TRA Consultation on

competition assessment and

proposed remedies in relevant
markets : Comments on
Responses
29 September 2011

Table of Contents
1

ExecutiveSummary.........................................................................................................3

MarketDefinition..........................................................................................................10

AssessmentofMarketPower........................................................................................11

RetailmarketswhereEtisalathasbeenfoundtohavemarketpower(RM1ARM9A)...12

Retailmarketswhereduhasbeenfoundtohavemarketpower(RM1BRM9B)...........14

WholesalemarketswhereEtisalathasbeenfoundtohavemarketpower(allmarkets).18

Wholesalemarketswhereduhasbeenfoundtohavemarketpower(allmarkets).........24

Page 2 of 25

1 Executive Summary
Etisalat welcomes the opportunity to provide comments on the
submissions of other parties as part of this consultation.1 This is an
important component of the consultation process allowing the views of
others to be tested and debated.
This submission only provides comments on selected aspects of the dus
initial submission to the TRA. It does not respond to every issue raised by
du. For the avoidance of doubt, where Etisalat has not provided
comments on a particular area of dus submission, this should not be
construed to mean that Etisalat necessarily supports such views.
dus submission is inconsistent and in places blatantly self-serving. Du
uses one argument to suggest increased regulation of Etisalat and then
subsequently the same argument to argue for reduced regulation on
itself, regardless of the fact that both operators are in identical positions
of having been found to have market power due to their control of
network infrastructure.
du uses international examples from countries that are fundamentally
different from the UAE offering no justification as to why these markets
should be used as precedents.
Etisalat makes the following specific comments:

It is unnecessary to identify further markets at this stage of the

consultation. A consultation on defining markets has already taken
place and the TRA has already issued a Determination.

Etisalat disagrees that the nature of dus market power in fixed

markets is fundamentally different to that of Etisalat. The two
operators should be regulated using the same approach with the same
remedies unless there are specific reasons for why this should not
happen.

Etisalat considers it critical that the regulatory burden is not skewed

in favour of du as this could substantially reduce Etisalats ability to
compete going forward as well as having adverse impacts on
competition more generally. This applies to resources and costs for

Besides Etisalat, du and UAE Communication and Media Industry Group (UCMIG)
responded to the TRA consultation.

Page 3 of 25

compliance as well as for time delays imposed through retail price

approval remedies
The table below provides a summary of Etisalats views, the details of
which are provided later in the main part of the submission.

Page 4 of 25

Summary Table: Etisalats response to selected aspects of dus initial submission

Market number

dus comments

Etisalat Response

High level comments

on market definition

The TRA should define an

additional
market
for
wholesale physical network
infrastructure access at a
fixed
location,
independently of wholesale
services market.

The TRA has already conducted a consultation on market definition, where all
interested parties (including du) have had the opportunity provide their views.
Following this, the TRA issued a determination on the number of market to be
defined. No additional markets should be identified as part of this market
review.

Market
assessment

A number of proposed
remedies on du should be
removed based on the
principle of proportionality
due to du having a smaller
network footprint and a
smaller fixed customer
base when compared to
Etisalat.

du and Etisalat have market power in fixed markets based on the same basic
rationale that of control of the fixed infrastructure in their respective
geographic markets. There is therefore no difference in the underlying
rationale for market power and this should flow through to the assessment of
appropriate remedies.
Given the unique characteristics of the UAE market there is a strong case that
similar remedies should apply to operators found to have market power in
equivalent markets.

Premature
to
remove
Etisalats
retail
price
approval obligations when
a range of wholesale
remedies are yet to be

While the TRA is not proposing to remove retail regulations on Etisalat over the
period of this market review, Etisalat considers that once the forthcoming
comprehensive suite of wholesale remedies begins to take effect it will be
appropriate to relax retail regulations on both operators in tandem (through
market share triggers).

power

Retail Markets where

Etisalat has market
power (RM1A- RM9A)

Page 5 of 25

Market number

dus comments

Etisalat Response

fully implemented.

