The recently published World Bank Telecommunications Sector Report, entitled “Introducing Competition in the Palestinian Telecommunications Sector,” highlights key issues in the Palestinian telecommunications sector, and suggests possible recommendations for policy and regulatory reform. The report was prepared in close consultation and cooperation with all stakeholders, taking into account disparate points of view. Its recommendations are in line with visions and policy directions of the Palestinian Authority, with the goal of benefiting Palestinian people by reducing prices and improving quality and reliability of services. The report endorses and supports Palestine's own policy of introduction of competition, as formulated by MTIT. The policies of favoring competition in this industry have proven effective across the world, including in post war, distressed and low income environments.
The Palestinian telecommunications sector is characterized by the presence of a private regulated monopoly, unauthorized competition, and overall weak governance and regulation. Increasing competition and efficiency in the telecommunications sector will have far reaching effects throughout on the Palestinian economy. It will reduce the cost of doing business in all sectors and help raise government tax revenues. In addition, by developing the capacity to regulate the largest monopoly in WBG and spur competition in the telecommunications market, the PA will develop its ability to provide a better regulatory environment for the entire economy.
The sector legal framework is defined by Telecommunications Law 3/1996 and by regulatory provisions under the Oslo Agreement. The agreement affects the interim relationship between Israeli and Palestinian companies, attributing rights and obligations to Palestinian and Israeli operators in the territory of the West Bank and Gaza, and defining the role of the Palestinian government in the sector. The PalTel group, which includes companies in all main sectors of the telecommunications and information technology (IT) market, is the dominant operator. Unauthorized competition exists in the mobile market, where Israeli operators, authorized under the Oslo Agreement to offer services to the settlers, cover a large part of the territory of the West Bank. PalTel’s market dominance, and the problems related to unauthorized competition, could be mitigated by the entry of a second mobile operator. The Ministry of Information Technologies and Telecommunications (MTIT) has awarded a mobile license to Wataniya. There is in principal an agreement at Ministerial level on the release of the frequencies for Wataniya. However at the time of this note’s publication they have not yet been released. The entry of competitive mobile and data operators would strengthen considerably the market and improve its key indicators. The data market segment is also characterized by a combination market dominance and unauthorized competition, but MTIT is in the process of awarding data licenses. Overall regulatory capacity is weak, governance and accounting standards have room for improvement.
The complex nature of the regulatory relationship between the PA and GOI has given rise to several areas of concern. In addition to the unauthorized competition in mobile and data, the Palestinian Authority (PA) raises the following main issues: (a) Palestinian operators are compelled to route international communications through a licensed Israeli operator; which increases costs (b) the lack of a direct long-distance connection linking the West Bank with the Gaza strip; and (c) difficulties in obtaining permits from the Israeli authorities to build infrastructure in large parts of the country. The note illustrates the different viewpoints on these contentious issues, assesses the actual nature of the constraints, and offers possible solutions.