1

Telecommunications Regulatory Authority Sultanate of Oman

July, 19, 2006

2

CHAIRMAN OVERVIEW

I really feel privileged to present to you the second Annual Report of TRA, focusing

the key activities of the Authority during 2005.

Last year has been a landmark year in terms of liberalization of the

telecommunications sector culminating in the introduction of competition in mobile

sector. The competition between Oman mobile and Nawras was conducive to a

decline in prices and customers were able to base their choice on many aspects such

as quality of service, customer care, tariff and network coverage. Another remarkable

achievement due to competition was the country’s mobile teledensity reaching up to

56.4 percent, where the number of total subscribers reached 1.333.225 in December

2005 with growth of 65 percent since the previous year.

One of the major functions of the Authority is to safeguard the interests of

beneficiaries of the telecommunication services in respect of the prices of the

telecommunication equipment, quality and efficiency of the telecommunication

services provided by its licensees. With this objective in view, the Authority had

examined different tariff proposals filed by operators and ensured fairness of the

prices and facilitation of market movement towards a competitive tariff regime.

TRA is also responsible for efficient management of the national numbering

resources. TRA implemented a new 8 digits numbering scheme for both Fixed and

Mobile services to cater for numbering requirements for next 20 years.

During the previous year, the old 3 digits short codes were changed to 4 digits short

codes. These short codes are used by telecommunication network operators to

provide particular services exclusively to their subscribers and also used for public

services such as emergency services etc. TRA had also instructed the mobile

operators to implement Mobile Number Portability (MNP) and these directives are

expected to be an impetus to further competition in the Mobile Market.

3

One of the major issues that were dealt with by TRA in the foregoing year was the

preparation of the National Frequency Allocation and Assignment Plan to ensure the

efficient management and use of radio spectrum.

On the other hand, TRA played a dynamic role by participating in Arab, regional and

international meetings and conferences. TRA actively participated in FTA negotiations

that were held between Oman and USA in the fields of telecommunications sector,

electronic commerce and cross border trade services.

I am proud to acknowledge the hard work and efforts done by members and

employees of the TRA to fulfil its objectives. We appreciate the cooperation of the

management of all telecom service providers to bring about TRA’s efforts to a

success in executing the tasks assigned to it.

On behalf of the members, I feel honoured to express our sincere gratitude to His

Majesty Sultan Qaboos Bin Said for his revolutionary vision and support to expand

telecom sector throughout the Sultanate effectively and efficiently.

4

The Organization

The Telecommunications Regulatory Authority is a body corporate established under

the Telecommunications Regulatory Act issued under the Royal Decree No. 30/2002

as a result of Government's initiative to liberalize the telecom sector in Oman and

transform the monopolistic telecommunications market into a competitive one. Until

2002, the national telecommunications network and services in Sultanate of Oman

were owned by the Government (formerly known as the General Telecommunications

Organization, GTO) and the Ministry of Transport and Communications preformed the

role of telecommunications policy maker, where the Minister acted as the Chairman

of the Company.

Such transformation required regulatory intervention to permit viable competition to

emerge and to facilitate transparency in the liberalization process. As a separate

entity, TRA implemented the Government policies in an objective and impartial

manner, and as competition in the telecom market proceeded, the ability of TRA to

act towards all market participants independently from the Government and

operators was enhanced.

The Staff and Management Team

When first commenced its operation in 2002, a minimum of three members of a

temporary committee were appointed in TRA with the Minister of Transport and

Communication the Chairman of the Authority. In 2002, as TRA was established,

there were few employees recruited, and as the responsibilities and functions of the

Authority grew, the number of staff increased. By the end of 2005, there were five

(5) directorates with 17 departments in TRA and a total of 62 staff working under the

organization.

1. The Telecommunications Regulatory

Authority

5

In selecting its team, TRA paid a great attention on the qualification level,

professionalism, efficiency and independency of the individuals selected and the

degree of proficiency and expertise of the managerial working party. The

management team in TRA comprises individuals with many years of experience in the

field of telecom in all its technical, economical, financial as well as legal aspect.

6

In its successive third year, TRA has accomplished a great deal in terms of regulating

and monitoring the telecom sector in the Sultanate. In 2005, TRA continued to fulfill

its objectives and duties that lie in ensuring that telecommunications services are

supplied in a manner consistent with national perceptions of the public interest,

fostering competitive markets to promote good quality of services, new technologies,

affordable prices and efficient supply of telecommunications services. As part of its

responsibilities, TRA aims at creating a favorable climate to promote public

confidence in telecommunications markets through transparent regulatory and

licensing process. TRA as well, persist in protecting consumer right and considers it

as a vital objective, it therefore strives to ensure customers' satisfaction in the quality

of telecom service and the availability of services for all users.

In order to execute its objectives, TRA attempts progressively to remove all barriers

to market entry and allow interested investors to enter the Omani telecom market. It

is not the objective of TRA to be involved in detailed management of the sector;

instead it is mainly involved in maintenance of a regulatory environment conducive to

the efficient supply of telecommunications services to the public.