Etisalat disputes the view that wholesale remedies will be insufficient to

promote a properly functioning competitive market.

The wholesale remedies

currently
being
implemented are unlikely
on a standalone basis to
impose
any
practical
constraint over Etisalat
over the short to medium
term

Retail Markets where

du has market power
(RM1B RM9B)

All of dus proposed retail

price
notification
obligations
(and
the
associated
selfcertification requirements)
should be removed.
All of Etisalats proposed
retail regulations should be
applied.

Markets RM5 and RM6 should be reassessed by the TRA as there is a strong case
that they are or will shortly become competitive.

dus arguments are clearly inconsistent and self-serving. Deciding to apply no

ex-ante obligations on an operator in markets where it has been found to have
market power due to having control over infrastructure would be undesirable
and clearly inconsistent with international best practice. Where this has been
done internationally it has been as a result of wholesale remedies enabling
retail competition. This is not yet the case in several markets in the UAE,
including RM1B RM9B
du presents misleading international evidence of regulatory treatment of the
second fixed operator in a number of other markets. In the majority of the
countries highlighted by du, regulators have decided on remedies based on an
assessment of market power the same approach used by the TRA. In the UAE
both Etisalat and du have been found to have market power and hence it is
appropriate that both operators are regulated. In the majority of the countries
highlighted by du it is only the incumbent that has been found to have market
power.
Etisalat disagrees that du should escape from any regulatory obligations at the

Page 6 of 25

Market number

dus comments

Etisalat Response
retail level on the basis of such regulation not being proportionate. Ex-ante
regulations should be applied to address the potential for du to behave in an
anti-competitive manner. The classic example to use here is the case of
Kingston Communications (KCom) in the UK and BT. KCom has been found by
the UK regulator to have market power in a specific geographic area of the UK
equal to its network footprint (i.e. the region of East Yorkshire). This is clearly
analogous to the way the du and Etisalat networks have unique footprints.

Wholesale
Markets
where Etisalat has
market power (all)

du agrees with TRAs

proposed
remedies
on
Etisalat and proposes a
range
of
additional
measures.

The TRA should reconsider its assessment of competition in WM5. A forward

looking analysis provides evidence that the market is competitive.
Etisalat agrees with du about the need for more detail on a number of the
obligations (including the content of the proposed RO and the timelines for
agreement) and made similar points in its initial submission. However, Etisalat
considers that these issues should be subject to a further consultation by the
TRA on the detail of the RO. Separate consultations on ROs are a common
practice in other countries.
The TRA should clearly differentiate its approach to regulating interconnection
compared to other wholesale access services (such as Bitstream, leased lines
and site sharing).
Any ex-ante regulatory obligations including any introduction of new monitoring
and enforcement regimes (as suggested by du) should apply equally to du given
that it also has been found to have market power in a number of discrete

Page 7 of 25

Market number

dus comments

Etisalat Response
markets and also has a non-discrimination requirement.
Etisalat strongly disagrees that it should face an ex-ante regulatory obligation
to provide access to its cable landing stations.2 Such landing stations are clearly
replicable (evidenced by the landing stations that have already been
established by du in the UAE). The ability to replicate such infrastructure
severely weakens the underlying rationale for imposing any regulatory
obligation in the first place.
Etisalat considers that any additional types of remedies to those already
proposed by the TRA would be premature and disproportionate. Before any new
wholesale remedies are introduced into the market (including any consideration
of structural remedies), the current range of wholesale remedies (including the
comprehensive wholesale Bitstream access product) should be given time to
impact on the competitiveness of the market.

Wholesale
Markets
where du has market
power (all)

du should face fewer

regulatory obligations than
currently
proposed.
In
particular, du argues that
it should not have to
prepare a Reference Offer
(RO).

