U.A.E. TRA Lifts Skype Ban

The U.A.E. Telecommunications Regulatory Authority (TRA) has announced that it will remove the ban on the VoIP service provider Skype, Middle East North Africa Financial Network reports. Skype has always been banned in the country, although there have been reports of some users, particularly international users, who have been able to access the service. Etisalat and du, the country's two telecommunications operators, route all internet traffic via "proxy servers" that filter the data transmission, when a VoIP packet is detected it distorts it, making services such as Skype unusable. The ban is primarily down to service providers' fears that Skype would massively reduce the revenues of du and Etisalat. Over the past year, the TRA had been doing much research into the status of the Skype service, the impact on the market and the impact on the customers; in its last review in March last year, the ban was maintained (see United Arab Emirates: 15 March 2010: U.A.E. Regulator Maintains Ban on Skype). However, prior to this, the TRA allowed network operators to provide VoIP services (see United Arab Emirates: 8 January 2010: U.A.E. TRA Approves VoIP Services). Under the VoIP approval, network operators were allowed to provide their own VoIP services to their customers. This was typically provided to enterprise customers; Etisalat, for example, provided a service where it would design and deploy a bespoke VoIP-based solution for businesses to outsource the management of their telephone network. The service offered benefits such as a lower total cost of ownership (TCO) and higher staff productivity.

Outlook and Implications

Skype's Impact on the U.A.E. Market: Skype has been a popular solution for many years now and heavily fuelled by international business and increased international travel, leading to the heightened need for people to stay in touch with others overseas. The main benefit of Skype is that it is free to use between two computers even in different countries. The service also offers video calling, which is of a good standard for the residential user. The ban on Skype services in the United Arab Emirates has caused much frustration, particularly as the majority of residents in the country are expats working for large multinational organisations and need to call home regularly. It is uncertain how many of these residents will benefit from the lifting of the Skype ban as it has been possible to access Skype through a Virtual Private Network (VPN). The VPN is legal in the country and bypasses the proxy servers, enabling the user to access blocked sites. Now that the ban has been lifted, the service will be universally accessible. Both du and Etisalat will have to reduce their international rates as users will very quickly switch to Skype services as soon as they are able.

The United Arab Emirates has some of the highest international call rates in the MENA region, even compared to other Gulf Cooperation Council (GCC) countries. For example, Qatar has cut the price of international calls by around 50% in less than a year after Vodafone entered the market. Batelco in Bahrain was forced to raise the prices of international calls as it priced its competitors out of the market. In the United Arab Emirates international callers would ask the person they were calling to call them back, as it was too expensive to call from there.

Currently the two national operators are in the process of carrying out tests to share each other's networks. Prior to this, the country's operators would only provide services in their own allocated parts of the country, which created monopolies in certain areas. The TRA will force both operators to share their networks by the end of the year, allowing them to compete on fixed-line and broadband services. The combination of increased competition amongst operators and the introduction of Skype will cause prices to come down significantly by the end of the year.