Tuesday, April 21, 2009

Top Six Reasons to Follow Mobile Phone News in Palestine

I'll be using this space to explore recent mobile phone developments in Palestine, in advance of a trip to the West Bank in early June. During this trip, I will interview analysts, customers and executives involved in the Palestinian mobile phone industry as part of a feature magazine article. Thanks, Shukran, and Tuda for your interest!

A little background about this issue: As in most developing countries, mobile phones are far more common than landlines in Palestine and cellular customers typically pay for their calls in advance, via phone cards. Paltel is currently the only Palestinian provider of mobile service. From 1996 to 2006, Paltel had an exclusive License Agreement with the Palestinian National Authority to develop the telecom sector. It is a publicly-traded company and its cellular subsidiary, Jawwal, serves about 1.1 million customers.

This is a fascinating time to be following mobile phone developments in Palestine. Here's why:

1) Gaza Reconstruction: In a Jan. 4 press release during the Gaza War, Paltel reported that “90 percent of the mobile service network is down, in addition to a huge number of fixed lines which are out of order, either due to direct damage or because of the loss of electricity.” I will use this blog, in part, to explore how the company is recovering from the Gaza war.

2) An Upcoming Acquisition: Paltel is in the process of being acquired by Zain, a multi-national telecommunications company that operates in six countries in the Middle East. If the acquisition succeeds, Paltel would likely be renamed Zain Paltel or Zain Palestine. For reasons that are not entirely clear, former CEO of Paltel, Abdel Malik Jaber stepped down, and Paltel’s chairman, Subaih Al Masry, is conducting the negotiations.

3) Arab-Israeli Leadership: The previous CEO of Paltel, Abdel Malik Jaber, was an Arab Israeli citizen—an interesting choice, given the sensitivity of the tumultuous political situation in the region. Jaber speaks Arabic and Hebrew and resides in both Jerusalem and Ramallah. As CEO, he negotiated contracts with Israelis, the Palestinian Authority and westerners and focused on business over politics. I found little information online about the new chairman and it may be interesting to compare his personality and background to Jaber’s.

4) New Competition: A challenge to Paltel’s monopoly on phone service has been posed by a new competitor, Wataniya. The Palestinian Ministry of Telecommunications and Information Technology awarded a license to Wataniya in 2006. On Feb. 5 of this year, Wataniya secured an $85 million loan from the private sector to create a new infrastructure for mobile phone service within Palestine. After multiple delays, Wataniya hopes to begin operations early this year, according to an article in Telecom Finance.

5) Unpermitted Israeli Phone Usage: Four Israeli telecom providers that operate without permits in the Palestinian Territories reach most of the West Bank. While the exact number is in dispute, it is generally agreed that many Palestinians are using Israeli phones. Paltel estimates that Israeli providers capture 20 percent of the Palestinian mobile phone market. In November of 2007, World Bank researchers took photos of Israeli phone cards being sold in the West Bank.

6) Tower Prohibitions Around Israeli Settlements: Some areas of the Palestinian Territories have better reception from the Israeli operators than from Paltel, because Paltel is not allowed to set antennas in West Bank areas controlled by Israel. This area, known as “Area C,” contains military locations and / or Israeli settlements, which some consider illegal under international law. Israeli leaders argue that Israeli cellular operation is legal in Area C, due to security needs.

These and other issues will be the subject of this blog. I will conduct phone interviews with various Middle East sources and scour the internet for new developments. Please do submit feedback and comments, as well as suggestions for potential sources and story angles.

Shalom, Salaam, Peace,