Telecommunications and the OccupationWhile Israeli mobile operators can offer comprehensive coverage for all 11M Israeli and Palestinian inhabitants, providing voice and broadband data services, the Israeli government puts economic sanctions on Palestine by not permitting Palestinian mobile operators (Jawwal and Watania) to deploy their networks in large parts of the territory, and furthermore not permitting to offer broadband data services using 3G frequencies.
"Economic sanctions" is actually wrong wording. "Unilateral trade policy" is maybe more accurate. The main intention I assume is not to punish Palestine, but rather to give Israeli companies a competitive edge over Palestinian ones, shifting the trade balance in favour of Israel. The official reason -- for those who know the region it's not hard to guess -- is "security reasons".
Many Palestinian customers -- especially those that like to enjoy the benefits of 3G Internet, and those that occasionally travel within Jerusalem or Israel -- can hardly avoid to get themselves a SIM card of an Israeli provider, if they don't want to pay the prohibitively high roaming fees or be patient enough to stick with Jawwal's GPRS services. The PA's attempts to impede the use of Israeli SIM cards are mostly futile. There are obviously no official figures, but I would estimate the market share that Israeli companies have among Palestinian customers to be in the range of 100-200 M $ per year.
MVNO -- a solution?MVNO stands for Mobile Virtual Network Operator. The Israeli telco regulator recently adopted this modern approach of getting competition into the telco market. Rami Levy is the first MVNO in Israel offering SIM cards and mobile telecommunications services to its clients without having its own infrastructure. MVNOs are doing sales, customer care, tariffs, billing and collection, but for the actual phone calls, they rely on the infrastructure of network operators like Cellcom, Pelefone or Orange. MVNOs can often buy network capacities very cheaply from network operators (because capacities are idle most of the time), and resell them to their clients at higher prices, being able to charge decent profit margins in exchange for their customer care.
Now Palestinian mobile companies like Jawwal and Watania are seriously crippled by Israeli authorities in their ability to deploy their own networks. Their competitive advantage however lies in customer care. Jawwal and Watania have a large existing customer base, and a well developed network of call centers and sales points, which can operate at much lower cost than Israeli competitors thanks to skilled staff with lower salaries, and cheaper rents.
Conquering the MarketIf Jawwal and Watania obtain MVNO licenses in Israel, they will quickly be able to offer their domestic Westbank and Gaza customers the full range of services including 3G and cheap calls from within Israel, giving Jawwal and Watania the chance to reclaim the above mentioned market share of 100-200M $. Furthermore, those Palestinian companies could start to conquer the Israeli market advertising with cheap rates among the 1.5 Million 1948-Palestinians (aka "Arab Israelis"). The remaining 6 Million Israelis could possibly also be attracted by low prices. And it shouldn't be too hard to create a call center with Hebrew language in Gaza or Westbank that economically outperforms call centers of Israeli providers.
Due to the numbering scheme, which separates Israeli and Palestinian numberspaces, your Jawwal SIM card would in the future have two numbers: 059xxxxxxx and maybe 053xxxxxxx, whereas the xxxx'es would ideally match, to make it easier to remember.
Under this scenario Jawwal would suddenly have a competitive edge not only at home, but also among the Arab Israeli population. '48 Palestinians can use their Jawwal SIM card to call their cousins or business partners in Westbank and Gaza cheaply, while at the same time being able to call Israeli phones at reasonable rates. When they visit their family in Al Masyoun area of Ramallah, or other areas where Israeli network coverage is poor, they can benefit from the Jawwal network infrastructure.
Political Risks on Israeli Side
On the side of the Israeli regulator, there may be a risk that they try to put conditions on the MVNO licensing process that impede the outsourcing of parts of the value chain of a MVNO operator to Palestine. A legal study would be required to assess these risks in detail, being
- Managing customer data in Palestine (data protection law, "security"?)
- Using palestinian SIM cards and running two numbers on the same SIM card
- Having call centers in Palestine for customer care
- Connectivity between Isr. and Pal. Networks (technical and regulatory)
- Billing and collection (this part would probably need to be carried out through a legal establishment registered in Israel -- options for joint billing and collection should be checked, tax optimization)
- Using Palestinian investment for licensed MVNO operator in Israel (capital requirements?)
- Can the agreement with the network operator be designed in a way that in worst case scenario, the Palestinian investor one can pull out of Israel without much losses?
The existing Telcos might try to lobby for a regulation that makes it harder to outsource part of the value chain to Palestine, and they might likewise have lawyers looking around above mentioned points where a regulation could be used to weaken the Palestinian competitor.
Political Risks on Palestinian Side
On the side of the Palestinian regulator, there are several risks. First and foremost, the PA government tends to utilize Israeli restrictions for their own PR. If Palestinian customers were legally and happily using 3G Internet, that would leave the PA with less arguments against Israeli oppression on the political stage. To keep their arguments, the political level of PA may be interested in hindering any legal 3G deployment for Palestinians. Today, the sales of Israeli SIM cards and prepaid vouchers is forbidden on territories under Palestinian control. (It is however easy to circumvent -- as there are many commuters to Jerusalem, and also Israeli gas stations in C-Areas accessible for all Westbank Palestinians are salespoints)
Furthermore there are some signs under way that Palestinian companies will soon get some 3G frequencies. This may further encourage the PA in its attempts to forbid any competition with Israeli mobile networks. If 3G frequencies are available for only one of the two Palestinian operators, either Jawwal or Watania, the lucky one will certainly be interested to lobby with PA government to prevent a MVNO deal for its main competitor on the domestic market. This internal competition, and the political hurdles imposed by PA, will then distract Palestinians from competing on the Israeli market.