Friday’s Fact: Palestinians’ Access to 3G May Help Put Their Economy Back on Track but Does Not Remedy Years-worth of Lost Value

unnamed (5)

Third Generation (3G) cell phone connection finally became available to Palestinians in the West Bank by Palestinian providers, on Tuesday the 23rd of January, 2018. The first access to the technology through a Palestinian provider was brought to the Palestinian public through Jawwal, followed within hours by Palestine’s other provider Wataniya. The service will be provided in the West Bank only, which has been dominated by Israeli providers until this week. This advancement arrives on the heels of Israel’s agreeing to allow the Palestinian companies’ access to the technology and real estate necessary for the implementation of the technology. However, it can in no way reimburse the Palestinian companies, economy, or National Authority for the lost revenue, value added and income that they have lost over the years due to Israel’s withholding of the technology.

In plain terms, 3G stands for the “Third Generation” of telecommunication services indicating the ability to access the internet through mobile devices. It is an upgrade to the already existing 2G, which only allows for the exchange of data through texts (SMS), and it is the predecessor of 4G and 4G LTE, both of which signify much faster internet and data exchange speeds and are widely available across the EU. Telecommunication companies require access to a certain radio frequency to provide 3G services. In turn, this entails access to international links and infrastructure to operate the service. These modes of production have been controlled by Israel. Moreover, the Oslo Agreement has designated particular provisions pertaining to the formation of the Joint Technical Committee (JTC), which, according to a 2016 World Bank report was intended to be a regular, technical (non-political) platform to address bilateral issues. In fact, the same report refers to its performance as inadequate and ineffective, while its meetings remain infrequent and irregular.

According to a 2013 World Bank report, development of the Palestinian providers’ networks requires a variety of Israeli permissions. The absence of these permissions has resulted in the prevention of Palestinian telecommunication providers from developing the industrial infrastructure in Israeli-controlled area C in the West Bank. The same report indicates that Palestinian telecommunication companies would require erecting 330 towers in area C to provide optimal signal coverage. However, of the 60 requests by such companies to build the towers only one was approved. Israel suggested that Palestinian companies rent the infrastructure from Israeli providers in area C, which would add to the cost significantly. Furthermore, Israel has also restricted the import of equipment for Palestinian telecom companies. As a result, the Palestinian market became dominated by “unauthorized” Israeli providers, as the 2016 World Bank report calls them, which have attained 3G capabilities since 2004 and 4G since 2015.

The Palestinian economy as a whole has suffered greatly from these policies. According to the same World Bank data from 2016, “the revenue loss directly attributable to the absence of 3G is between US$ 339 and 742 million and the total 2013-2015 Value Added Tax fiscal loss for the Palestinian Authority is between US$ 70 and US$ 184 million. The direct impact represents 3% of the GDP over the last three years.” This does not account for the effect that the introduction of 3G technology can have on the revenue and penetration of other economic sectors that could be advanced with the new technology.

It is doubtless that the introduction of the 3G technology is an avenue to the improvement of the stagnated Palestinian economy. Nonetheless, the Palestinian mobile providers find themselves in a hole created by a decade-long wait between the application to introduce the technology and a decision being made to allow for it. Now, the companies must race time to reclaim a decade-worth of ground from their Israeli competitors and the never-ending curve of technological advancement. The odds are stacked against their chances of ever winning the race.