WIMAX ROLLS OUT IN JORDAN WITH GOAL OF HIGHER BROADBAND

UNCLAS AMMAN 004717

SIPDIS


SENSITIVE
SIPDIS

STATE FOR NEA/ELA

E.O. 12958: N/A
TAGS: EINT ECPS EINV TINT JO
SUBJECT: WIMAX ROLLS OUT IN JORDAN WITH GOAL OF HIGHER BROADBAND
PENETRATION

REFS:
A) AMMAN 4628
B) AMMAN 3770
C) AMMAN 3654
D) 04 AMMAN 8596


1. (U) Summary: Telecommunications companies Umniah and Batelco
Jordan jointly launched Jordan's first WiMAX Internet service
(Worldwide Interoperability for Microwave Access) on November 12.
Service is now available in Amman and Aqaba, with plans to expand to
two other cities. A second WiMAX effort will be launched in the
next few months, and a third WiMAX license was just awarded.
Government officials hope that WiMAX will improve broadband
competition, lower Internet prices, and increase use.
Telecommunication companies continue to complain about
interconnection and international access costs they must pay to
Orange, formerly the state-run telecommunications provider Jordan
Telecom. End Summary.

WiMAX SERVICE IN JORDAN
--------------


2. (U) Umniah and its parent company Batelco Jordan launched
Jordan's first WiMAX Internet service under the UMAX brand on
November 12 (Ref B). This is the latest step in the widening and
opening of Jordan's telecommunications sector. Prior to 2000 when
France Telecom purchased a 51 percent stake, Jordan Telecom (JT) was
the state-run telecommunications provider. Since the purchase,
France Telecom has invested $490 million in the company's
infrastructure which continues to dominate the local market.
(Worldwide, France Telecom serves two-thirds of its customers,
including its Jordanian customers, under the "Orange" brand.) Since
JT's privatization, new companies including Umniah have entered the
market and new services such as WiMAX have been offered.


3. (U) WiMAX (Worldwide Interoperability for Microwave Access) is an
Internet technology that uses fixed, local radio cells to provide
high-speed wireless Internet access. At its press conference,
Umniah said WiMax will significantly improve Internet services in
Jordan with data speeds up to two megabytes per second.
Telecommunications Regulatory Commission (TRC) Chairman Ahmad Hiasat
predicted during a November 26 meeting with EconOff that WiMAX would
change not only the Internet market in Jordan, but also mobile
telephony and Internet protocol-based television in the country.


4. (U) Isa Abdul Rahman, Director of Marketing for Batelco Jordan
(BJ),told EconOff on November 25 that UMAX is currently being
offered to 30 percent of Amman's population and to Aqaba, and there
are plans to extend the service to the north to Irbid and Zarqa.
Umniah also recently signed an agreement with the Greater Amman
Municipality (GAM) to provide free wi-fi Internet access using its
WiMAX technology along Jordan's first pedestrian-only street as part
of the city's efforts to make Amman a more pedestrian-friendly city
(Ref A). Abdul Rahman said that WiMAX's advantage is its
portability, and that it does not require a fixed telephone line,
which decreasing numbers of Jordanians have.


5. (SBU) TRC Director of Communications and Media Raw'a Mirza told
EconOff she thought WiMAX was well-suited to Jordan's population
density which is concentrated in Amman and Irbid. She was
particularly hopeful that WiMAX would lower the prices for all
broadband services, and said high prices of both computers and
broadband were slowing adoption. She added that competition in the
wireless mobile market had already lowered prices and increased
service, and that she was hopeful the same competitive pressures
would do the same for Internet service.


6. (U) Hiasat said that a second WiMAX provider, ATCO Clearwire (a
joint venture between Saudi-based ATCO and the American firm
Clearwire),would begin service "soon" - probably in December and
definitely before February, when a penalty would be activated if
service didn't begin. NOTE: All WiMAX licenses in Jordan are issued
with a penalty clause if service is not activated within 12 months,
to prevent companies from hoarding spectrum. END NOTE. Hiasat said
the second service shares the same service requirements as Umniah to
cover a 30 percent swath of Amman in its first year, and to serve

other governorates in the second year.