Among its diverse responsibilities, TRA is accountable for monitoring the telecom

market in its economical aspect, which constitutes reducing barriers to entry, creating

strong market growth, rapid innovation, and ensuring no unfair cross subsidy of

services. Apart from the economical aspect of regulatory basis, technical and radio

spectrum management are two other main areas of Authority's operations, ensuring

efficient use of natural and scarce resources of radio spectrum, numbers and rights

of way.

2. TRA Regulatory Framework

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Duties and Functions

TRA implements the approved general policy for the telecommunications sector in

accordance to the programs prepared by the Authority for this purpose, and

particularly, it is liable to propose policy implementation strategies regarding

Universal Access in the Sultanate of Oman to expand telecommunication access

networks to cover a wider proportion of the population and geographical areas.

The Authority also prepares all necessary programs and plans to develop the general

policy of the telecommunications sector. The policy , international representation and

legal affairs directorate of the Authority assists in this regard by identifying the

policies for the telecommunications sector, proposing suggested changes on the

existing policies necessary for the betterment of the telecom sector, and reports on

the long term effects of alternative policies on domestic and international telecom

industries and services.

The TRA in managing the radio spectrum prepares national frequency allocation plan

and determines the telecommunications systems and services that can be undertaken

by radio licensee. It also prepares proposed amendments to radio licenses, and

allocates and monitors the provisions of the use of radio spectrum in accordance with

international treaties to which the Sultanate is a party.

All telecommunications equipment are administrated by TRA, who issues approvals

for the use of telecommunications equipment for which no technical specifications or

standards have been determined, and prepares the necessary technical specifications

and standards for import and use of telecommunications equipment besides setting

obligations of such equipment.

TRA ensures that operators execute the terms and conditions as per their licenses,

and all proposed interconnection agreements between the operators should be

approved by the Authority. Furthermore, national numbering plan allocated to

operators beside domain name allocation all are set and supervised by the Authority.

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Sultanate of Oman realized the importance of a liberal telecom market regime in

developing the economy and enhancing the private sectors. As part of the national

strategy and Oman's commitments to the WTO, the liberalization plan was set in

action in 2003 under the regulation of TRA.

Seeing the growth trend of mobile services around the world and the excessive

demand for it, it was important for TRA to initiate competition in mobile services. The

benefits of competition will facilitate efficiency, reduction of prices, increase

investment in infrastructure and better customer choices.

The competition introduced in the mobile sector created a healthy market

environment where resources were allocated appropriately and fairly. The instigation

of competition between Oman Mobile Company and Nawras allowed prices to decline

and customers could base their choices on many aspects such as quality of service,

customer care, tariffs and network coverage.

Issuance of Telecom Licenses

In the course of liberalization and open market reform, licensing process is generally

regarded as one of the most important regulatory processes undertaken by the

Authority. The TRA is responsible for the preparation of licenses, and qualification

criteria, analysis of the requests for licenses and to monitor the obligations of the

service providers.

In order to form a liberal telecommunications sector, TRA intends to open

competition for other telecom services gradually. Currently there is one Basic Public

Fixed Telecommunications operator and two Basic Public Mobile Telecommunications

operators in the market. TRA is considering introducing competition in the Basic

Public Fixed Telecommunications Services for local access, long distance and

international carriage. TRA had announced its intention to appoint a consultant to

3. Liberalization of the Telecom Sector

9

assist in the introduction of competition and preparation of licenses for Basic Fixed

Public Telecommunications Services, and Public Data Network services.

As well, TRA will soon open the telecom market for Class II those who meet the

qualifying criteria. TRA is also in the process of formulating regulations and

procedures for issuance of Class III licenses. The objective is to introduce new sort of

technologies and services in the market and provide customers with greater range of

choices at lower prices.

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0

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1400000

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ber o

f Sub

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ers

Jan

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Figure 1. Number of Mobile Subscribers in 2005

Telecom sector is one of the most important sectors of the economy. Over last year,

the sector has witnessed significant changes such as competition in mobile that

helped in bringing efficiency and good quality of services at competitive prices.

As to date, there are three leading telecom service providers in the Omani telecom

market; Oman Telecommunications Company; the sole provider of basic access

services and internet, Oman Mobile and Nawras are basic mobile communications

services operators. The following sections discuss growth of telecommunications in

these services.

Mobile Communication

As the new operator; Nawras commenced its services during 2005, radical

transformation was observed in the Omani mobile market, due to competition

resulting decline in prices of services offered and enhancement in their quality of

services. The two mobile operators witnessed several developments during the year

reflected in their mobile usage, tariffs, quality of service as well as traffic.

Mobile Usage: Although competition in the cellular mobile sector is still in its

infancy stages, yet it

has created a wave of

transforms in the

mobile sector. Figure 1

shows the trend of

monthly mobile

subscribers in 2005.

