The time for reckoning is fast approaching for the region’s legacy telecom operators. Feeding on protected markets and enjoying unqualified state patronage, these companies have had their turf insulated from any kind of genuine competition.

But a sense of realism is beginning to dawn that things won’t be as rosy in the days ahead.

It is often not entirely due to reluctance on the part of these players that they are not made to face genuine competition. For instance, the UAE telecom operators etisalat and du have competed in a limited sense and customers have benefited to that extent. But the scope of their co-operation has been greatly restricted by the regulators, who tend to be driven by the overriding interest of shareholders, which happen to be mostly state entities.

That seems to be the biggest hindrance to opening up the market for competition. Technically, du ended etisalat’s monopoly in 2007 by launching certain services in competition with the existing operator, but this has remained by and large restricted to mobile phone services. Even the limited competition has shown how the presence of more than one player radically changes the situation in favour of customers.

But when it came to core segments such as fixed-line services, internet and cable TV, there has virtually been no competition as du services are restricted to newly developed areas of Dubai, where etisalat services are not available. This has meant that the presence of two players only amounted to a division of monopoly rather than any genuine competition.

Although talks had begun as far back as in 2009 for sharing the network infrastructure between the two players, there has so far been no real progress and this has helped etisalat to keep the lion’s share of the market on its own terms. In fact, 86 per cent of all revenue for etisalat in 2013 was contributed by the fixed-line business and the second player had virtually no stake in the market share, which was worth Dh8.5 billion.

The absence of genuine competition has continued to help the legacy player to price the services arbitrarily. Comparisons with markets that allow competition show that for the price of one day’s internet data package offered by etisalat, customers in some markets may be able to get a month’s subscription. The same applies to the pricing of roaming services, which continue to be prohibitively high.

By its own admission, the threat to etisalat by way of competition from du has only been limited. The prospectus published in connection with a forthcoming bond issue clearly states that competition from du is much less significant than the threat from internet telephony, which is consistently eating into average revenue per customer. It also acknowledges the prospects of the fixed-line market being shared with du in the coming months, which will prove to be a major drag on future revenues.

Similarly, on the roaming services front, new developments have implications for the legacy players. In fact, etisalat is party to a decision by the Middle East and Africa GSM operators to make roaming services more affordable and improve international connectivity.

GSMA, which is the association of mobile operators, announced last week that leaders from nine major mobile operator groups, accounting for over half a billion mobile connections across 48 countries in Africa and the Middle East, would undertake initiatives designed to reduce the cost of roaming for consumers across both regions.

These include addressing the pricing issue as well as improving regional connectivity and mobility while offering choice. The combined efforts are expected to enable customers to use mobile phones with greater confidence and predictability while travelling.

The telecom players as well as the regulators can no longer walk away from the reality that the dynamics of the market today demand more affordable services and better value for customers.

- The writer is a journalist based in Dubai.