Under siege

Palestine's telco sector struggles amid Israeli restrictions
Palestine's telecom operators are hindered by a lack of spectrum and illegal competition from Israeli operators.
Palestine's telecom operators are hindered by a lack of spectrum and illegal competition from Israeli operators.

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As minister of telecoms and IT for Palestine, Dr Mashhour Abudaka has his work cut out. While telecoms ministers in most countries have a busy inbox, with new technology and competition throwing up numerous challenges, Abudaka has the added burdens posed by Israel.

Certainly, at face value, Palestine’s telecoms market should be flourishing. With two private telecom operators, numerous ISPs and an extensive fibre optic backbone serving a combined population of about 4 million people across the West Bank and Gaza, the Palestinian telecoms sector is well ahead of some other countries in the region.

Palestine has two mobile operators and one fixed operator. Paltel Group, the incumbent operator, was established in 2005 and runs fixed line services under the Paltel brand and also owns Jawwal, the biggest mobile operator. A second mobile operator, Wataniya Palestine, which is a subsidiary of Qatar’s Qtel Group, launched services in the West Bank earlier this year.

The ministry of communications, which is also acting temporarily as the regulator, is currently in the process of opening up the fixed line sector for competition, using bit stream access. While Palestine already has a number of ISPs, bit stream access will offer a greater degree of competition in the fixed sector.

Restricted access

But despite this level of competition and ministry’s plans to further develop the industry, the problems posed by Israel’s restrictions on the telecoms sector are all-encompassing. Abudaka points to numerous “Israeli obstacles” that have effectively halted development of the sector.

The most pressing issue facing the sector is a lack of mobile spectrum that Jawwal and Wataniya are forced to work with. Palestine’s airspace and frequency allocation is controlled by Israel, which has allowed the two operators only very limited access to 2G spectrum, and no 3G spectrum.

“Wataniya does not have enough frequency. They have 3.8 for 2G, and if they want to increase subscribers they have to increase power and Israel is not allowing this,” Abudaka says.

Even more worrying is Israel’s intention to move Wataniya from its current 900 Megahertz frequency to 1800 megahertz, which is slower and more expensive to use. Jawwal, which has almost 2 million subscribers and runs on 4.8 Megahertz frequency, also needs more spectrum to cater to its existing customer base, but its requests have so far fallen on deaf ears.

“The smallest Israeli operator has around 37 Megahertz power frequencies, while the biggest one on our side has only 4.8 Megahertz, and does not even have 3G,” Abudaka says.

Dr Ammar Aker, CEO, Paltel Group, agrees that limited spectrum is one of the biggest hurdles the operators face. “Limited frequency for both operators is a very big challenge,” he says.

“Any other operator would enjoy having 8,12, or even 17 megahertz for frequency. Plus the lack of 3G is a big challenge, we cannot get it because of restrictions. All of the countries around us now enjoy working with 3G networks.”

Furthermore, based on experience, Aker has little optimism that either operator will gain 3G spectrum or even additional 2G spectrum, anytime soon. Indeed, he points out that it took Paltel and Wataniya a number of years just to gain the limited spectrum they needed to launch operations in the first place.

“We are working on all levels with the PA and the international community to try to put pressure on the Israelis to have 3G on our road map in the next couple of years, but we hope we will get it sometime before then.

“There is no movement on the 2G spectrum. We have passed 2 million subscribers and our competitor has passed a quarter of a million and still the spectrum is restricting our growth.”

Illegal competition

The mobile operators’ problems are exacerbated by presence of Israel’s mobile operators, which manage to cover all of Gaza and the West Bank with 2G and 3G services, despite the fact they are not licenced by the Palestinian Authority to do so.

This puts the Palestinian operators, which are not permitted by Israel to cover all areas of the West Bank, at a particular disadvantage. Indeed, it means that Paltel and Wataniya lose business in many parts of the West Bank and Gaza that are close to the Israeli border and settlements, where subscribers are often forced to switch to a roaming service provided by one of the Israeli operators.

While the Israeli operators’ coverage of Palestinian areas is often referred to as “spillover”, Abudaka prefers to call it “classical colonisation”.

“It is not a spill over. It is a planned telecommunications infrastructure,” he says. “Israel uses the settlements to cover all the West Bank and Gaza with its own networks.”

Indeed, the West Bank is divided into Areas A,B, and C, Abudaka explains. “Our mobile operators are allowed to put cell towers into areas A and B. But the Palestinian operators are not allowed to put towers in Area C, which is the largest area in the West Bank.

