Unlimited ADSL packages have come to town

2 Aug, '07

Finally, there is some movement as far as the internet connectivity is concerned. Lightspeed Communications, which is partly owned by Jordan Telecom, has announced unlimited ADSL packages for the home and office at cheaper rates than the current bandwidth-limited packages offered by Batelco; details of these packages are:

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If you go to their site’s tarriff page you will see a bright orange star next to the “promotional rate” but the page does not explain what that star is. It is fair to assume that it indicates some terms and conditions attached to that offer, but in the absence of printed explanations we have to wait for an official response, but unfortunately no response was forthcoming.

Hot on the heals of Lightspeed though, Lightspeed’s supplier have started offering Unlimited access to their business packages with an appreciable discount too! I would not be surprised to find that Batelco will soon introduced either more reductions of tariffs for home users and/or new unlimited packages and that, my friends, will be very welcome.

Is Batelco feeling the competitive heat? There are now many competitors in the broadband business: MTC Vodafone, Lightspeed, Neutel, Kalam, MENA Telecom and 2Connect amongst others, so Batelco most definitely is feeling the heat and Batelco being Batelco is responding of course. They do take competition very seriously and if history serves right, they will only move to provide better, faster and cheaper services when they have to.

Lightspeed starts offering UNLIMITED ADSL packages ad

They have now, I believe that the charges they levy on broadband access (both residential and business) are still high and I am absolutely convinced that ultimately they will be forced to reduce their tariffs to be more compatible with world standards, and more importantly, be reasonable enough for the local market to engender good internet based innovations.

The numbers that the competitors are offering though do not seem very convincing, especially when you consider they essentially buy wholesale from Batelco and then resell it without having to invest in their own infrastructure but depend on that provided by both Batelco and BIX. This is legitimate business practice of course and done in true trader mentality. But the thing that I fear is that just like a lot of small traders, they over promise and under deliver.

Consider for instance the packages recently announced by Lightspeed (shown above); their capacity is based on a 1Gbps port purchased from Batelco (bitstream service a lot of Lightspeed’s services would run on) which they hope to generate enough interest to fill. At the moment their contention ratio on that pipe is promised to be something like 15:1, but insiders tell me that in order for them to make any money off this deal, their business model is based on providing a contention ratio of 30-40:1. This essentially means that if you buy a 2Mbps contract from them, when they reach their break-even point you will probably experience much lower speeds! By that time of course Batelco might well have released much more competitive packages, or other entrants would have come into the market with good financial strength to carry their plans through while you are locked into that “star” that we can’t seem to find the explanation of.

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The financial strengths of both Lightspeed and Kalam specifically give rise to some concerns. My sources indicate that both companies have not paid their BIX bill for months now and are under threat of stop-service. Lightspeed also had to downgrade its bandwidth capacity with BIX because it simply cannot afford the bill and this happened after it has been taken over by Jordan Telecom!

Lightspeed might have a bigger problem on its hands in a few months if it does not meet the “minimum customer connectivity clause” of the contract and if that happens, you can rest assured that Batelco will come down on Lightspeed like a tonne of bricks with hefty fines already designed in their contract. The repercussions – without the Jordan Telecom muscle – could very well be bankruptcy should they not take care of this particular problem.

Still, residential packages as they have offered could be their ultimate salvation. But they are sitting on a knife’s edge and they have to manage it very very carefully. If they sell a lot of these packages and they ultimately find they have a lot of unsatisfied customers due to the high contention ratios they will shoot themselves in the foot. Actually they would have shot off the whole leg. It’s that serious ironically because customers in 8 – 12 months’ time will have a much bigger choice than that currently enjoyed.

This is a similar situation – business wise, I am told, between Batelco and Kalam where the former who has been branded the latter as a “bad payer” with all the conditions that ensues on their relationship and ultimately customer base. There is nothing worse than falling foul of a business supplier. I hope they can re-capitalised (again?) in order to remove that particular stigma and be more creative in their offerings. We hardly hear of Kalam now.

