I’ve had a good long chat with Shaikh Abdulla Al-Khalifa, the MD of Lightspeed this afternoon where he crossed some tees and dotted a few eyes. As one might expect, he was not forthcoming as far as the money aspects of the issues (overhead per customer, investment levels, margins, forecast number of customers) but he was adamant that with the backing of big operators like France Telecom, which majority owns Jordan Telecom which in turn majority owns Lightspeed, they will have the financial wherewithall to pull this and future packages and services (triple-play).
Therefore, he said, whenever there is a reason to buy more bandwidth there will be no hesitation in doing so, and in fact they have already planned for that eventuality. It is interesting that he also stressed that they will buy from BIX and “from any other infrastructural provider who comes into Bahrain” – which is something I know that is being worked on, but that’s another topic.
As for the resilience and reliability issues, he was comfortable enough with the signed SLAs with both Batelco and BIX. I am not; however, as I could not find any audit requirement by independent watchdogs to ensure that Batelco and any other operator actually abiding by published and contractually agreed contention ratios. From my own bitter experience I can tell you that I feel that the contention ratio in my area could not possibly be what is promised; it possibly is much higher owing to how slow the connection gets in both the office and at home.
When I pushed for me to see their audited financials, he was a bit bashful and said that in reality they have only been in operation for about a year and although they do have audited reports, their costs and overheads where all lodged with the TRA. I could not find annuals on their website, which is another criticism I had put to him as I believed that their website is at best very amateurish. He agreed and promised that another nicer version is being worked on which should be launched by year’s end, maybe sooner.
There is no reason for me to believe that they are playing games; it is not in their best interest to be sure and what they are doing is slowly chipping away at the monolith. Their ability to be the first in the market to offer this service from the 1st of August, while others can only apply for the service on that date was due to Lightspeed being the selected beta tester for the service – according to Shaikh Abdulla. In fact, he said, they have been testing the service on a limited basis for quite a while, but the TRA and Batelco’s requirement for “belt and braces” by double testing everything before launching the product delayed them from coming to market even sooner.
As to the financial stability and some operators still owing money to BIX/Batelco he doesn’t see an issue in this at all and I partly agree; BIX provides a 45 day credit facility to its customers while Batelco’s terms are generally 30 days, so that actually and practically lumps all operators in the same basket as far as owing moneys to vendors. I agree that it is good business practice to utilise the full credit period given – why would you give your money away before you really have to while you can invest it however briefly in other pursuits?
Shaikh Abdulla also feels that the Batelco-mandated requirement of minimum registrants per month and a really stringent forecasting procedure could easily be reached and surpassed. He did not offer any specific numbers of customers already signed up to their service so far, nor was he forthcoming in disclosing their submitted forecasts. I somewhat hesitate to share his enthusiasm; however, but am more than happy to wish Lightspeed the best of luck in this regard.
The clauses I am talking about – by the way – are clearly stated in the TRA produced “Bitstream Service” description document of which I quote a few of relevant sections which you too might find interesting:
3. SERVICE TERMS
- 3.1 Provision of the Bitstream shall be conditional on the Access Seeker agreeing to submit the following minimum aggregate number of Bitstream Requests for all Batelco Exchanges per month for each year of the provision of any Bitstream Service by Batelco to the Access Seeker:
3.2 Batelco will implement Bitstream Requests from the Access Seeker and requests for configuration and provision of connections from other Licensed Operators and from itself with respect to any Batelco Exchange in batches of 32, representing the number of ports on a DSLAM or MSAN equipment card in the Batelco Exchange.
- (a) 192 per month in the first year;
- (b) 128 per month in the second year; and
- (c) 96 per month in the third year.
- 7.1 At the beginning of each calendar month, the Access Seeker must supply a forecast of the expected requests for the Bitstream Service in each month of the six month period following the date of the forecast, in the form required by Batelco from time to time.
- 7.2 Subject to Batelco complying with paragraph 7.3 below, for each forecast made under this Service Description, the aggregate number of requests for Bitstream Services identified in a calendar month of the forecast plus the two following calendar months are a commitment to order those Bitstream Services. If the Access Seeker has not placed those number of requests by the end of the calendar month the Access Seeker shall pay an amount equal to three times the relevant monthly port charge for each request for Bitstream Services not ordered.
- 7.3 Batelco will use all reasonable endeavours to adhere to the rollout plan for BEs at Annex 5 and will give the Access Seeker reasonable notice of any changes to that Annex, such
notice period to be at least the same as any notice period by which any Batelco retail operation is notified of changes by any Batelco wholesale operation.
I really have a problem with the above paragraph being titled “Forecasting” because normal forecasting or pipelining I am familiar with in my business is an exercise for a us – the customer – to provide the vendor with a non-binding best guestimate of foreseeable purchases so that the vendor could statistically prepare their production lines to fulfill the needs. Needless to say, vendors have developed quite sophisticated methods to forecast demand based on feedback they receive from their customers.
With the above requirements it is hardly a forecast but a commitment to buy services and you would get penalised for it if you don’t order whatever you have forecast for the current month and the 2 months which follow, essentially you are giving them a quarterly prepaid cheque and if you don’t deliver, boy your ass is grass, to the tune of a penalty which is three times the port rental charge! I will leave you to do the math if a customer does not fulfil their numbers. Man do I salivate at the prospect of having salesmen whom I can treat like this, slavery would be a blessing for them I can tell you!
As to the very important contention ratios which Batelco must abide by (by the description does not provide practical manners in which it could police this very important aspect of the operation)
Of course the costs of providing these services which the operators will have to pay Batelco (note that these are not all the charges obviously, there are several more which are quite steep that the operators have to pay for the privilege of offering these services in lieu of Batelco, if you are really interested I can give them to you, suffice it to state that the pleasure of establishing a bitstream relationship will set you back BD50,701 – don’t you ever forget the BD1 in that figure! – but fortunately that’s a one time charge. You do pay a monthly relationship maintenance fee of BD1,067 for the honour, however, not forgetting the other infrastructural charges you will have already borne by investing in equipment not provided by Batelco nor BIX.)
I would like to draw your attention to the 256kbps package which is arguably the one that most of the 50-60k ADSL subscribers in Bahrain have opted for. Note that Batelco sells this service at BD10 retail, but offers it at higher than that for wholesale! I hope I understood the figures wrong and wish to be corrected, but that in itself is unsavoury isn’t it? Apart from it being completely anti-competitive.
All in all, there is much more to this issue than meets the eye. I fully realise that getting anything out of Batelco is akin to wrenching a steak from the mouth of a hungry lion, but it has to be done, and if this is exercised by (now) smaller operators in the market, then so be it and I wish them all much luck. Anything that could takes a chunk of Batelco is good for this country. Generally.