Network Operators in Oman Oppose Sim Locking

Oman Sim Lock
In May 2009, the TRA issued a issued a public consultation on the regulatory position on mobile sim locking. The current position in Oman is that sim locking practices are not allowed. The TRA issued a paper asking the public’s opinion on the matter. The TRA’s initial opinion seems to support allowing sim locking as that could improve the mobile market. It feared that this might lock customers into specific networks, but suggests that the solution could avoided through the following:

  1. Creating an obligation on operators to continue to provide connection packages without handsets for those who do not want a bundled connection.
  2. Creating an obligation on operators to inform customers of the contract details.
  3. Create a maximum cap on the lock period that does not exceed one year.
  4. Create an obligation on operators to provide early termination terms.

Surprisingly, all operators who responded to this consultation paper opposed allowing sim locking.

Renna, Oman’s first MVNO, opposes the practice of sim locking because (1) they believe that handsets locks could be easily broken and (2) that smaller players (like Renna) won’t be able to match the prices offered by bigger companies through subsidy.

Nawras opposes sim locking on the grounds that it shift the focus from competing on service price and quality into a competition on handsets. Nawars claims that handset subsidies are usually used in immature markets as a “catalyst to improve the uptake” of mobile services (which is obviously not true because it is the normal practice in mature markets like USA and UK), that it will increase customer acquisition cost, it will make the market less transparent, and that customer choice will “ultimately be restricted by virtue of” the contract commitment period.

Oman Mobile also opposes sim locking, though not as absolutely as Renna and Nawras saying that “Sim Locking implementation in Oman at this stage will not necessarily achieve the main objective of ensuring” customers choice. Oman Mobile is of the opinion that this might delay the introduction of new handsets as that will be in the hands of operators instead of consumers.

On the other hand, all non-corporate respondents seems, including the Oman Association for Consumer Protection, seem to support the initiative and think that it will be in the interest of consumers.

I personally think that introducing sim locking would be in the benefit of consumers. Currently, mobile handsets are very expensive in Oman and the iPhone has not been released in Oman, probably because no mobile operators from Oman approached Apple.

Whether or not the sim lock could be broken is not buy itself a huge problem, the benefit of the lock to the operator is usually in ‘locking the customer’ into the network for the contract period, whether or not the phone gets unlocked the customer will still be under an obligation to pay up his monthly charge. Fear of defaulting customers could be minimized by introducing qualification requirements in a way comparable to the way a bank loan is granted – (even Oman Mobile made that comparison in its response). This could be further minimized by requiring a deposit from new customers that is claimed back within six months.

There is no doubt that the introduction of sim locking will not be in the interest of smaller players like Renna as they will not be able to easily compete against bigger player like Oman Mobile as they will subsidize the prices through mass purchases, but it can also be using as a great marketing technique by acquiring exclusive mobile phone deals (e.g, the iPhone on AT&T).

There is a risk that the market can become way too dependent on phone subsidies in the sense that mobile phone manufacturers could eventually find it hard to sell mobile phones if no network operators wishes to sell that phone, but that can only act as a market force that pushes manufactures to make phones good enough for operators to pick, instead of saturating the market with crappy devices.

You can read all the responses here.