“As a result, the Palestinian operators are forced to make agreements with the Israeli operators to cover area C, and if somebody traveling from, say, Ramallah to Nablus, or Ramallah to Jericho, they will have to roam to the Israeli operators.”

However, the Israeli operators do not need roaming agreements with the Palestinian operators because they already cover all of the West Bank and Gaza.
“The relationship is one-sided, it is colonial. It is exploiting the Palestinian side,” he says.

The Palestinian Authority estimates that the country is losing about $120 million a year in taxes, licensing fees, and roaming charges because of the presence of the unlicenced Israeli coverage.

“We have been struggling with this since the signing of Oslo accord in 1994. Israel has been flouting all the agreements, which are quite clear cut.”

While the lack of spectrum presents problems, so too does a lack of hardware. Imports of telecoms equipment to the Palestinian Territories are restricted by Israel, which is also hampering development.

“Israel is also hampering us from importing high tech equipment, so they want our sector to always to a sub economic sector to their economy,” Abudaka says.

“In the 90s we thought we were in the lead in the Arab area for telecommunications, but the Arab area has advanced greatly while we stay as is. Now we are at the back.”

This is a situation that Paltel and Wataniya are forced to wrestle with, and the difficulties that arise are best illustrated by the location of Paltel’s switches. Until last month, all of the incumbent’s mobile switches were located in London, because it was not permitted to locate them in the Palestinian Territories.

This meant that all mobile traffic from Jawwal’s service was being routed via London, and was thus reliant on the reliability of undersea cables. Paltel has since relocated most of its switches to the Jordanian side of the Dead Sea, which it hopes will increase reliability.

The situation is even more acute in Gaza, which is under the control of Hamas and is under blockade from Israel. “In Gaza we have been experiencing many difficulties in expanding the network both in mobile, fibre and fixed,” Paltel’s Aker says.

“It is not easy to sell telecoms equipment into Gaza these days because of the restrictions, so for the past three years, most of the growth has been in the West Bank.
“In mobile we didn’t even have 100,000 new users in Gaza out of the 1 million people, because we cannot expand the network. In internet you have thousands of people on the waiting list for internet lines because we simply cannot expand the network.”

Focusing on fixed

Given the many difficulties facing the mobile sector, the Ministry of Communications plans to focus its efforts on developing Palestine’s fixed line infrastructure. Most of Palestine’s big cities are already connected to each other with fibre optic cable, and most of the government ministries are also connected by fibre, even in Gaza, and the ministry is keen to develop this further. Most of the cities themselves rely on copper networks.

The ministry is considering fibre to the home and is also considering other technologies to boost data access, including the modification of power lines.

“We are trying to make use of new methods of connecting homes through electricity lines to provide internet. We have so many WiFis in the inner cities which Israel has no access to and does not interfere with,” Abudaka says.

However, as with the mobile sector, Palestine’s ISPs also face extensive unregulated competition from Israel in the form of 3G and microwave access. Paltel, which owns Palestine’s fibre backbone and has about 100,000 ADSL subscribers, sees significant potential for data services, depending on the easing of restrictions and competition from Israel.

“Internet still has more potential and we are trying to increase the penetration rate for internet in Palestine,” Aker says. “The internet market was liberalised more over the past few months, but unfortunately again the Israelis are big competitors in the internet market.”

If the various restrictions were removed, Aker reckons that most of the growth in Palestine’s telecoms sector would be in 3G and fixed internet, while in Gaza, there would be a surge in business for all types of services.

“Increasing the internet penetration is something that will ultimately benefit our revenues. The most important thing is to clean up the market from the Israeli competition, because that is not regulated.

“They just mess around with the market without any authority from the regulator and that is the worst part, because they can do whatever they like and the regulator cannot say anything,” Aker adds.

It is a sentiment that Abudaka agrees with: “When we see borders are being removed and telecommunications is making the world as a village, Israel is moving against time – they are still building walls, making international access very difficult and restricting a young population’s access to technology. I think this is ridiculous and backwards, but I don’t think it will be sustainable.”

Despite the hardships and long running setbacks, Abudaka tries to remain upbeat that Palestine’s operators will at least be able to gain additional spectrum and begin to offer 3G services, which he sees as vital to the development of the sector.

“We hope that if the direct negotiations are started and there is Israeli goodwill that there could be some frequency released for us because this will help the Palestinian economy to flourish.

“This sector is very important for us and the use and demand for telecommunication services from the Palestinian area is huge.”

 

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