Source: Oman Mobile and Nawras

4. Telecommunication Market Statistic

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Figure 2. Number of Post-Paid and Pre-Paid Subscribers in 2005

0

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Jan

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Post Paid Pre Paid

There were 1,333,225 subscribers for both pre-paid (1,080,113) and post-paid

(253,112) by both operators by the end of the year 2005.

The annual comparison of mobile market performance shows that the number of

mobile subscribers increased by 65 per cent from 806,280 in December 2004 to

1,333,225 subscribers in December 2005. The entry of Nawras has no doubt

increased the demand for mobile services as prices declined due to competition.

Prepaid and Postpaid

Analysis shows that the demand for pre-paid exceeded the demand for post-paid in

the Sultanate, which could be due to the convenience use of pre-paid services

compared to the post-paid. As revealed in Figure 2, the number of mobile pre-paid

subscribers increased by 97 per cent whereas the number of post-paid subscribers

decreased by 1.6 per cent compared to the last year. The pre-paid subscribers

represented 81 per cent of the total market by December 2005, while post-paid

subscribers constituted around 19 per cent, which is in line with the international

trend.

Source: Oman Mobile and Nawras

Figure 2 shows the trend of in both pre-paid and post paid subscribers from

January to December 2005.

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Market Share

With 1,089,355 mobile subscribers, the Oman mobile share in the market was 81.7

percent by the end December 2005 and it continued to have dominant market power.

This is naturally expected in the first few years of competition as Oman Mobile was

the sole and dominant mobile service provider under the roof of the incumbent. By

December 2005, the market share of Nawras was 18.3 percent and its total number

reached at 243,870. On average, the monthly average growth in number of mobile

subscribers was 23,590 and 27,100 for Oman Mobile and Nawras respectively.

Mobile Teledensity

Teledensity is an important indicator widely used to describe the mobile subscribers

as a percentage of population. The mobile teledesity was 56.4 per cent in december

2005 comapred to 34.1 per cent in December 2004. Although increasing, the

penetration rate in the Sultanate still remains low compared to regional countries.

Mobile Tariffs

As competition intensifies, the movement of mobile tariffs is in continuous decline

and each operator is striving to offer attractive prices to its customers. Oman Mobile

has made several changes in its tariff plans. The most significant change was the

introduction of flat rates for pre-paid voice tariffs in March 2005. Prior to the flat rate

tariff, the tariff was distance-based ranging from 12.5 baiza per minute to 100 baiza

per minute depending on the distance slab. The new system came in line with the

launch of Nawras on 16th of March 2005.

Pre-paid Tariff

Both operators have reduced their activation fee from R.O 19 to R.O 14. Oman

Mobile has reduced its off-peak voice tariffs from Bz.55 per minute to Bz.45 per

minute while Nawras has reduced its tariff from Bz.55 per minute to Bz.39 per

minute. In addition, SMS charges became standard one at Bz.10 per massage for

both Oman Mobile and Nawras, whereas prior to that, SMS during peak hours was

costing Bz.20 and Bz.10 during off-peak hours by both the operators.

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It is perceptible that competition between Oman Mobile and Nawras instigated review

of pricing. Competition between the two operators is not only based on price

reduction strategy where one has greater advantage in prices; it is also based on the

differentiated products they offer. Each company attempts to make additional offers

and introduce new technology-based services to stimulate more customers, such as

offering promotions on regular basis.

Post-paid Tariff

In terms of post-paid products, Oman Mobile's average price per minute is Bz.40,

while Nawras offers Bz.39 per minute for calls to Oman Mobile and Omantel and

Bz.19 per minute on calls from Nawras to Nawras. Operator's tariffs depend on

interconnection cost. Nawras, for example, is charging more for calls made off-

network seeing that it involves higher cost for interconnecting to other networks.

Customers' choice between the two products should be based on cost-effectiveness.

An average per minute call from Oman Mobile network to other networks would be

Bz.40, while a call from Nawras to other network such as Oman Mobile and Omantel

will cost Bz.39 per minute and will cost Bz.19 per minute for calls within Nawras

network. For customers with regular calls within Nawras network, it would be

economical to subscribe to Nawras network, and for customers with regular calls to

Oman Mobile and Omantel, there would be minimum differences between the two

products (average of Bz.40/ min for Oman Mobile compared to Bz.39/min for

Nawras), noting that both Nawras and Oman Mobile offer identical monthly rental fee

of R.O 3 per month (Nawras reduced its monthly fee from R.O 3.9 per month to R.O

3 per month).

