Jawwal and Wataniya, the two Palestinian mobile operators, have at last launched 3G, but the high prices that they are charging for data could hold back the uptake of their mobile broadband services.
Palestinian operators must make data prices more attractive to counter illicit competition from Israeli providers
The Palestinian operators' launch of 3G at the start of this year has been in the making for a long time and comes at a time when many other markets in the Middle East have already introduced 4G, with some of the most advanced markets in the region expected to unveil 5G services before the end of 2018.
For many years, the Israeli authorities prevented the Palestinian operators from gaining access to the spectrum required for 3G, until Israel and the Palestinian Authority agreed a deal in November 2015 to allow Jawwal and Wataniya to build 3G networks in the West Bank. However, the deal did not cover Gaza, which remains limited to 2G mobile technology.
Palestine has been in desperate need for 3G to become commercially available, with the former minister of telecommunications for the Palestinian Authority, Mashhour Abu Dakka, stating that the country's economy has been losing around $120m a year, both in commercial sales and tax revenue, due to the lack of reliable fast mobile internet. Much like in neighboring countries, the addressable market for data in Palestine is strong, with a significant youth population and various mobile startups which have so far struggled to operate under the limitation of 2G technology.
However, despite the opportunities that 3G can bring, both Palestinian operators are struggling to compete with the Israeli SIM black market, whereby smuggled prepaid 3G and 4G from Israeli operators are being used by connecting to cell towers in Israeli and Jewish settlements. The main reason for the struggle is price.
Jawwal is offering 4.5MB of data on a prepaid SIM for ILS50 ($13.80), whereas 5MB of data from Israeli operator Pelephone costs ILS19.90. For ILS50, a user in Palestine can access 30GB of data when using one of the Israeli networks. With a market as price sensitive as Palestine, it is inevitable that users will be more inclined to opt for an Israeli SIM card.
Israel has had a 12-year head start on Palestine, having launched 3G in 2006, and prices are significantly lower in the more mature market than those offered by Jawwal and Wataniya. But over time, competitive pressures will bring prices down and the Palestinian economy will start seeing the benefits of 3G in the telecoms industry which will also allow for tech development opportunities. The fact that the market is not new to 3G, as it has been used via the black market, means that users are tech savvy in terms of data usage and, therefore, once operators can look at how to reduce prices, they are likely to see significant growth in data subscriptions and revenues. The question that now remains is how long is it going to take for Jawwal and Wataniya to reduce their prices?
Middle East Mobile Broadband Pricing Analysis, 4Q17, GLB002-000013 (January 2018)
Middle East Market Outlook, 1Q18, GLB002-000009 (December 2017)
Mai Barakat, Senior Analyst, Middle East and Africa