BAGHDAD, 30 November 2003 — Mobile phone operators are expecting hefty profits from licenses awarded by Iraq, as it will be the only cheap alternative to the damaged land-line system for some time, but persistent insecurity promises risks as well as rewards.
The insurgency that has plagued Iraq ever since the US-led spring invasion will have a double-edged effect, industry experts say. It heightens interest in reliable communications from people who want to stay in continual touch with their loved ones, but the relay installations are likely to become targets for the insurgents. “Commercially, it will be a success,” said Mohamed El-Roubi, managing partner of IandD Iraq Law Alliance, which represents several telecommunication companies. “The land-line network in Iraq was a big system, it will take a long time to fix,” he said.
The Thuraya mobile satellite system is currently the only reliable way of being connected, but it has many limitations. It is expensive for a population that mostly earns salaries below $150 a month.
The handset costs $600 and the communication charges average $1 a minute. The user has to have a line of sight to the satellite, which often means that he has to be outdoors. “Because it is cheaper, the GSM system will spread far beyond the Thuraya,” said El-Roubi, whose clients include mobile operators and equipment suppliers. He estimated the number of subscribers to Thuraya in Iraq at 60,000. GSM subscriptions will be driven by businesses as much as individuals, and the availability of the cost-effective short message service — SMS — will make it even more attractive. “It will be less of a headache when my daughter goes to university,” said ophthalmologist Abdullah Abdul Sattar, who also counts on the new networks to put some order in his appointment schedule.
But El-Roubi said the mobile phone system “is also likely to draw unwanted interest from elements who want to destroy the infrastructure and maintain the atmosphere of insecurity.”
The system in Baghdad will be launched in mid-December with an installed capacity of 125,000 subscribers, to be boosted to about 400,000 after two months, industry sources said.
The licenses were given for 24 months, and El-Roubi said the break-even point for the investment will be met “way before expiry.” The three operators selected for the licenses “have hopes of renewing their licenses after the initial term,” he added. Orascom of Egypt has been chosen for the central region which includes Baghdad, AsiaCell for the north, and AtheerTel for the south. The last two companies are partially owned by Kuwaiti mobile phone operators.
Last week, Kuwait’s Mobile Telecommunications Co. (MTC-Vodafone) said its southern network has been delayed for security reasons, but insisted the project will go ahead. Orascom and MTC-Vodafone have said they will invest at least $100 million each in their Iraqi networks.
US company MCI has been running since last July a mobile phone service around the capital restricted to about 10,000 civilian and military personnel of the US-led coalition, as well as aid workers and selected Iraqi officials. Until the new systems are up and running, Iraq remains the only country in the Middle East and North Africa not to have a mobile network.
The population has relied on high-range cordless telephones operating on radio frequencies, known locally by the most common brand name, Senao.
VHF radios, or walkie-talkies, became common after the occupation, used mainly by contractors and the media.
The Iraqi telecommunications network is the only infrastructure that the coalition has admitted to deliberately targeting during the six-week invasion, because of its dual military and civilian use. Land connections have been restored within provincial cities, but in Baghdad, 12 out of 38 exchange switches, serving 240,000 lines from a total 540,000, are out of service, according to the US Agency for International Development, which is supervising the reconstruction.
