Palestine’s First Mobile Phone Company

Posted: July 24, 2012 in International, Published

PUBLISHED in ‘Connect’ CWU Magazine Page 33 – http://www.cwu.ie/_uploads/documents/Connect/Connect_June_2012.pdf

Harassment from the most battled-trained army in the world, explosion of equipment, unlawful competition, limited access to frequency and excessive government restrictions. Palestinian-American businessman, Sam Bahour, encountered all of this in establishing Paltel, Palestine’s first mobile phone company.

Since Paltel’s eventual launch in 1999, its subscription rate increased from 570,000 subscribers in 2005 to two million in 2010. Telco in Palestine outperforms other conflict countries. Penetration per capita stands at about 33%. This puts it ahead of Egypt, Syria and Yemen. Paltel is Palestine’s largest private sector employer, employing 3,000 people, with 7,668 shareholders, making up 29% of Palestinian GNP and accounting for 50% of worth of the Palestinian Security Exchange. Paltel is a success story.

Despite this success, Bahour claims that even today Paltel faces unauthorised competition from Israeli providers serving Israeli settlements overlooking Palestinian areas. He claims this is illegal as, in his words, “there are no ifs ands or buts about it, neither side is allowed provide a service to the other side unless they are licensed to do so” and the Israelis are not licensed to do so according to Bahour.

The Palestinian National Authority (PNA) have the right to collect taxes on these calls, yet cannot do so as Bahour claims the Israelis refuse to transfer them. This amounts to an estimated loss of $60m annually. It is also estimated that if Paltel had the opportunity to provide 3G coverage since 2005, it would have avoided lost revenue of almost $67m.

So how then, did he get Paltel off the ground? Bearing a striking resemblance to former Minister Frank Aiken, Bahour explains that to set up a mobile phone company he needed to tick six boxes – mobile licence, mobile frequency, transmission equipment, start-up capital, human resources and customers. As the PNA grant the licence and Palestinians were eager customers, two boxes were immediately ticked.

Palestinian Banks hold over $7Bn in reserves and the Diaspora is keen to invest, which ticks the start up capital and transmission equipment boxes. However, this equipment still needs to be accessed, when it arrives at customs, and installed safely. That box, and the access to human resources and mobile frequency box, is not so easy to tick. This is where Paltel faced their greatest challenges.

As an IT graduate from Youngstown State University and as a Director at the Arab Islamic Bank, Bahour was one of their key human resources. However, other properly skilled Palestinians living abroad were refused entry visas which necessitated the hiring of expensive foreign labour and consultants.

Accessing mobile frequency was problematic due to the bizarre reality of Palestinian Telecommunications. Local telecommunication regulations give the PNA the right to issue licences but Israel the right to issue frequency. Frequency must be released “…based on need…” which Bahour claims the Israelis ignored. Paltel did not get the necessary frequency until mid 1999 despite being ready to go live since January 1997.

The transmission equipment ordered by Paltel was held in storage by Israeli customs, without explanation, for two years. Israeli equipment was released in 2-3 weeks. In August 2010 the World Bank found that from 2002 – 2009 Paltel lost an estimated $382.7m due to Israeli confiscation of equipment and restrictions to operate.

The equipment that eventually got through was subject to arbitrary attacks from the Israeli Defence Force with “no explanation, apology or compensation given” claims Bahour. Delays meant that Paltel were forced to host mobile switches in London and route communication through that switching equipment to one of the Israeli operators. To avoid further delays Paltel then bought from Israeli providers.

So how did Bahour do it? How did he cope with the delays, explosions and lost revenue? What was the key? Quite simply he says “Palestinian business people are resilient”. He believes they are successful as they are “very tested crisis managers” and have learned to “use technology effectively to communicate with areas they cannot physically access”. He believes the Palestinian Diaspora are also a major advantage as, like the Irish, “…are scattered to every corner of the globe…” keen to invest and “willing to take a lot of risk”.

As a businessman Bahour pursued a “better reality for Palestinians” through business and believes the “best form of resistance against Israeli occupation is setting up businesses”. Not talk of revolution, talk of business and business can be revolutionary. Just as we in Ireland know, Bahour too knows that people are less likely to leave their homeland when they have work. “Businesses mean jobs and jobs mean Palestinians stay”. The Paltel story is an example of resilience in the face of adversity. Resilience not dissimilar to that in Irish business people.

 

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