02 July, 2010

Du, Etisalat, the TRA and the future

According to The National, Du is (finally) soon going to gain access to Etisalat's telecommunications network...
The telecommunications operator du is set to gain access to the network of its rival Etisalat within weeks, ushering in a fresh wave of competition in the phone, internet and television market.

If the move goes ahead as expected, UAE residents will finally have a choice of telecoms providers regardless of where they live.

Etisalat has a monopoly on traditional telephones, internet service and cable TV throughout most of the country, while du services a small area of Dubai that includes newer neighbourhoods such as Dubai Marina and Media City.

“Welcome to competition,” Farid Faraidooni, the chief commercial officer for du, said this week.

The development will be a boon to du, which has been able to offer UAE consumers only mobile and landline services because of regulatory and technical issues.

Here are my personal predictions for broadband internet access and telecommunications in general in the next 12-24 months:
  • Du and Etisalat will begin a price war and heavily reduce the cost of their bundles (i.e. internet/tv/phone bundles) in a short timespan in an effort to gain market share.
  • We will see impossibly ridiculous combinations of high-speed internet with low bandwidth (like Etisalat's connections that you can only use for 6 hours at full capacity in an entire month) In light of bandwidth increases for internet connections it is likely (and already on the way to happening) that we will see people having to pay for additional bandwidth through their teeth (like Telstra in Australia
    used to charge 465 AED per additional GB). Because of these bandwidth restrictions we will be 'heavily reliant' on content provided by Etisalat / Du.
  • They will make it harder to individually purchase services (i.e. a separate internet or separate telephone connection) and harder to purchase services with no obligations.
  • They will both introduce things like yearly contracts, ETF (early termination fees) and start ramping up the fees so we can enjoy full duopoly greatness; the contracts will make it hard for us to move between Etisalat and Du. You can already see that Du's new low priced, high speed connections have a 12 month contract with a 100 AED early termination fee (in my opinion this isn't too bad)
  • While the price of telecommunications will seem to come down, we will all be at the mercy of contracts with our telephone companies and will end up paying heavily for breaching them.
  • Skype will still be cheaper.
  • The TRA will probably say "no comment"
(Of course this is in many cases a worst-case scenario prediction and is just a prediction so take it with a grain of salt. But please do ask Du and Etisalat as much as possible before signing anything and research whatever services you purchase as much as possible before agreeing to anything)


Anonymous said...

there is no pleasing you guys

when you get significant price reductions in telecom services you will still find something negative

you do realize we pay no direct taxes and very little in indirect taxes yet we have access to the city's excellent services and roads

Lets all be thankful for once...

samuraisam said...

Anonymous: I never asked for significant price reductions to begin with and if that's the first thing you're going to talk about from what I mentioned then perhaps you should think about re-reading it. It was really more to do with customer freedom, and also about telecommunication companies charging people up the ass through hidden means.

I don't really get what I'm supposed to be thankful for? Being somewhat forced into contractual agreements with telecommunication companies that show absolute disregard towards customer service? and knowing that if either company screws up I'll be held in a contract for some time?

Anonymous said...

I am with Anonymous 1:43 here.

Just see it as an additional tax. Somewhere there is an after-tax break-even point for everyone. And yes I miss the gazillion MB line for £15 a month but I prefer zero income tax.

Ultimately DU and Etisalat have the same owners so this is more of a marketing exercise.

Mohammad said...

Anon at 1:43 is wrong.

Unless you live with your parents, you are paying a lot in indirect taxes.
From housing fees to salik to high utility bills to phantom fines to high telecom charges; they are all indirect taxes that go towards the excellent roads and to subsidizing someone else'e electricity and housing.
Dubai does not give anything for free, so dont pretend otherwise.

As for telecom, I think we have come to the point where I am willing to pay above average rates for internt, as long as service is good and customer service doesnt haev drones, and problems don take 8 phone calls to resolve.

