Unleashing a new era of connectivity

The two operators compete with Israeli networks that already offer 3G services
Wataniya Palestine and Paltel are the only official operators for the Palestinian territories.
Wataniya Palestine and Paltel are the only official operators for the Palestinian territories.

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Inevitably, the telecommunications sector in Palestine is affected by the current political problems in the Palestinian territories. The tense relationship with the Government of Israel makes development of the sector slower. However, the two operators, Wataniya Palestine and Paltel Group, are achieving positive financial results in the country.

Paltel Group has been operating exclusively for 11 years in the West Bank and for 15 years in Gaza; Jawwal, owned by Paltel Group, covers 98% of these areas. Operations across the territories are further complicated by the fact that they are split into three, fragmented administrative divisions, Areas A, B and C, each with a different degree of control from Israel.As the company reported, Jawwal is facing political difficulties to offer good coverage in Area C, which is fully controlled by the Israeli authorities, because it is not able to establish new base stations in the area.

Wataniya entered the West Bank in 2007 and launched its services two years later. The company is pursuing its “long awaited launch” in the Gaza strip. Wataniya’s coverage is over 96% of the total population and over 86% of the total land area of the West Bank.

Paltel Group and Wataniyanote that the political issue is the main problem in this market and agree on the necessity of an independent telecoms regulator. Paltel group says that a genuinely independent regulator could “ensure effective, cost efficient, timely and transparent administration for improving the Telecom sector".

Fayez Husseini, Wataniya Mobile CEO, states that the company “has maintained for a while its interest to see the establishment of an independent telecom regulator in Palestine” and that the company continues to lobby for this. Husseiniadded: “Wataniya has seen more intervention from the Ministry of Telecommunications and Information Technology (MTIT) in the past two years, however, we feel that MTIT’s ability to drive deeper structural changes are limited, when what is needed is an aggressive fast track approach. Some of the laws we want to see implemented deal with the definition of incumbent operator and then enforces related rules that normally govern interconnection, competitive practices and retail pricing.”

Frequency controlled

The Palestinian ministry is continuously requesting more frequency from Israel but the military control the frequency allocation. According to Husseini, this control makes “any future allocation of frequency to Palestinians a pure political issue.”

He also admits that Wataniya does not expect “a major breakthrough anytime soon unless the frequency file is decoupled from politics”.

“Real efforts must be spent in this regard at all levels and we believe that MTIT spares no efforts to achieve some accomplishments in the near future. However, the key is the international community to help with our on-going efforts,” says Paltel group.

Husseini thinks that improving the network could be a relevant opportunity for Palestine. “The Palestinian population is predominately young, educated and seek to be connected and have proven that they are willing to spend on communications,” he says.

When talking about satellites, both companies face the same challenge. “As long as Israeli politics drive progress in the telecommunication sector in Palestine this is farfetched at this point,” says Husseini.

“Paltel is not able to offer satellite services, due to the restrictions imposed by the Israeli authorities,” said the company to CommsMEA.

Israeli competition

Another issue facing operators is that Israeli operators are able to serve areas of Palestinian territories with their networks, which creates unfair competition.

“Israeli operators cover the West Bank via their network infrastructure built up in settlements or all over the West Bank allowing it significant amount of spillage of Israeli operators signal into the inhabited Palestinian areas,” says Husseini.

“They [Israeli operators] hold a competitive advantage over us making them the only providers of 3G service in West Bank illegally. Nothing is done to ban Israeli operators’ activity in the West Bank, while Wataniya Mobile, the only Palestinian operator licensed to provide 3G services is prevented from that.”

Paltel says that “Israeli SIM’s are increasing in terms of market share and subscribers due to their ability to offer services that are not available by the Palestinian operators, such as 3G services.”

Growth opportunities

For both operators, launching 3G services will mean growth for the company. Paltel is focused on 3G services for mobile, and fixed broadband, as the company sees data as the future.

Wataniya has licence to provide 2G services in all of Palestine and 3G with an exclusivity period of four years.

“The priority continues to be: marinating the market and rolling out our 3G services,” says Husseini, although the company has no plans to develop fixed lines. The company is also expecting to enter Gaza, a move that will bring 45% additional revenue growth. “Overall the market remains promising but it is not for faint-hearted,” comments Husseini.

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