Eye on Jordan's telecoms market

Jordan boasts one of the most advanced telecom markets in the world. But internet penetration remains low - an issue that features high on the telecoms agenda for this year.

For the third year running in 2007, Jordan topped Arab Advisors' Cellular Competitive Intensity Index. With a score of 78.1%, it easily finished ahead of other Middle Eastern markets.

As well as having four fully licensed operators, Jordan has the third highest number of prepaid plans, according to the consultancy group. But there is still much work to be done.

"I agree that the Jordanian mobile market is reasonably competitive, but I would not say that it's fully competitive," says Dr Ahmed Hiasat, CEO of the Telecommunications Regulatory Commission (TRC). "That can be viewed in terms of the competition between the current operators, the prices and the range of services available."

It is a testament to the market that instead of just comparing itself to its regional counterparts, Jordanian telcos are keen to compare themselves against other developed markets around the world. "We try our best to measure ourselves as not only in the region, but beyond," says Marwan Juma, CEO of XPress, the only iDEN operator in the country. When Batelco's Umniah acquired a mobile licence, there was talk that the market was already saturated.

But with over 1.2 million subscribers, the operator has proven naysayers wrong. Additional players may soon enter the market. According to Juma, the talk about a crowded market place is because incumbents are looking to protect their interests. "The players say there's no room for growth; the issue is that they want to retain margins," he says.

This year the TRC will issue 3G licences, and may open the floor to mobile virtual network operators (MVNOs). The prospect of this is obviously worrisome to the established players. There is a concern that networks are reaching capacity.

"The existing operators do not have much capacity to spare, as the low competitive prices encourage higher than average ‘minutes of use' utilisation by the subscribers," says Joseph Hanania, CEO of Umniah. "Hence, with a relatively high penetration rate, extremely competitive mobile services prices and existing operators running their networks close to full capacity, I fail to understand the business case, or the regulator's justification for an MVNO," he adds.

Internet woes

The country is lagging behind Western markets is in fixed-line and internet usage. Penetration rates are low, at around 20% at the end of 2007. The TRC is now working towards an ICT strategy which will see penetration rise to 50% by 2011. Despite the fact that it was liberalised a few years ago, Jordan Telecom still controls the last mile, and the regulator has its work cut out for it to force the operator to unbundle its lines.

Most agree that there are three main hurdles to internet uptake: the cost of PCs and laptops, the price of connectivity and the lack of Arabic content. While local-loop unbundling will help reduce the cost of access, Jordan Telecom Group CEO Mickael Ghossein says it won't guarantee the take-off of the fixed-line/internet sector - and that should it be forced it relinquish part of its fixed revenues, it will innovate to stay ahead of the game.

"Unbundling is not the objective, even if the regulator is pushing this," he says. "I don't believe this is the right time to do it. Firstly, I believe you should make the PC affordable - this is the beginning. Secondly, you should have content. Even if you [go ahead] with unbundling, it will be very difficult to improve the broadband market.

"2008 will be a little bit difficult, maybe, for different reasons. We will have new challenges, especially in the fixed-line market. I would love to show that fixed-line [revenues] will not decline as a result, with new ideas that could make a good business case," he adds.

For others, however, local-loop unbundling will go some way to bringing the price of the internet down. Presently, there is only one international gateway in the country, installed by Jordan Telecom and Fibreoptic Link Around the Globe (FLAG), in the Gulf of Aqaba. Other companies may soon build new infrastructure, meaning there will be other options for IP connectivity.

The TRC is also playing its part in helping the process through smoothly, by trying to establish at least two from gateways to foster competition. Last year, it also issued WiMAX licences. The introduction of WiMAX as an alternative access should help as well.