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:
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.
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.
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.