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French Version

Bad blood across the telecom divide

No sooner had the government approved earlier this week the granting of the third GSM license to Umniah, than a dispute evolved Monday between the government and the Kingdom’s current two GSM operators, Fastlink and Mobilecom.

Minister of Information and Communications Technology, Fawwaz Zu’bi reiterated his government’s position that the procedures entailed in granting the third GSM operator were all “legal and sound”.

He said that the government hastened the procedures to end the exclusivity of the two GSM operators in the Kingdom and open the market for “a freer competition in the telecom sector”. Zu’bi advocated the decision by the Telecom Regulatory Commission (TRC) to award Umniah the third GSM license, saying, “It is a good and significant move that would enhance the sector and develop it further.” Fastlink’s revelation this week, that the TRC demanded the current two GSM operators to pay JD 100 million to delay the third GSM license so as to extend their exclusivity, caused uproar in the telecom sector.

Mohammad Saqr, Fastlink’s CEO and director general, said the company took part in a meeting shared with MobileCom and the government, during which the government asked the two GSM operators to submit proposals so as to delay the third GSM license. “We were asked by TRC to offer the money without securing the consent of Fastlink’s main stakeholders, the Kuwaiti Mobile Telecommunications Company,” Saqr said. He claimed that the government had asked the two mobile operators to propose a “reasonable financial offer to postpone the third GSM license for five years.” Saqr continued his heated charges against TRC by saying that there were “frequent secret meetings” held in the past with the government over the issue. He said the telecom market in Jordan is “small” and “not ready yet to host another contender.” Mobilecom’s Chairman, Michael Ghossein confirmed the meetings with the government and Fastlink and said, “We are fully aware of the dealings between Fastlink and the government on that regard.”

Zu’bi, on his part, rejected Fastlink’s claims and said telecom companies have the right to protect their interests “but only through proper measures.” He added that the two mobile operators knew from the beginning that the government would open the market for a third operator. “The government is committed to install coherent and firm licensing agreements that assure cost-efficient services for consumers,” added the minister.

Zu’bi held a press conference with TRC Chairman, Muna Nejem, who called Fastlink’s allegations “nonsense”. She maintained that the two GSM operators offered to extend their exclusivity in the telecom market. “Proposals began with JD 4 million paid by Fastlink to extend its exclusivity, while Mobilecom offered JD 3 million for the same reason,” she said. “Over time, the combined proposals rose gradually to JD 19 million, then JD 41 million… to end up with JD 88 million two months ago.”

According to TRC sources, that last offer by the two GSM operators was “very small” compared to JD 500 million in revenues that the government would earn in 15 years once it instated the third GSM license. These sources refused to deny or confirm rumors suggesting “if the two mobile operators submitted a higher offer the government would rethink of its plan to grant a third GSM license this year.”

It is worth mentioning that TRC has conducted intensive and transparent procedures in pre-qualifying and qualifying the potential contenders for the third GSM license since summer 2003. Umniah was one of two companies that were qualified for the final stage in April, before the commission chose it late May. The other qualified contender was the Lebanese Infoscom.

Among the charges that Fastlink highlighted against the government is that the latter has asked Umniah to pay JD 4 million in license fees, less than the JD 7 million paid by each of Fastlink and MobileCom. “TRC stipulated JD 4 million for licensing to encourage investments in telecom sector and receive better contenders for the market,” Nejem justified. She said that the third GSM operator is free to use the technology that serves its applications and services, “a fact that means the commission has nothing to do with the operators’ businesses.

All operators can introduce the same sophisticated technology if they want.” Nejem indicated that Fastlink asked TRC to renew its GSM license for another 15 years, after it runs out in 2009. “Fastlink wanted to have the same privileges that the third GSM operator would have, by giving Fastlink an eight-year duty-free agreement. We have been asked by the Prime Ministry to assess how profitable these proposals are for the economy,” she explained.

Nejem said that TRC was not in a position to negotiate with the two GSM operators on their proposals but rather to assess them only. She said a study indicated that Jordan’s economy would lose some JD 200 million in revenues for the coming 15 years if the government refuses to grant a third GSM license. “The study compared the financial advantages of the two operators’ proposals with the financial losses that the economy would endure because of the delay,” she added. “It was a final decision and we are not going to change it,” stressed Zu’bi, who referred to the TRC’s decision to grant Umniah the third GSM license.

By having three GSM operators in the Kingdom, Zu’bi said the treasury would earn JD 2.6 billion in direct revenues in the coming decade. Saqr, meanwhile, said the market would suffer “negative effects” if it was “opened abruptly”. “We are ready for competition, since we are the biggest in the local market,” he said during a press conference held Sunday to announce that Fastlink already has one million subscribers in Jordan. According to Saqr, Fastlink’s subscribers are estimated today at 1.035 million, and they would reach 1.1 by the end of this year.. “These figures show that a third GSM operator would not be able to beat us easily,” Saqr stressed. Zu’bi emphasized that there will be no negative effects on the market in view of the third GSM operator. “We understand the fears by the two mobile operators but we are sure that they will maintain their positions in the market along with the third operator,” he told reporters.

The minister said he received many appeals from Jordanians and MPs to enhance competition in the telecom market. “They told me that they want to have new contenders who would provide them with advanced services and higher quality at competitive prices. By having a third GSM operator, our objectives will come true soon.”

Amman,16August2004
Ghassan Joha
The Star


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