|
Entrants into the telecom market are decrying tactics and decisions
employed by Jordan Telecom and the TRC. Wajih Halawa navigates
Amman’s non-highways for answers about Jordan’s info superhighway.
Ahead of most regional markets, the Jordanian telecommunications industry has an impressive infrastructure, three mobile phone operators, one radio trunking operator, and several companies providing international calling card services. Along with Bahrain, Jordan’s telecommunications market arguably leads the region in terms of liberalization.During the five years that preceded liberalization of the fixed sub-sector in January 2005 (a deadline set by the government), the incumbent Jordan Telecom (JT) was given time to prepare for a competitive market. Since then, the Telecommunications Regulatory Commission (TRC) has been issuing two types of licenses. Class licenses, the more popular option, give licensees permission to undertake all telecom-related activities, with the exception of control over scarce resources (like numbering for fixed lines and frequency spectrum for wireless communications), as well as public rights of way (which govern public works and the deployment of telephone poles and the like). Individual licenses, on the other hand, include these exceptions and are therefore issued to companies that wish to provide services like fixed land lines.
Let my people go
In theory, new market entrants would have the opportunity to diversify the range of value-added services available through the telecom backbone built and maintained by JT. Unfortunately, things have not been smooth-sailing, and several companies are alleging pressure from what they call a rigid incumbent, even in the shadow of the independent TRC. With over 20 class licenses issued – some of which include Swiftel, Cyberia, and Al-Deka – and nearly another dozen pending, the competition is understandably intense.
LaSilkee Virtual Connexion is another one of those companies, obtaining its class license from the TRC just over a year ago with the aim of offering international long distance services, data streaming, video telephony, and other services using a multi-service, multi-access Next Generation Network (NGN). These services would be to fixed lines what 3G technology is to mobile phone users.
But until now, LaSilkee has been unable to launch. Company officials lay much of the blame on the TRC, which they say has not forced JT to allow LaSilkee access to its infrastructure. Greg Smith, chief commercial officer of LaSilkee, told Jordan Business that both JT and the TRC have presented their own reasons for the delays.
“The TRC’s failure is multi-faceted: there are things they have not done and things they are doing too slowly,” said Mr. Smith.
“The key problem,” he emphasized, “is the TRC’s failure to force the incumbent to interconnect with us. Having access to the incumbent’s network at non-discriminatory, cost-based pricing is essential to the success of deregulation.”
For each day these companies are delayed, they lose thousands of dinars in potential revenue. Mr. Smith added that services like carrier selection and carrier pre-selection – which would allow consumers to choose their carrier for each phone call, as well as choosing which companies they use for local and international calls – will be delayed for at least another year with no clear reasons from the TRC.
But at the end of the day, even JT is not above the law, and skeptics have warned that care must be taken when addressing this sensitive issue. One longtime expert in the media and telecommunications sector privately noted that the TRC’s structure was the cause of the problem at hand, and not JT.
Data communications,
McGyver-style
After months of wrangling, LaSilkee recently managed to set up voice termination, which will allow it to sell termination services for calls coming into Jordan from international carriers. But it has achieved this by going through a third party, rather than waiting for the TRC to take action.
“We’ve been trying to launch a number of products and services,” said Mr. Smith. “With each one, the delay was first and foremost related to JT’s refusal to allow us to connect, and then TRC’s inability or unwillingness to enforce this.”
To that end, the TRC has issued several letters to JT, ordering it in various ways to comply with the law, and has assured new entrants that it will take the necessary measures to enable them to operate. But there has been very little to show in terms of progress.The TRC, on the other hand, responded to some of these allegations in an email sent to Jordan Business by Dima Abu Gharbieh, director of media relations. Ms. Abu Gharbieh noted that Jordan Telecom had in fact implemented a set of interconnection services back in 2003 and had unbundled its bitstream in 2005, in compliance with Interconnections Guidelines and Instructions issue by the TRC. Unfortunately, Ms. Abu Gharbieh did not directly address the complaints.
