Ending exclusivity

Jordan’s telecoms sector will benefit from a swift end to 3G exclusivity

Tags: JordanOrange JordanZain - Jordan
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Ending exclusivity Orange Jordan is taking legal action over an alleged infringement of its 3G exclusivity period.
By  Roger Field Published  February 15, 2011

When it emerged that Orange Jordan had started legal action against Jordan's telecom regulator, the TRC, it initially appeared to be a classic case of an incumbent operator rejecting the prospect of increased competition.

Orange was awarded Jordan's first 3G licence back in August 2009. The company paid JD50 million ($70.4m) for a licence and was given six months to deploy its network, followed by a one-year exclusivity period.

Orange launched commercial 3G services in March 2010, and has since gained some 150,000 subscribers.

But with Zain now preparing to launch its own 3G service this month, Orange claims that its licence conditions have been breached, and Nayla Khawam, CEO, Orange Jordan, confirmed to CommsMEA that the company had filed a lawsuit against the TRC for allegedly violating its 3G exclusivity rights.

Khawam said that under the terms of Orange's licence, no other operator was to be awarded a 3G licence during the exclusivity period. She added that the TRC had received JD50 million from Zain for a licence during this period, which Orange considered to be a breach of the agreement.

Jordan's Ministry of Communications and ICT (MOICT) told CommsMEA that Zain had paid JD50 million in May 2010, which allowed it to import 3G hardware into the country.

Haitham Al-Qaisi, media relations manager at MOICT, said that Orange's "separation period" ends in February 2011 and also confirmed that: "Once the separation period ends, Zain will then sign the license and frequency agreements after which they can launch services."

With Orange apparently seeking compensation of JD80m from the TRC, the issue is likely to be high on the regulator's agenda. And while all of the facts surrounding the case are not yet clear, it appears that much hinges around the definitions of the words "licence" and "exclusivity" and what exactly constitutes a breach of exclusivity.

For the TRC and Zain Jordan, it appears to mean that Orange had the right to be the exclusive provider of 3G services during the exclusivity period, while allowing another operator to develop a network and be ready to launch services at the end of the period.

Orange appears to have taken the definition of "exclusivity" to mean that it had the exclusive right to test and install 3G infrastructure, and run 3G services.

The MOICT and the regulator could have been more transparent about the licencing process for a second 3G operator, and should also have kept Orange better informed of its plans to allow Zain to deploy a network. The licence agreement itself could also have been clearer in its definitions of what another operator would be able to do in terms of testing and deploying 3G equipment during the exclusivity period.

But by claiming that the regulator should have denied any other operator the right to even test equipment and prepare a 3G network infrastructure, Orange is effectively arguing that it was entitled to an exclusivity period of far longer than one year.

Had the regulator not given a second operator permission to begin deploying a 3G network, Orange's exclusivity period would have stretched on for at least another six to 12 months - taking into consideration the time necessary for licencing arrangements, importing and testing equipment, and deployment of the network.

Ensuring a competitive marketplace should be a priority for all regulators, and this is something that the TRC appears to have undertaken by allowing Zain to test and install a 3G network prior to awarding a final licence allowing the operator to start commercial services.

It is also interesting to note that Zain paid JD50 million to the TRC in May. This is the same amount that Orange paid for its licence, which means that Orange has still enjoyed a significant advantage over Zain.

Indeed, a good proportion of the 150,000 3G customers that Orange has already gained are likely to represent the "low hanging fruit" - customers that were desperate for 3G services and were less concerned about price - and so Zain could well face a tougher task gaining a similar number of 3G customers in its first year of operation.

In this light, competition is what Jordan needs most to spur growth of mobile broadband. Even Orange admitted that one of the reasons it had attracted fewer 3G customers than it hoped for was due to a shortage of 3G-enabled devices and a lack of awareness of 3G services.

With less than 30% of Jordan's 6.4 million people estimated to be internet users, according to the ITU, the introduction of a second - and even a third 3G operator - would surely be the ideal antidote to a lackluster broadband sector.

Far from being a threat, competition will benefit Orange Jordan's efforts to expand its 3G network and customer base. With a low 3G mobile penetration, it is clear that the Jordan's mobile broadband sector remains in its infancy, and both Orange and Zain have everything to play for.

2406 days ago
Mohammed Merie

That's really a kind of fraud ..
how come TRC allows Zain to import these 3G Equipments & be ready for the launch by the time Orange Ends the exculsivity ?
That doesn't make sense !!
Does TRC allow any company to import any equiments before taking the apporval & lots of questions on how & where to be used .. while they are allowing Zain to import this while it's not even time to pay for the License ?

where are the rights of excusivity ?
why TRC gave 6 months to Orange to deply the 3G while allowing Zain to be start the service right away ??

That's not Fair ..
if I were Orange Jordan .. for sure I will make more than a case for that .. & sue them & ask for the 6 months period Loss

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