x Abu Dhabi, UAEWednesday 26 July 2017

Jordan's lively mobile model

The kingdom is an example of a vibrant regional telecommunications market, with multiple private operators, but with service problems that afflict customers across the region.

Orange has the country's first and only 3G licence. Other, smaller businesses have entered the mobile broadband market with WiMax.
Orange has the country's first and only 3G licence. Other, smaller businesses have entered the mobile broadband market with WiMax.

When a study last year named Iraq the most competitive telecommunications market in the Arab world, it unseated a country that had sat atop the rankings for a number of years. Jordan, with just 6 million people and an average income of US$5,000 per year, reformed its telecommunications market early and is now home to four mobile operators, with at least one more expected to enter the market in the coming months.

The country was the first in the region to allow foreign private investment in the sector and the first to sell a majority stake in its state-owned operator to outside investors. The telecommunications sector did about US$1.5 billion (Dh5.51bn) of business last year. The proliferation of private sector operators is a pillar of a long-running government policy to modernise the nation's technology and telecommunications industries.

But complaints of lax customer service, high prices and substandard technical service, which plague markets across the Arab world, remain frequent in the kingdom. Even so, the country has dived head first into two areas of market reform that remain long awaited in the Gulf. Along with the major incumbent operators - Zain, Orange, Umniah and Xpress - a number of smaller businesses now offer broadband internet connections, using new WiMax mobile technology to compete in a market that has proved resistant to competition in the UAE and the region.

And in the coming year, two mobile operators will enter the market using the "virtual" network model that is widely tipped to be the way new competition will eventually emerge in the UAE duopoly. Mobile virtual network operators (MVNOs) are telecoms players that use existing operators' physical networks to offer their own brand of phone service. They purchase phone minutes and data capacity for text messages from operators at wholesale rates and resell them to their own subscribers.

The virtual model allows networks to be rolled out faster and cheaper than traditional ones. It requires a mobile operator to build a network of transmission towers across a country. The low cost of launching a virtual network lets smaller businesses enter the market offering a niche service. Without the burden of billions of dollars of investment in network infrastructure, virtual operators can survive on fewer customers and smaller profit margins.

The Friendi Group, based in Dubai, will launch its MVNO service in Jordan in the next few months, says Mikkel Vinter, the chief executive and founder of Friendi. Friendi launched a similar service in Oman last year and has gained 150,000 subscribers, or about 4 per cent of the market, since then. "Jordan is a pretty fierce market," Mr Vinter says. "They've had competition for longer than the other regional markets. We're very respectful of that, but we have a combination of concepts that have worked in Oman as well as something that is market-specific."

To compete against Jordan's four incumbent mobile operators, Friendi's business strategy is to focus on specific segments of the country's population such as the expatriate and youth markets. "We see a number of opportunities in Jordan," he says. "We can focus on a segment that is relatively small in size in customers and still make a good business case for it. We believe we can find our space in Jordan."

Friendi's main network in Oman is targeted at what Mr Vinter describes as "the people with a piece of their heart outside of the country", meaning primarily expatriates and Omanis who make many international calls. In the expat-heavy Middle East, it is a proposition that the company believes can take off across the region. Friendi also struck a deal last year to launch a second virtual network in Oman, in partnership with Hala FM, a popular Omani radio station that is partly owned by the regional broadcaster MBC. Subscribers to the network will get free music downloads and access to Hala FM's special events, call-in shows and promotions.

As Friendi prepares its Jordan launch, a second virtual network licence has been awarded to i2, a regional mobile phone retailer based in Saudi Arabia. Although i2 announced its intention to launch a service as early as 2008, it has yet to be rolled out. With the mobile market preparing for new competition and business models, Jordan's broadband internet sector is now characterised by competition from some of the Middle East's first WiMax providers.

WiMax works in much the same way as the mobile broadband systems that provide Web access to handsets, broadcasting high-speed internet over the airwaves. Technical differences mean a single transmission tower can reach more customers over a greater distance than traditional networks. But the real difference between WiMax and the mobile networks currently in operation is in the commercial focus of the companies operating them. While regular operators view mobile internet as a lucrative new source of revenue from their existing customer base, WiMax companies are built from the ground up to operate as internet service providers.

Instead of laying copper or fibre-optic cable across a city, WiMax companies roll out a series of transmission towers and sell wireless receivers to customers looking to connect their homes or businesses. With no physical link needed, the service can quickly connect a customer, and it can be moved from one location to another with no administrative or technical work needed. "I recently moved houses, and the beautiful thing about WiMax was walking into the store and an hour later I had a solution up and running in my house giving me a 5-megabit connection," says Ahmad Humaid, a veteran of Jordan's internet industry. "It is very convenient in that way, very light and flexible."

Jordan's WiMax operators offer basic connections for about 30 Jordanian dinars per month (Dh154), about half the price for a comparable connection in the UAE. But for Mr Humaid, a digital entrepreneur who has kept a close eye on the country's internet market for personal and professional reasons, prices still need to fall. "Of course, internet access has become cheaper here, like it has all over the world, because the costs are falling," he says. "But there is still much more to be done to make the internet accessible and create a really competitive market. I still have not seen a clear national plan that makes you feel there is a commitment to making the internet a lot cheaper."

tgara@thenational.ae dgeorgecosh@thenational.ae