Oman Mobile introduced two approaches to attract more customers into its market,

one is the "Mada Plan", which facilitates customers to budget their monthly calls and

enables them to plan in advance accordingly. The plan was introduced in April 2005

as an attempt to make the post-paid service attractive and compatible to pre-paid

services. The second strategy was the "Family and Friends discount" concept, which

offers 10 per cent discount for calls made by an Oman Mobile subscribers to two

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Figure.3 Fixed-line Post Paid and Pre Paid Subscribers in 2005

0

50,000

100,000

150,000

200,000

250,000

300,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPost Paid Pre Paid

specified lines within Oman Mobile's network. Nawras, on the other hand introduced

the Bz.19 for On-network calls to attract more customers. Both Nawras and Oman

Mobile tactics aim to entice more customers into their network. Both the operators

are striving for expanding their respective subscriber-base and are offering promotion

tariffs. The promotions have become a permanent feature of their marketing strategy

and throughout the year there is some promotion going on by each operator.

Fixed Line Service

Although the number of fixed line subscribers has been increasing, the growth rate

on the other hand has been steady. Figure.3 shows the monthly change in post-paid

and pre-paid fixed line subscribers from January to December 2005.

Source: Oman Telecommunication Company

The number of subscribers has been growing on average 1500 per month from

January to December 2005. By end of December 2005 the total number of fixed line

subscribers were 265,237 compared to 246,978 subscribers in December 2004 (7.4

per cent increase). Figure.4 shows the fixed line subscribers by region. As seen in the

graph, Muscat has the largest fixed line subscribers followed by Batinah and lastly is

Wusta.

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Figure.4 Number of Fixed-Line Subscribers by Region

2042766

3916

4

1435

1

1832

1

2321

2

1712

6

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76

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20000400006000080000

100000120000

Mus

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haliy

a

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a

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RegionsN

umbe

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ubsc

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s

Penetration rate

In terms of teledensity, basic access

service still maintains low penetration

rate compared to regional countries. In

December 2005, the rate was 11 per

cent, and remained low as compared to

Source: Oman Telecommunication Company

the regional countries and not improved much since December 2004, where the rate

was approximately 10.65 per cent. Low teledensity could be due to limited coverage

within the Sultanate areas, or it could be due to low demand for the service due to

substitution of mobile.

Post-Paid and Pre-paid

The pre-paid service "Sahl" for fixed line has been increasing over the year, reaching

25,422 subscribers in December 2005, as compared to 10,019 in December 04

showing an increase of 54 per cent. While post-paid still remains static increasing at

a lower rate as shown in figure.3 above.

Internet Services

Internet service is also provided by Oman Telecommunication Company. There are

four main types of internet service that Omantel provides; pre paid Ufaq, dial-up

subscription, ADSL, other broadband and leased line services. Omantel introduced

the ADSL service in December 2004; however the service was available for

residential customers in January 2005. Internet subscribers were 49,425 in December

2005 compared to 47,732 in December 2004 (3.5 Per cent increase). On average, the

number of dial-up internet subscribers has been decreasing over the months, which

is mainly due to prepaid Ufaq and higher demand for ADSL than dial-up service.

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Figure.5 Internet subscribers in 2005

dial-up 41,086

ADSL 8,339

dial-up ADSL & Leased Line

Nevertheless, the market share for dial-up subscribers is higher since ADSL was only

introduced recently in December 2004 and

relatively expensive for those who have limited

use. The number of ADSL subscribers has

increased by an average of 680 subscribers per

month from January to December 2005.

Figure.5 demonstrates the number of internet

subscribers for dial-up, ADSL and leased line in

the third quarter of 2005.

Internet Prepaid “Al-Ufaq”

Another major access to the internet is through prepaid cards called Al-Ufaq. This

allows customers to access internet with a duration determined by the value of the

card. Prepaid internet cards are good for budget conscious consumers. Omantel

offers two types of cards with a value of RO 6 and RO 10 having duration of 20 and

41 hours respectively. Omantel sold approximately 594, 400 hours through 16,600

cards for RO 6 denomination (332,000 hours) and 6,400 for RO 10 denomination

(262, 400 hours) in December 2005. The number of hours sold in December 2005 is

35 percent higher than the December 2004 which indicates that the use of prepaid

internet cards is increasing substantially over the period of time.

Cyber café

Cyber Café is a popular source of internet use. Most of the people who do not have

PC at home use Cyber café for internet, being cheaper and convenient. There is

increase in the growth of internet Café from 80 in December 2004 to 124 in

December 2005. Most of the cyber cafes are in urban areas (more than 100 in

Muscat only). There is need to expand this facilities to other cities and rural areas

too.

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Tariffs

One of the major functions of the Authority is to safeguard the interests of

beneficiaries of the telecommunication services in respect of the prices of the

telecommunication equipment and quality and efficiency of the telecommunications

services provided by its licensees. With this objective in view, the Authority had

examined different tariff proposals filed by operators during the year 2005. The main

thrust of the Authority while examining such proposals was to ensure fairness of the

prices and facilitation of market movement towards a competitive tariff regime. The

approved tariff proposals ranged from marketing promotions to new service tariffs.

However during the period under report most of the proposals focused on the

promotional offers.

For instance Wireless Hotspots Internet service was approved during the year as a

new service to be offered by Omantel. Any filed proposal is assessed based on the

possible market outcomes, impact on competition and consumer welfare.

