on setting up a regulator in the last decade, we do not expect the new law to be implemented anytime soon.

This article is tagged to:
Sector: Telecommunications
Geography: Kuwait, United Arab Emirates, Oman, Qatar, Saudi Arabia

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