The telecoms regulatory environment in the Middle East is holding back the development of the sector. “There is a lack of competition in many of the countries where the incumbent player and regulator have a close relationship,” says Eric Festraets, director of broadband marketing & consulting solutions for EMEA at French telecom vendor Alcatel-Lucent.

Regulators play an important role in opening up the industry by promoting competition, helping to determine costs and maintaining suitable prices. “Without this environment, there is uncertainty and investors will not want to invest,” says Festraets.

This has been most visible in fibre optic rollout where countries with strong regulators have managed to develop more robust fibre-optic networks, like the UAE, Qatar and Bahrain. Egypt, Jordan, Lebanon and Iran have the potential to foster a competitive broadband market, but political and eocnomic setbacks have prevented this so far.

Fixed line broadband penetration in the Middle East is 2.3 per cent, lower than the global average of 5 per cent. This has pushed users to take up mobile broadband which has a penetration rate of 9.4 per cent in the region. Long term evolution (LTE) technology which enables fast-speed internet access on the mobile platform has therefore become an important area for investment for the operators.

While many of the regional players are ready for LTE deployment, the regulators in the Middle East have yet to award them the required spectrums.

Zain Bahrain was the first to announce plans to deploy LTE in August 2009. In March 2010 it trialed LTE, reaching download speeds of 70Mbps. Other operators that have trialed the technology include Vodafone Egypt, Vodafone Qatar, Zain Jordan, Omantel, STC and Mobily in Saudi Arabia.

“Spectrum availability is a challenge, it is a scarce resource and there are many stakeholders who all want a particular frequency,” says Jeremy Foster Ericsson’s head of marketing and government relations for the Middle East & Africa.