Powerful TCI Seemingly Cut Down to Size by Regulator

The Communications Regulatory Authority has issued a mandate obliging the Telecommunication Company of Iran to share its networks with local Internet service providers.

Mohammad Javad Azari Jahromi, the telecoms minister, said on his Twitter account that the “TCI has agreed to share its infrastructure with private businesses,” ICTNA reported.

“Henceforth, all private ISPs can offer services through TCI’s fiber-optic network,” he wrote.

TCI is a state-owned company with a strong monopoly over the landline telecommunication network. In addition to telephony services it also sells broadband Internet services.

The company has laid fiber optic cables in several areas in Tehran and other major cities replacing copper cables that were the norm in the not too distant past. While public funds have been used for establishing the networks, TCI did not allow the private ISPs to sell services through the newly-installed cables.

Furthermore, whenever customers demanded Internet services in such areas, they received an official message saying that “only TCI can offer an Internet connection in your area...” Local Internet service providers and users have taken their complaints against TCI to the CRA.

One of the oft-mentioned criticisms by the people is that TCI services are of inferior quality and they rather subscribe to private ISPs.

CRA’s new mandate is part of the plan of action by the ombudsman and the Telecoms Ministry to loosen the TCI’s ironclad grip on the key sector.

Earlier this year the CRA issued permits to the state-backed Iranian Net Communication and Electronic Services company for installing fiber optic cables. Prior to this, the TCI was the one and only company that had permission to lay the cables.

Through a deal brokered by the Telecoms Ministry, South Africa’s MTN. a multinational mobile telecom company, is set to invest $300 million in Iranian Net and lend the company $450 million for establishment and expansion of its fiber-optic network.

Earlier in November, two of the largest local Internet service providers HiWeb and Pars Online signed a merger agreement with the blessing of the Telecoms Ministry.

From what is known, none of the ISPs have the capital to compete with the powerful TCI. After taking office in summer Jahromi had said, “Mergers and acquisitions between local ISPs will help private businesses to cut cost, raise funds and compete with TCI.”

He suggested that the CRA is also planning to provide incentives to the M&As.  However, it is not yet clear what the CRA has in mind in its bid to create voice and space for private telecom companies in need of financial assistance.

While government officials often criticize TCI for its monopoly over the market and have long talked about the need for privatization and a market-based economy, it is not certain whether they would be able to walk the talk and make any meaningful changes in the near future.