Etisalat notes that the current TRA proposals mean that du would face fewer
regulatory obligations than Etisalat, so dus proposals would further widen this
asymmetrical treatment of operators that have both been found to have market
power in a range of wholesale markets. This would be unfair and
discriminatory.
Etisalat does not agree with du that it should escape from a requirement to
prepare a RO. Etisalat notes that a RO covers more than just pricing and, given
that Etisalat will be keen to negotiate with du to provide competition in dus
network areas moving forward, it will be important for Etisalat and other new

See pp. 67-69 of Etisalat initial submission to the TRA for a detailed discussion of Etisalats views on this issue.

Page 8 of 25

Market number

dus comments

Etisalat Response
market players in the future that a comprehensive RO is available from du.
Nevertheless, Etisalat agrees with du that interconnection prices should be
reciprocal between the operators. This is consistent with Etisalats views set
out in its initial submission that footnote 70 of the TRA consultation regarding
interconnection pricing should be revised.
du should also be required to produce regulatory accounts on a HCA and CCA
basis. This is needed in order for the TRA to have comfort that the prices
offered by du are not set at anti-competitive levels.

Page 9 of 25

2 Market Definition
2.1 Summary of dus position
du proposed that the TRA define an additional market for wholesale
physical network infrastructure access at a fixed location, independently
of wholesale services market.3

2.2 Etisalats response

Etisalat does not agree that additional markets should be defined at this
stage of the consultative process. The TRA has already conducted a
consultation on market definition, where interested parties (including
du) provided their views.4 Following this, the TRA issued a determination
on the number of market to be defined.5

3
Emirates Integrated Telecommunications Company, PJSC [du] (2011) Response to
TRAs consultation on competition assessment and proposed remedies in Relevant
Markets Redacted Version, pp. 9-12.
4
TRA (2010) Consultation: The definition of Relevant Markets for the purposes of ex
ante market reviews, 4 October.
5
TRA (2011) DETERMINATION NO (1) OF 2011: Relevant Markets for Telecommunication
Services and Related Products in the UAE, 23 January.

Page 10 of 25

3 Assessment of Market Power

3.1 Summary of dus position
du argues that market power is always a question of degree and the
degree of market power should determine the amount of regulation. 6
du argues for the removal of a number of remedies on du based on the
principle of proportionality due to du having a smaller network footprint
and a smaller fixed customer base when compared to Etisalat.7

3.2 Etisalats response

Etisalat does not accept dus argument that du should face materially
lower regulatory obligations than those imposed on Etisalat in similar
markets where it has been found to have market power. Du appears to
use the argument of degrees of market power to advocate that they
should face reduced remedies. However, Etisalat considers that the
market power of both operators is similar. Etisalat notes that market
power should be determined with reference to the specified markets
defined, not on the overall size of the respective businesses.
The two operators in the fixed market in the UAE have rolled out
networks in largely separate geographical areas. As a result both
operators have sole control over the fixed line infrastructure in certain
geographical areas. Consequently, there is a strong case that equivalent
remedies should apply where these operators have been found to have
market power. Applying reduced remedies in one set of markets
compared to the other markets (distinguished only by their respective
geographic coverage) could leave customers in some markets with a
substantial reduction in choice and other benefits arising from
competition.
Equivalent obligations should apply to each operator in order to protect
against anti-competitive behaviour. As Etisalat noted in section 3.4.1.1
of its response to the TRA consultation, there are no objective measures
by which the market power of one operator is stronger or more
detrimental to consumer than the other so it is unclear how a greater
regulatory burden on Etisalat can be justified.

6
7

See dus initial redacted submission to the TRA, p. 13.

See dus initial redacted submission to the TRA, p. 23 (section 4.2).

