In the Middle East, Iraq is one of the least-developed telecom markets mainly because of its fragile security. Thus, mobile network operators have had to struggle to maintain their networks to keep up with growing demands and to properly invest in their infrastructure.
International and domestic hope for Iraq’s economic recovery mainly depended on its large oil and natural gas assets, but the country has great potential for telecom infrastructure development and capability to develop 3G and 4G network services. There is also possibility of increasing mobile data revenues from existing 3G/2G networks.
However, lots of mobile infrastructures have been damaged in the conflict-affected areas.
Currently, three major telecom companies are licensed to provide internet services nationwide (Zain Iraq, Asiacell, and Korek Telecom). In addition, many minor companies provide this service, especially in the Kurdistan Region of Iraq (KRI).
In Kurdistan alone, 60 companies have been registered and licensed by the Kurdistan Regional Government (KRG) ministry of transportation and communications to provide data services, according to Omed Mohamed Saleh, spokesman for the ministry. Asiacell, the second biggest telecommunication company in Iraq, is the leading data services provider in 2019.
Mapping the Companies’ Volumes Based on Data
The following table illustrates the total number of subscribers for the major companies in the last quarter of 2018 and the first quarter of 2019. In Q4 of 2018, the total number of subscribers in Iraq was 39 million (40% Zain Iraq, 36% Asiacell, and 18% Korek Telecom).
Asiacell was the main provider of mobile broadband services and wireless Internet, as its market share is 38%, followed by Zain and Korek.
(Data Source: www. gsmaintelligence.com)
Although many companies provide data services, they are not effective as the prices are high and data-speed is low.
The companies blame bad infrastructure, fragile security, and political instability for the high prices and poor service. They must follow regulations from the National Communications and Media Commission of Iraq (CMC) and the Ministry of Transport & Communication of Kurdistan.
The CMC has recently issued a rule prohibiting some of the international telecommunications equipment suppliers from selling their products to companies registered only in Kurdistan (not by CMC). As Mohamed Saleh stated, “The CMC has issued a new regulation under which international companies (such as Huawei) which are not registered by the CMC are forbidden to supply materials to telecom operators in Kurdistan. The companies have to find their own ways to buy and import the products.”
Beside the regulations, closing Kurdistan’s international airports also negatively affected data service providers. They had hard time importing equipment necessary to improve their services. For instance, they had to import their capital equipment through Turkey or Iran and then to Iraq and finally Kurdistan. Given the expensive transportation costs and wasted time, the companies’ services deteriorated and became more expensive. Consequently, consumers paid higher prices for poor service.
To make their voices heard, consumers in Kurdistan organized in small groups and NGOs to express their complaints against the companies that provide data services. Yaqub Kakil, head of the Shaqam Committee for Human Rights and Freedom, stated that the companies provide low-speed internet for high prices. “It is benefiting business owners at the expense of the people,” he said, adding that although the complaints were sent to relevant Iraqi federal institutions, it is still not clear how the federal government is going to respond.
Lack of Equal Opportunity Hurts the Industry as Well as Consumers
Companies headquartered in Kurdistan face regulations from both Baghdad and Erbil, and they also are affected by the governments’ political disputes. However, the companies headquartered in the middle and southern Iraqi provinces are subject only to the federal government’s regulations. They also get significant financial support compared to the Kurdistan-based companies.
Zain, a major telecom and data service provider headquartered in Baghdad, is a partner of the International Finance Corporation (IFC), which is a member of the World Bank Group. In 2018, it successfully secured a $269 million financing package including a seven-year loan to help reconstruct the country’s telecom operations.
The financing package will help Zain to enhance its capacity and the quality of its 3G network. It also helps it to expand coverage to unserved areas and to start developing 4G networks. It allows the company to modernize its networks and customer service in northern Iraq.
In an article published on Zain’s website, Mouayed Makhlouf, the IFC’s Regional Director for the MENA (The Middle East and North Africa) Region, said,
“Supporting infrastructure development in Iraq is an essential building block of the reconstruction effort. Restoring and enhancing broadband infrastructure can have a substantial multiplier effect on the economy through increased connectivity, reduced transaction costs, enhanced flows of information, and more efficient and effective matching of market players, among many other much-needed benefits.”
The financial package, indeed, helps to improve the industry and benefits customers. But why are Kurdistan-based companies denied such financial support?
Kurdistan-based telecom companies need financial support to provide better and less-expensive services. Plus, having headquarters in Kurdistan should not result in more taxes and political punishment from the dual regulations and fractured relations between Erbil and Baghdad.
For Data Operators, How to Keep Up with Customers’ Demands
Nowadays, operators are struggling to cope with fast-growing customer demands. Customers are engaging in activities such as video chatting and online gaming that can overwhelm and slow the network. As a result, operators fail to deliver sustainable customer received usage experiences. They are working hard to maintain their customers and generate enough cash to cover their costs, but when they are unable to do this, they start cutting rates to keep customers from rivals, or they trigger destructive price wars. To successfully remain in operation, companies need to shift their focus from rigid engineering network performance to a new customer-driven metric, to better manager customer experiences.
In this way, successful operators will be able to provide good service to customers using the network, and then can decide how much bandwidth is required to provide such service for each activity and act on that information in real time.
On the other hand, in rural and conflict-affected areas, telecom infrastructure is compromised. It is the responsibility of big operators like Asiacell and Zain to fix the damaged sites and networks in those areas to provide internet coverage.
Although a majority of the companies claim that they are 3G network operators, most of their sites are still 2G. This is one of the major causes of the bad Internet quality in the areas. This provides huge opportunity for the operators to have full 3G coverage in all of Iraq, and with it, coverage will be expanded and data quality will be improved.
For the KRG
It is not beneficial for the KRG to issue operating licenses to companies until they are registered by the CMC. Pre-requirements for CMC-registration help reveal which companies have enough capacity to provide the promised services and which ones do not.
Iraq’s ministry of transport and communication, as well as the CMC, should coordinate with the KRG to better regulate the three major companies’ service and operations. They should closely monitor the data service quality provided to customers.
As it stands, the companies operate in a relatively free and competitive market, where supply and demand sets prices; however, when Internet quality is substandard and too expensive, it is the responsibility of the governments to intervene and set the price point.