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Last Updated: Thursday, 21 August, 2003, 16:07 GMT 17:07 UK
Door closing on Iraq mobile bids
US soldier
The US plans its own mobile tender
The chances of the US mobile phone standard CDMA getting a foothold in Iraq are looking increasingly slim, experts believe.

The rules for the tendering process drawn up by the Coalition Provisional Authority (CPA) leave the door open for CDMA, the standard invented by California-based firm QualComm and backed volubly by US lawmakers for Iraq.

There have been accusations of US political pressure to push through the US technology, but the CPA says it drafted the rules solely to get the best deal for Iraq.

However, the CPA's tender document calls for a technology that is not yet commercially available.

Going for CDMA instead of the more widespread GSM standard - which is also used in the Middle East - would be a "very, very difficult proposition to argue", an expert said.

The deadline for mobile phone consortia to get their bids in for one of the three licences available in Iraq, passed earlier on Thursday.

Turkey's leading mobile phone operator Turkcell said on Thursday that it would be taking part in the bidding as part of a consortium, although it did not name its partners.

Turkcell said the result of the tenders is expected to be announced on 5 September.

Limits

The Coalition Provisional Authority, which is running Iraq, has already got into hot water over the tenders.

It initially barred from bidding any company which was more than 5% state-owned, shutting out most big European operators and China's up-and-coming mobile kitmakers.

The rules have now been changed to allow up to 10% government ownership within a single consortium - meaning a company in which a state held half the shares could constitute 20% of a bidding group.

"People in Iraq were very concerned that there might be control of a major part of their economy by overseas governments," Jim Davies, the director for regulatory policy of telecoms for the CPA, told the BBC's PM programme.

There's no way you can come up with a business justification
Bernt Ostergaard
Forrester Research
Iraq has about 300 mobile phone antenna towers, built by the Hussein government in 1990 for a planned GSM network.

But from 1991 sanctions stopped the necessary equipment getting into the country, Mr Davies said.

Value judgement

Mr Davies also told PM that the priority was to "get the best value" for the Iraqi people.

Although all Iraq's neighbours - and 70% of mobile users worldwide - use the GSM standard, the CPA would be happy to take a CDMA bid if it proved competitive.

The condition, Mr Davies said, was that each winning network would allow phones from the other networks to "roam" onto it, ensuring the maximum national coverage.

That meant all handsets would have to function on both CDMA and GSM.

"It's perfectly possible to have handsets that contain both GSM and CDMA technology, and that would enable users to roam to other countries," he said.

'No justification'

But experts contacted by BBC News Online said otherwise.

There is no commercial dual-mode phone - as such equipment is called - on the market, according to Jason Chapman, principal mobile analyst at technology consultancy Gartner.

Phone lines being fixed at public communication centre hit in Baghdad
Phone lines were battered during the recent war
"I would say getting such a system to work would be challenging," he said, pointing to trials in China which have yet to produce a commercial product.

"The ability to have commercial roaming on tap is unproven."

And Bernt Ostergaard of Forrester Research told BBC News Online that while a standard exists, manufacturers were a long way from commercialising a product.

"QualComm has been pressing very hard behind the scenes to get CDMA in there," he said.

The inclusion of CDMA in the bidding process was "very political", he said, noting that US congressmen from QualComm's home state had been voluble in calling for CDMA to be given preference.

"But I wouldn't be surprised if they had a very hard time getting anyone to bid" using CDMA.

"If you're looking for best value, that's a very, very difficult proposition to argue. There's no way you can come up with a business justification."

The CPA's Jim Davies denied any political motivation. "If we had set up a system that would do anything other than get best value, I personally would be very upset, and many other people would as well," he told the PM programme.

Shipping

QualComm in fact started shipping chips to power dual-mode handsets to at least four different manufacturers early this year.

Among them are South Korean powerhouses Samsung and LG, and QualComm believes they intend to have handsets on the market by the end of 2003.

But it remains unclear whether there would be sufficient handsets on the market to make the technology commercially viable.

Other manufacturers said they doubted the prospects.

Nokia, which makes about a third of the mobile phone handsets sold worldwide, said it had been experimenting with dual-mode phones.

But it said that there was no single unified CDMA standard worldwide.

"We would find it very hard to produce a dual mode terminal for that, and it would have a high price point," a spokesman told BBC News Online.

"Iraq is a very marginal market."


WATCH AND LISTEN
Jim Davies, Coalition Provisional Authority
"Communication underpins absolutely everything"



SEE ALSO:
Firms banned from Iraq mobile bids
31 Jul 03  |  Business
US calls time on Iraq mobile firm
28 Jul 03  |  Business
US opens up Iraq mobile bidding
17 Jul 03  |  Business
Firms face risky Iraq business
10 Jul 03  |  Middle East
Iraq to open up airwaves
16 Jun 03  |  Business
WorldCom lands Iraq contract
20 May 03  |  Business


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