Saturday, October 17, 2009

Wataniya delays its launch- AGAIN

So the deadline has passed and Wataniya is still holding out hope for a breakthrough. Yesterday I wrote a breaking news article for Ha'aretz about this now very familiar development. Here's the link and here's the text of the article...

Israeli leaders have highlighted loosened security restrictions, an economic growth rate of 7 percent, and the construction of state-of-the art shopping malls and cinemas in the West Bank as an indication of what Gaza citizens could enjoy— if only Hamas chose to abandon terrorism.

However, the struggles of a multi-national cellular company elucidate the political roadblocks still stifling businesses in the West Bank. On Oct. 15, Palestine’s Wataniya Mobile once again did not launch as planned because it has not received its promised 4.8 MHz of airwave frequency spectrum.

Wataniya hoped to launch last April, but unwittingly became a political pawn in clashes between Israel and the PA. Tensions piqued last week when the Israeli government, which controls the airwaves in the Palestinian Territories, threatened to withhold Wataniya’s spectrum indefinitely unless the PA dropped its demand for IDF officers to be tried at the International Criminal Court. This followed the publication of the controversial Goldstone report, which accuses both Israel and Hamas militants of war crimes.

“[Wataniya has] nothing to do with the Goldstone report—nothing at all,” said Allan Richardson, the Scottish CEO of Wataniya. “We’ve been trying for two and a half years to get this spectrum….We’re just trying to build a network that’s competitive and gives the Palestinian people a choice. That’s it.”

Richardson previously started mobile networks in post-war Iraq and Afghanistan and said in a May 2009 interview that “the obstacles [Wataniya is] suffering from [in the West Bank] are obstacles you’ll never get anywhere else in the world.”

The Israeli government has suddenly backed away from its threat not to give the PA any spectrum for Wataniya and has resumed its position announced last month that it would provide 3.8 MHz. This is less than the 4.8 MHz that Wataniya was promised in a complicated and bitterly disputed contract brokered by Tony Blair and signed by Israel and the PA in July of 2008. Both sides agree that Wataniya was promised 4.8 MHz, but Israeli representatives insist that this allotment was conditioned upon unnamed commitments that the PA has not fulfilled.

In an August press release, Wataniya’s board of directors set Oct. 15 as the final launch deadline and said they would demand compensation from the cash-strapped PA, whom Wataniya paid for its license, if the 4.8 MHz was not received. The PA, in turn, announced its plans to demand compensation from Israel if it failed to follow through on its promise to provide the spectrum.

“3.8 MHz will not support enough subscribers and will not allow us to deliver the quality we need to get into this market,” Richardson said in an Oct. 16 interview. “The PA had an agreement with the Israeli government for 4.8 MHz of spectrum. Based on that agreement, we made our investment.”

He added, “To be quite honest, we haven’t got a lawyer yet….The worst case scenario is we don’t launch. But I don’t see that happening. I’m an optimist. I believe we will launch.”

Richardson’s contention that 3.8 MHz is not enough to operate a viable cellular network is shared by many telecom experts. Most cellular carriers worldwide operate on at least 10 MHz of spectrum, according to Derek Kerton, a principal analyst with Kerton Group, a telecommunications consulting company.

In 1996, Israel allotted 4.8 MHz to the PA for use by Jawwal, the sole Palestinian cellular provider that now serves 1.5 million subscribers. Jawwal’s parent company, Zain Palestine (formerly Paltel Group), constitutes about 50 percent of the Palestinian stock exchange. Despite this financial success, Jawwal stopped selling SIM cards on multiple occasions because it didn’t have sufficient frequency spectrum to support new customers, according to Jawwal’s CEO Ammar Aker.

By contrast, Israel’s three major cellular companies, which support a larger and denser population of subscribers, have between 20 and 46 MHz of spectrum and are generally satisfied with their allotment, according to company reports.

In addition to its undelivered spectrum, Wataniya has waited more than six months to have some of its equipment cleared through Israeli customs. Jawwal has experienced similar challenges. The average customs holdup for Jawwal base stations and towers is six to 18 months, and some of Jawwal's switch equipment has been held in customs since 2005, according to Aker. Israel recently prohibited Jawwal from importing microcells used to prevent the dropped calls for which Jawwal has become notorious.

Palestinian-American businessman Sam Bahour, who oversaw the establishment of the first Western-style shopping mall in the West Bank, said that Wataniya’s struggles are “a clear example of… Israel, the occupier, continuing to micromanage the Palestinian economy, [which is] the core reason why the Palestinian economy is stunned.”

Tony Blair has not weighed in publically on the details of the political dispute over Wataniya’s frequency allotment, but said through a spokesperson in a June 3 statement that the release of telecommunications frequency was “an important part of the set of [Mr. Blair’s] understandings with the Israelis.” Blair has pressed Israel to release all 4.8 MHz of frequency, arguing that this will bolster the moderate government of Mahmoud Abbas and grow the Palestinian economy.

The impact of Wataniya on the Palestinian economy would likely be powerful and lasting. The competition posed by Wataniya could improve the quality and cost of Palestinians’ phone service. Richardson reports that about 20,000 have already registered to receive Wataniya numbers. While Wataniya currently has 250 employees, the company predicts it would create more than 2000 direct and indirect West Bank jobs after its launch.

However, Wataniya’s continued paralysis at the whims of political battles could jeopardize the West Bank’s fragile growth and scare off future investors. Bahour said that these investors are “willing and ready to build a true Palestinian economy the second Israel ends its military occupation.”

Nati Schubert, senior deputy director general of spectrum management at the Israeli Ministry of Communications, said that when Wataniya is still in its launching phase, 3.8 MHz should be “enough.” He insisted that Israel has committed to give the PA 4.8 MHz “over time.”

“Wataniya is good for Israel. It’s a win-win situation,” Schubert said. “Israel losses [if Wataniya fails] because [Israel] wishes to improve the relations with the PA first by improving the commercial situation.”


Marian Houk said...

Good stuff -- this is very good work. It's hard to follow here, and you're doing it from Chicago -- bravo.

Anonymous said...

I concur with Marian; I work for a Ramallah based think-tank writing a report on this and this blog has been an excellent source of info - thanks for all the hard work.