There are five times as many telephone subscribers now as there were before the 2003 war. But that growth has come at the price of a risky reliance on wireless technologies
In the 2003 Iraq war, precision munitions demolished 12 of Baghdad’s 38 telephone-switching central offices, as well as four key exchanges outside of Baghdad. At the same time, the coalition did its best to avoid damaging Iraq’s electric power system at all.
Yet today, three years after the officially declared end of major combat operations, Iraq’s electrical system remains hobbled by an array of problems, while its communications networks have begun to flourish. According to the Brookings Institution, in Washington, D.C., there are now more than 4.6 million wireless and wire-line telephone subscribers in Iraq—five times as many as there were before the war. And Internet use has jumped even more steeply, from an estimated 4500 tightly monitored and restricted subscribers before the war to some 150 000 unmonitored and unrestricted subscribers today. Many thousands more don’t have connections of their own but use the Internet at cafés and other public locales.
The reasons behind this stunning disparity between the electrical and telecom sectors are many. The vicious insurgency has wreaked enormous destruction on the electrical system, and bureaucrats made some bad decisions at the outset of the electrical restoration effort [see “Re-engineering Iraq,” IEEE Spectrum, February]. Clearly, too, privatization has been used to great effect in telecom but not at all in electricity.
For example, almost all of Iraq’s growth in telephone subscribers since the war is due to new wireless users—more than 3 million since the spring of 2003, when the country had no large-scale wireless systems usable by ordinary citizens. And all of Iraq’s new wireless networks were built and are being operated by private companies. All of them are subsidiaries of non-Iraqi wireless companies or partnerships with non-Iraqi companies.
Like it or not, Iraq is charging toward a communications system that is private and fundamentally wireless. “The reality is that mobile telephony is becoming the foundation of telecommunications in Iraq,” says an Iraqi-born telecom engineer during an interview in Baghdad. “Many people cannot get a landline, so they’re going mobile,” adds the engineer, who works in Baghdad for the U.S.-based consulting firm Bearing Point. “Whole businesses are operating with cellular phones as the only means of communications.”
This coming June, the Iraqi National Communications and Media Commission, a government regulatory body similar to the U.S. Federal Communications Commission, expects to award each of three companies a license granting the right to operate a cellular telephony business in Iraq for the indefinite future. The three licenses will replace temporary ones issued in December 2003 by the Coalition Provisional Authority (CPA), which governed Iraq in the war’s aftermath. Even more ambitious, the Iraqi regulatory body has begun working with foreign companies, including Ericsson, Lucent, MCI, Siemens, and the Chinese firm Huawei Technologies, to study the feasibility of deploying a nationwide wireless local-loop system. It could, in effect, gradually replace the country’s wire-line phone network, potentially leaving Iraq with a copper-wire-free telephone system some day. Based on WiMax, the IEEE’s wireless data transmission standard that carries the designation 802.16-2004, the proposed wireless local-loop system would be one of the first—possibly the first—such system deployed throughout a country.
But as Iraqi officials move swiftly to deepen their commitment to privatization and wireless technology, some experts are warning that the country is moving too far too fast. With just 25 million people, Iraq now has four official, licensed wireless telecom companies and perhaps half a dozen unauthorized ones. “The country is too small to have that many independent carriers,” contends the senior engineering official at Bechtel National Inc., of San Francisco, who led the initial restoration of Iraq’s wire-line network. (He requested anonymity, as did other sources for this article, who cited a personal or company policy prohibiting being identified by name.)
None of those wireless companies, this official notes, have yet allowed their rivals access to their networks, as required by Iraqi law. The lack of access precludes more than just roaming: in Iraq today, any given cellphone can be used to reach only other subscribers of the wireless company that issued the phone. So multiple cellphones are the order of the day for the Iraqi elite. And that same fragmentation of the wireless system has also complicated efforts to monitor insurgents, who make extensive use of cellphones and other wireless devices to detonate bombs remotely and to coordinate attacks among scattered operatives.
Fraught as it is with challenges, the reemergence of Iraq’s telecom sector is a testament to the hard work and bravery of a relatively small group of telecom workers, Iraqis and non-Iraqis alike. The first order of business after the 2003 war was repairing the landline system. After getting a contract early in 2003 to restore Baghdad’s 12 destroyed central offices, Bechtel’s telecom engineers and its subcontractors began leading teams of mostly Iraqi workers who started installing Lucent 5ESS telephone switches and fiber-optic lines in the spring of 2003. Before the 2003 war, Iraq’s telephone networks relied primarily on microwave links for domestic long distance and entirely on satellites for international service.