The year under report was the first year of competition in the cellular mobile sector

in Sultanate of Oman. After launch of Nawras in March 2005, a number of

competitive offers were introduced by the new operator. In response to the

competitive offers of the new entrant the incumbent operator also tried to come up

with matching new options and better offers for the subscribers. Major focus of the

operators remained on attracting the new customers and increasing their customer

base. Most of the offers were of promotional nature restricted to 2-3 months in order

to test the grounds. However, this year witnessed quite innovative and non

traditional pricing offers from both the operators.

Interconnection

In the telecom market, the interconnection is a corner stone of competition. Since

the introduction of competition in the Omani telecom market, the Authority had

realized that Interconnection will be a central and essential factor for facilitating

5. Economic Activities

18

competition. To this end, the Authority is doing its best to ensure that

interconnection between operators is based on fair and judicious arrangements and

the dominant operator does not take undue advantage of its market power. In order

to achieve this objective, the Authority put a lot of stress on developing a regulatory

framework, which can ensure quick and smooth interconnection agreements between

the parties. As a common practice world over, use of Reference Interconnect Offer

(RIO) is considered a very useful tool for this purpose. The incumbent operator was

thus mandated to produce RIO for its interconnection services. The draft produced

has been shared with the new entrant and other potential licensees and stakeholders

for their input. The new entrant has been given the opportunity to negotiate the

terms and conditions of RIO. Although these negotiations are not yet conclusive,

however, these are a step forward to achieve a balanced and fair interconnection

regime in the telecom market in the Sultanate Oman.

Since the final agreement could not be reached between the operators, the service

providers are operating under Interim Interconnection Agreements, awaiting the

determination to be given by the Authority mainly on the level of interconnection

charges for different interconnection services. In order to be fair and transparent and

to use international experience for this very critical and complex issue, the Authority

decided to engage an international consultancy. The consultant has been hired,

which will advise the Authority on a number of interconnection pricing issues. The

consultant’s report will be of vital importance in issuing the determination and setting

the basis for fair Interconnection in the market. The report of the consultant is

expected to be finalized by the second quarter of next year. The Authority will then

issue a determination on the issues in dispute between Nawras, Omantel and Oman

Mobile.

Consumer Affairs

Under the Telecom Act 2002, TRA has statutory role to protect consumers interest.

In carrying out this responsibility , the TRA seeks to ensure access of

telecommunication services to all citizens at affordable prices. The ideal mechanism

to achieve this objective is competition. However, 100% achievement of this

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objective cannot be ensured and all administrations through out the world undertake

a number of policy and regulatory initiatives towards this end. The TRA try to achieve

these objectives by providing relevant information to the consumers and handling

complaints against operators. The consumer complaints are given high priority and

the operators are directed to address the complaints within the shortest possible

time. Most of the consumer complaints pertained to billing accuracy and un-solicited

SMS messages. The Authority has directed all operators to ensure that their systems

are capable of providing detailed billing information upon request from a consumer.

USO

Universal Service ensures that basic fixed line services are available at affordable

price to all citizens across the Sultanate. However, it is not possible to provide basic

telecom services to citizens on commercial terms because of non-viability of business

potential in far flung and sparsely populated areas. As a part of the TRA’s

responsibilities; in 2005 the Authority initiated the process of formulating Universal

Service Policy. This policy would be aimed at creating suitable mechanism in the

Sultanate, whereby the Government can ensure Universal Access to all its citizens. If

required, the help of international consultants would be sought. This policy will create

a mechanism for providing universal services, participation by the operators and

service providers, and ensuring sustainability of such projects in the long run. There

is a plan to test the framework through implementing a pilot project.

In -house Studies

The TRA conducts in-house studies periodically to assess and evaluate market

performance; these studies included among others mobile, fixed and internet

services. In 2005, the Authority through the Internal Planning, Control and Statistics

department carried out a study in collaboration with Sultan Qaboos University

(Communications and Information Research Centre) to investigate the gender's

usage and access to Information and Communications Technologies (ICTs). The

result of the study was presented in WSIS exhibition "ICT 4 All" in Tunis in November

2005.

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Numbering & Domain Names

Article 8(3) of the Telecommunication Act 2002 has granted the responsibility of

managing the national numbering resources and domain names to TRA.

In 2004, TRA implemented a new 8 digits numbering scheme for both Fixed and

Mobile services to cater for numbering requirements for next 20 years. On 17th May

2005, TRA published a Ministerial Decree No. 4/2005 stating that TRA shall charge

operators for the allocation and reservation of Numbers and Short Codes. The

charges were established to only cater for the cost of management of the national

numbering plan.

Following the entry of Nawras in the Oman mobile cellular market, Nawras was

allocated a new number level (95 xxx xxx) to be used for providing services to their

subscribers. A new Mobile Network Code1 (03) was also allocated to Nawras.

