The Middle East / July 2000
By Larry Luxner
Even though the state of Palestine doesn't yet exist, the 2.8 million Palestinian Arabs living in the West Bank and Gaza already print their own stamps, adorn their cars with green-and-white Palestinian license plates and boast their own international airport.
Recently, the ITU, in an unprecedented move, awarded Palestine its own international dialing code: 970. And in the latest symbolic gesture, the Internet Assigned Numbers Authority has designated ".ps" as the top-level domain for Palestine.
All this comes as the Palestinian Authority, led by Chairman Yasser Arafat, rushes to disengage its telecom network from that of Israel, which until recently was the sole supplier of fixed and mobile phone services in the West Bank and Gaza.
"We started working five years ago. It was a very difficult situation at that time, because the Israeli occupiers didn't want to improve anything," claimed Imad Falouji, the Palestinian minister of posts and telecom. "Their policy was they didn't want any communications between villages and cities."
As Falouji was being interviewed in his Gaza City office, the power went out briefly -- a situation he also blamed on the Israelis, even though Gaza has been under Palestinian autonomous rule since 1994.
Despite their mutual suspicions, Israeli and Palestinian officials talk regularly on a number of issues, telecom being one of them.
"After we established our network three years ago, we started separating our network from Israel. Now local and national telecoms are fully separated; only the international code remains linked. Within two months, we'll have full separation," said Falouji. "But we agree with Israel that all future calls between Israel and Palestine should be charged as domestic and not international calls."
So far, 48 countries recognize the 970 code for Palestine, though from the United States, only MCI customers can use 970. AT&T and other companies still use Israel's code, 972, to reach cities and towns in the West Bank and Gaza.
The disparity in telephone density between the two peoples is glaring. Israel's teledensity of 47 lines per 100 inhabitants is among the highest in the world; it's hard to meet an Israeli these days who doesn't have both a fixed line and a cellphone, not to mention Internet access.
Among Palestinians, however, it's a different story. Teledensity ranges from a low of 5.8% in the crowded, impoverished Gaza Strip to a high of only 28% in Ramallah, a prosperous city in the West Bank. Overall, teledensity in the areas controlled by the Palestinian Authority comes to just 8%, with fewer than 9,000 Internet subscribers.
The country's telecom monopoly is Nablus-based Palestine Telecommunications Co. Plc (Paltel), which is 60% owned by a consortium of Arab banks, and 40% by some 9,000 individual stockholders in the West Bank, Gaza, Jordan and the Gulf states.
The largest company traded on the fledgling Palestine Stock Exchange, Paltel reported 1999 revenues of $90 million and profits of $10 million. Paltel doesn't have to worry about competition for awhile; it enjoys a 10-year monopoly in fixed service expiring in 2007, and a five-year monopoly on mobile service expiring in 2004.
At present, says marketing manager Suleiman Mashraqi, Paltel has 235,000 subscribers throughout the West Bank and Gaza, a number projected to rise to 300,000 within eight months.
These figures do not include East Jerusalem, which Israel annexed in 1980. As a result, Paltel has no authority to install lines there, despite Arafat's dream of making East Jerusalem the capital of the Palestinian state he intends to declare by September.
"We have commercial agreements with two Israeli companies: Golden Lines [partially owned by SBC and Italy's Stet] for international calls, and Bezeq for local calls," Mashraqi told The Middle East. "At the local level, we are fully separated. We have already installed the fiberoptic backbone connectivity to our switches. We have two international switches -- one in Ramallah, one in Gaza -- but we're using Israeli operators for international calls until a final agreement is concluded. After separation, we'll change the numbering plan. Phone numbers will remain the same; only the area codes will change."
Until now, the Israelis and Palestinians have shared not only the 972 international dialing code but also local area codes. For instance, (07) covers not only Gaza but the Israeli cities of Ashkelon and Be'ersheva, while (02) encompasses Jerusalem as well as Bethlehem and Ramallah. Ending that agreement will free up three million numbers for Paltel's use.
Separately, Jawal -- a mobile subsidiary launched by Paltel four months ago -- already has 25,000 subscribers with a capacity for 70,000. The GSM-900 network used by Jawal is being provided by Ericsson as part of a $40 million deal with Paltel that includes radio base stations, microwave towers and civil engineering work.
The equipment is similar to that used by another Ericsson customer, Partner Group (Tel Aviv), which in 1998 became Israel's third cellular provider after Pele-Phone [a joint venture between Bezeq and Motorola Israel] and Cellcom [a joint venture partially owned by BellSouth]. Under an agreement signed last November between Partner and Paltel, Jawal customers will be able to use their phones inside Israel. All calls will be routed through Partner's GSM network, which operates under the Orange brand name.
Yet Partner's Israeli customers will have to wait awhile to use their phones in the West Bank and Gaza. Among Israel's three cellular operators, Partner is the only one that doesn't offer service in Palestinian areas.
Meanwhile, Bezeq has won $10 million worth of contracts with the Palestinian Authority. Rami Mintz, who oversees Bezeq's relations with the Palestinian Authority, says the Palestinians now want Bezeq to lay three fiberoptic cables linking the Gaza Strip, via Israel, to the West Bank's three most important cities: Nablus, Hebron and Ramallah.
"This is an $8 million project," says Mintz. "We are the only company in Israel that has the facilities to do it."