Telcos Duke It Out Over Iraq
By Elisa Batista | Also by this reporter Page 1 of 1
02:00 AM Jun. 27, 2003 PT
The fighting in Iraq hasn't stopped and the country isn't stable, but U.S. telecom companies are already trying to muscle in to sell cellular-phone service.
It's unclear how quickly the country's economy can turn around, how much cellular service is in demand or who would even pay to have it built, but at least two U.S. providers are poking around the country for new business.
Most recently, Tecore Wireless Systems, a private company in Columbia, Maryland, said it would lay the groundwork for phone companies to offer wireless in Iraq. Tecore sells cellular infrastructure and software to carriers in Afghanistan, the United Arab Emirates and other parts of the Middle East. It plans to begin building a distribution center in Iraq by the end of summer, the company said.
Tecore's plan closely follows news last month that the U.S. government awarded WorldCom a $45 million contract to build a cell network in Iraq. The Pentagon also gave Motorola a $10 to $25 million contract -- depending on options the company exercises -- to install radio communications for security forces in Baghdad.
The WorldCom deal was especially eye opening because the company has never before operated a cellular network in the United States. It also filed for bankruptcy protection last year after having committed $11 billion in accounting fraud. One analyst questioned whether the U.S. government is rewarding the company's behavior.
"There's so many questions surrounding why WorldCom is being awarded so many government contracts given the accounting scandals they have had," IDC analyst Rena Bhattacharyya said. "On the other hand, WorldCom did put up a wireless system in Afghanistan and they (Pentagon officials) were happy with that."
But some U.S. telecom companies are not happy about the presence of the early bidders, and legislators in Congress are taking their side.
WorldCom and Tecore use cellular technology based on Global System for Mobile Communications, or GSM. The technical cellular standard is common throughout Europe and Asia, but not the United States.
Rep. Darrell Issa (R-Calif.) was so irked by the government's decision to use GSM technology -- which he called a "European-based wireless technology" -- that he shot off a letter to U.S. Defense Secretary Donald Rumsfeld in March demanding that the government consider a "native" network standard called code-division multiple access, or CDMA. The technology was developed by Qualcomm, a company based in San Diego in Issa's district. It is the most common U.S. cellular standard and is used by Verizon Wireless and Sprint PCS.
"The situation with respect to cell phones in Iraq is fairly confusing right now," Issa's chief of staff Dale Neugebauer told Wired News. "There have been claims and aggressive PR moves by GSM providers to make it sound like they have sole access to contracts in Iraq. We have been assured by administration officials that their intention is to license spectrum for GSM and CDMA networks."
Bush administration officials did not return calls seeking comment.
But Tecore's director of marketing and product management, Sonu Mirchandani, said his company was willing to use any of the technical standards. It chose GSM because it was the best system for Iraq. GSM, he pointed out, is the most common network in the Middle East, so Iraqis will be able to use their cell phones in neighboring countries as well.
"We are seeing a lot of growth in the GSM markets worldwide," Mirchandani said. "We put up a GSM system in Afghanistan. It's been phenomenal."
Telecom analysts were reluctant to say whether U.S. companies were in the best position to repair Iraq's infrastructure. Iraq's landline network was already badly damaged in the 1991 Gulf War, and even the few people who had home phones had sporadic access. Analysts have estimated it will cost $1 billion to repair the country's landline system.
Iraq has never had a cell-phone system, but analysts say it would be easy and cheap to install.
"What makes the most sense is having a GSM network put in place," Bhattacharyya said. "The problem ... is the U.S. has more experience with other technologies and not the GSM standard that's been primarily used in Europe."