The workers managed to get the 12 central offices and the satellite station back on line by the end of 2003. “To my knowledge, no one had ever specified, competitively bid, purchased, and installed 12 central offices plus an international satellite earth station in six months,” says the Bechtel official.
At the same time, the workers began repairing and improving Iraq’s modest fiber-optic network. Nortel Networks, of Brampton, Ont., Canada, a subcontractor to Bechtel, upgraded the 655-kilometer backbone of Iraq’s fiber-optic system, which connects all of the major cities between Baghdad and Umm Qasr in the far south.
Along the way, the group overcame tremendous setbacks. In mid-2003, during work on the Mamoon central office in Baghdad, a saboteur attempted to bring a bomb into the building. It blew up prematurely, killing him and no one else, but it also damaged the satellite earth station, which took the team four days to repair.
In May 2003, workers finished a project that linked Baghdad and al-Kut, 175 km to the south, with a fiber-optic cable. The very next day, insurgents dug up the cable in five places and cut it. “You put your head down and go do it again,” the Bechtel official says.
Still, all in all, Iraq’s communications networks have not suffered nearly the level of insurgent violence that other sectors have. That has allowed wireless networks, in particular, to become indispensable, allowing spouses, friends, and relatives all over the country to check in after violent attacks to reassure each other—or to learn of the death of a loved one.
A survey last summer by Baghdad University found that in Iraq, where the average monthly family income is about US $150, many middle-class people are paying an astounding 25 to 50 percent of their income on cellular service. These rates stand in sharp contrast to those of the electrical sector, where the only provider is the Ministry of Electricity, a huge government bureaucracy, and where heavy subsidies allow the minority of Iraqis who are actually being billed for electricity to pay about $1 for monthly usage up to about 1500 kilowatthours.
Like a lot of other things about Iraq these days, the wireless situation is complicated. The country’s three main officially licensed cellular providers are Orascom Telecom Iraq Corp. (known as Iraqna), Atheer Telecom Iraq, and Asiacell GSM. Not so complicated? Keep reading.
Iraqna is a subsidiary of Orascom Telecom Holding, a Cairo-based company with major cellphone ventures in Egypt, Algeria, and Tunisia. Atheer Telecom Iraq operates in partnership with MTC-Vodafone Kuwait, which itself is a partnership of Kuwait-based Mobile Telecommunications Co. and UK-based telecom giant Vodafone Group. Asiacell GSM is a consortium of the Iraqi company Asiacell Company for Telecommunication and the Kuwait-based company Wataniya Telecom. All three of these Iraqi networks use the Global System for Mobile communications (GSM) technology that took off initially in Europe.
A fourth wireless operator, Sanatel, was also licensed by the CPA in 2003 to provide local service to eight cities in a relatively small area of the Kurdish region. The company now has about 100 000 subscribers.
The three main Iraqi wireless ventures—Iraqna, Atheer, and Asiacell—were awarded licenses by the CPA two years ago in a process that was widely criticized for its lack of transparency. For example, Ali Mudhar Shawqat, who has been the deputy leader of the Iraqi National Congress, is a major shareholder in Atheer. The Iraqi National Congress is a political party led by Ahmad Chalabi, the ubiquitous and controversial Shiite politician who has lately led the Ministry of Oil, arguably Iraq’s most important bureaucracy. Indeed, the CPA’s award of a license to Atheer was “regarded as a thank-you from Washington,” an Iraqi telecom engineer says. Chalabi had provided intelligence information to U.S. officials before the 2003 war and was advocated by Washington for a while to be a leader of the country. But his fall from grace began when some of his information apparently turned out to be false and accelerated in the spring of 2005, when U.S. officials charged that he had provided sensitive data to Iranian officials.
Allegations of impropriety also clouded the awarding of all the wireless contracts. In the most significant case, the Office of the Inspector General of the U.S. Department of Defense launched an investigation in 2003 into charges that Iraqna had bribed two CPA officials and Haider al-Abadi, who was briefly the Iraqi communications minister, to receive its license. A spokesman for the Defense Inspector General’s office would not say what the investigation found or even confirm that it had taken place. It was first described in a 26 November 2003 article in the Financial Times.
