A natural evolution

With the tender for 3G spectrum appearing on Jordan’s horizon, Mickael Ghossein, CEO of Orange Jordan is eager for his company to secure the first slice of the 3G pie in 2009. Gaining the first licence would give the telco at least a 10-month head start on its competitors. Ghossein shares his beliefs on why MVNOs will not work in the kingdom’s already crowded telecoms market place, and how non-voice services have driven growth for the integrated operator in 2008

The tender to allot a long overdue 3G licence in Jordan opens mid- December with bids for the available 3G spectrum closing on January 27. The Telecommunications Regulatory Commission (TRC) has set the reserve price of JD25 million (US$35.3 million) for a paired block of 5MHz spectrum, while a concurrent tender will also take place for additional 2G spectrum. Mickael Ghossein is quietly confident of Orange Jordan’s bidding position.

“3G is a maturing of your mobile service. You should never think of 3G frequencies as just another licence,” states Ghossein. “Today you have voice, you have speed on your network with EDGE 2.75 generation, then you move to 256 Kbps, and finally, 3G brings even more speed. It is a natural evolution.” Ghossein adds: “We are lucky we have cash because most operators do not have cash.”

Jordan’s telecoms scene is one of the most competitive in the Middle East with three GSM operators as well as iDEN operator Xpress. The TRC has also awarded two reseller licences, the first to i2, a leading mobile retailer in the region and the second to Friendi Mobile. Neither reseller has reached a commercial agreement with a host operator, although Friendi is on track to become one of the first two MVNOs to launch in the Middle East, having secured an agreement in Oman. This will likely serve as a test case for virtual operators in the rest of the region. Ghossein, however, remains adamant that he does not see MVNOs working in Jordan given the number of service providers already present in the market and the country’s relatively small population of just six million.

“In France they have 65 million people and only three operators. Instead of giving more licences they authorised between 10 and 20 MVNOs. In this case, if an operator were charging 10 piastres (US$0.14) a minute, then an MVNO would charge eight to12 piastres per minute. But when an operator in Jordan is charging one piastre a minute, then what is an MVNO’s position?”

“If they were to work in the niche market model, then perhaps they could cater to the Lebanese community or to the north of Jordan, for example. But to be what? To be low cost? We are low cost. To add value? They would not add much value in my opinion. Perhaps if you were paying JD10 today and they offered more music for JD20, maybe you would, but it would be a very narrow market.”

While it has been suggested that the regulator is putting pressure on operators to hold discussion with prospective MVNOs, Ghossein insists a financial decision ought to be left to operators.

“The final decision is ours because we would be the ones investing. The regulator can not oblige an operator to accept an MVNO. If it wants to push us to put an MVNO on our network, then it should give us the money.”

Reflecting on the three arms to Orange Jordan’s business – mobile, fixed-line and Internet – Ghossein says the strategy of integrating three separate companies into the unified Orange Jordan operator last year, is now paying dividends with the generation of diversified revenue streams as the market matures.

“At the moment the mobile market is stable and maturing, fixed is a declining market, but the data side is growing considerably,” Ghossein says.

Orange Jordan’s results for the first nine months of 2008, showed fixed-line revenues declined by 4.2 per cent, mobile grew by 6.6 per cent, while Internet soared by 34 per cent. “Data is starting to compensate for the fixed losses. This was a key strategy and part of why we did the integration.”