x Abu Dhabi, UAEWednesday 26 July 2017

More regulation is not the answer

The National agrees in principle that the competition between Etisalat and Du is inadequate. However, the solution cannot simply be forcing companies to reduce prices.

Fatima Ghanem al Marri summed up how many feel about internet and telephone service in this country: "We really feel that we're being drained, whether by the type of services or prices." Most customers of Etisalat and Du open their monthly bills with trepidation. We want prices to decrease and for the service to improve. Apparently so does the Federal National Council (FNC), Ms al Marri was only one of the FNC members demanding that the authorities force the two service providers to compete.

The National agrees in principle that the competition between Etisalat and Du is inadequate. However, the solution cannot simply be forcing companies to reduce prices. More regulation rarely leads to a vibrant and competitive marketplace. Often, it yields exactly the opposite. More competition is needed, and part of the problem is revealed in complaints made by Etisalat and Du. They note that several attempts to add services or reduce prices were blocked by the Telecommunications Regulatory Authority (TRA). The regulators probably wish to ensure that Du is sheltered from Etisalat's overwhelming advantage in the market. They also have an incentive to ensure that Etisalat's investments in infrastructure do not become a liability as a result of a price war. But noble intentions do not necessarily lead to appropriate results.

Instead of seeking a regulatory solution, the TRA ought to be examining how it can apply a lighter touch to the telecoms industry. But unless more freedom for service providers is combined with greater protection of consumer interests, then less regulation would be a bad thing. With only two service providers in the country, it is likely that they will not compete but work together to protect their own interests, not those of the consumer.

The TRA has not created competition but instead, two nearly identical companies. The TRA should lighten its control over business practices and uphold the existing regulations that enshrine a customer's right to choose their provider. In the end, a larger pool of service providers is needed for the consumers to drive the market. That day will come but much more can be done in the interim to meet consumer demands for lower prices and better service. As Ms al Marri asked yesterday: "How long are we going to wait before we reach a competitive market?"