Etisalat is one of the very few operators who still manage to mint money from international calls. And it manages to do so because almost 80 percent among the country’s population of 3 million are expatriates who helped generate 4 billion minutes of international calls during 2007. Any form of arbitrage would threaten that healthy revenue stream. That is why VoIP is banned in the UAE. The official ban applies to VoIP as a competitive international service offered to UAE residents in form of offerings such as Skype. Other forms of VoIP, such as the local loop voice over broadband, do not have to be kept at bay however.
Etisalat has therefore kept itself VoIP-ready from technology standpoint. It conveyed to the regulator yesterday that its network is ready for VoIP based services. The regulator however is not entirely comfortable yet in terms of a regulatory framework that tackles VoIP based emergency services, legal intercept, and interconnection issues. The UAE incumbent had been trialing VoBB on top of Marconi’s softswitch a few years back before the acquisition of the latter by Ericsson. It has lately been field-testing various VoIP services for enterprises including IP Centrex. Etisalat’s competitor du also uses VoIP internally in form of softstwithes to transit/refile the regional voice traffic of the Middle East carriers.
The regulator is likely to seek a protective legal framework for Etisalat that ensures the international call revenue remains in tact. But I would expect them to allow in-country VoBB and business IP-PBX/Centrex services.
International calls are ridiculously expensive in the UAE. I happened to spend a week in Dubai a year ago, during which I found myself recharging the phone at least three times. But there are people there (plenty of them) finding ways to use VoIP despite the ban. Just too many softclients out there to block. Some of the services are actually based in the Middle East region. I am not sure if the UAE authorities have blocked Ahwar but that is one of the more recent options available.
Anyway, if international calls revenue erosion is what Etisalat is worried about, I think VoIP is actually less of a threat to Etisalat because less than 10% of the expatriates would have access to broadband Internet. I reckon mobile callback has better arbitrage potential. Almost everyone in the UAE owns a mobile phone. The other point is that expatriates are typically very price-elastic. If you drop the prices they will jack up the call volume. Net result is the same, if not positive.
It is interesting to see various forms of protection that VoIP invokes. In India a VoIP subscriber can make all the international calls for peanuts but cannot make a domestic long distance call (IP-to-PSTN) within India. UAE is likely to present an opposite scenario: You will probably be offered unlimited calls within the country, but the international part will perhaps remain fairly regulated for a while.