ALKHOBAR, 23 July — Last Tuesday while all of you were reading my column, I was in Amman attending Convergence 2002, Jordan’s annual business communications and technology conference hosted by Jordan Telecom. It is always a sobering experience for me to travel to nearby Arab countries, which have many of the same problems as those facing the Kingdom, and see that they are meeting these challenges in innovative ways, while here in Saudi Arabia stagnation and excuses continue.
The Jordanian government has transformed the Ministry of Posts and Communication into the Ministry of Information Technology and Communications (MITC) and made changes in the structure of the Jordanian Telecom Regulatory Commission (TRC). MITC is led by the dynamic Dr. Fawaz Zubi, the former minister of posts. Thus continuity throughout the transition has been assured. Even more interesting for the Arab world, increasingly Zubi is being assisted in fulfilling his mission by Jordanian women, who now make up the majority of MITC’s staff.
“This is a signal that gender barriers are fading rapidly,” said Zubi. “It serves as a reminder that we cannot ignore the positive social impact of our emerging ICT industry.”
In an effort to increase services and bring down prices through competition, Jordan is in the process of liberalizing its telecommunications sector. The process began in January 2000 when the government of Jordan signed a strategic partnership with France Telecom to transform Jordan Telecom into a regional partner in the field. In that $508-million deal, France Telecom along with the Arab Bank acquired 40 percent of Jordan Telecom. What value did France Telecom add to Jordan Telecom? Pierre Mattei, CEO, Jordan Telecom, commented:
“Operators have a big problem. They must reach the best level of development as fast as possible and with good management. But it is very difficult for an operator to transform itself from inside. You must change your methods, know what are the best practices and what is the state of the technology. The choice of a foreign strategic partner is good because it allows transformation from within without changing the people who are already a part of the company. For Jordan Telecom, France Telecom brought in some expatriates, not many, only about 20, but these outside experts have been essential in helping Jordan Telecom develop new processes. So it is the job of the strategic partner not to do the job, but to show the way to follow. In addition, Jordan Telecom through France Telecom has had access to the latest state-of-the-art technology at the best price, so we’ve been able to move forward faster than before. Of course to transform a company needs confidence and loyalty from the strategic partner. If you have this confidence and loyalty then you will succeed.”
Jordan Telecom may have the confidence and loyalty of its strategic partner but the people of Jordan appear to be less than thrilled with the company. There are constant calls both from within the government and the society to bring down the cost consumers must pay for connectivity. Jordan’s telecom sector will be completely liberalized by 2005. The idea of competition is already most visible in Jordan’s GSM sector where the number of subscribers has exploded in the past year and prices have been pushed down by 40 percent. Fixed lines and the Internet are still sore spots. While prices have been reduced to some extent, Jordanians wanting to connect to the Internet still must pay fees to both an Internet service provider and the telecom. This is one major reason that Internet access is out of reach for many low-income Jordanians. As the nation moves forward with plans for e-government, the lack of Internet access is becoming a very serious issue as it increases the digital divide between the haves and have-nots in Jordanian society.
“Providing Internet access to rural areas is still a serious concern, as is the problem of low PC penetration in Jordan,” said Dr. Shabib Ammari, chairman, Jordan Telecom. “Fifty percent of the population is under the age of 18. So that is why we have decided to make Internet technology available in public schools and universities throughout Jordan. Under the initiative, Connecting Jordanians, a broadband network will support all schools, universities and tele-centers by the beginning of 2005. In the meantime, we will connect 3,200 schools over copper. The school connectivity is being provided without a concern for profitability. It is part of our long-term view.”
Under the agreement signed between the Jordanian Ministry of Education and Jordan Telecom, by September 2002, 500 public schools will be linked through an Intranet. Each month, 200 more schools will be added to the network until all 3,200 public schools acquire connectivity. The project is scheduled for completion before the end of the year 2003. This project is in response to the initiative of King Abdallah to reform the education process in Jordan. Intranet connectivity is necessary to transport the Jordanian government’s e-learning platform.
While school connectivity is a new area of endeavor, the Jordan Telecom Fund has already been working through innovative activities to bridge the digital divide and to stimulate enthusiasm for the Internet. The Jordan Telecom Fund was set up with the objective of eradicating Internet illiteracy and enhancing the use of IT in the Jordanian education sector.
The fund has contributed to spreading IT awareness in communities through the use of Internet tents and an Internet bus. These enable Internet technology to be demonstrated throughout the country. The fund project includes a full range of activities for the school summer holidays, with an emphasis on youth summer camps. During the past year, the Jordan Telecom Fund has succeeded in introducing more than 33,000 students, out of a national total of one million, and 33,000 teachers, out of a total of approximately 55,000, to the fast changing world of modern digital technologies.
While Jordan Telecom is making strong moves in many directions, it is important to remember that even its charitable activities are part of a master plan to build customer loyalty ahead of 2005. Jordan Telecom will take a major step in this regard with its partial flotation on the Amman Stock Exchange in December. Not only will average Jordanians then own a part of the local telecom, but the earnings from the flotation will help Jordan Telecom invest in upgrading its infrastructure and services.
Such improvements are necessary because fixed telephony is the main source of cash flow for Jordan Telecom. It must diversify to survive after the 2005 competition date. At Convergence 2002, Jordan Telecom announced the formation of the Jordan Telecom Group (JTG). JTG will combine the activities of all Jordan Telecom partner companies under one portfolio. JTG will be able to provide fixed line telecommunications, GSM mobile communications, Internet service, web access and hosting technologies, and Internet content development. By working together as a single entity, JTG hopes to give customers access to cross-specialization expertise and economies of scale. Mattei believes that JTG will succeed because, “today’s customer wants seamless access, and not to have to deal with different companies that all offer different things.”
JTG of course also wants to make the impression in the market that it is a power player and hopes that this will attract further foreign investment to the group. It needs to improve the profitability of its partner companies, too. As in Saudi Arabia, Jordan’s 13 Internet service providers are in poor financial condition, in part due to the small market. It is thought that consolidation down to no more than five ISPs is inevitable and JTG plans to do all within its power so that Global One, its ISP continues to hold the top position. JTG’s mobile communications operator, MobileCom, will not have it so easy. MobileCom is already involved in a price war with Egypt’s Orascom’s Jordanian subsidiary, Fastlink, and even JTG acknowledges that subscriber saturation has been reached at current tariff rates. Reducing rates will be the only way to increase subscriber numbers. While that will make it more difficult for Jordan’s mobile communications operators to earn an easy profit, it should increase the calling pleasure of Jordan’s mobile telephone users. Just imagine what similar competition could do for telecom services in Saudi Arabia.
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