Grand ambition

As Jordan’s regulator prepares to award the country’s 3G licence, the head of the TRC tells George Bevir about his plans for the sector, while two of the country’s leading operators reveal their plans for the industry.

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By  George Bevir Published  July 6, 2009

As Jordan’s regulator prepares to award the country’s 3G licence, the head of the TRC tells George Bevir about his plans for the sector, while two of the country’s leading operators reveal their plans for the industry.

Jordan’s journey towards 3G connectivity has been a faltering one, with an auction that was meant to take place in 2008 finally concluding two months ago in May. If all had gone according to the regulator’s plan, by now an initial payment of JD50 million ($70.5 million) for the licence would have been received and the operator would be hard at work building a speedy mobile network across the Kingdom. Instead, the TRC only received one bid for the licence, from Orange Jordan, which it rejected on the grounds that it “did not fulfill the tender document requirements”.

Every quarter we have new proposals on tax for telecoms, under one form or another. But for as long as the tax regime is complicated and not technology-neutral, then it’s a problem. - Nayla Khawam, Orange Jordan CEO

Nayla Khawam, Orange Jordan’s recently appointed CEO, says the requests were mainly for assistance from the state for help with the launch of 3G, including “limiting the tax burden on 3G equipment and services during a certain time”, and launching 3G services on 900Mghz spectrum to “speed up deployment”.

The TRC says the cost of the licence was based on an average of European 3G licence auctions, but critics of the process say that that the financial commitments were simply too high to make a strong business case.

Ihab Hinnawi, CEO of Jordan’s third largest of four mobile operators, Umniah, was one of the operators deterred by the price. He says: “The regulator announced a bid for a minimum of JD50 million for a one shot payment, and then an operator would have to pay around JD2.5 million on the licence fee on a yearly basis for 15 years, and this is without building the network. You need to have at least 500,000 subscribers – if not more – that use 3G in order to break even after 10 years. The business case is not sound,” he says.

The TRC says it has listened to the concerns of operators and that it has learnt lessons from the process. Dr Ahmad Hiasat, head of the TRC, told CommsMEA that instead of a tender process the regulator will now make a direct award of the spectrum to the existing operators, “within terms that we think are fair to everybody; the treasury, operators and the consumer”.

If the direct approach is not concluded within a month, then it will be retendered with some of the conditions altered, seemingly in reponse to the “requests” of Orange Jordan. For example, Hiasat admits that the previous exclusivity period of 10 months was not long enough for an operator to build and launch a network and still retain a period of exclusivity, and he says that it will be revised under the new licencing process.

Despite the fact that Jordan is no closer to issuing any 3G licences than it was this time last year, Dr Hiasat says he would not judge the process as a failure. “We look at it more as a difficult time in which the tender was offered,” he says. “It was offered in March, and the implications of the financial crisis were still there. If the tender was launched or floated in the months before, or if we waited months until the end of the year, the result would probably have been different,” he says.

He insists the TRC’s “ultimate goal is not to maximise revenue but rather to introduce services and have more services and more competition in the telecom sector with all its submarkets.” A more collaborative approach – with a lower asking price – should see greater interest from operators.

Khawam says Orange Jordan remains committed to launching 3G in Jordan, and if there is an opportunity at a reasonable price, and with reasonable conditions, she says the operator will welcome the initiative.

Hinnawi suggests that if the conditions are favourable, Umniah may be interested. “The whole world is evolving and moving towards technology upgrade and broadband, be it on mobile or fixed,” he says. “We believe we cannot be off track, but at what price?”

WiMAX operators

If the lack of 3G connectivity has been good for anyone in Jordan, it has been for the four operators that chose to deploy WiMAX, which is thriving in the Kingdom. For Umniah, the third largest of four mobile operators, its fixed wireless WiMAX network was launched in 2007 in response to the problem of incumbent Orange Jordan controlling the last mile of fixed connectivity. Hinnawi claims that Unmniah now has a 60%-70% share of the WiMAX market, and he says that the delays in getting 3G to market will only strengthen the case for the wireless broadband technology.

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