The initial licenses split up Iraq geographically, with Asiacell getting the Kurdish northern part of the country; Iraqna the central region, including Baghdad; and Atheer the Shia-dominated south. But the regulations stipulated that after one year all three companies would be allowed to compete nationally. Each company would have to open up its network and allow its competitors to tap into that network, permitting real competition by allowing a subscriber of one network to make calls to subscribers of one of the other two networks. This provision was seen as particularly important to Asiacell and Atheer, because more than half of Iraq’s potential (and actual) cellphone subscribers are in the central region.
But that open access was never implemented, Iraqi engineers confirm. “Iraqna is not allowing other phones to interconnect,” one of them says. So, for example, if you had bought an Atheer phone, you still can’t call Iraqna customers on their cellphones. The country’s National Communications and Media Commission (NCMC) is “taking steps to force the three operators to solve the problem,” this engineer says. The likeliest means of pressure are penalties and possibly other financial sanctions, he adds.
Now, with the three main wireless licenses again up for grabs, you might think the three incumbents would be toeing the line. But they’re not, according to an NCMC official, who requested anonymity. If one or more of the incumbents do not win a license, those companies will have to sell their assets to whichever wireless firms do win the licenses, the official adds.
Although such blocking of access might seem problematic enough, the NCMC has other things to worry about. When Asiacell won the license to operate a wireless network in Iraq’s chiefly Kurdish northern region, one of the companies it beat was Korek Telecom. Korek, in fact, was already operating a wireless network in and around Irbil, the Kurdish capital, that was serving 45 000 customers with a system built by Huawei Technologies. After Asiacell’s victory was announced, people associated with Korek made it clear that the company would not only continue to operate its network, but that it would demolish any rival towers erected in its service territory. The threat carried a great deal of weight, because Sirwan Barzani, Korek Telecom’s chief executive, is the nephew of Massoud Barzani, the former Kurdish warlord who is now president of Iraq’s Kurdistan region.
Since then, as Asiacell’s network has grown in the north, the Korek system has remained, yet another island of isolated wireless service in Iraq. Iraq’s NCMC has forbidden any of the country’s other wireless operators to connect to Korek; it is about the only real leverage the comission has over Korek, the NCMC official conceded in an interview in his Baghdad office with IEEE Spectrum.
Even in the wireless local-loop plan, which is still emerging, there is already some strife. Wireless local-loop systems, which are designed to replace the copper wires that connect homes and businesses with central offices, are not meant for mobile communications and therefore differ fundamentally from cellular systems. This past April, the NCMC issued a formal request for information about how such a wireless local-loop system might be implemented, and quickly received responses from 27 different companies and consortia, including Huawei, Lucent, MCI, ZTE Corp., of China, and an Arab group that proposed using Siemens and Ericsson hardware.
Most proposed using technology based on the WiMax wireless standard to link subscribers to a central antenna tower and base station. Fiber-optic or microwave links would connect base stations to each other and also to the wire-line telephony network’s central offices and cellular networks.
The system would be digital, based on the Internet Protocol, and offer subscribers the choice of either a 64-kilobit-per-second voice-only Voice over Internet Protocol (VoIP) line or a 128-kb/s voice and Internet connection.
Such wireless local-loop systems have been deployed on a limited basis in China, Africa, India, Saudi Arabia, and New Zealand, but Iraq’s could very well be the first such system to be installed throughout a country. Their great advantage is their low installation cost—as little as $300 per subscriber. One disadvantage is that the technology is too new to be considered proven.
The NCMC planned to award two national and three regional contracts to roll out such a system all over Iraq. But according to the NCMC official who spoke with IEEE Spectrum, last year another Iraqi government communications agency, the Telephone and Post Company, shocked the NCMC by awarding two contracts for just such a wireless service, to build relatively small WiMax-based local-loop systems in Baghdad and Najaf. Under Iraq’s telecom laws, the Telephone and Post Company, which is the operating arm of the Ministry of Communications, apparently did not have the jurisdiction to make those awards.
The NCMC official says the two companies, which he did not identify, that were already awarded the wireless local-loop contracts will have to compete again on an equal footing with the other companies still seeking the contracts. But, unofficially, he acknowledges that the situation is complicated by the fact that the two companies have already broken ground on their networks in Baghdad and Najaf.
Like The Country Itself, Iraq’s fast-moving telecom sector is turbulent, thrilling, and definitely not for the faint of heart. Whether its bold, risky bets on privatization and wireless technologies will pay off in the long run no one can say. Nevertheless, loaded with problems as it is, the emerging telecom scene is already looking better than the sectors where the government’s total and rigid control has kept market forces at bay.