The TRA has said it will leave any decision on whether to ban Skype up to the country's two operators, Etisalat and du, rather than enforcing the rule itself.
Regulator loosens grip on Skype ban
The telecommunications regulator will no longer enforce the ban on Skype in a sign that the UAE could be shifting its stance on internet telephone services.
Instead, the Telecommunications Regulatory Authority (TRA) will leave any such decision up to the country's two operators, Etisalat and du.
The TRA said that while it was considered an offence to use the internet network provided by Etisalat or du to make and receive voice calls by Skype, it would not instruct operators to block VoIP technology
"The licensees [Etisalat and du] will have the right to block [VoIP] traffic," the regulator said. "The TRA does not mandate the licensees to exercise this right."
The regulator added that the two UAE operators were "entitled to allow a subscriber to use their internet services for Skype if they wish, or alternatively to provide their own 'Internet Telephony' services".
The move does little to clarify the grey area of the legality of using Skype but indicates that the TRA is increasingly unhappy with the high cost of making international phone calls in the UAE, analysts say.
"If we think about it commercially, it's still in the interests of Etisalat and du to block [Skype]," said Irfan Ellam, a telecoms analyst with Al Mal Capital.
"If they don't block it, they run the risk of losing a significant portion of their international revenues."
Mr Ellam said that by taking a more relaxed stance on providers of voice over internet protocol (VoIP) such as Skype, the TRA was sending a clear message to Etisalat and du. "Consumers are unhappy about high prices and something needs to be done about this."
Software applications using VoIP technology are illegal in the UAE unless they are sanctioned by a licensed operator.
Access to the Skype website is blocked in the UAE but many residents have found ways to download the desktop or mobile applications and enable themselves to place international calls for a fraction of what is offered by Etisalat or du.
Skype is the largest provider of international phone calls with 45 billion minutes of calls made last year, more than twice the volume of all of the world's phone companies combined, according to data from TeleGeography Research, a telecoms analyst.
Skype phone calls to landlines and mobile phones can be easily placed over Etisalat and du networks. Etisalat and du declined to comment.
Matthew Reed, a senior analyst with Informa Telecoms and Media, said it was difficult for operators to constantly police VoIP services over their networks or shut them down.
"One could read this as a very tentative hint that the TRA is pushing [VoIP] towards the operators and that it is less interested in enforcing on VoIP," Mr Reed said.
"The law is relatively clear but if it is not enforced, it opens the doors slightly wider for the actual use of Skype here."
Meanwhile, Rouzbeh Pasha, the head of market development for Skype in the Middle East and Africa, said the company was not in talks with the TRA to launch its internet communication service legally.
Last month, Mohammed al Ghanim, the director general of the TRA, said the regulator was working with Skype and other VoIP companies to see if their services could be established here.
Mr Pasha declined to say whether Skype was in discussions with any Middle Eastern operator, because the company was in the process of filing its upcoming public offering.