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GSM Wins Iraq Battle

The long-running debate over the choice of wireless technology in post-conflict Iraq ended today with a decision to award licenses to three regional GSM (Global System for Mobile communications) operators, rather than proponents of rival CDMA (Code Division Multiple Access) networks.

The Iraqi Communications Ministry has granted two-year licences to Egypt’s Orascom Telecom; a partnership between Kurdish communications company Asia Cell and Kuwait’s National Mobile Telecommunications (NMT); and a consortium including Kuwait’s Mobile Telecommunications Co. (MTC) and Atheer Tel of Saudi Arabia.

The three contracts have been carved up regionally (see US Outlines Iraq License Plan). Orascom’s network will cover the most densely populated Central region, including capital city Baghdad, whilst NMT and Asia Cell will serve the North region. MTC and Atheer Tel, meanwhile, will operate in the South.

Communications minister Haidar al-Ebadi declined to provide financial details of the awards but claimed that services should commence “within a few weeks.”

“This is an important day for Iraq,” he told a press conference. “Iraq badly needs the mobile system to enhance the security of the country.”

The decision to opt for GSM ends a bitter war of words between supporters of the predominantly European-backed wireless standard, and the rival CDMA technology. In March, CDMA supporter and American congressman Darrell Issa (F-Calif.) riled GSM Association CEO Rob Conway with his belief that the region required the “superior U.S. technology” (CDMA), rather than the “outdated French standard” (see US Rep: Vive la CDMA! and GSMA: Back Off, Darrell! for more).

Conway has been quick to rub sand in Issa's wounds. "GSM is the logical choice to deliver cost-effective, rapidly deployable and interoperable infrastructure, handsets and services," he said in a statement.

Analysts believe today’s decision is no great surprise, especially in light of two earlier GSM contracts for military use (see MCI's Iraq Offensive and GSMA Cheers Iraq Deployment) and the fact that the technology is already widely deployed in most of the Middle East region. However, the move is expected to bode well for the fortunes of European infrastructure suppliers.

“European vendors are boosted by the choice of the GSM standard, rather than the more U.S.-centric CDMA standard,” comments Stuart Jeffrey at Lehman Brothers.

Jeffrey notes that “Alcatel and Siemens appear to have the closest relationship with Orascom,” and “Motorola, Nokia, and Siemens appear to have the closest relationship with Kuwait’s MTC.”

Although any Iraqi orders are unlikely to be financially significant, Jeffrey expects all new revenue opportunities to be aggressively fought over. “Contract announcements are likely to be made very quickly, given the urgency of building a new telecom infrastructure. At this stage, EU vendors appear well placed.”

— Justin Springham, Senior Editor, Europe, Unstrung

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