Palestine ranked 106th globally on the ICT Development Index, which measures the development of information and communication technology, in November 2016, compared to its 103rd ranking in 2015.
A February 2016 World Bank report revealed that the total revenue loss for Palestinian mobile operators during the last three years exceeded $1 billion because of Israeli restrictions on the telecommunications sector.
In light of this situation, the Palestinian Ministry of Telecommunications and Information Technology (MTIT) signed a final agreement with Israel on April 5 to allow Palestinian telecommunications companies to provide 3G services in the West Bank governorates and to allow Wataniya Mobile to operate a 2G mobile system in the Gaza Strip. (The latter of which comes after more than 10 years of negotiations on the issue.)
Wataniya Mobile was granted a license to operate in Palestine in 2006 after winning a $355 million tender as a second mobile operator alongside Jawwal. It started operations in the West Bank in 2009 but did not cover the Gaza Strip, as Israel prevented it from importing its equipment into the enclave.
The agreement between MTIT and Israel allowed Palestinian mobile service providers to use 3G only in the West Bank. It also allowed Wataniya Mobile to operate in the Gaza Strip alongside Jawwal. But the agreement did not explain why the 3G license was not granted in the Gaza Strip.
This agreement comes after the Palestinian and Israeli governments signed memoranda of understandings in September 2016 that regulated the telecommunications sector so as to activate the 3G service in Palestine and allow Wataniya Mobile to operate in Gaza.
Palestinian Deputy Minister of Telecommunications and Information Technology Suleiman Zuhairi said the agreement with Israel is in line with the memoranda reached in mid-2016 to activate the 3G service in the West Bank.
He explained to Al-Monitor that, under the agreement, the Palestinian Authority (PA) would receive two 10 megahertz (MHz) of 3G services. He said, “The first 10 MHz would be allocated for the exclusive use by the two Palestinian mobile service providers, Jawwal and Wataniya Mobile, while the second 10 MHz would be assigned for shared use between these two Palestinian companies and two Israeli companies, Cellcom and Pelephone. Ericsson, an international mobile broadband company, would manage the technical process of how the Israeli and Palestinian companies would share the second 10 MHz, in particular in Area C, to prevent any disturbances or overlapping of functions.”
Zuhairi further noted that Jawwal and Wataniya Mobile will invest a total amount of $100 million, equally divided between them, to purchase the requirements necessary and activate the 3G service within a period of three to six months.
“The public treasury revenues are expected to reach … $200 million a year. This amount represents the direct losses and lost investment opportunities that Israeli telecommunications companies illegally obtained by exclusively and illegally providing the 3G and 4G services to the West Bank,” he said.
Haitham Abu Shaaban, CEO of Wataniya Mobile in Gaza, told Al-Monitor, “The company started on April 6 purchasing 3G service equipment for its activation in the West Bank within a period of up to six months, in parallel with the launch of the first transmission tower on April 10 built in Gaza City following the finalization of the agreement with Israel.”
He added, “Wataniya Mobile will start working in Gaza within a maximum of three months from now, with an investment expected to reach $60 million to operate the 2G service in the Gaza Strip after a wait of more than 10 years.”
It should be noted that after Israel allows Wataniya Mobile to operate in the Gaza Strip, the Palestinian telecommunications market will witness competition between this company and Jawwal, which has served the residents of the Gaza Strip and monopolized the telecommunications market since 1999. Wataniya Mobile has operated in the West Bank since 2009, along with a number of Israeli telecommunications companies, most notably Cellcom and Pelephone.
Nasser Abdel-Karim, a professor of economics at An-Najah University in the West Bank, told Al-Monitor this agreement will have tangible positive effects on the Palestinian economy and the PA's public treasury revenue by encouraging foreign companies to invest in the Palestinian telecommunications sector, which Jawwal has monopolized for 20 years.
He added, “This will improve competition, reduce the cost of calls and data transmission and allow dispensing with the old 1G and 2G equipment. This will also be clearly reflected on the PA tax collection revenue, which is expected to exceed $150 million annually.”
In November 2016, speaking at the announcement of Palestine Technology Week, Expotech 2017, Ammar Aker, CEO of Palestine Telecommunications Company (Paltel), said the number of Israeli SIM cards has exceeded 370,000 in the West Bank, attributing this to the 3G and 4G services offered by those SIM cards. He estimated the ensuing losses sustained by the Palestinian telecommunications sector at $100 million annually.
An official source at Jawwal told Al-Monitor on condition of anonymity, “Wataniya Mobile will not be a real competitor to Jawwal as many imagine. The company has been operating in the West Bank for eight years now with a market share of 17%. Jawwal has the largest market share with 2.5 million SIM cards. Wataniya Mobile's expected market share in the Gaza Strip will not exceed 20% at the latest.”
Samir Abu-Maddalah, a professor of economics at Al-Azhar University in Gaza, told Al-Monitor, “MTIT’s signing of a 3G services agreement in the West Bank will not have as great an economic impact as the PA envisions. Israeli SIM cards have flooded the Palestinian market, with more than 400,000 Israeli SIM cards accounting for a 25% share in the Palestinian digital market, without the Palestinian treasury reaping any benefit.”
He added, “Israeli SIM cards offer 4G and 5G technology that is less expensive and of a higher quality than the 2G and 3G technology. Under this agreement, Palestinian and Israeli companies will be jointly operating in Area C — i.e., 60% of the West Bank's geographical surface — and Israel will monopolize the 4G and 5G services there.”
This agreement may be an achievement for MTIT, as it will allow Palestinian companies to offer their West Bank subscribers 3G technology services and will also allow Wataniya Mobile to operate in the Gaza Strip after 10 years of waiting for Israel’s approval to import its equipment. However, the coming days will reveal the technological and economic benefits of this agreement.