Palestinian potential

The ongoing problems faced by Wataniya Palestine, which has yet to start mobile services owing to the failure of Israeli authorities to grant it the required spectrum, epitomise the huge challenges faced by Palestine as it attempts to forge a dynamic telecoms sector.

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By  Roger Field Published  June 10, 2009

The ongoing problems faced by Wataniya Palestine, which has yet to start mobile services owing to the failure of Israeli authorities to grant it the required spectrum, epitomise the huge challenges faced by Palestine as it attempts to forge a dynamic telecoms sector.

Directors at Wataniya Palestine, which is backed Qatari operator Qtel, had hoped to start mobile services by the second quarter of 2009, after securing a licence back in September 2006.

But despite having its infrastructure in place and ready for launch, the company’s directors have been left in limbo as they wait for Israeli authorities to uphold an agreement to release the required spectrum.

The issue is a cause of huge frustration for company bosses, who have already overcome significant headaches just to get the required network infrastructure such as cell sites into the West Bank.

Unsurprisingly, the company’s management is also starting to lose patience, and now appears to be bringing the situation to a head by threatening to sue the Palestinian Authority for the repayment of the license fees it has already paid, a sum worth about $140 million, according to the Financial Times.

While Wataniya’s directors no doubt hope that the move will ultimately help exert some pressure on Israel to fulfill its pledge and release the spectrum, any optimism is likely to be tempered by the experiences of Palestine’s incumbent operator, Paltel, which has long had to run the gauntlet of Israeli restrictions just to offer its customers basic services.

Since it was established in 2003, Paltel, which was recently acquired by Kuwait’s Zain Group in a share swap agreement, has faced obstacles that have delayed and hindered its growth, largely owing to the failure of Israeli authorities to give permission for vital infrastructure to be brought in to Palestinian territory, or for extra spectrum to be released.

For example, until earlier this month, switches for Paltel’s mobile network, Jawwal, were located in London, adding to the cost of delivery of mobile services. While Jawwal has since relocated the switches to Jordan , its growth remains stifled by limited spectrum.

Speaking on the sidelines of the recent Arab Advisors conference in Amman, Jawwal’s CEO Amar Aker told CommsMEA that his company is now operating with the “minimum” amount of frequency possible and that this is likely to become an increasing problem as demand for mobile services continues to rise.

“Over the past ten years, and since day one, we have asked to increase the amount of frequency we have, and the Israelis never replied,” Aker said.

For many industry insiders, the reason for the denial of adequate spectrum is mainly due to commercial reasons, with Israeli authorities attempting to protect the interests of Israel’s mobile operators, which all operate without any restrictions throughout Palestinian territories, a fact which allows them to offer a more seamless service than Jawwal.

In a further blow to Paltel and Wataniya, the Israeli operators also avoid paying any tax to the Palestinian Authority, giving them a financial advantage over the Palestinian players. Paltel, for example, pays a licence fee which represents about 7% of its gross revenue each year to the PA.

Yet despite these huge challenges, Paltel has made huge strides, with its mobile arm having gained an 80% share of the market since it launched.

While Wataniya has not disclosed what market share it is planning to target, it was expected to aim for a subscriber base of 400,000 customers after one year of operation, according to the World Bank.

If the company had been granted the spectrum on time, it would now be preparing to launch operations at the start of July, which effectively means the company will be losing potential revenue from the end of this month.

With Wataniya Palestine having already earmarked some millions of dollars of investment for its network, and with greater competition and investment sorely needed in the Palestinian market, it is clear that the relevant authorities should immediately release the spectrum required or risk long term damage to Palestine’s telecoms sector.

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