Following the introduction of a mandatory Internet Fair Usage Policy by Iran’s Communications Regulatory Authority enforcing price caps, the ombudsman plans to give some wiggle room to Internet service providers and let supply and demand regulate the tariffs.
While CRA is wary of relenting its oversight over ISPs’ pricing mechanisms, the regulator has announced that by summer’s end, through introduction of an amendment to the Internet Fair Usage Policy, price caps are to be removed for most service providers in a move aimed at deregulating the market, reported ISNA.
CRA chief Hossein Fallah says by the end of summer, a directive will be introduced that will give some wiggle room to ISPs to set prices according to market demand, which will hopefully boost competition in the market and optimistically lead to better quality and lower costs of services.
According to Fallah, the draft of the amendment has been uploaded on CRA’s website and ISPs have days to submit suggestions before the proposal is ratified.
According to the proposal, the CRA will no longer be in charge of imposing price caps on Internet tariffs and market demand coupled with competition among ISPs will govern the prices.
Fair Usage Policy
It has been more than six months since the CRA with the collaboration of the ICT Ministry established the mandatory landline Internet Fair Usage Policy.
The scheme has been designed to lower Internet tariffs and allow users to download more data. Lower Internet costs have always been on top of Iranian authorities’ agenda.
Through the Fair Usage Policy system, or FUP, each landline ISP is required to announce a bandwidth cap for different Internet speeds. A bandwidth cap, also known as a band cap or a data cap, is a limit imposed on the transfer of data over a network. Although often referred to as a “bandwidth cap”, it is not the actual bandwidth (bits transferred per second) that is limited, but the amount of data downloaded per month.
Furthermore, a maximum monthly fee has been set based on Internet speed ranging from 125,000 rials ($3) for 512 Kbps services to 800,000 rials ($20) for a 16 Mbps connection.
Major local ISPs including Shatel, HiWeb, Pars Online, Asia Tech and Telecommunication Company of Iran have announced their new data caps for each Internet speed. The caps and tariffs have offered users some long-awaited relief as prices have been cut and data caps are significantly higher than the limits imposed by ISPs previously.
For instance, getting 4Mbps Shatel Internet service with a 110 gigabyte data cap now costs 400,000 rials ($10). Previously, the company offered a 4Mbps connection for 440,000 rials ($11) with a 4 GB data usage limit.
Furthermore, according to the CRA’s Fair Usage Policy, henceforth, even if users exceed their nominal data cap the ISPs cannot disconnect them but are allowed only to decrease the Internet speed to 128 Kbps and not lower. Even with the lower speed, supposedly users would be able to access websites and online services with a relatively low but acceptable speed.
Safety Net
To curb monopolistic tendencies on part of major ISPs which dominate the market to a great extent, the CRA will put measures in place that can operate as safety nets whenever prices are jacked up by broadband service providers exorbitantly.
The Young Journalists Club interviewed Nasrin Mohseni, an official with the CRA, in regard to the possible protective measures.
According to her, when a market moves toward unfettered competition, authorities are not to set price ceilings on the services offered by operators.
She, however, agrees that certain Internet companies have captured the majority of the broadband market in Iran, making them prone to monopolistic behavior.
“Decisions by certain firms can impact Internet tariffs excessively; therefore, the tariffs set by the big companies in the business will first have to be approved by the CRA before they are posted on the ISP’s website.”
Iran’s gradual shift from government-imposed price controls to a free market can hopefully boost the quality of landline Internet services.