Page 11 of 25

4 Retail markets where Etisalat has been found to

have market power (RM1A RM9A)
4.1 Summary of dus position
du argues that it is premature to remove Etisalats retail price approval
obligations when a range of wholesale remedies are yet to be fully
implemented.8
du also argues that the wholesale remedies that are currently being
implemented are unlikely on a standalone basis to impose any practical
constraint over Etisalat over the short to medium term.9

4.2 Etisalats response

Etisalat observes that TRA is not proposing to remove retail regulations
on Etisalat over the period of this market review. These regulations are
very similar to the regulations that Etisalat currently face. Etisalat
considers that once the forthcoming comprehensive suite of wholesale
remedies begins to take effect it will be appropriate to relax retail
regulations on both operators in tandem.
Etisalat disputes dus view that wholesale remedies will be insufficient
to promote a properly functioning competitive market. With appropriate
wholesale regulation in place, the current regulatory restrictions (and
costs10) placed on operators in the retail market can be relaxed. This
approach is consistent with that taken by regulators in many other
markets.11
Etisalat has proposed the introduction of market share triggers that
would introduce automatic reductions in retail price regulation in lieu of
waiting for the next market review.12 Etisalat considers that this
proposals merits consideration by the TRA as it will allow the regulatory
See dus initial redacted submission to the TRA, pp. 13-14 (Section 3.1).
See dus initial redacted submission to the TRA, p. 14.
10
Etisalat agrees with dus view (as outlined on page 17 and 18 of dus submission to
the TRA) that the TRAs retail regulation proposals will impose considerable compliance
costs in operators.
11
For a detailed discussion on this, see Etisalats initial submission to the TRA, p. 46-47
(section 3.1).
12
More detail on the market share trigger proposal can be found in Etisalats initial
submission to the TRA, p. 42 (section 3.4.1.2).
8
9

Page 12 of 25

regime to adapt in a more dynamic way to changing competitive

conditions.
As outlined in Etisalats initial submission to the TRA13, and based on a
forward looking analysis, markets RM5 and RM6 should be reassessed by
the TRA as there is a strong case that they are or will shortly become
competitive. Given this, ex-ante remedies in these markets (such as
retail price approval and notification requirements) should be removed
over time.

13

See p. 33-40 (section 2.2.5 and 2.2.6) of Etisalats initial submission to the TRA.

Page 13 of 25

5 Retail markets where du has been found to have

market power (RM1B RM9B)
5.1 Summary of dus position
du argues for the removal of all proposed retail price notification
obligations (and the associated self-certification requirements)
applicable to dus supply of fixed line services.14
du argues that this would be consistent with the principle of
proportionate regulation and would take better account of dus relative
size and constraints on dus ability to take advantage of its market
position.15
Using the same arguments of proportionality, du argues that Etisalat
should face the full suite of proposed retail regulation. Where they are
applied, du argues that based on international best practice, they should
be applied in an asymmetric manner and only to the incumbent operator
(ie. Etisalat).16

5.2 Etisalats response

dus arguments are clearly inconsistent and self-serving. On the one
hand du argues that retail obligations should be maintained on Etisalat in
both fixed and mobile markets over the medium term as wholesale
remedies have not been implemented and would be unlikely to impose
any practical constraint in the short to medium term. However, in fixed
markets where du has been found to have market power, similar
arguments do not appear to apply. Instead, du argues that it should face
no regulatory obligations on its retail operations, even in markets where
it has been found to have market power. Deciding to apply no ex-ante
obligations on an operator in markets where it has been found to have
market power would be undesirable and clearly inconsistent with
international good practice.
Given the market definitions determined by the TRA for the fixed
market, the same approach needs to be followed for du and Etisalat as
both have market power in their respective geographic markets. This is
See dus initial redacted submission to the TRA, p. 14 (section 3.2).
See dus initial redacted submission to the TRA, pp. 14-17 (section 3.2).
16
See dus initial redacted submission to the TRA, p. 15 (section 3.2).
14
15

