Competition heating up in Jordan for 4G services

JordanICT

Economic News

28 Jul 2015
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With a 4G licence recently awarded in Jordan and mobile operators rapidly rolling out new networks and services, increased competition is likely to boost connection and download speeds for consumers over the coming years.

In mid-June, the Telecommunications Regulatory Commission (TRC) granted a 4G licence to mobile operator Umniah, which purchased the requisite spectrum for JD71m ($99.8m), which will make it the third mobile operator to offer 4G services after Zain Jordan and Orange Jordan.

Despite a robust ICT sector, challenges remain, particularly in terms of infrastructure and financing, with the latter constrained by higher taxes applied to mobile subscriptions. Tackling these and other issues will be key to exploiting 4G’s opportunities further down the line.

New networks

In February Zain Jordan, a subsidiary of Kuwait’s Zain Group, launched its long-term evolution (LTE) network, making it the first full-service Jordanian 4G provider. With theoretical download speeds of up to 150 Mbps and coverage of all twelve governorates, the new network is the result of a JD200m ($281.2m) investment, with an additional JD100m ($140.6m) to be spent over the next two years.

Orange Jordan followed suit in late May, launching 4G services with mobile and wireless broadband speeds of up to 70 Mbps. While the network will initially be limited to the capital of Amman, the company is targeting nationwide coverage by the end of the third quarter. According to Orange Jordan, total investment in 4G network upgrades is set to reach JD250m ($352.8m) – equivalent to one-fourth of its total investments in the country since 2000.

Meanwhile, Umniah, which is controlled by Bahrain’s Batelco, has pursued a more gradual implementation strategy following the successful completion of technical network tests in 2013.  “During the next few years, we expect a rise in the introduction and usage of such advanced and innovative services that are based on machine-to-machine communication,” Ihab Hinnawi, CEO of Umniah, told local media in February.

Data drive

The launch of 4G services is good news for Jordanians, who are increasingly conducting their businesses online. TRC statistics from the first quarter place the number of internet users in the kingdom at 5.9m, for a 76% penetration rate, while smartphone penetration has risen to 65%, according to Azzam Sleit, former minister of ICT.

Orange Jordan estimates that around 4-6% of smartphones are already 4G enabled, with this figure expected to rise rapidly in the year ahead. Users will be able to benefit from a major leap in download speeds, which will lead to more data and better quality, while also facilitating a broad spectrum of other services. For example, the new network is likely to boost migration to machine-to-machine communication and smart tools. Jordanians will also have greater access to online tools like e-government, e-education and e-health, in addition to controlling other electronic appliances, such as household thermostats or security systems, from their mobile devices.

The upgrade to 4G also promises to yield dividends for a wide variety of Jordanian ICT firms and other service providers, ranging from retailers to video streaming sites. Advertisers will have a much more useful and flexible platform on which to operate and exposure is set to grow as penetration rates in the country rise.

Despite the potential offered by 4G connectivity, operators will have to contend with issues like a high tax burden and emerging technologies such as Skype, which routinely piggy-back on the sizeable infrastructure investments made by telcos, consuming large quantities of the available data. Moreover, the sector is still being impacted by the doubling of taxes on mobile subscriptions in 2013, to 24%. According to local media, this elicited a 7% average decline in operator revenues in the first quarter of last year.

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