It’s all about termination
Viacloud, a provider of pre-paid international calling cards in the Jordanian market – Ma’ak – has been in business since 2002. Entering the market before the liberalization of the sector, Viacloud is not affected by the current crisis with JT, particularly since its reliance is on call origination services; Viacloud makes its money from people buying its cards and using minutes which the company routes through international carriers to the countries being called.
One of the problems in the sector, according to Viacloud general manager Abdullah Kawasmi, is that most new class licensees are in the business of termination services. “It’s all about termination for them,” he said to Jordan Business, “because it involves lower investment and can be set up very quickly, with almost immediate results as long as you can offer competitive rates.”
Mr. Kawasmi went on to say that he believed relying primarily on termination services for these companies was not a sound business model, because a provider can lose all its traffic in a matter of minutes once an international carrier reroutes traffic to other providers who are offering lower rates.
This is why, he added, JT has not been too worried about losing origination business, which is mostly based on corporate accounts that do not switch business providers easily. Losing termination business, on the other hand, can cause a drastic decline in business, which would be detrimental to JT’s income statement.
FLAG for follow-up
Wanting to bypass the headaches of JT, LaSilkee even approached the company that routes wholesale IP bandwidth into Jordan, Fiber-optic Link Around the Globe (FLAG). FLAG Telecom is the company responsible for the 28,000 kilometer-long undersea fiber-optic cable that has connected much of the world since the mid-1990s, allowing for today’s broadband telecommunications revolution. The network has an access point that lands in the port of Aqaba, giving Jordan direct access to the FLAG backbone.
Wanting to connect directly to the FLAG access point, LaSilkee was referred instead to JT. This, says Mr. Smith, is not a feature of a liberalized market. But one expert surmised that this was probably because FLAG does not own its landing station in Aqaba; the access point is housed in a building owned by JT. The TRC also told Jordan Business that it had worked with JT to allow access to the submarine cable.
Connection costs are also said to be overpriced. One source estimated that leasing a fiber-optic line from JT, extending between Amman and Aqaba, could cost as much as several hundred thousand dollars per year, making it impossible for a small firm to justify the expense. Given that pricing schemes are approved by the TRC, Mr. Smith says this is hardly in line with the commission’s “non-discriminatory, cost-based” approach.
A statement from the TRC, however, said that it has worked with JT over the past three years to reduce charges for many other data communications services. According to the commission, competition will be further promoted by the Integrated Regime of Licensing and Regulation, a set of rules that will employ “a common approach to licensing all service activities,” which will be operational at the end of the year. The regime is also supposed to lead to lower prices for consumers
“[In] accordance with its duties under Articles 12/7 and 12/8 of the Telecom Law, the TRC monitors the prices of services in the telecom sector and will impose obligations or sanctions if there is any abuse of dominance or anti-competitive conduct, as will as interfering to regulate prices if needed,” said the statement.
How far, how long?
In its role as an independent regulator, the TRC does have a record of working towards liberalizing the telecom sector in Jordan. However, concerns are mounting at the commission’s lack of responsiveness to the immediate needs of local and foreign investors who have placed their bets on Jordan’s supposed openness to competition. And Jordan Business has been told that, over its lifespan so far, the TRC has only issued one fine for a violation of the law, amounting to the humble sum of JD 10,000.
With life being extremely difficult for these companies, one is forced to question the efficiency of the regulator in promoting effective competition. As each party blames the other for its problems, what remains clear is that new entrants appear to be close to dire straits. Mr. Smith from LaSilkee says he could go back to raising capital from new investors, but adds that the current situation needs to change. His conclusions are grim: “We need positive indicators that the conditions will improve soon, or it will be difficult for us to survive for much longer.”
DISCLAIMER: Forum postings are the opinion of the posting author alone, and should not be taken as the opinion of Jordan business The author is entirely and solely responsible for all content that he/she uploads, posts, or otherwise transmits via the website. Jordan business is not responsible for such content. However, Jordan business shall have the right, but not the obligation, to delete, move, or edit any content that violates this agreement or is otherwise objectionable as determined by Jordan business in its sole discretion and without notice. |