Page 14 of 25

based on each operator owning the only access infrastructure connecting

customers in their respective fixed geographic markets.
du presents misleading international evidence of regulatory treatment of
the second fixed operator in a number of other countries. While
different countries have different regulatory regimes, it is a general
economic principle that ex-ante obligations should be imposed on
operators found to have significant market power. In the majority of the
countries highlighted as examples by du, regulators have decided on
remedies based on an assessment of market power. This is the same
approach used by the TRA. In the UAE both Etisalat and du have been
found to have market power and hence it is appropriate that both are
regulated.
In the countries referenced by du, the second operator has not been
found to have significant market power and hence it is correct that
these operators should not be subject to ex-ante regulatory obligations.
However, this is not the case in the UAE where du has been found to
have market power in clearly specified geographic markets. Hence, it is
entirely consistent with international good practice that operators found
to have market power in similar markets and with similar rationale for
the market power findings (control of infrastructure), should face largely
similar ex-ante regulatory obligations.
The UAE has two fixed networks in separate geographical areas, with
little network overlap. This is quite different from the examples
provided by du, which include markets where there is an incumbent
operator with a national fixed network and a second operator that has
rolled out a duplicate network across some geographical areas.
A more relevant example in terms of this consultation is the one
highlighted by Etisalat in its initial submission to the TRA. This is the
case of Kingston Communications (KCom) in the UK. KCom has been
found by the UK regulator to have market power in a specific geographic
area of the UK equal to its network footprint (i.e. the region of East
Yorkshire). A range of wholesale and retail remedies have been applied
historically on KCom to address this market power.
The current regulatory obligations are summarised by KCom below:
The Regulator has performed a series of Market Reviews to
establish the state of competition within the communications
sector with the aim of determining how much regulation should
be imposed within each market sector. KCOM's East Yorkshire

Page 15 of 25

operation has been found to have dominance leading to an SMP

determination for it in the "Hull area" for a number of EC defined
product and service markets.
Some of the consequent additional conditions impose further
obligations with respect to publication of other documents and
information regarding the KCOM Group's retail and wholesale
services and operations.
The documents that are required to be published to comply with
the obligations arising from General, USO and SMP conditions,
including reference offers, price lists, interface specifications
and statistical information..17
Historically, KCom has been regulated at both wholesale and retail levels
in a similar manner to BT. Etisalat notes that in its 2009 Market Review
of Fixed Narrowband Retail markets, Ofcom decided to keep a range of
retail regulations in place on KCom as it found KCom still retain
significant market power in the fixed market, while removing all of BTs
retail regulations in its much larger geographic market (i.e U.K.
excluding East Yorkshire).18 Hence, it is not always the case (as has been
argued by du) that smaller operators necessarily face a relatively lower
regulatory burden. The appropriate form of regulatory obligations relies
crucially on an assessment of market power of each operator.
Etisalat also disagrees that du should escape from any regulatory
obligations at the retail level on the basis that such regulation is not
proportionate. In the same way that KCom (mentioned above) has been
historically regulated in the UK (in both the retail and wholesale market)
due to a finding of market power in a number of specified markets, so
too should du. Ex-ante regulations should be applied that are sufficient
to address the potential for du to behave in an anti-competitive manner.
In terms of relative size, KCom is around 2% of BTs size in the UK. In the
UAE, du is approximately 30% to 40% of Etisalats combined revenues.
Etisalat does not agree that du has significant constraints in its ability to
take advantage of its market position. There is strong evidence (as

See http://www.kcomplc.com/regulatory-information/background/
See Ofcom (2009) Fixed Narrowband Retail Services Markets
Identification of markets and determination of market power,
http://stakeholders.ofcom.org.uk/binaries/consultations/retail_markets/statement/st
atement.pdf.
17
18

Page 16 of 25

outlined by the TRA in the consultation as well as in Etisalats initial

submission to the TRA) of the significant progress du has made over the
last few years in gaining market share across a range of markets in the
UAE. The range of additional wholesale and retail regulations can only
strengthen its ability to compete in markets where Etisalat has market
power.
Etisalat reiterates its view (made in its initial submission to the TRA)
that in addition to the regulatory obligations proposed by the TRA, du
should also be required to prepare regulatory accounts on a Historical
Cost Accounting (HCA) and Current Cost Accounting (CCA) basis. This is
needed in order for the TRA to adequately verify that prices offered by
du are not set at anti-competitive levels.

