WASHINGTON —
Bush administration efforts to help Iraq create a competitive wireless market and an independent regulatory regime to oversee telecom reconstruction in the aftermath of the 2003 U.S.-led invasion are at risk of being undermined by internal political strife in the war-torn country, according to Iraqi and U.S. government sources.
Motorola Inc., Lucent Technologies Inc. and Verizon Communications Inc. are among the U.S. companies that have won millions of dollars of telecom business in Iraq since the ouster of Saddam Hussein nearly four years ago. Selling and installing commercial and first-responder wireless telecom gear in Iraq, already risky business, could become messier for U.S. and other foreign telecom companies attempting to cash in on new opportunities in a country that essentially lacked a meaningful wireless market before 2003.
U.S. and Iraqi government sources say a power struggle has broken out between the Iraqi Ministry of Communications and Iraq’s National Communications and Media Commission over mobile-phone licensing and telecom policy. Iraq’s Minister of Communications is Mohammed Tawfik Allawi, reportedly a close relative of former interim prime minister Ayad Allawi. The latter Allawi, a politically secular Shia Muslim and a former Ba’athist, continues to be a force in Iraqi politics, leading his Iraqi National Accord’s party in the new assembly.
The Iraqi NCMC is headed by Siyamend Zaid Othman, an Iraqi Kurd with a strong background in media policy.
Until recently, Othman held sway over wireless licensing and telecom-media policy as chief executive officer of the nine-member NCMC, intentionally modeled after the Federal Communications Commission. These days, communications minister Allawi is grabbing headlines, frustrating and angering the NCMC and putting the Bush administration in the role of reluctant referee.
When NCMC has complained to the Bush administration, U.S. officials reiterate their support for separation between independent regulators and regulated telecom operators-including the two Iraqi-owned landline telephone and Internet service carriers. But, according to a U.S. government official, the Bush administration does not want to dictate a political solution since Iraqi self-governance is a primary objective. At the same time, the U.S. official said widespread wireless and other telecom services at competitively low prices are also American-supported goals-the very ones the NCMC are being threatened by intervention of Iraq’s communications minister.
Cell-phone licensing is right smack in the middle of the rivalry between the Iraqi communications ministry and the NCMC. The Iraqi government is months behind granting new national mobile-phone licenses. Prospects for licensing could get murkier as Iraqi politicians consider revising or repealing the law that gives the NCMC its independence and jurisdiction over the Iraq’s telecom and media sectors.
Under the now-defunct U.S.-led Coalition Provisional Authority, mobile-phone licenses were awarded in 2003 to Orascom Telecom Iraq Corp., Asia-Cell Telecommunications Ltd. and Atheer Telecom Iraq Ltd. All three operators use GSM technology, which is predominant in the Middle East. Mobile-phone subscriptions in Iraq have gone from near zero to more than 7 million subscribers in just three years. Indeed, mobile-phone growth in Iraq is arguably the biggest commercial success story in a country otherwise generating daily headlines of killings from ethnic and sectarian violence.
The three national operators, whose two-year licenses expired months ago, have been allowed to continue operating for an unspecified period until the next phase of cellular licensing is sorted out.
Adding to the confusion is a potential snag over a stand-alone mobile-phone system in Baghdad built by Verizon Communications Inc.’s MCI unit and operated by the U.S. government. The Bush administration has considered donating the system to the Iraq government, but the NCMC has concerns the Iraqi government would require all wireless calls to interconnect with a state-operated mobile-phone system and offer cellular service to Iraqis at low, subsidized rates. The NCMC fears such an arrangement would have catastrophic financial impact on licensed carriers and wireless competition generally. Verizon declined to comment on the matter.
A U.S. official said the Bush administration could decide to simply scrap the Baghdad cellular system altogether.
Iraqi communications minister Allawi was quoted last week as saying “the cabinet had recently developed a committee to study the issue of frequencies and mobile-phone contracts to consider the granting of new licenses for mobile-phone companies after the contracts of companies operating in Iraq ends.” It was an odd statement, given the NCMC has authority over wireless licensing and spectrum policy in Iraq.
When Canadian-based Nortel Networks Ltd. last week announced it had been awarded a $20 million contract by Iraq Telecommunications & Post Corp., Iraq’s sole fixed-line operator, to build a nationwide optical backbone to deliver high-bandwidth data, video and multimedia services for personal and business communications, Allawi again was out in front.
“This national project is vitally important to the many telecommunications projects underway that will help rebuild the capabilities of the Iraqi society and economy,” said Allawi. “We selected Nortel’s advanced networking technology as the right foundation for Iraqi telecommunications and are confident that the improved communications made possible by this network will help accelerate the reconstruction of our country.”
The Iraq government has a head start in the country’s emerging wireless local loop market, where U.S.-developed CDMA technology is getting its first chance to showcase its capabilities in a region where GSM is king. The NCMC recently announced the selection of two commercial national WLL and three commercial provincial WLL licensees. One of the new national WLL license includes U.S.-based Artel Inc., a telecom consulting firm. Lucent will provide network equipment to the second national WLL licensee.
The future mobile phone-WLL landscape in Iraq also is an issue for the Department of Defense, which recently dispatched a team to Iraq to investigate the possibility of becoming an enterprise customer of one or more of the three national mobile-phone carriers. The Pentagon, according to a U.S. government source, wants to lower its communications costs in Iraq. DoD did not reply to e-mails for comment.
