3G battle lines drawn

At the beginning of March 2010, Orange Jordan became the country’s first operator to launch 3G, enjoying an official exclusivity period that extended to just under 12 months thereafter. Within that time the telco looked to establish a strong brand association with the technology and the services it enabled ahead of the introduction of competition. The launch by Zain of its HSPA service in February 2011 will be a test of how successful Orange has been in establishing its own 3G credentials

Nayla Khawam assumed her new responsibility as CEO of the telco as of July 1, 2009

Broadband penetration in Jordan is estimated at around 30 per cent and growing all the while, offering decent opportunities for providers to invest in various technologies, including fibre, WiMAX and WCDMA/HSPA. Price competition in Jordan’s telecom sector remains intense, making it one of the most competitive in the region, and the likelihood is that this will factor into the offer of 3G services as more competition arrives, much to Orange Jordan’s displeasure.

Nayla Khawam, Orange Jordan’s CEO says the telco was aware of the likely impact of intense price competition after its 3G exclusivity period ended, and as such focussed on highlighting customer benefits and what 3G actually stood for when the operator launched the service in March 2010.

Orange Jordan partnered with Ericsson for the roll out of its 3G network and Khawam recalls the time pressure the operator faced in order to launch its service as close to the six-month timetable as possible. “We worked with Ericsson because of the company’s price and reliability, and the fact that it is well known for having good products,” she said. “The timing of the roll out and keeping to that timetable was also important to us, as was knowledge of our network.”

Orange Jordan’s network roll out was structured in three phases, and Khawam describes the first six months of launch as an education of the market as to what new benefits 3G brought subscribers in Jordan. “From September 2010 onwards, we experienced super-growth in the usage of 3G services on our network,” she said, suggesting that once subscribers began to understand the benefits of 3G, they begun actively utilising the service.

At the time of launch in March 2010, Orange Jordan offered preliminary 3G services in select areas of Amman, Irbid and Zarqa. The network was gradually expanded over the next six months to reach most populated areas in the kingdom.

The integrated operator signed a strategic agreement with Arab television network MBC, to offer several of the television network’s popular programmes and series, streamed exclusively through Orange’s 3G network directly to subscribers’ handsets.

"The services that will be delivered by Orange’s 3G network will greatly bolster Internet penetration in the kingdom, which conforms to the national strategy that aims at increasing Internet penetration by 50 per by 2011," Khawam said.

By the end of 2010, nine months after launching the network, Orange Jordan counted 150,000 3G subscribers, with this number doubling to 300,000 by the middle of February 2011, highlighting the impressive ramp-up the technology has received in recent months.

"By the end of 2011, we expect the number of 3G service users on our network to hit one million, especially after we provided high speed broadband Internet in the market," Khawam said.

However, Khawam remains concerned that the brutal price competition that exists in the voice arena in Jordan’s telecom sector will permeate into the 3G realm. “Quality of service is the game I want our competitor to play, not prices,” Khawam said. “The threat that the game that is played in voice being played in 3G is a concern,” she added.

At the beginning of March 2011, Zain Jordan announced it had officially launched 3G HSPA+ technology in the country. The operator said the mobile broadband service would be offered at competitive prices tailored for various customer needs with speeds of up to 21 Mbps.

Jordan has one of the most price competitive markets in the voice space and Khawam is hoping this will not spread to the 3G arena as well

The new services will target all customer bases, whether individuals, companies or institutions and will be introduced with a variety of offers and products at prices to suit the different needs of its consumers, the operator stated.

“Zain had set aside JD 120 million (US$169 million) to invest prior to launching HSPA+. Today, the Zain network is able to offer high speed Internet services that can reach up to 21 Mbps during phase one, and up to 42 Mbps in the near future,” said Zain’s Network department director Youssef Abu Mutawe.

“The new network will cover around 97 per cent of Jordan’s populated area” Mutawe added. The number of Zain’s HSPA+ base stations already reaches 1,000, covering the whole kingdom as well as the main highway,” Mutawe said.

According to Khawam, a factor that may affect the uptake of 3G in Jordan on a general level is with respect to the pricing of 3G devices. She claimed it had been difficult to find devices at a competitive price, which would have presumably helped push up the adoption rate of 3G in the kingdom.

“We placed our first very competitively priced handset in the market in January (2011),” Khawam revealed. “It is a ZTE device that is subsidised and comes at no extra charge with a subscription,” she added.

Khawam estimates 3G handset penetration rate at 30 per cent of the overall market, and suggests that given the overwhelmingly prepaid nature of Jordan’s mobile telco market, it would be of tremendous assistance if more of the leading handset manufacturers supplied higher numbers of low-end 3G devices.

“Nokia, for example has a 3G device priced at around €60 (US$85), which was one of the cheapest available, but for Jordan, this is still too pricey,” Khawam said. “A €30 price point would b more positive.” And with the ARPU of third cellco Umniah standing at around JD5 (US$7) per month, the need for competitive pricing of devices is self-evident.

Orange Jordan benefits from the fact that subscribers in the country continue to have appetite for both mobile as well as fixed line broadband services, and as an integrated operator, it is in a position to offer both varieties competently.

In due course Khawam believes tablet devices shall be the next form factor of interest as they are bundled into 3G offerings. Given that mobile data consumption as a percentage of overall capacity remains highest of all regions in the Middle East, the prospects for the successful uptake of 3G in Jordan remains positive.

Orange Jordan challenges new entrant terms

At the beginning of the year Orange Jordan said it was in the process of taking legal action against Jordan’s government for violating the exclusivity rights that formed part of the telco’s 3G licensing agreement.

When the telco was awarded its licence in August 2009, the regulator stipulated that Orange Jordan would have six months to build the network, after which a 12-month exclusivity period would begin.

Orange Jordan said it had filed a lawsuit against the government for allegedly violating its 3G exclusivity rights, and was asking for JD120 million (US$168 million) in compensation for "granting the 3G licence to another operator", according to a report from the Jordan Times.

The report said Orange Jordan alleged that the government had already granted its Zain Jordan a licence to offer 3G services, and that the Telecommunications Regulatory Commission (TRC) had received JD50 million from Zain for a licence.

Khawam told the Jordan Times that the telco’s exclusivity period had been breached because Zain started to install and market its 3G network during the exclusivity period.

Marwan Juma, Jordan’s minister of communications, denied the claims. He told the paper that the government had allowed Zain to test equipment for 3G services, but added that the operator was not able to start services during the exclusivity period.

"No agreement has been signed with Zain at all. After the exclusivity of Jordan Telecom Group (JTG) is over, we will start licensing procedures for Zain," Juma was quoted as saying in January.