—Research In Motion Ltd. BB.T -3.24% is close to an agreement with telecoms operators in the United Arab Emirates which will allow the manufacturer of BlackBerry devices to offer Internet-based voice and video services for the first time to users in the Persian Gulf country, providing a potential boost to sales of the recently-launched Z10 handset.
RIM has faced resistance in the U.A.E. and other Persian Gulf countries to the launch of so-called Voice over Internet Protocol (VoIP) services because of fears that they would pose a threat to revenue from traditional voice services offered by the region's carriers. In the U.A.E., Dubai-based Du and Abu Dhabi-based Etisalat are the duopoly providers of telecoms services.
Du and BlackBerry confirmed that they have started to test VoIP and Internet video functions on the BlackBerry 10, and said they expect to launch the service to customers soon. Those functions were missing when BlackBerry launched its new device in the U.A.E. on Sunday because both Du and Etisalat had blocked the BlackBerry application which is needed to launch the services.
"Our partners are currently testing the service. They will announce availability when they're ready," a BlackBerry official in Dubai said in an emailed statement. An official at Du confirmed that the new BlackBerry Messenger voice and video services are being tested, but said an agreement to launch the products wasn't yet guaranteed. Etisalat declined to comment.
The launch of RIM's VoIP service, known as BlackBerry Messenger video and voice, would provide the Canadian company with an advantage over rival handset providers in the U.A.E., as its competitors—Samsung Electronics Co. 005930.SE +1.29% Ltd., Apple Inc. AAPL -2.57% and Nokia Corp. NOK1V.HE -1.63% —are still unable to provide such services. Other VoIP services, such as Apple's FaceTime and Microsoft's MSFT +0.07% Skype, are blocked in the U.A.E., either because they can't be downloaded or because they're not available on smartphone hardware.
"It would be an advantage to have that feature available," said Matthew Reed, principal analyst at Informa Telecoms and Media in Dubai. "It's a clear advantage for BlackBerry."
But the move could damage revenue at the established phone companies, depending on how the operators charge customers for the services. Carriers in the oil-rich Persian Gulf are particularly wary of allowing foreign companies to provide VoIP services because they have high roaming charges and large expatriate populations who need to phone relatives in their home countries.
"In other markets BBM Video would be a nonissue, but it is [a potential issue] for Du and Etisalat because if they give up international calls as a source of profit they would have to look at other ways to win that back," said Edwin Grummitt, head of Middle East at London-based consultancy Analysys Mason. "I cannot see how the operators can commercially make this work."
Traditional voice calls are charged depending on the length of the call and the country receiving the call. VoIP calls are usually free to anywhere in the world, once the user has purchased a fixed-cost data package from a telecoms operator. VoIP services will cost the global telecoms industry $479 billion in lost cumulative revenue by 2020, which represents 6.9 % of cumulative total voice revenue, according to consultancy Ovum.
Etisalat, which is present in 15 countries across the Middle East, Africa and Asia, made revenue in the first nine months of last year of 24.4 billion dirhams ($6.6 billion), while Du, which is present only in the U.A.E., had 7.4 billion dirhams of revenue in the same period. The operators don't break out revenue from voice calls, but analysts say income has fallen as customers have worked out ways to get around the ban on free Internet-based voice services.
BBM is one of BlackBerry's most popular offerings, with more than 60 million active members using the free instant messaging service. In other markets, BlackBerry has offered a voice function for BBM since December on its BlackBerry 7 operating system. It launched the video service on the new BlackBerry 10 late last month.
RIM doesn't break out the number of BlackBerry users in the Gulf region, but analysts say its market penetration is above the global average. Reflecting that popularity, Dubai was chosen by RIM as one of just six cities globally for the launch of the BlackBerry 10 operating system and its two new phones, the Z10 and Q10.
Retailers across the U.A.E. report strong sales of the new BlackBerry Z10, though RIM has declined to provide figures. A launch date for the Q10 in the region hasn't been announced but the handset is expected in the U.S. in April.
A senior executive at EMS, the official distributor of BlackBerry handsets in the U.A.E., said sales had been "mind-boggling" so far for the Z10, but declined to give exact figures and declined to be named as he isn't the official spokesman for BlackBerry.
In 2010 the U.A.E. threatened to ban BlackBerry services in the U.A.E. on security grounds, because the government wasn't able to monitor text messages sent via the BBM system. The two sides subsequently reached an undisclosed agreement to allow BlackBerry sales to continue.
An official at the U.A.E.'s Telecommunications Regulatory Authority, who requested anonymity, said that the BBM voice and video services will also comply with that agreement