Anonymous said...

To Mohammad:

I am not sure if you lived anywhere else other than dubai because your argument is pretty weak

Housing fees I assume you mean the the management fees you pay to leave in one of those housing development...its the same all over the world

High utility bills- the price of electricity ranges from 5 - 9 US$ cents per KHW depends on your consumption. Now compare it to other developed countries of the world on this website http://en.wikipedia.org/wiki/Electricity_tariff#Price_comparision

Compare it yourself and you'll see that what we pay is less than most those countries.

phantom fines- Now that is a really stupid example...follow the law and you will not be fined

As for the telecom charges...well I cant argue with that...it is expensive and the internet does suck
but then again would you rather live in a country where phone calls and internet is cheaper but 40%+ of your income is taxed?

samuraisam said...

Anonymous @ 07:06: I don't get what you mean "just take it as tax".
I made this post, as well as the last one on Etisalat's eLife to ensure that people in the UAE have a FAIR idea of what to expect from these internet connections and lower prices with high bandwidth.

If you guys want to take it as me bitching about the price then you do that. But I'm not.

In any case, 30-40% of the telecoms profits are paid to the government of the UAE (it's slightly different with Du). It is likely (and has already been discussed a bit) that in the future this may be reduced or eliminated entirely. In which case none of this would be a hidden tax.

samuraisam said...

I'd also like to add if Etisalat offered me the same connection but at a higher price with no limits I would most probably purchase it. Bandwidth costs money.

What I don't appreciate from Etisalat is calling the connection 'unlimited' when it in fact only works for 6 hours out of a month. That is false advertising and the TRA should be doing something about it.

Anonymous said...

hey fuck face why did you block my post

samuraisam said...

anonymous: Hey fuck face! I didn't. Just no one got around to publishing it yet.

Mohammad said...

Lets see:

1) Housing Fees: I meant the 5% that has to be paid by ever tenant to Dubai municipality

2) Phantom fines: plenty of people have been fined when their cars were in the garage, or they were at work. People at the fines section will just shrug their shoulders and say its better to pay than to try investigating.
So yes, there are fines given wrongly even though i havent been a victim yet


3) I forgot about fuel prices. The UAE has the priciest fuel in the entire GCC. All countries in the GCC earn oil money, yet somehow fuel is cheaper in Oman even though they earn much less than what the UAE does. If thats not an indirect tax, I dont know what is....

Rupert Neil Bumfrey said...

Ultimately DU and Etisalat have the same owners so this is more of a marketing exercise.

04 July, 2010 07:06"

Pedantic I know, however best not to let incorrect statements become accepted as facts!

Etisalat headquartered in Abu Dhabi, with a free float of 24%, Du headquartered in Dubai, with TECOM plus other Dubai entities major shareholders.

Of course if one looks at this in a Macro-Federalist way then anonymous is correct, but does that view ever prevail, unless it suits?

junk said...

First, I want to say to Mohammad that I agree with him that there are a lot of indirect taxes, but compared to most comparable countries in the world, these taxes add up to much less than what you would end up paying in those other countries. But that said, I do find it irritating when people try to claim this country is Tax Free. That's total BS. Secondly, I agree with Samuraisam regarding false advertising. I too can not believe Etisalat is allowed to get away with such blatantly false and misleading claims. Like their "Unlimited Mobile Broadband" packages. It makes me so mad I wanna rip their heads off for it. There is nothing "Unlimited" about their mobile broadband. Is the speed unlimited? No, obviously no internet speed is unlimited, and the mobile broadband tops out at 14Mb? Is the total bandwidth limited? No, its capped at 10GB. SO WHERE DOES THE TERM UNLIMITED APPLY???? God I hate them and I hate the officials who SHOULD BE stopping this nonsense. It's nothing short of ROBBERY when Etisalat ends up billing people for using more than 10GB. I hope someone finally gets to sue the crap out them. Please Please, anybody!

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