IT is just four years since Jordan quietly launched a telecommunications revolution when it opened the sector to private participation. It is now beginning to tot up its achievements, but also to see the difficulties of transforming a sector which has been a government preserve for so long.

The new approach was a radical innovation for the Middle East. The telecoms sector was split into three elements: a Telecommunications Regulatory Commission (TRC), service providers, and a policy-making body. The UK's Price Waterhouse was appointed to assist in the transformation of the government-owned Telecommunications Corporation (TCC) into the public shareholding Jordan Telecommunications Company (JTC) as a first step to its privatisation. The JTC continued to hold a monopoly of fixed line telephone services while all other activities were opened to private operators.

Conditions needed to be improved. Waiting times for telephone connections could be as long as eight years and almost anything other than a conventional telephone needed time consuming licensing from a reluctant TCC. By adopting a new approach, the government conceded that private money, new technology and a more open approach to licensing were necessary.

Since 1996, 10 licences have been granted for the provision of data transmission services and five companies are already offering Internet, e-mail and other services. Trans Jordan for Communications Services (Alo) and Jordan Public Payphones Services (JPP), both private payphone operators, and a second paging company, the 50 per cent Saudi Arabian owned National Group for Communications, have started operations. Offers for two trunking services licences are due at the end of March.

Close to two hundred licences have also been granted for private wireless equipment users, mostly to companies setting up mobile radio networks. TRC director-general Yousef Abu Jamous says the commission is considering issuing a policy for Global Mobile Personal Communications Services (GMPCS).

Merrill Lynch and the local Export and Finance Bank are acting as financial advisers for the sale of a 40 per cent stake in the JTC. Negotiations are now underway with four companies - the UK's Cable & Wireless, SBC of the US, Stet of Italy and OTE of Greece - with a decision on the sale expected by mid-year.

The most spectacular growth has been at Jordan Mobile Telephone Services (Fastlink), the first cellular service provider which was licensed in 1994 and began services in 1995. Its network now covers from the Syrian border in the north to Aqaba in the south and includes all of the Amman area, covering up to 95 per cent of the population. Fastlink already has close to 45,000 paying subscribers.

Even Fastlink has been surprised by the rate of growth in the network. The original business plan anticipated 8,000 connections in the first 10 years, but subscriber numbers doubled in 1997 when the price of handsets dropped. Fastlink general manager David Bosworth estimates subscriptions will double again in the next two years and treble over the next five, although not necessarily all with Fastlink.

Abu Jamous believes the success in bringing private operators into the sector has been based on a transparent tendering process which includes continuing consultations with the private sector. 'Our major achievement has come from applying the most transparent process in Jordan,' he says. 'It has been done for the paging, the payphones and now for the trunking.'

Abu Jamous says the extensive participation of the private sector in the decision making process has led to a public/private sector relationship previously unheard of in Jordan. For consumers there has been a clear benefit from competition between service providers which has brought a substantial drop in prices and a greater variety of services on offer.

Not that there aren't complaints. Customers find some charges by the JTC, which still has a monopoly on telephone connections, to be exorbitant. Bosworth points out that JTC interconnection fees are around three times those charged by Gulf telecoms companies. Fastlink is now the JTC's largest single customer, but it pays seven times the cost per minute paid for home connections. Charges are expected to come down only if plans to open the sector to a second fixed line provider go ahead when JTC's monopoly ends in 2002.

Abu Jamous himself says the TRC's greatest challenge has been in convincing the government that times have changed. 'The private sector understands more than the government,' he says. 'The challenge is to persuade them that the TRC really is the regulator and that the JTC is now just another operator.'

Abu Jamous has already spoken out strongly about Ministry of Finance interference in the TRC budget. He is particularly concerned that the commission should have the resources for staff training. 'We have just started our work and we are facing many challenges which we must be qualified to face,' he says. Pricing principles are one area he highlights. The TRC is responsible for establishing the pricing for all services.

The experience of Fastlink reveals some of the challenges facing the liberalisation process. When the company was given a 15-year licence in October 1994, it included a four-year exclusivity period in exchange for a hefty fee of $24 million to be paid in four installments. In Fastlink's view, this exclusivity period continues until October 1998 and the process of issuing a second licence should not start until after that date

In late 1997, however, the Council of Ministers (cabinet) announced that the JTC itself had been granted a cellular licence. Fastlink immediately declared its objections. Fastlink and TRC both say that the issue can be settled through discussions, but the stand-off goes to the heart of the whole privatisation process, which appears to have been violated.

Under the Telecommunications Law of 1995 the TRC, not the cabinet, should be the agency making such awards. The licence was also granted without prior consultation and there was no bidding process.

The Council of Ministers has given no justification for its decision but observers have suggested that it could be connected with plans to sell a stake in the TRC to a strategic investor. The TRC is already a valuable institution. Price Waterhouse is reported to have estimated its assets at JD 860 million ($1,211 million) and it earns the government revenues in excess of JD 40 million ($56 million) a year, but Fastlink's success has shown the value of a cellular service.

Fastlink estimates its total investment in cellular services at $80 million and, while welcoming competition as a valuable and necessary element of the system, believes it is entitled to a reasonable period to be able to recover the costs of setting up. 'The up-front costs are high,' says Bosworth, 'and we are obliged to provide cell sites in areas such as the Wadi Araba which have no people and won't ever pay themselves back.'

Jordan's new approach to telecoms has succeeded in attracting foreign investors. The payphones, cellular system, a second paging service and a number of the data services companies have a 50 per cent foreign partner. But Jordan's ability to continue attracting private money, particularly foreign money and the technology that comes with it, will depend in the end on whether investors are convinced they are being offered an equal opportunity.