There are also those malicious rumours doing the rounds that a telecoms company has not paid its employees for 6 months! I don’t know about the employees themselves, but had that been me I would have chucked that company in a long time ago and wrote the unpaid salaries off rather than keep with the headache of “will I get paid this month.” Telecoms companies are not alone in this boat of course, other major media companies do suffer from the same, uh, variable salary pay days just to keep employees (and their personal loaning banks) on their toes.

Which brings me to another question mark point here: Is it ego that is driving MENA Telecom or is it really good business sense? Why would anyone invest in a technology that has not solidified yet and why depend on a single vendor to take you down that path? Why invest such a huge sum of money in it without first testing the market properly or simply building a viable business case?

Why would it invest the huge sum of US$60 million in a market whose best estimates of broadband users is 60,000 and the vast majority of whom are on the Batelco 10 Dinar package per month?! What and where is their particular market? Please tell me! Unless they wish to take on Batelco head-on in the broadband business but then Batelco is operating on completely depreciated copper while MENA is going for the ultra new WiMax technology! If they do get even 100% market ownership of that “huge” 60k user-base, where can they make their money? I doubt very much that they will make it from VPN or DVB services. I can understand that a few business customers (and by few I do mean few) going for their VPN solution, but as we do not have any media infrastructure to speak of in this country, I would be kind enough to them to assume that they actually copied their business solutions from the Motorola WiMax brochure rather than have conducted proper market research! Could they please give the salesman who sold them that “solution” my number? I am in desperate need of as good sales staff. Still, they will be successful. They’ve got KFH to hold their back and it won’t allow it to fail. Industry watchers think that MENA might have gone bankrupt twice already save for KFH’s deep pockets.

So where does all of that leave us the consumers in this Jewel in the Arabian Gulf?

It certainly gives us more options, entrants are now coming up with nice packages but unfortunately they are not very well thought out business cases as we have seen from the above, but one could be forgiven for seeing a similarity in this and “birth pains”. Ultimately the good will rise because of innovative offerings while others will just naturally disappear from existence. This is the nature of a deregulated market and that is what we should expect more of.

What would really deregulate the market; however, is splitting Batelco into at least 2 businesses: one managing the wholesale which should own the infrastructure, while the other continue to offer the retail services. This will allow its retail operation to fairly compete in the market and with its own self. Rather than continuously being at loggerheads with the TRA for hiked prices offered to its customers and much more importantly allow new business entrants to come into the market and boldly provide new innovative services without having to worry that the rug will be pulled from under their feet at any moment.

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Comments (20)

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  1. Ammar says:

    well, its a very exciting time for internet users here in Bahrain, although somehow I still don’t feel really happy with any of the solutions just yet; i’ll just stick to my regular 40bd connection until I find something I feel happier with. I guess as they develop with time we should find some more stable solution, and then would be a good time to lunge. I’m sure most of these companies will try to lock customers in through contracts etc, but that just might reduce the number of customers they get in the first place; people are pretty skeptical right now anyway, after taking it roughly from batelco for a while, they don’t exactly trust telecom companies too much.

    Anyhow, I have a friend working in Lightspeed; if you’re interested in finding out more, give him a call on 36654654, Nawaf. Tell him Ammar Alaradi gave you his number

  2. mahmood says:

    I tried to speak to their managing director to get a response and did leave my details with his secretary (or someone at PR called Fatima I think) but he never got back to me. He did say that I could call him at 4.30pm but I didn’t get a chance to.

    Other CE’s (like Peter K) immediately responded to my request, even if it is just with “I’ll get a member of my team to follow up,” they didn’t, but their unlimited packages got released the day after so they must have been planning these new packages for a while.

    Anyway, they are more than welcome to rip the above apart with their responses.