TRA received quite a few numbering applications from telecomm operators during

the year 2005. The main point of concern before the approval of such applications,

were ensuring that the numbers will be used in accordance to the National

Numbering Plan and will be used effectively and efficiently to preserve the numbering

resources.

During 2005, TRA has also changed the old 3 digits short codes to 4 digits short

codes. These short codes are used by telecommunication network operators to

provide particular services exclusively to their subscribers and also used for public

services such as emergency services etc.

1 Mobile Network Code (MNC): The MNC is the second field of the International Mobile Station Identity (IMSI) and is two to three digits in length. The MNC, in combination with the Mobile Country Code, uniquely identifies the home network of the mobile terminal or mobile user.

6. Technical Activities

21

TRA had also instructed the mobile operators to implement Mobile Number Portability

(MNP) and these directives are expected to be an impetus to further competition in

the Mobile Market. MNP is the ability for a GSM mobile subscriber to change the

subscription network within a portability domain whilst retaining his original mobile

number.

In the Domain Names area and during the year 2005, TRA has been negotiating with

Omantel (the incumbent Internet provider) to relinquish the registration of Domain

Names to TRA as this is TRA’s responsibility according to Article 8(3) of the

Telecomm Act. TRA also drafted a dispute settlement policy for any disputes between

two parties in the registration of a domain name.

Standardization

The Authority identifies and analyzes the impact of new network technologies that

will necessitate significant changes in the Authority's regulations. The effect of major

Authority actions on the deployment of new technology and advanced

telecommunications capabilities are also analyzed by TRA.

During the year under report, TRA Developed a Code of Practice for Liability and

Limitations on ISPs. It also continued the process of preparing the WLAN regulations

and investigates the technical solutions for National Roaming issues between

operators.

Quality of Service

TRA considers Quality of Service as one important aspect to be carefully monitored

by the Authority. Periodically, TRA follows up with the operators on their license

obligations regarding Quality of Service and carries out drive tests to verify Mobile

Networks performance. In 2005, TRA obtained a test drive tool that facilitates mobile

networks performance checks. There were several test drives conducted during the

year and a report in this regard was issued to assess performance.

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Figure.6 Granted Approvals in 2005

177

52

82

311

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Radio

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GSM

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Number of Granted Approvals

Figure.7 Imported Telecommunications Equipments

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36695

62351

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0 20000 40000 60000 80000 100000 120000

Radio

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GSM

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Number of Imported Equipment

Type Approval

The type approval department of the Authority is in charge of identifying new or

novel products submitted for equipment authorization and performs radio

interference analysis to

determine the impact of

new radio equipment on

users of the frequency

spectrum. As dealers and

users apply for certain

equipment, the TRA

approves and authorizes

the use of these

equipment subject to test

results and regulations of the Authority.

TRA registered 466 dealers for telecom equipment and systems including GSM during

the year 2005, 82 approvals for GSM hand sets, 52 for other terminal equipment and

117 for radio equipment (Figure 6). Moreover, 36,695 terminal equipment and

systems, 62,351 GSM, and 1,164 radio equipment and systems were imported

through official channels during the period under review (Figure 7 refers).

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TRA is responsible for radio spectrum management. The Radio Frequency Allocation

Assignment and Planning department has prepared National Frequency Allocation

and Assignment Plan to ensure the efficient management and use of radio spectrum.

It supports a large number of communications services, particularly for aviation,

shipping, defense services, public safety and mobile telephony. The plan is prepared

according to International Radio Regulations and in line with the international

practices. The national frequency allocation and assignment plan will be implemented

after the required approval from the Frequency Spectrum Allocation Committee that

has been formulated by decision of Council of Ministers and chaired by H.E. Minister

of Transport and Communications.

In order to implement the plan, it is necessary to have a migration plan, where

frequencies can be re-allocated according to the up-coming plan. The migration plan

was also prepared during 2005 after getting the list of used frequencies with

technical specifications from all users. Currently, the plan is with the Frequency

Spectrum Allocation Committee for final approval.

The major function of the department of Frequency Allocations is to assign

appropriate frequencies to radio-communications equipments. It is the responsibility

of TRA to ensure national coordination of frequencies and in cases of radio

interference; it is the responsibility of TRA to provide appropriate solutions.

RRaaddiioo LLiicceennssiinngg

Radio frequency spectrum is available for radio based services such as cellular mobile

communication, aircraft, ship & costal, HF/VHF/UHF, private land mobile/fixed radio,

trunking, GMPCS, microwave, WLL, VSAT, point to point and point to multipoint radio

data networks. The use of radio equipment in the Sultanate of Oman requires radio

license from TRA under Telecom Act 30/2002. The Radio Licensing department

7. Radio Spectrum Management

24

process all such applications/ requests and ensures that licenses are maintained in a

manner which maximizes the efficient use of available spectrum. As of December 31,

2005, the total number of radio licenses issued was 8570 of these 6625 were

renewed.

