Better late than never

Roger Field examines the business case for 3G services in Jordan after the first licence is awarded

Tags: 3GBroadbandJordanTelecommunications Regulatory Commission - Jordan
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By  Roger Field Published  August 19, 2009

Jordan TRC’s decision to finally award its first 3G licence to Orange Jordan is a positive development for a country that is already home to one of the region’s most competitive telecom sectors.

But the move to award the licence, which was late compared with many other countries in the Middle East, also leaves a few question marks around the business case for 3G services in Jordan.

The licencing process, which had been due to take place last year, has certainly been a protracted affair. It was originally postponed from last year after three of the four mobile operators in Jordan, Zain, Orange Jordan and XPress apparently asked for more time to complete their business plans.

But when bids were finally invited in March this year, interest from operators appeared to wane, with Orange Jordan the only operator to submit a bid by the deadline.

Perhaps unsurprisingly, the bid was denied, with the TRC arguing that Orange Jordan had failed to abide by the rules mentioned within the tender, while the operator said it had met the conditions but admitted it had included some additional requests relating to tax payments and technical issues.

The incident underscored a fundamental difference in the viewpoint of the regulator and operator that is seen in many countries, and which ultimately does little to help develop the telecoms sector.

Indeed, some analysts pointed out that the TRC was essentially using the licence to extract as much cash from the operator as possible, while Orange Jordan was focusing on the business case to ensure it would be able to make a profit from a 3G operation.

While these differences appear to have been bridged by the latest development, with the TRC apparently accepting some of Orange Jordan’s additional requests, including the scrapping of a JD10 million security bond, it seems that the regulator remains keen on placing short term gains above the long terms development of the sector.

In this latest process, four licences had been up for grabs, but only Orange Jordan and Zain took part. Zain’s bid failed because it did not comply with the rules laid out in the tender document, according to the TRC, while Jordan’s third mobile operator, Umniah, told CommsMEA in an earlier interview that the price was simply too high.

Although Jordan will soon have a 3G network, the development of mobile broadband in the country could have been far quicker, and competition greater, had the licencing process been handled differently.

Analysts at Strand Consult believe the value of selling a mobile licence is minimal compared to the benefits to society of having a national mobile broadband network.

For John Strand, head of Strand Consult, regulators and governments would help their telecom sectors perform better by putting best practice and collaboration ahead of short term gains: “We believe that [regulators] should encourage operators to work together on building network infrastructure, especially in the thinly populated areas and we believe that one should reward operators that deliver a better coverage than required in the license terms. This can be achieved by using taxation models, or by giving a share of the auction money back to the operators if they do things that benefit society,” he said.

Roger Field is the editor of Communications Middle East & Africa.

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