Page 17 of 25

6 Wholesale markets where Etisalat has been found

to have market power (all markets)
6.1 Summary of dus position
du agrees with TRAs proposed remedies on Etisalat. In addition, du
argues for the following additional measures:

That the TRA should introduce a sufficiently robust enforcement

mechanism to support the implementation of the remedies; 19

that the obligation on Etisalat to publish a reference offer (RO)

should only apply on a forward looking basis to new services and
services that are still subject to early stages of negotiations between
the parties;20

that more granularity is required regarding the elements to be

included within the RO and the timeline for its development and
agreement;21

that the RO needs to be a baseline for negotiations, as opposed to a

take-it-or-leave-it commercial offer;22

that the TRA should introduce a sufficiently robust dispute resolution

mechanism (timeframe for decision making, backdating of
decisions);23

that the TRA should introduce a monitoring regime to detect any

price and non-price discrimination by Etisalat;24

that Etisalat should be required to submit a report on an annual

basis, using a template determined by the TRA in consultation with
the industry. This report should cover connection times for
residential and business users, as well as times associated with fault
detection, rectification and handling. To encourage appropriate
levels of internal diligence and responsibility, the report should be
signed off by Etisalat senior management. To the extent that a
report reveals possible discrimination, Etisalat should be required to

See dus initial redacted submission to

See dus initial redacted submission to
21
See dus initial redacted submission to
22
See dus initial redacted submission to
23
See dus initial redacted submission to
24
See dus initial redacted submission to
19
20

the TRA, p. 5 and pp. 23-27 (section 4.3).

the TRA, p. 24 (section 4.3).
the TRA. p. 25 (section 4.3).
the TRA, p. 25 (section 4.3).
the TRA, p. 25-27 (section 4.3).
the TRA, pp. 35-39 (section 5.1).

Page 18 of 25

produce an implementation plan for approval by the TRA that seeks

to address the instances of non-compliance with its nondiscrimination obligation;25

The TRA should review the information produced in the report

(mentioned above) in order to consider whether the current approach
of behavioural remedies remain appropriate or whether more
structural measures, such as functional separation, are necessary to
safeguard the competitive process in the telecoms sector; 26 and

Implementation of passive infrastructure access.27

In WM8A and WM8C, du supports the TRAs decision to require Etisalat to

establish additional points of interconnect.
However, du argues that it is necessary for the TRA to develop a Points
of Interconnect (POI) Policy28 setting out at a granular level a process and
criteria in relation to the development and implementation of new
points of interconnect.29

6.2 Etisalats response

6.2.1 General comments
As discussed in section 2.2.8 of Etisalats initial submission to the TRA,
and based on a forward looking analysis of the market, the TRA should
reconsider its assessment of competition in WM5. In this market, the
rapidly changing competitive dynamics as well as the forthcoming
introduction of comprehensive remedies (including mobile number
portability) means that the market should be considered competitive and
all ex-ante remedies in this market should be removed. Etisalat notes
that the introduction of Mobile Number Portability is intended to reduce
switching costs in the mobile retail market and increase competition,
which, when combined with the high level of competition that already
exists in the mobile market, removes the need for specific wholesale
remedies in this market.
National Roaming should be time-limited in order to promote incentives
on du to invest in its network (rather than piggy back on the investments

See dus initial redacted submission to

See dus initial redacted submission to
27
See dus initial redacted submission to
28
See dus initial redacted submission to
29
See dus initial redacted submission to
25
26

the TRA,
the TRA,
the TRA,
the TRA,
the TRA,

pp. 35-39 (section 5.1).

pp. 39-41 (section 5.2).
p. 35 (section 4.5).
pp. 27-33 (section 4.4).
pp. 28-33.

