Operating under occupation and competing with four Israeli mobile operators, Jawwal has captured over half of the Palestinian market and is now eyeing new markets in the region. Alex Ma'louf reports on the company's strategy for expansion.
Jawwal's new CEO has had a tough time of late. Appointed in October last year, Ammar Aker's mobile phone hasn't stopped ringing with customers complaining about quality of service. But if you think it's strange to call the CEO to vent your frustrations, that's not the only unique aspect to being the only official mobile phone provider in Palestine.
"People don't understand that we live in a very abnormal situation. Look what happened in Amman with the bombings. Four operators had their networks congested because all their subscribers were trying to make that call at that time. In our case, this kind of situation happens every week," explains Mr. Aker.
Just as every aspect of Palestinian life is shaped by the occupation and dealings with Israel, Jawwal has been competing for its very existence since it was founded in 1999. Four Israeli GSM companies operate illegally in the Palestinian territories; Israeli customs bar shipments of network hardware for months on end; and the Israeli authorities regulate telecommunications frequencies and network coverage in areas outside of the Palestinian Authority's control.
"We were born in competition; it's not like other incumbent operators in Egypt or Jordan. Even when they only had 100,000 subscribers, Fastlink made much more money than Jawwal now makes with over half a million. Why? Because they were the incumbent and exclusive operator. For us, we had to compete from day one in the worst circumstances," contends Mr. Aker.
Still, as Mr. Aker says himself, a tough upbringing has taught Jawwal vital lessons. "The Palestinian population compares us not with Jordan, but with the Israelis - we have to compete at their standards. If Palestinians cannot find the best product from a Palestinian company, then they go and buy Israeli."
In truth, Jawwal is a victim of its own success; increasing subscriber numbers and hardware delays at Israeli customs have crippled the company's network, resulting in reduced service quality levels. This is a charge that Mr. Aker and his team take seriously. The steps they have taken to restore consumer confidence and improve service are drastic, including temporarily halting sales of pre-paid lines.
"We have been under a lot of stress over the last couple of months because of network congestion. To solve the network problems... we had to be creative. One of the solutions is to take part of our switching system and place it abroad. Imagine that you wanted to call me from downstairs; the call would travel thousands of kilometers and come back... just to relieve the network," says Mr. Aker.
If Jawwal does manage to resolve network bottlenecks, and judging by Mr. Aker's confidence a solution is not far off, then its customers can expect a raft of new offerings. But Jawwal is not following in the footsteps of European GSM providers by rolling out video content; Israeli control of communication frequencies has dissuaded Jawwal from adopting 3G for the next three years, at least. Instead, Mr. Aker believes there is significant untapped demand for voice and data services - especially in the pre-paid sector.
"Only 10% of our customers are post-paid, and we probably only have another 50,000 business customers to capture. After that, everything will be pre-paid, and these customers deserve to receive the same attention as post-paid subscribers," adds Mr. Aker.
Much of Jawwal's long-term planning revolves around the youth segment. New services are focused on an adolescent population that constitutes over 50% of the populace: receiving high school exam results through messaging, friends and family discount voice program, and even a method whereby parents can monitor the whereabouts of their children are just a few of the many products in the pipeline. As Mr. Aker explains, Jawwal's aim is to make life easier for Palestinians, even when faced with the most challenging of situations. "When the market becomes saturated, the only potential for us is university and high school students. The opportunities are there, but you cannot be a traditional cellular operator [in the youth segment]. You have to create the need for it, and the unique situation in Palestine pushes us to come up with better solutions and better uses for the mobile phone."
Jawwal's insistence on maintaining high service levels has spread beyond its half a million subscriber base to change how the country does business. By trying to maintain standards even in the worst possible scenarios (in the company's early days gunmen would march into showrooms demanding phone records), Jawwal has inspired consumers to demand more. As Mr. Aker himself puts it, "Jawwal has changed the mentality of the whole country, and now [everyone] expects professional service."
From Palestine to the World
So, what's ahead for Mr. Aker? The answer lies abroad, in taking Jawwal international. The company is actively seeking opportunities for overseas expansion, and recently bid for a GSM contract in Yemen. The only bar to entry is the prohibitive license costs, but with the listing of Paltel, Jawwal's parent company, on the Abu Dhabi stock exchange, Jawwal should have extra bidding capital.
"Based on Jawwal's and Paltel's joint experience and success, we wanted for the first time in this country's history to move overseas - this success story is going abroad. Our shareholders and board of directors are hunting for telecoms business overseas. We have the expertise to be a player in the [regional] market, and forge alliances. In a year or two, you will see the Paltel group expanding in the region."
Before that may happen, Jawwal faces the prospect of competing against a second Palestinian GSM operator. The Palestinian Authority (PA) has asked Israel to release additional frequencies to prepare the ground for a new mobile provider. While Mr. Aker welcomes the challenge, he is critical of how the PA has dealt with the Israelis."Before we see a new operator, I'd like to see a Palestinian market cleared of the Israelis. It's not fair to us to bring a fifth operator to compete with us while we are still competing with four giants. They pay no taxes, no license fees. The Israeli operators shouldn't even be here. The PA should clear my equipment first, clean up the market and then talk about a second operator."Mr. Aker's hope is that by clearing the territories of Israeli operators the PA will attract the attention of the region's telecommunications giants. His fear is that liberalization will be an opportunity for PA officials to establish their own mobile operator, an entity which would not benefit consumers.
"They will align together and say, 'You know what, Jawwal made millions of dollars over the last five years, we can make the same now if we form the second operator.'
They will have no real expertise and add no value to the economy. You create competition for nothing. If you are going to get investment and expertise from overseas, then you have to do it right."
In a society where over 56% of the three million plus population is under the age of 20 (according to the Palestinian Central Bureau of Statistics), Jawwal is set to go from strength to strength. Having built its reputation by taking on larger competitors from Israel, the challenge facing Jawwal, a company born in challenging conditions, is deciding when and where it should expand
© Jordan Business 2006
