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Fri 29 Aug 2008 04:00 AM

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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.

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."I'm predicting 2008 to be a year of quality, in terms of having competition in providing wireless broadband services and additional international access/gateways. These factors together will bring the prices down to an affordable level for people to get access to the internet," Hiasat says.

"Other companies will start to offer wireless internet this year. I believe there is not much competition so far in the fixed broadband wireless access, but we are expecting this to happen mainly in 2009."

Differentiating the brand

With some of the lowest prices in the region, operators need to work feverishly hard to provide innovative value-added services (VAS) and differentiate their offerings. Mobile-based solutions such as location-based services, e-government and e-commerce applications could become more popular - particularly as 3G is rolled out this year.

Umniah sees wireless broadband as the answer. With only 170,000 internet accounts - with less than 40% classified as broadband, according to Hanania - the operator's UMAX WiMAX offering should strike a chord with its customers.

"Given these challenges, Umniah has launched UMAX, which is Jordan's only wireless broadband internet service. Since it was launched in November 2007, [the number of] UMAX subscribers has increased significantly every month," Hanania says.

JTG's Ghossain, however, takes a different approach. "Each customer would like to have wireless broadband, be it WiMAX or HSDPA. I personally believe in HSDPA. I am also a believer in GSM, some people believe in WiMAX, but we'll see in the future," he says.

Jordan Telecom's product du jour is IPTV, which it is hoping to launch later this year. It will be one of the few operators in the region to roll-out such a service. And key to this offering is a huge provision of Arabic-language content. "To develop IPTV and the internet market, we should be adapting to the country, and we should have Arabic content. It should be maybe 80% Arabic, and 20% English or French content," he adds.

With perhaps the strongest regional brand presence, Zain is in a good position. It was the first to introduce the BlackBerry service last year, and it picked up a CommsMEA award for its BLOG service, which provides an online interactive forum for mobile users via the web, MMS and SMS.

However, the operator says the rise in inflation is affecting disposable income, and therefore the purchasing power of local consumers. Operators therefore risk losing more revenue as they strive to be more competitive. "With such fierce competition, the sector risks drops in revenue as a result of tighter profit margins.

It also faces the challenge of being able to maintain a healthy revenue growth with four mobile operators in the market," says the newly appointed general manager of Zain in Jordan, Dr Ahmed Al Shatti.

This year, the operator is expanding its fiber-optic network to extend its coverage and enhance its quality of service. A WiMAX network is also on the cards for later this year. Its differentiating factor is the One Network service, which seamlessly connects 14 million customers and is called the world's "first borderless mobile communications network in the Middle East.

"For Zain customers, this means that when travelling to any of these three countries, they can make calls and send SMS at that country's local rate to other Zain customers in One Network countries," Dr Al Shatti explains.

Hiasat concludes: "Although we are witnessing a very advanced telecom environment in Jordan and in the world, this is still the appetiser. There is still more yet to come. Companies will be offering new services, new technologies.

The world is moving to a digital era and although the first indicators are there, the digital era in the true sense is yet to come. The reaction time is usually very short in Jordan when the technology is out somewhere else, especially in the Western world," he adds.

The high cost of PCs/laptopsOf the three problems associated with Jordan's low internet penetration, the cost of the PC is something that operators can do little about. Current costs are pricing many Jordanians out of the market, and preventing them from accessing the internet.

While proposals such as Intel's US$100 laptop programme do help, the Ministry of ICT has its own solution: give each university student a laptop, and allow them to pay for the cost over their years of study, by monthly instalments.

Our target is to get a 50% internet penetration by 2011," says Ahmed Hiasat, CEO, TRC. "This is a very challenging objective. Everyone - the stakeholders, Ministry of ICT, the TRC, other ICT societies - is working hand-in-hand to achieve this target.

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