The Aircraft Radio licenses are issued for use of radio transceivers equipment located

on board aircraft and operating within the aeronautical frequency bands to airport

control towers. During 2005 TRA issued 4 new licenses in this category. While 12

new licenses were issued for two way communications for ships during 2005 as

compared to 18 licenses in 2004. The use of radio for ships helps passenger vessels,

ships, and fishing vessels to communicate. Finally, the most of radio licenses were

issued for fixed and mobile services, where 1929 new licenses were issued in 2005 as

compared to 1260 licenses in 2004.

Monitoring and Inspection

In granting radio frequencies, the TRA verifies applicants planned location of radio

equipment before installation and controls the authorized equipment for proper

application in conformity with the licensing conditions. Prior and following final

granting of radio licenses, the TRA carries out pre-license and post-license conformity

inspections The aim is to control the frequency usage consequently to detect any

illegal usage (Unlicensed) of the spectrum. The Frequency department has initiated a

project to monitor frequency systems. The project is in its first phase and TRA is

training its staff to familiarize them with the new system. Phase I of the project is

completed during the year 2005.

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TRA is the main jurisdiction in charge for follow up of legal and regulatory issues of

the telecommunications sector, when necessary, TRA arbitrates disputes between

operators, solves conflicts, and identifies possible illegal actions of the operators /

service provider's enablers for possible development of enforcement actions.

TRA actively participated in the FTA negotiations and contributed its input issues

related to it especially on the chapter dealing with telecommunications, and

Electronic Commerce and Cross Boarder Trade Services.

A committee was formed by the Ministry of National Economy to look into Electronic

Commerce legislation and TRA played an active role in it. The inputs of TRA on the

legislation draft were substantial especially in the gap analysis document of Electronic

Transaction and Commerce Act.

Drafts on dispute regulations to be instigated by operators as well as on licensing

framework for Arab network were prepared by TRA during 2005. In later stages, TRA

initiated a proposal to play an active role in Telecom Policy and Legislation

Committee of Arab/GCC countries.

8. Legal Activities

26

Global Symposium of Regulators and World Summit on Information Society

(WSIS)

The most prominent events of the year were the Global Symposium of Regulators

and the World Summit on Information Society (WSIS) both held in Tunis. The Global

Symposium of Regulators is a meeting held annually by regulators that is evolved in

size, scope and importance. During the Symposium, experts discusses array of issues

related to telecommunications and allow countries to present their opinion and point

of views on various issues related to telecommunications.

The World Summit on Information Society (WSIS) on the other hand was held under

the high patronage of the United Nations Secretary-General, Mr Kofi Annan, with the

International Telecommunication Union (ITU) taking the lead role in its preparation.

The objective of the summit was to develop and foster a clear statement of political

will and take concrete step to establish foundations for an information society for all,

reflecting all the different interests at stake and find solutions and reach agreements

in the field of internet governance and financing mechanism. Delegates from

Sultanate of Oman attended these meetings and TRA actively participated as a part

of the delegation and gave political support to the Tunis Commitments and Tunis

Agenda for the information society that was adopted on 18th November 2005. More

than 19,000 participants from 174 countries attended the Summit.

International Telecommunication Union (ITU.D)'s Development Sector

Study Groups 1 & 2

For the third year in a row, TRA contributed in the workings of the International

Telecommunication Union (ITU.D)'s Development Sector Study Groups 1 & 2. The

study groups were developed in order to allow telecom experts, regulators and other

interested bodies to make authoritative recommendations related to the technical

work of the ITU through extensive studies. Eng. Naashiah Al-Kharusi, TRA's

temporary committee Member is the Vice-Chairman of ITU-D Study Group 1 for

9. International Events

27

Telecommunication Development Strategies and Policies. The study group will

accomplish the tasks by the end of the year 2006.

Meetings and workshops

During 2005, TRA participated in various meetings, workshops and conferences at

regional and international level notably those which were conducted by the ITU and

the GCC. Some of the regional workshops/meetings were ITU/IBDT Arab Regional

Workshop on Universal Access and Universal Services Policies (Amman, Jordan),

General Assembly Meeting of Arab Centre of Excellence CoE/ARB (Cairo, Egypt), The

Pan Arab Conference on WSIS-Phase II, An Arab Regional Dialogue (Cairo, Egypt),

and Regional Information Meeting and Workshop related to the Administration of the

Arab Group of Countries (Damascus, Syria).

They covered almost every aspect of telecommunication, the most significant issues

were frequency spectrum, standardization, interconnection and price regulations,

access to broadband, universal service opportunities, core statistical indicators for

Information and Communication Technology (ICT) and cyber and network security.

Visit to Regulatory Bodies

In order to enhance the skill and expertise of TRA’s employees, seniors and juniors

staff of TRA visited the Telecommunications Regulatory Commission Jordan to gain

knowledge from their experiences which are at advance stages of liberalization

process. Moreover employees also visited to TRA Telecommunications Regulatory

Authority, UAE for exchanging experiences.

