ANALYSIS: Iran opens doors to international carrier community
Iran has begun publicly raising the profile of its telecoms market to the international carrier community following the lifting of international sanctions earlier this summer.
A senior official from Iran’s Telecommunication Infrastructure Company was present at Capacity Eurasia 2015 in Istanbul, Turkey, earlier in October showcasing the country’s existing telecoms infrastructure and its plans to grow the market moving forward.
Speaking at the event, Mahmoud Khosravi, who is deputy minister, chairman of the board and managing director at TIC, said Iran would “welcome foreign investment” and is “committed to connecting the region”.
In particular, he highlighted to delegates the transit potential of the country, revealing that TIC is aiming to grow international transit from 6.2Tbps by the end of the year to 20Tbps by 2020. Furthermore it has a target to increase its internal IP network from 4Tbps to 40Tbps over the next four years.
“It is a big project for us,” he commented. “We welcome all players to come talk to us about business and traffic then we can determine timeframes for them.”
TIC operates over 58,000km of fibre-optic network in Iran and is aiming to position the country as an alternate terrestrial route for traffic between Europe and Asia.
Since the US and EU announced they would be lifting sanctions on Iran, it has emerged as one of the more stable options for transiting traffic through the Middle East, with war plaguing attempts to establish routes via Syria or Iraq. Indeed, compared to many of its neighbours, Iran has a relatively high level of security and an established constitution.
Carriers will also be encouraged by the initial openness of TIC, both in its promotion of international transit and the measures it is taking to attract investment in its domestic market.
Iran is in the process of establishing a new telecoms regulator, and has plans to open a data centre and internet exchange point in Tehran aimed at peering traffic locally. This has the potential to act as a hub for regional traffic, helping to reduce the large volume of traffic between Iran and its neighbouring countries that is still transiting via Frankfurt. “All players can come to Iran to establish PoPs in Tehran Telehouse,” added Khosravi.
Furthermore, there are plans to issue MVNO licences, enabling international players a chance to offer services to Iran’s considerable population of 78 million. Mobile penetration presently stands at approximately 90%, but just 10 million are 3G or 4G subscribers.
According to research by Salience Consulting, the present estimated ARPU for combined fixed and mobile services equates to $13, and there is said to be huge potential for mobile broadband and FTTx deployments in the country.
Iran, however, remains uncharted territory for telecoms operators. The country has a high number of VPN users, and its internet speeds are said to be slowed down by heavy web filtering. Most popular applications, such as Facebook, Skype and YouTube, are banned.
During decades of isolation, sanctions in relation to payments, importation of equipment and collaboration with foreign companies have clouded the risk of conducting business in the country.
Mahdi Yahya, MD at SAMA, has been encouraged by the improvements he has seen to the Iranian telecoms market, but questions if the country can meet the necessary standards. “The biggest risk is Iran has raised expectations and can it meet them?” he asks. “The network might not be to the standard advertised technically or financially. Will they also be able to regulate competition effectively?”
Pricing for existing transit through Iran remains high, and Yahya believes this must be lowered in order for the country to be considered as a viable option for carriers. “I think quality has improved [for transit through Iran] but pricing hasn’t,” he said. “Capacity was a limited commodity, which restricted the pricing. As more capacity comes on-board, hopefully pricing will be adjusted.”
Yahya brings experience of operating in neighbouring Iraq, where SAMA worked alongside the Iraqi government on a project to enhance the country’s data infrastructure.
SAMA is hoping to leverage this experience to become one of the first private companies to operate large-scale projects in Iran once the country is fully open for business. Yahya is overall extremely positive about the potential of the market and his early discussions there: “Iran is open to suggestions from foreign companies, which is great.”
SAMA will face competition. Iran represents an exciting new unknown market for carriers, and there is likely to be a flurry of interest in the country as the timelines and regulatory framework becomes clearer in early 2016.
In the meantime expect Iran to continue making all the right noises. TIC’s presentation closed with a slide reading: “We are going to mobilise our efforts to facilitate foreign trade. We are going to overcome past limitations.”