Privatization in the Iraqi telecom industry

The liberalization of the telecommunication sector in Iraq is a good example of how privatization can actually help in economic growth.

While other crucial sectors "take electric power, for example " that are still under the government's control and under heavy bureaucracy have been struggling to get back to the pre-war status "although it's facilities weren't as much affected by the military action and coalition forces did their best to avoid damaging electric infrastructure ",



that wasn't the case in the telecom sector! within less than 3 years, wireless and wire-line subscribers have increased 4.6 Million , five times as much as it was pre-war! Internet subscribes have increased even more steeply , from 4500 to 150000! [1]. of course the numbers are increasing.

Prior to the war, the telecom sector was totally under government's control, with less than 3 phones for every 100 people!, almost no wireless services and a highly restricted internet access.[2]



After the war, there was alot to be done to restore the telecommunication sector, and with the insufficient and somehow outdated wire-line infrastructure the best choice was to go wireless , and to privatize the wireless sector,



obviously, a country with a population of more than 25 Million and no cellular services was a good opportunity for all foreign and domestic investors!!



The CPA "Coalition provisional authority" issued Order #11 in 2003 that gave the iraqi Ministry of transportation and communications to be the licensing and regulatory body for telecommunication services in iraq, after less than one year three GSM cellular licenses were awarded to three different companies, with each license covering only a part of iraq's geography " one license for north , one for the middle , and one for the south"



Shortly afterwards the INCMC the Iraqi National Communications and Media Commission was formed, the NCMC "website www.ncmc-iraq.org" is a non-governmental organization responsible for regulating and licensing all telecommunications , radio and tv broadcast activities, with a structure and activity and independence very similar to the FCC Federal Communications Commission. [1]



the temporary license was only for one year, so the INCMC had to start working on a new license for all of iraq, at the same time it started to research for solutions to replace the wireline service. for reason mentioned earlier, the wireline infrastructure was unable to cope with the growing demand for communications in the country, the WLL "wireless local loop : a technology that mixes wireless and wireline systems in a fixed wireless network" seemed to be the best solution for that problem!

last year the INCMC issued six licenses for WLL, three national licenses and 3 provincial licenses, with one of the national licenses awarded to the ITPC "the iraqi telecommunications and postal commission: a governmental telecommunications body" the other 5 licenses were awarded to local and foreign investors, along with the WLL license , a WiMax license was awarded " as a gift!!!!! " for all the winners !



The WLL story is indeed a very interesting one, first it's very rare for a government to enter the market as a direct competitor along with other companies , with no preference or special treatment!!!



second this is the first time that a WiMax "IEEE's wireless data transmission standard that carries the designation 802.16-2004 [1] " is deployed national, a brave step despite the uncertainties and challenges of the new WiMax technology.



However , as iraqi officials are becoming more and more committed towards privatization and wirelss technology, some are warning that the country is moving too far too fast, after all , the population is only 25 Million and there are more than 4 licensed cellular companies " some regional cellular licenses are awarded in some areas in north iraq" some fear that the demand would not require the existence of too many independent companies [1]



in addition to that , theres's still much more for the INCMC to work on , with the idea of a free market and a regulatory entity still new in iraq, there are many challenges to be faced, many cunning foreign and regional companies with relatively more experience and funding that of the INCMC trying to twist the fresh new laws "if not break them!!" to their own benefit, the decentralized regional governments don't make it easier too! " in some parts of north iraq , the INCMC doesn't have much control over the regulation of telecom, leaving that to the regional telecom ministries!".



After all, despite all the obstacles, the privatization of the iraqi telecom sector helped in it's growth, it can be called a success story! yet there's still much more to do out there, if done right, it can help as a guideline for other industries to recover faster and help bring this troubled country and it's economy back on it's feet again.



Late is better than never!!!







References :

[1] Iraq Goes Wireless
By: Glenn Zorpette , IEEE spectrum


[2] IIRTF

Overview of key industry sectors in iraq

www.export.gov

June 4, 2004