Competitive edge

Jordan’s mobile sector is highly competitive, but its fixed sector needs greater liberalisation

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Competitive edge Antonio Carvalho: Jordan’s fixed line sector remains a monopoly.
By  Roger Field Published  August 2, 2010

It was perhaps no great surprise that Jordan topped a recent index measuring the competitiveness of the mobile sector in each of the Arab countries.

Jordan, which was the first country in the Middle East to begin opening up its mobile sector and to privatise its incumbent operator, Jordan Telecom Group, earned top spot in the Arab Advisors’ Cellular Competition Intensity Index, gaining a score of 80.7%, placing it ahead of its closest rivals Saudi Arabia and Palestine.

But while the accolade was no doubt welcomed by Jordan’s government and telecoms regulator, the operators are probably more concerned with an even more important set of numbers.

As one of the region’s most competitive mobile markets, Jordan has experienced stellar growth in the past few years. Indeed, according to data from Delta Partners, a Dubai-based research and consulting firm, Jordan’s mobile penetration rate increased about 13% between December 2008 and June 2010, when it reached 101%.

Jordan has three mainstream mobile operators and an IDEN operator, which caters mainly for the corporate sector. Zain, which was the first player to start mobile services back in 1995, has a market share of about 39%, while Orange Jordan follows closely with 34%, and Umniah, a unit of Bahrain’s Batelco, has a respectable 26% share, according to figures for June 2010 from Delta Partners. Xpress has a market share of just 1%.

The mobile market also looks set to benefit from the launch of Friendi Mobile, an MVNO that operates on Zain Jordan’s network, in June.

Antonio Carvalho, a partner at Delta partners, says that the mobile operators are engaged in “a strong battle” for customers, which is driving competition.

But while he admits that Jordan was the first country in the region to liberalise its telecom market, he adds that plenty of work remains to be done, particularly in the fixed line and broadband sectors.

“It was the first to liberalise its telecom market in the Middle East by privatising the incumbent and opening up the mobile market for competition. It offered licences that allow national transmission and international gateways to be built,” he says.

“However, the pace of liberalisation slowed and no other fixed licences were issued, and this has somewhat affected its overall level of competition in the region.”

Carvalho describes Jordan’s fixed sector, which is yet to introduce Local Loop Unbundling, as an “absolute monopoly” held by Orange, which faces only very limited broadband competition from a few WiMAX operations, including services from Umniah and Zain.

Jordan also lags behind many of its regional peers in the mobile broadband space. The country was late to auction its first 3G licence, which was awarded to Orange in 2009. The incumbent operator launched its 3G service in March 2010 and has exclusivity until March 2011.

While this may give Orange a better chance of extracting value from the $70 million it paid for the licence, it does little to instigate competition in the broadband space. “There is still room to introduce a more competitive environment,” Carvalho says.

“The average connection speed from fixed line internet access is 512kbps which leaves ample space for competitive mobile broadband offering in the coming months.”

Furthermore, Orange Jordan’s 3G exclusivity period could delay Jordan’s mobile broadband sector from catching up with more developed countries until as late as 2012, in terms of penetration, speed and price, Carvalho adds.

“If one considers the regulatory environment a measure of competitiveness, then I agree that Jordan tends to be a competitive market by Middle East standards, but there are still more regulatory steps to be made,” he says.

Regulatory issues

Ihab Hinnawi, CEO of Umniah, agrees that there are a number of areas in which Jordan’s regulatory climate can be improved. He points to a lack of mobile number portability and a lack of unbundling of the copper local loops, which are necessary for last mile access, as issues that need to be dealt with.

Jordan would also benefit from more regulations to control dominance and anti-competitive behaviour within the telecom sector.

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