The annual publication, Iran - Telecoms, Mobile and Broadband, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Iran.

The telecoms market in Iran is, as one might expect, one of the least liberalised in the region. Serious competition exists only in the mobile market where second national mobile operator MTN Irancell now has around one third of the market. Further liberalisation, in the form of a third national mobile licence and the partial privatisation of incumbent telco TCI, has been in gestation for some considerable time, with both beginning in August 2008, but both have yet to eventuate and maybe the stop-start proceedings reflect wider conflicts in government.

The third mobile licence tender has had a particularly difficult path. The tender was launched in late August 2008 and in January 2009 the government confirmed that a consortium led by Etisalat of the UAE had won the licence. The consortium was reported as having submitted the highest bid in the tender, at US$402.1 million, plus a royalty of 23.6% of revenues. In May 2009 the government announced that Etisalat had been stripped of the licence, which would instead be awarded to the runner-up bidder - a consortium including Zain of Kuwait. The government claimed that the Etisalat Consortium had not fulfilled its commitments and had not paid the licence fee, a claim Etisalat denied. Then in July it was reported that the Zain Group had also ‘not fulfilled obligations’ and a new tender would be held. Both Etisalat and Zain are very experienced winners of mobile licence tenders and seem unlikely to have made such basic mistakes.

The process of the award of the second mobile licence was also similarly difficult and took two years from 2003 to 2005. That licence was also awarded and then re-awarded to another bidder. In that instance it was Turkish mobile operator Turkcell reported as not paying a fee by the required deadline. The final winner was MTN of South Africa.

Despite these regulatory difficulties and hazards, plus low ARPU, the mobile market is attractive for new operators due to Iran’s relatively large population and yet to be saturated market. Both annual growth and penetration rates are around 65%. No 3G licences have been issued as yet.

Fixed-line penetration in Iran is higher than in most Middle East countries. Internet user penetration is probably not that much different from many countries in the region but most users access the Internet at Internet cafes or other non-residential access points. Internet subscriber numbers can only be estimated. Broadband subscribers can also only be estimated but numbers are almost certainly very small. Internet censorship is strict. By November 2008 the number of banned sites was put at over 5 million.

Iran is very stony ground for any form of digital media to grow or flourish due to the government’s strict control and censorship of Internet media and its banning of satellite TV dishes to receive the wealth of free to air DTH satellite TV channels available in the region.