Positive Step In Quest To Establish Independent Telecoms Regulator
The move to establish an independent telecoms regulator in Kuwait has received a major boost following the approval of the first reading of bill for that purpose by the country's National Assembly in March 2014, according to a report on the assembly's website. The second and final reading of the bill is set for March 18 2014. BMI will continue to monitor the developments leading to a possible enactment and implementation of a law establishing a telecoms regulator, which we believe is vital for creating an enabling environment for investment and growth in the telecoms market, especially the underserved fixed broadband segment.
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Kuwait is the only GCC state without a separate telecoms regulator. The country's Ministry of Communications (MoC) has been supervising the sector since it was created in 1962. Kuwait first announced plans to establish a telecoms regulator in 2001 but all previous attempts to do so have stalled at various stages of legislation. While the latest attempt appears to be making good progress, we do not rule out further delays to the timely enactment of the law, especially if the passed bill is deemed a threat to the dominance of the state-owned incumbent operator in the fixed-line market. It is worth mentioning that the scope of the supervisory powers or level of independence of the regulator has not been made public.
The MoC has allowed competition to develop in the mobile and broadband sectors but, as the owner of the national fixed-line operator, Kuwait Public Telecoms (KPT), it has maintained a monopoly in the fixed-line sector. This has had a negative impact on the development of advanced fibre-optic infrastructure in Kuwait's fixed-line and fixed broadband sectors compared to other countries in the region. Qatar, UAE, Saudi Arabia, Bahrain and Oman's telecoms operators have been investing heavily in fibre to the home (FTTH) infrastructure since 2010. This has helped slow the decline of the fixed-line sector and allowed internet service providers to diversify into high value broadband services such as IPTV.
Although we expect that a separate telecoms regulator in Kuwait would maintain close ties with the MoC, we believe it would likely have the power to open up the country's fixed line sector and enable it to attract investment and catch up with GCC standards of fibre connectivity. Arguably, this would be the most significant outcome of this process, which BMI will continue to watch closely.