  3. haythoo says:

    Hi Mahmood,
    See this post

    http://umm.biz/index.php?showtopic=49975&view=findpost&p=1399705

    just got back home ph34r.gif
    mmm … in the way we called them (about 5.15 ) but thats too late bcoz they close at 5
    so we asked them on the phone
    we asked them about p2p and they said that everything works
    and about the requirements we should have a line from batelco and provide last bill of the line , CPR & 15BD

    mmm… we asked about the time between the registration and the receiving the service they said it’s maybe just 2 days bcoz they don’t have alot of customers now
    thats what I remember for now !
    my friend is going to register with them maybe 2mrw
    I wish I could go with him but I have other things to do
    it’s like old batelco services with another name !!!

  4. Redbelt says:

    Actually, thier pricing seems.. well, arbitrary at best.

    Look at this

    256 @ batelco = BD 10 (2G cap)
    256 @ Lightspeed = BD 15 (later 19) (unlimited)

    You see, paying more for unlimited isn’t really what I call a deal. I could simply choose to pay as I go over limit with batelco. BD 19 is way more than BD 10 you know.

    However

    1M @ Batelco = BD 40 (15G)
    1M @ Lightspeed = BD 35 (Unlimited)

    Which is a great deal!
    It’s lower in price AND unlimited.

    Very uncertain about the pricing I am, how structred are they?

    And if the break even point is as you said mahmood, then a flag must be hoisted.

  5. What’s up with the star thing? i checked it and it said: * Promotional offer for limited quantity and time. I called the company out of curiosity and they said that there is no threshold whatsoever, and that the speed will not go down no matter what. I am very interested in this offer actually. Just for the heck of it.

  6. mahmood says:

    Errata:

    Fatima Al-Alawi is actually the marketing manager. Apparently the original message got crossed; I thought they will be contacting me while they thought that in fact I would be calling them. In any case, I am glad to report that this point has been cleared now and we are set for a phone interview/chat with Lightspeed’s chairman tomorrow afternoon where I hope that a lot of what has been raised in the article will be cleared.

    I shall report back of course.

  7. mahmood says:

    Ayman, there is nothing nefarious about me bringing “the star” up, it normally denotes “small print” in the terms and conditions. That small print I could not find in the tariffs page and I suspect that it denotes special terms and possibly a requirement to sign some sort of “lock-in” contract.

    Others do of course likewise, MTC Vodafone locks you in by giving you some discount off handsets and it’s up to you to decide if that 30 dinars discount is worth being locked in with them for that period of time.

  8. abdulla says:

    Mahmood, I asked them a while ago about the promotional rate, they told me that it was about a limited time offer. They previously told me it would end on 1st of Aug, but I guess thats one way to get more customers. They also stated that there were no contracts, but their Terms and condition specifically mention that you agree on the one year contract. More about this issue here.

  9. mahmood says:

    Thanks for the hunting Abdulla.

  10. Sidd says:

    finally got a bit of clarifications on the points u brought up Mahmood:

    – the crossed-out rates above are actually their normal rates, while in this `promotional´ period (which is loosely defined generally) u get better rates .. i guess that`s what the star means next to the pricing perhaps.

    – there is no `1Gps` that Lightspeed purchases, what they`re getting is Bitstream DSL (totally different than pure or full wholesaling of Batelco`s infrastructure and pipes..) what they get is the same speeds provided by Batelco (256K, 512K, 1MB, 2MB), without the threshold stuff, so whatever the customer downloads each month, Lightspeed pays the same amount of port rent for that line (i.e. cost of customers who download 40GB`s or 2GB`s per month is the same, only difference is Lightspeed may in the future have to increase their pipes with BIX to maintain the level of quality of internet surfing) as its said in the comments Lightspeed doesnt have that much customers right now and could easily utilize its current pipes with BIX.

