WATANIYA LAUNCH IN JEOPARDY

C O N F I D E N T I A L JERUSALEM 001323 SIPDIS NEA FOR FRONT OFFICE, SEMEP, AND NEA/IPA, EEB FOR CIP/BA/GIBBS; PRM FOR PRM/ANE; NSC FOR SHAPIRO/KUMAR; E.O. 12958: DECL: 07/31/2019 TAGS: ECPS PREL ECON BEXP EINV KWBG IS SUBJECT: WATANIYA LAUNCH IN JEOPARDY REF: A. JERUSALEM 618 ¶B. JERUSALEM 386 Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d) ¶1. (C) Summary. The GOI notified the Palestinian Authority (PA) and Wataniya July 30 that, beginning August 1, it would allocate a portion of the bandwidth requested by the PA to launch the second mobile telecom operator. The allocation of 3.8 MHz is less than the 4.8 MHz agreed upon in the July 2008 agreement between the PA and GOI. According to CEO Allan Richardson, Wataniya cannot launch with the spectrum announced July 30. PA President Abu Mazen told U.S. officials in a July 30 meeting that the Israeli offer was insufficient. The PA responded to the GOI on July 31, requesting an immediate release of the agreed-upon spectrum, and PA and Wataniya representatives urged a coordinated and immediate reaction from the international community to urge the GOI to provide the necessary frequency. End Summary. GOI Allocation Not Enough to Launch -------------- ¶2. (C) The GOI notified the PA and Wataniya Palestine in a July 30 letter that it would extend 2.0 MHz of the current 2.4 MHz in the temporary 900 spectrum for 12 more months beginning August 1, 2009, and would immediately assign 1.8 MHz in the 1800 spectrum, for a total of 3.8 MHz. The letter also urged "concerted efforts" to find a source of 900 spectrum that would replace the temporary strip. However, the GOI-PA July 2008 agreement (ref B) required the allocation of 4.8 MHz (2.4 MHz in each band). According to Wataniya Palestine CEO Allan Richardson, Wataniya's network was designed based on this allocation, and any less will result in poor coverage and service. Additionally, he said, launching with less than 4.8 MHz would invalidate Wataniya's network support agreement with Ericsson and go against recommended international standard practices. Richardson noted that his Board is due to meet next week to discuss the status of Wataniya Palestine. He noted that, if Wataniya abandons its efforts in the West Bank, it would seek repayment of its $140 million licensing fee from the PA. ¶3. (C) Richardson characterized the GOI's decision to partially release the spectrum as "playing games." He speculated that the GOI's continued references to the "options" included in the July 2008 agreement is an effort to force the PA to make the current monopoly mobile telecom operator give up part of its spectrum to Wataniya, so that the GOI can allocate the original spectrum to an Israeli company. ¶4. (C) PA President Abbas told U.S. officials on July 30 that the GOI offer is insufficient to allow Wataniya to launch successfully. He noted that, despite repeated GOI assurances, there is still no final resolution of this issue, to the detriment of the Palestinian economy and the credibility of the PA to deliver to international investors. PA Urges Compliance -------------- ¶5. (SBU) According to the PLO's Negotiations Support Unit, PA Coordinator for Civil Affairs Hussein al Sheikh sent a reply to the GOI requesting release of the agreed-upon spectrum immediately. Coordinated International Response -------------- ¶6. (SBU) In discussions with ConGenOffs, the Office of the Quartet Representative stressed the importance of coordinating the international response to the GOI at the highest levels to provide the requested bandwidth. WALLES