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Iraq: New Telecom Licenses Will Let Ordinary Citizens Call The Shots

Three consortiums have been awarded licenses to build mobile phone networks in Iraq. The groups include Arab-owned telecommunications companies -- two from Kuwait and one from Egypt -- as well as local Iraqi investors. Experts say the contracts will improve Iraq's communications, give a fresh push to the country's struggling economy and help raise the confidence of Arab countries in the U.S.-led attempts to reconstruct Iraq.

Prague, 13 October 2003 (RFE/RL) -- It's a nightmare trying to reach someone on the telephone in Iraq -- whether you're dialing a satellite phone, a mobile phone, or one of the country's fixed land lines. The procedure might take hours to succeed, if it ever does.

But Iraqi authorities say the situation could soon change. Earlier this month, Iraqi Communications Minister Haidar al-Abbadi announced that three developers have been awarded contracts to set up mobile phone networks in Iraq within the next several weeks.

"The companies that will bring Iraq world-class mobile communication are, in the northern region, the AsiaCell consortium; in the central region, Orascom; and in the southern region, AtheerTel. The race is on -- which of these three companies will be able to launch the first service to the public and therefore enable the minister of communications to make the first call on Iraq's first mobile network?" al-Abbadi said.

Orascom is based in Egypt. AsiaCell and AtheerTel are both owned by Kuwaiti companies. More than 30 bidders competed for three, two-year contracts.

Under ousted Iraqi President Saddam Hussein, mobile communications did not exist in the country. The authorities blamed security reasons and international sanctions. The land-line telephone network was badly damaged during the U.S.-led war, as well as from sabotage.

Many experts believe that creating a cellular phone network represents a cheaper and faster solution to the country's communication problems. John Everington is a senior research analyst with the EMC wireless communications research firm, based in the U.K.

"Satellite phones are very expensive. The land-lines telecommunications system was in a great state of disrepair. It suffered a lot in the war, of course. And in terms of rolling out a national network, it's easier, and it's cheaper to do so with a mobile network," Everington said.

The three contracts will be launched in partnership with Iraqi investors. The three consortiums plan to initially invest about $250 million in building and developing infrastructure in the three regions.

Telecom experts say that choosing companies from Arab countries is a sound business decision and will help improve relations between Iraq and its neighbors.

"It would not have looked good on the ground in Iraq and certainly within the region if [the contracts] had been given to outside players," Everington says. "The awards to the local players are also significant because the Kuwaitis -- the MTC-Vodaphone who're in the consortium in the south and Wataniya in the north -- they've been investing in the region for the last year or so. And they are really pushing for outside investment. Orascom telecom are very, very experienced in the region. These three investors were awarded these contracts because they know the region and they have experience operating in the region."

The Kuwaiti telecom company Wataniya has already been operating a mobile network in the Kurdish-controlled north of Iraq, where it says it already has about 50,000 subscribers. With other investors, it formed a consortium called AsiaCell. Another Kuwaiti company, MTC-Vodaphone, formed the investment consortium AtheerTel in the south of Iraq.

The companies have chosen GSM technology, already widely used in the region, which will make it easier for Iraqis who are traveling abroad to stay connected.

Some U.S. legislators and government officials were suggesting the U.S.-supported CDMA technology be used in Iraq to complement the already existing cellular network in Baghdad. This service was built by the U.S. telecom firm WorldCom to establish communications among the coalition civilian and military authorities. It uses U.S. long-distance prefix codes and is not available to ordinary Iraqis.

Neil Partrick, an editor with the Economist Intelligence Unit in London, says, "I don't think that too many people in the U.S. administration really expected that the U.S. system would be opted for, despite some congressional pressure. The problem with it is that it would constrain access in terms of dialing around the region."

Al-Abbadi is promising that calls on mobile phones in Iraq will cost about 10 U.S. cents per minute.

Is such a price affordable to ordinary Iraqis? Experts believe Iraqis will enthusiastically embrace the new mobile communications network. Everington says there are currently thousands of satellite phone subscribers in Iraq, despite the cost.

"We've seen Iraqis paying very large amounts of money just to speak on satellite phones, to talk to people abroad. Therefore, the demand is there. And as the Iraqis have already embraced the opportunities of the satellite technology -- which is very expensive -- we believe that they will embrace the opportunities given to them by mobile technology, which is even cheaper than satellite technology," al-Abbadi said.

Ziad Maghazachi sells Thuraya satellite phones in Baghdad. He expects to expand his business to cellular technology.

"These days, a Thuraya phone costs $600. A mobile phone will cost anywhere between $100 and $700. We brought a whole load of mobiles to the shop, especially Nokia phones, because they're famous. I think they will be cheaper than Thurayas," Maghazachi said.

Al-Abbadi has been quoted as saying mobile phones will only cost $50 to $60 each.

The mobile telecom companies who won the contracts in Iraq expect the number of customers to jump to about 2 million. Some experts have an even more optimistic outlook. Malik Saadi is a senior analyst at the ARC Group, a research and consultancy firm based in Britain.

"The penetration rate of the mobile phones is very, very low. So there is a great potential there. Because now the market is still virgin. And in periods of crisis like this, people love to talk. So people are hoping to convert 50 percent of the population to the mobile phones within the next two to four years," Saadi said.

The Iraqi authorities expect the new mobile phone networks will be up and running within weeks.