    – contention ratios are already set and Batelco fortunately has to comply to those levels. Its already fact in Batelco`s website if u look really closely. and nope its not 1:15 its less and diffinitely not 1:40 or Batelco would be in trouble with the TRA 🙂

  11. mahmood says:

    practically however, Batelco’s ratios are now around 1:20 and when you contend the IP uplink at 1:2 then you automatically reduce the quality of service to half, which means that Lightspeed is looking at 1:30 at best guess… or have I missed something here?

  12. Sidd says:

    well, lets make it clearer this way:

    1. There is ‘local’ access and ‘uplink’ access to the internet. Local access is like from your home to Lightspeeds network and uplink is internet uplink.

    2. I think the ratios which Batelco has to abide by are set already in stone for local access (check their website and you’ll know the ratios they have to provide, which have been set by the TRA anyway) and this ratio only relates to local access. Not sure though what Batelco truly gives to its customers in terms of contention ratio, but i’m sure its higher than what the TRA set for wholesale, judging from the comments i see in blogs like this one..

    3. lightspeed gets its uplink not from Batelco but from BIX. So u cant really compare between what Batelco does with its uplink as its a whole different uplink from what Lightspeed uses.

    .. So at minimum 512K of Batelco should be a bit slower than Lightspeed 512K as a) it has pretty good contention ratio and b) their uplink is totally underutilized as they dont have that much customers and lots of bandwidth to play with.

    ..cant wait to know more about your interview 🙂

  13. ASKAD says:

    I think light speed is working with Orange, compare the logo in Lightspeed & http://www.tp.pl they share the same logo.

    I heard also that if you buy the DSL modem from Lightspeed, you will find the Orange logo on it.

  14. Ex-BIX says:

    We need to change the way BIX works. Initially BIX was the only other route when compared to Batelco international access. If BIX could leave Bahrain on its own Fiber and not have to connect to Batelco on its way to EMIX in Dubai, or Teleglobe in Saudi Arabia prices will fall dramaticlly in the local market. The reason we are not at international standards in terms of pricing is that our international bandwidth is still a problem. It doesn’t help that we are in the Gulf and the amount of fiber here isn’t that great either!! compared to Europe… Batelco charges BIX more to connect to EMIX than EMIX charges to connect to the world and to peer. This has to be addressed in the RIO where I’m hoping the TRA would help BIX get lower prices and thus help every company that is connected to BIX which is everyone in the industry. Lowering local rates is not enough throught the RAO.

  15. ehsan says:

    The so called scarcity of international bandwidth due to distance and fiber limitations is a myth created by Batelco, and propagated into the telecoms industry in Bahrain. There is no problem with being in the Gulf, as obviously apparent in every gulf country except Bahrain.

    Batelco’s contention ratios are much higher than anyone is lead to believe, but they do insure that they have a safety margin above peak global bandwidth usage. The TRA have no idea about the technical backend scams.

    Lightspeed being a new player can also afford to ignore contention ratio and start signing up customers until their peak bandwidth usage saturates their pipe, in which case it is much easier to upgrade their uplink. That is why contention ratio is not an issue for now.

    Lightspeed are doing a good thing here, if anything it’s similar to how MTC fixed Batelco. Batelco already have real unlimited usage packages ready, but I think they have to give Lightspeed a one month grace period before playing the Government-Owned-Monopoly card.

    And the TRA is still a joke. Not because of the people working there, but because it was created to boost some high-up’s ego while being confined to not hurting some other high-up’s feelings. The whole infrastructure is screwed up.

  16. abdulla says:

    Bahrain’s new WiMAX network will be the first of its kind in the Middle East and will transform communications. Abdulhakeem Al Khayyat, Chairman, Mena Telecom explains why.

  17. mahmood says:

    Ehsan that is spot on, as usual.

  18. ISPs betting on WiMax are playing Russian roulette.
    It’s like starting a personal teleport or jetpack company :p

  19. Ahmed says:

    A friend sent me this link. Amusing: http://www.youtube.com/watch?v=XkBUgmtOjW8

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