Page 19 of 25

already made by Etisalat). Site sharing should be reciprocal and not

based on an assessment of market power.30
Etisalat notes that large sections of dus submission, particularly section
4 covering remedies applicable to wholesale markets, have been
redacted making it impossible for Etisalat and other interested parties to
understand the reasoning behinds some of dus arguments as well as to
fully respond to their views and proposals. While Etisalat accepts the
principle that redaction of commercially sensitive data may be necessary
before publication of consultation responses, we do not agree that the
logic of a reasoned argument should also be redacted.
6.2.2 Requirement to produce a Reference Offer
Etisalat agrees with du about the need for more detail on a number of
the obligations (including the content of the proposed RO and the
timelines for agreement) and made similar points in its initial
submission. However, Etisalat considers that these issues should be
subject to a further consultation by the TRA. Separate consultations on
ROs are a common practice in other markets. A separate consultation
will allow for the range of practical issues to be given proper
consideration by interested parties, such as those raised by du including
timelines for agreement, whether backdating of regulatory decisions is
appropriate and whether a formal enforcement and/or monitoring
regime is required).
Etisalat fails to understand why du argues that the RO should only cover
new services on a forward looking basis. Etisalat disagrees with this
proposal as a RO should include all the key services provided by an
operator who has market power in a specified market. This will support
transparency and non-discrimination and the obligation should be
applied to both operators.
Also, Etisalat considers that the TRA should clearly differentiate its
approach to regulating interconnection compared to other wholesale
access services (such as leased lines, cable landing stations, site sharing
etc.). Consistent with this view, Etisalat recommends that two forms of
RO are produced: (1) A Reference Interconnection Offer (RIO) and (2) A

Further detail on Etisalats views on national roaming and site sharing can be found in
Etisalats initial submission to the TRA, pp. 62-65 (section 3.4.5).

30

Page 20 of 25

Reference Access Offer (RAO). This approach is consistent with that used
in a number of other markets (both in the region31 and worldwide).
6.2.3 Introduction of a monitoring, reporting and enforcement
regime
Any ex-ante regulatory obligations including any introduction of new
monitoring and enforcement regimes (as suggested by du) should apply
equally to du given that it also has been found to have market power in
a number of discrete markets and also has a non-discrimination
requirement. Again, Etisalat considers that if the TRA is minded to
introduce such a regime it should be subject to a separate detailed
consultation to allow industry to provide views.
6.2.4 Introduction of a Point of Interconnection (POI) Policy
Etisalat agrees with du that more detail is needed on what the various
remedies proposed will mean in practice (for example, the requirement
on Etisalat to provide additional points of interconnect).
A POI Policy of the like proposed by du may have merit, as a range of
agreed processes and procedures will need to be agreed between
operators in order to implement this obligation in practice. For example,
Etisalat would see merit in such a policy including pricing principles that
set out which party should pay for the capital expenditure (which can be
considerable relative to the amount of traffic that may cross the point of
interconnect in some geographical areas of the UAE) of establishing new
points of interconnect.
However, these details should not be finalised as part of this
consultation. Rather, they should be discussed and agreed as part of a
further consultation at a later time. This will allow for proper
consideration of the range of issues by all interested stakeholders.
6.2.5 Regulations of cable landing stations (WM8C)
Etisalat strongly disagrees that it should face an ex-ante regulatory
obligation to provide access to its cable landing stations.32 Such landing
stations are clearly replicable (evidenced by the landing stations that
have already been established by du in the UAE). The ability to replicate
such infrastructure severely weakens the underlying rationale for

For example Saudi Arabias CITC has directed STC to produce both a RIO and a RAO.
See pp. 67-69 of Etisalat initial submission to the TRA for a detailed discussion of
Etisalats views on this issue.
31
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imposing a regulatory obligation in the first place. If du needs additional