BROADBAND AVAILABILITY & USE
--------------


7. (SBU) Jordan currently has 12 Internet Service Providers (ISPs)
which offer dial-up and ADSL broadband services. Abdul Rahman said a
significant number of customers purchase pre-paid cards for Internet
access. Hiasat estimated that Jordan has 13 percent penetration in
Internet use and four percent penetration in Internet subscription.
According to Ministry of Information and Communications Technology
(MoICT) statistics, broadband subscriptions made up 31 percent of
Internet subscriptions in 2006. The government has set a target of
broadband subscriptions accounting for 50 percent of Internet
subscriptions by 2011, a goal Mirza said was realistic. Government
officials attribute the cost of computers as the highest barrier to
Internet use (Ref C). MoICT is working to develop a US$480
university student laptop program to increase ownership, which Mirza
praised. The government has also lifted the sales tax on computers
to further lower their price, but the price tag is still considered
too high for many Jordanian families.


8. (SBU) All interlocutors agreed that broadband prices in Jordan
remain high. Abdul Rahman pointed out that broadband subscription
prices were the equivalent of 34 percent of per capita income and
beyond the reach of most Jordanians. Hiasat predicted that
expansion of WiMAX would lower prices. Already, competitor Orange
is countering the launch of UMAX by dropping its US$98 ADSL
installation fee. Orange does not offer a WiMAX product, however.

BARRIERS TO BROADBAND ADOPTION
--------------


9. (SBU) All ADSL and dial-up ISPs in Jordan rely upon Orange's
local fixed-line loop infrastructure for interconnection. This
reliance on Orange's infrastructure has long been blamed for the
high price of Internet access and the slow deployment of broadband
services within Jordan (Ref D). In response to a TRC request for
comments that was published November 25 on its website, several
companies reiterated their complaints about Orange's dominance, and
Hiasat admitted that Orange had been a "bottleneck" to broadband
expansion. Abdul Rahman criticized the TRC's slowness in
deregulating Jordan and Orange's efforts to delay any changes.


10. (SBU) While fixed line services have been open to competition
since 2005, no company has yet established competing services.
Abdul Rahman argued that no company will ever lay additional copper
lines and hence provide competing interconnection because of the
high investment cost, but explained that his company is laying fiber
lines in business districts. He said that Orange needs to un-bundle
the local loop, lower interconnection prices, and lower
international access prices. Hiasat further commented that several
telecommunications companies are investigating alternative
international access points in the West Bank and Saudi Arabia. He
predicted that as soon as an alternative is established,
international access prices will fall dramatically and immediately.
He also said TRC is changing its accounting methods which will not
allow Orange to continue to charge for inefficient costs.

WiMAX LICENSES AND TECHNOLOGY
--------------


11. (U) In December 2006, fourteen companies participated in a
sealed-bid TRC spectrum auction. Batelco won Jordan's first WiMAX
license at the 3.5 GHz frequency with its US$11.5 million bid. In
January 2007, ATCO Clearwire was awarded a second license in the 3.6
GHz frequency with a winning bid of US$7.7 million. TRC received
three bids in a second round of 3.5 GHz auctions this month and
awarded the license to the Jordanian-Kuwaiti company Al Ma'kha. At
the Umniah press conference, Minister of Information and
Communication Technology Basem Rousan said that TRC is considering a
significant reduction in WiMAX annual licensing fees to lower the
consumer prices and encourage Jordanians to subscribe.


12. (U) Umniah's WiMAX equipment was purchased from Boca Raton,
Florida-based Airspan Networks. Customers attach a small portable

customer premises device to their computer to access the Internet
via WiMAX or wi-fi where available. Abdul Rahman said that in June
2008, Intel will offer chips with imbedded WiMAX which will make the
service easier to use. Umniah's service utilizes 3.5Ghz which it
says is the best band for indoor Internet use. Umniah also says
that its system will be fully-ready for migration to 3G systems.

Visit Amman's Classified Website at
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