Jordan Telecom Wins Domestic 3G Licence

After a lengthy allocation process which commenced in November last year (and which dismissed Jordan Telecom’s mobile unit Orange in an initial bid in June this year), the Jordanian Telecommunications Regulatory Commission has allocated a 3G licence to Jordan Telecom Group.

The Jordanian incumbent operator, the Jordan Telecom Group (JTG), has been granted a 15-year, third-generation (3G) licence by the Telecommunications Regulatory Commission (TRC) making it the only mobile operator in Jordan to be authorised to provide 3G services in the country Middle East Company News reports. The news comes two months after the Jordanian mobile operator, Orange, was the sole bidder for the previous auction in May this year but soon after had the licence revoked because the operator failed to abide by the rules mentioned within the tender; the regulator failed to expand on this. During a press conference, Nayla Khawam, CEO of Jordan Telecom Group (Orange Jordan) commented on the result: ''We are very pleased to have won this license. Offering the 3G mobile services has long been awaited for by both us and Jordanian customers.''

JTG pitched for this tender despite the very high price of 50 million Jordanian dinars (US$70.3 million) asked by the TRC, and the difficulty in accomplishing its economical feasibility. Khawam clarified that the new amended terms which were recently placed by TRC have improved the feasibility of offering 3G services with global standards. Orange Jordan will start offering 3G services during the next six months and France Telecom Group will offer its extensive experience to support Orange Jordan in building the infrastructure for 3G network in the kingdom. This will ensure that Orange Jordan will offer the highest quality of service during this short period which will be a technical and operational challenge.

Outlook and Implications

The introduction 3G services in the Jordanian market will make a significant difference to Internet and mobile users, especially Blackberry and iPhone owners, for its ability to transmit live pictures during phone calls, as well as enabling Internet users to access electronic locations in very high speeds in addition to downloading large quantities of content which means a greater value-added service for businesses whose work depends heavily on the Internet.

• Market Conditions: With four major mobile operators and a mobile penetration of over 80%, the Jordanian mobile market country is one of the most competitive in the Middle East and is ready for advanced mobile data solutions. The market leader, Zain (formerly known as Fastlink and has now swapped its assets for PalTel’s in Palestine), reported 2.3 million mobile subscribers and a market share of 43% at the end of 2008. It faces strong competition from Orange, which was rebranded from its original name, Mobilecom, and the newest operator Umniah. Orange and Umniah had a market share of 30% and 26% at end-2008 respectively. The three also face limited competition from the Integrated Digital Enhanced Network (iDEN) operator Xpress, whose market share is estimated to be below 1%.
• 3G vs. WiMAX: It is as yet unknown why the other mobile operators in the country did not submit a bid for the 3G licences on offer. One explanation could be that Zain and Batelco-owned Umniah favour WiMAX for the provision of fast wireless broadband access. In November 2007, Umniah became the first operator to launch a WiMAX network in Jordan, while earlier this year Zain Jordan teamed up with Mada Communications to launch a WiMAX network (see Jordan: 3 September 2007: Umniah Selects Airspan for WiMAX Deployment in Jordan and Jordan: 26 March 2009: Motorola Partners with Mada Communications to Launch WiMAX in Jordan).
• Licensing Delays: The minimum bid price required by the Jordanian authorities for the 3G licences could also be considered too high to justify by the operators under the current market conditions. Last year, a few licences in the MENA region were postponed due to the global financial crisis. Some of the smaller mobile operators were not able to get the funding they required while regulators anticipated lower submissions of bids from the larger operators that would have been able to purchase available licences. One of the most recent postponements was in Lebanon, where the regulator was anticipating an income of around US$3.7 billion for the sell-off of its two mobile operators (see Lebanon: 13 January 2009: Orascom and Zain Win Lebanese Extended Mobile Management Contracts). In this case, the regulator sold off the management contracts to Zain and Orascom and will likely reoffer the licence in better market conditions.