capacity then it has the ability to commercially negotiate with Etisalat
or any other international operator for such capacity or invest in its own
capacity on its existing cable landing station. As du has at least one
landing station, it does not require access to Etisalats infrastructure to
manage resilience. As such, there is no case to require Etisalat to
provide such capacity as part of an ex-ante regulatory obligation.
6.2.6 Implementation of passive infrastructure access
du proposes that an additional market is defined: the wholesale market
for physical network infrastructure at a fixed location. Du argues that
following a market assessment that Etisalat would be found to have
market power in this new market and the remedy that should be applied
to address this market power would be provide for access to passive
infrastructure. Etisalat reiterates its view that defining additional
markets at this stage is unnecessary. It also considers that any additional
types of remedies to those already proposed by the TRA would be
premature and disproportionate. Before any new type of wholesale
remedy is introduced into the market, the current range of wholesale
remedies (including the comprehensive wholesale Bitstream access
product) should be given time to impact on the competitiveness of the
market.
The forthcoming Bitstream access product (which Etisalat and du are
jointly developing) is intended to allow operators to compete for
customers of other networks and through that increase competition in
the downstream retail market. The introduction of this product has been
subject to considerable investment of time and resources by the industry
over the last few years. It should be given time to impact on the market
before alternative remedies are considered.
6.2.7 Structural reform options
Functional or structural separation remedies on operators should only be
considered as a last resort. This is consistent with the approach taken to
the issues by the European Commission. For example, the Commission
has made the following statement:
In exceptional cases, functional separation may be justified as a
remedy where there has been persistent failure to achieve
effective non-discrimination in several of the markets concerned,
and where there is little or no prospect of infrastructure

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competition within a reasonable time-frame after recourse to

one or more remedies previously considered to be appropriate.33
The wide-ranging and comprehensive wholesale remedies that are being
introduced in the UAE, including a Bitstream access product that is
unprecedented in its scope, should be given a chance to address the
perceived market failures identified by the TRA before any additional
remedies are considered.

European Commission (2009) DIRECTIVE 2009/140/EC OF THE EUROPEAN PARLIAMENT

AND OF THE COUNCIL of 25 November 2009 amending Directives 2002/21/EC on a
common regulatory framework for electronic communications networks and services,
2002/19/EC on access to, and interconnection of, electronic communications networks
and associated facilities, and 2002/20/EC on the authorisation of electronic
communications networks and services, paragraph 61.
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7 Wholesale markets where du has been found to

have market power (all markets)
7.1 Summary of dus position
du argues that it should face fewer regulatory obligations than currently
proposed. In particular, du argues that it should not have to prepare a
Reference Offer (RO) as it considers that it would have to charge
reciprocal rates for wholesale prices to those charges by Etisalat.34

7.2 Etisalats response

Etisalat notes that the current TRA proposals mean that du would face
fewer regulatory obligations than Etisalat, so dus proposals would
further widen this asymmetrical treatment of operators that have both
been found to have market power in a range of wholesale markets. This
would be unfair and discriminatory.
Etisalat does not agree with du that it should escape from a requirement
to prepare a RO. Etisalat notes that a RO covers more than just pricing
and, given that Etisalat will be keen to negotiate with du to provide
competition in du network areas moving forward, it will be important for
Etisalat and other new market players in the future that a
comprehensive RO is available from du. Therefore the benefits of an RO
also depend on how many players there are in the market.
Given dus market power in its fixed network areas, it is critical that any
negotiations that Etisalat enters into with du are backed up by a
requirement on du to provide a reference offer for its relevant fixed
services. This is consistent with the general principle that operators that
have been found to have market power in similar markets should be
subject to equivalent ex-ante regulatory obligations.
Nevertheless, we agree with du that interconnection prices should be
reciprocal between the operators. This is consistent with Etisalats views
set out in its initial submission that footnote 70 of the TRA consultation
regarding interconnection pricing should be revised.35

See dus initial redacted submission to the TRA, p. 23 (section 4.2).

For details on Etisalats views see p. 48-49 (section 3.4.4) of Etisalats redacted
initial submission to the TRA.
34
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In addition, and as outlined in Etisalats initial submission, du should be

required to produce regulatory accounts on both a HCA and CCA basis
(the arguments made by du on page 37 of the redacted response apply
equally to du given that du has market power in a number of wholesale
and retail markets).36 This is needed in order for the TRA to have comfort
that the prices offered by du are not set at anti-competitive levels.

For details on Etisalats views see p. 40-41 (section 3.4.1.1) of Etisalats redacted
initial submission to the TRA.

36

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