ITU/BDT Regional Workshop on "Interconnection and Price Regulation at

Muscat

In addition, TRA also hosted a workshop on "Interconnection and Price Regulation".

The workshop was seen as an important event as to gain experience from other

national and international expertise in the field of interconnection and Pricing

methods.

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Free Trade Agreement (FTA)

The Government of Sultanate of Oman decided to enter into Free Trade Agreement

(FTA) with the United States of America. Negotiation lasted about one year. The

agreement was finalized and awaited for formal legislative approval. TRA fully

participated in the process and contributed to various areas such as market access to

goods, cross border services, intellectual property rights etc. However, the most

important for TRA was Chapter 13 which deals with telecommunications. Eng.

Naashiah Al-Kharusi, Member of Temporary Committee of TRA led the

telecommunications and ICT Group. This field is most flourishing for economic

activities and both sides negotiated on each and every aspect. Therefore, it took

considerable time and several rounds of discussions were held before agreement was

finalized. TRA did it best to protect safeguards and interest of the state and

telecommunication business. However, it must be pointed out that the starting point

of these negotiations was the Sultanate of Oman commitments to WTO. Thus

protection could not be given to those concerned which were already conceded under

WTO agreement.

Arab Centre of Excellence (CoE)

The Centers of Excellence concept was established in order to develop and

strengthen the capability to generate the expertise in developing countries around

the world.

The Arab Center of Excellence is playing unique role in the development of attractive

telecommunication markets and the rendering of telecommunication services for the

development of society in Arab Region by:

1- Developing and strengthening the capability to generate advanced level policy,

regulatory, managerial and requirement of technical expertise to address the needs

of the telecommunication sector in Arab States Region

2- Introducing and enhancement of application of communication and information

technology in education, commerce and other fields of importance in the Region.

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The Center is an ITU project run by a Steering Committee representing the

stakeholders in the Region.

The Steering Committee decided to transfer the office of the CoE from Damascus to

Oman. TRA is hosting the office of the CoE for coming 3 years and providing all the

logistic and man power support to facilitate the activities of the Center besides a

contribution of RO 23130 per annum. CoE office is located at Telecommunication

Regulatory Authority’s premises.

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Liberalization of telecommunications is an on going process and it has embarked TRA

to come up with an ambitious drive to fulfill its objectives stipulated in Telecom Act

2002. In order to accomplish its goals, TRA has prepared a strategic plan and is in

the process of implementing through its staff, by developing legal framework and

procedures, ensuring transparency in its decision making and following customer care

strategies. TRA has planned following priorities to achieve its objectives

Competition

One of the major responsibilities of TRA is to foster competition in all areas of

telecommunications. Competition is best guarantee of other key objectives such as

the improvement of services and facilitation of a wider choice. A competitive market

cannot be created without the need for regulatory intervention to ensure that

resources are allocated appropriately and fairly. During the period under review

competition was promoted in mobile sector and its fruits are reaching to the end

users. TRA intend to introduce competition in fixed line as well as in value added

services sectors in near future.

USO

Currently teledensity in rural areas is very low due to difficult terrain of the country.

It is the prime concern of the Government and the TRA to ensure access of basic

telecommunication services to all the citizens at affordable prices. Due to unattractive

market in rural areas for the operators from return on investment point of view, it is

challenge for regulator. The Authority intends to address this issue on top priority

through a program in coming year by identifying and formulating the basic

requirements for telecom services in the Sultanate, whereby the Government can

ensure Universal Access in rural and remote areas for such services.

10. Forward-Looking Activities for 2006

31

Radio Spectrum

TRA is well aware of future needs of the radio spectrum, therefore the department of

Frequency Planning and Allocation has planned to vacate the 1800 MHz and 2 GHz

bands from the concerned government bodies and make it available to new operators

or licensees, and also intends to vacate the 450-470 bands to make it available for

mobile services for rural areas and other frequency bands which are important for

safety and for the use of aeronautical and maritime services. As for Radio Local Area

Network (R LANs) operating in 2.4 and 5.8 MHZ, the regulations in this regard have

been prepared and awaited for approval. TRA intends to complete all technical data

and to implement Phase II and III of monitoring network system.

Voice over Internet Protocol (VoIP)

VoIP is growing at twice the rate of traditional switched voice and now accounts

globally for 11 percent of international calls. The impact of VoIP technology is

greatest on routes into developing markets, where continuing high international

settlement costs make VoIP an attractive alternative. VoIP will be an area of high

priority for TRA and developing and articulating a longer term view of VoIP and

increased liberalization in light of global developments.

Broadband

Broadband penetration in the Sultanate is very low as compared to regional

countries. The main reasons for low penetration include lack of competition, high

prices and lack of awareness of general public. TRA recognizes the importance of

broadband proliferation in the country since it is directly associated with the social

and economic uplift of the country. TRA is devising strategy to introduce competition

in the broadband resulting reduction in prices and making measures to ease

broadband delivery mechanism and users equipment facilitations.

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