Finally Voice over Internet Protocol (VoIP) appears to have arrived officially in the UAE and should soon not only be on everybody’s lips but also on their laptops and telephones. 
On 10 January 2011 the UAE Telecommunications Regulatory Authority (“TRA”) released a statement according to which they would no longer enforce the ban on Skype and other VoIP providers. From now on it is up to Etisalat and Du to decide whether to open the gates for Skype & Co or to offer their own VoIP solutions.
Background:
According to Federal Law No. 3 of 2003 (Telecommunications Law) VoIP is classified as a regulated telecommunications activity. TRA is the regulatory and supervisory body. In accordance with a TRA –Regulation of 2006 VoIP services can only be legally offered to UAE customers through a licensed company. As such there are only Etisalat and Du, the two half-governmental organized and oligopolistic co-existing telecom providers in the UAE. In unison both have been reluctant to reach agreements with Skype to allow for their services to be run in joint venture in the UAE or to develop their own VoIP solution, whilst willingly enforcing the TRA ban on Skype. Their biggest problem will be the expected turnover losses in relation to international phone calls, due to the high ratio of expats traditionally forming the lion share of the telecommunications business in the UAE.
However, even with blocked skype.com websites it has been possible for many users to obtain the Skype software. The same can be used once installed independently from the Skype website. Only Du went a step further and appeared to be jamming the Skype voice signals with the result that Du customers were not able to use the Skype client for calls.
The policy change of the TRA represents an act of de-regulation, albeit a questionable one if one considers the principles of due process of law. Instead of a true de-regulation including a requirement for Etisalat and Du to connect to third party service providers, both are now being granted an almost sovereign discretion to open the market in accordance with their own strategies.
This illustrates rather bluntly what everybody knew but never really dared to say, namely that the sole reasons for or against an opening of the UAE market for Skype & Co in the end of day rest solely on the commercial considerations of these two oligopolists.
However, lately the pressure increased significantly and in the aftermath of the financial crisis the UAE must fear a loss of image if they are to continue their Don Quixote like resistance against a global trend. Neither Etisalat nor Du will want to appear anything else but progressive and innovative. So far they were able to point the finger towards the TRA, but now the responsibility rests with them.
Hence, despite the prevailing commercial risks it does not surprise that Du has already released the block on Skype’s website and furthermore has ended the jamming of Skype voice signals. Etisalat is yet to change its policy. The same however appears to be just a matter of time.  At least Etisalat users who are in possession of the Skype software can use it with no problems and they may download it whilst being logged in with another local area network provided by Du.
In the end of the day we can only draw the following conclusions. The use of Skype & Co for telephone conversations can no longer be regarded as illegal in the UAE, regardless of whether Etisalat and/or Du are blocking the service or not. However, both providers have the option to provide their own VoIP solutions and it would not be very unlikely that they opt to block Skype again in order to push their own services. However, the same would mean a step back and could entail a very unpleasant PR effect that may be hard to swallow even for an oligopolist.

Axel Jacob
Legal Consultant