With mobile penetration at more than 100%, three mobile operators, an MVNO, and numerous ISPs, Jordan’s telecoms sector is one of the most competitive markets in the region – and one of the toughest for its operators to compete in.
As CEO of Jordan’s third mobile operator, Umniah, which entered the market in 2005, Ihab Hinnawi is familiar with the challenges presented by the country’s telecoms sector.
The operator, which has more than 2.3 million subscribers and a market share of about 32%, operates a GSM and Edge network, and also has extensive WiMAX and fibre-optic backbone deployments, allowing to offer ISP and backhaul services.
But with GSM penetration at about 120%, Hinnawi views data services as the natural area of growth potential.
“The voice side of the sector has started to plateau and this is just the normal lifecycle trend when you reach a penetration of 120%,” he says. “The growth is more on the internet access than voice,” he adds.
Both of Umniah’s bigger rivals, Orange Jordan and Zain Jordan, have launched 3G networks, and Hinnawi said that Umniah intends to deploy its own 3G network by the first half of 2012.
While Orange and Zain have already attracted a significant number of 3G subscribers, Hinnawi thinks that Umniah will still be in a strong position to attract users, partly because the market will be increasingly receptive to 3G in 2012.
“Even though the licencing of 3G was delayed for many years we still believe that if you want to have a huge pick up in 3G services you need to address three of four major issues,” he says. “The first one is smartphone availability and prices. We now see devices sold at below $100 and operators can subsidise part of that if needed.
“The second part is availability of relevant content in the region, and we are seeing a pick up on that especially with the emergence of social media and other apps. The third part is the affordability of the service.”
Referring to the affordability of the service, Hinnawi says that people in Jordan cannot generally afford to pay $40-50 a month for a 3G connection. However, he says that if mobile broadband is bundled in the right way and at a low rate, then it should start to grow.
“We are getting there,” he says. “By Q1 2012, that trigger or jump of demand in mobile broadband will come, and we are approaching that.”
Winning with WiMAX
While Umniah has not yet launched 3G, it already offers internet services via its WiMAX network, which continues to grow despite the introduction of 3G in the Kingdom. However, Hinnawi concedes that WiMAX faces a number of challenges in Jordan.
The government could support the country’s WiMAX operators, and in doing so, help to promote greater competition in the fixed-ISP sector, which remains largely dominated by the incumbent operator, Orange Jordan.
“I think the government should support operators dealing with WiMAX,” Hinnawi says. “The only means of competing against DSL is WiMAX and it has to be supported by everyone.”
Hinnawi believes that WiMAX can compete with ADSL services in many parts of Jordan, especially given the poor state of the copper network in some parts of the country.
However, he points to three main challenges: the initial cost of licences, the high taxes faced by operators and the high cost of expanding the network.
Indeed, the high licence fees simply mean that the operators are forced to charge the end user more for the service, which can lower uptake of the services.
“We paid a lot of money for the licence and if you want to have full deep indoor coverage you need to roll out more sites, so this is where the problems start. This puts a lot of pressure on operators when it comes to retail pricing.”
He adds that the total number of WiMAX subscribers in the country remains in the “hundreds of thousands”.
Each of Jordan’s WiMAX operators paid the government about JD8m ($12m) for the licence, and they also used to pay an annual subscription fee of $1 million, which has since been waived on the condition that the operators expand their coverage outside the main cities. However, this investment in itself can be challenging.
“You need to invest more, so another challenge is building the economies of scale. You have to have the mass – this is the main challenge for WiMAX,” Hinnawi says.
Despite these challenges, Hinnawi says that Umniah remains committed to its WiMAX network, which has reached more than 30% market share and has extended wireless internet services to 80% of Jordan’s population. “Umniah will remain focused on specific segments...including complementing our HSPA+ network,” Hinnawi says. He adds that a new breed of USB dongles, which support 3G and WiMAX, could also help increase demand for WiMAX.
Converging the network
Hinnawi is also optimistic that Umniah will be able to use its WiMAX network to complement its 3G deployment. “If we handle it smartly, the WiMAX network will remain as a source of fixed broadband and will be a fixed substitute for wired businesses such as SMEs and people who want a fixed service.
“It will also be used to support the 3G network. We can design the network so that we can utilise WiMAX when it comes to offloading the bandwidth needed, enabling it to complement our 3G network,” he says.