Kurdish Rivalries Play Out on Cellphones (WSJ)

Kurdish Rivalries Play Out on Cellphones
Providers' Battle, Soon to Ease, Points to Underlying Lack of Unity in Iraq Region
By PHILIP SHISHKIN
November 24, 2007; Page A4
The Wall Street Journal

Suleimaniah, Iraq

Like many Iraqi Kurds, Kawa Hassan must carry two mobile phones.

One is for staying connected in this Kurdish city where he runs an art gallery. The other is for talking to his girlfriend in Erbil, the capital of Iraqi Kurdistan 100 miles to the north.

IN KURDISTAN



• See an interactive map of the region, with details on ethnicities, oil infrastructure, and major cities and towns.Customers of the two Kurdish networks can call the rest of Iraq and abroad, but they can't call each other.

The two companies, Korek Telecom and Asiacell Telecom, have fought hard to keep it that way. They split Iraq's autonomous Kurdish enclave into two hostile cellular ministates, damaging the notion of Kurdish unity trumpeted by the region's leaders.

With U.S. backing in the 1990s, Iraqi Kurdistan won self-rule from Baghdad. Soon after, civil war broke out between the two dominant Kurdish factions. They have since declared an end to their old rivalries and formed a joint government, but the two parties are still reluctant to relinquish much control.

There are two defense ministers, two interior ministers and two finance ministers. "When they speak of a unified Kurdistan, it is a big lie," says Asos Hardi, a newspaper editor in Suleimaniah.

• The Issue: Two Iraqi Kurdish cellphone networks haven't been able to connect or roam with each other because of longstanding political rivalries.
• The Context: The rift belies the notion of Kurdish unity trumpeted by the region's leaders.
• What It Means: Customers have been sometimes forced to purchase two cellphone plans, an inconvenience that is expected to end Saturday when the companies plan to connect their networks under new licensing terms.Nowhere is the division more jarring than in cellphone service. At the offices of Iraqi Airways here, managers can sell tickets to flights leaving only from Suleimaniah, not from Erbil. The reason: They can't reach their colleagues by mobile phone, the preferred means of communication in a country with bad fixed lines.

The split stems directly from the rivalry between the two Kurdish parties: the Patriotic Union of Kurdistan (PUK), led by Iraqi President Jalal Talabani; and the Kurdistan Democratic Party (KDP), led by Massoud Barzani, who is president of the Kurdish region. Both fostered rival carriers when cellphones first came to Kurdistan.

For years, Asiacell and Korek wouldn't connect calls between the two networks and wouldn't allow each other roaming rights. Korek has been pressing Asiacell for a roaming deal, but Asiacell says its license from Baghdad bans the company from allowing unlicensed operators to roam on its network.

The Kurds are unlikely trailblazers of the Iraqi cellphone market. In the 1990s, when mobile phones were unheard of in Iraq, Kurdish businessman Faruk Mustafa Rasool began smuggling components of a cellular network across the mountains into Kurdistan.


Crates carrying switches were intentionally mislabeled to fool the customs of the neighboring countries who were enforcing a trade embargo against Saddam Hussein's regime. "Nobody believed I would succeed," Mr. Rasool recalls. The ragtag operation would eventually grow to become Asiacell, making Mr. Rasool one of the region's richest men.

The son of an imam, Mr. Rasool had an unconventional career. For years, he lived in the mountains with Kurdish guerrillas battling Mr. Hussein's army. He joined the Communist Party and says he was considered leftist even by his party comrades. "In the old days, we didn't believe in money as motivation," he recalls.

That changed when Mr. Rasool, fed up with politics, went into business in the late 1970s. He brought automated slaughterhouses to Kurdistan and dabbled in construction.

His cellphone business was supported by the PUK, the Kurdish party that controls Suleimaniah. "It was very important to build a connection between ourselves and the rest of the world," recalls Noshirwan Mustafa Amin, a former member of PUK's leadership.

To reward Mr. Rasool for his risky venture, the PUK gave him an exclusive license to operate in Suleimaniah, the city under the party's control. PUK members also took a stake in Asiacell, though exactly how much remains in dispute. U.S. officials believe the PUK may control as much as 20% of Asiacell, while Mr. Rasool says PUK members own no more than 3% of the company.

Across a mountain ridge in Erbil, the city under control of the rival KDP, a similar experiment was taking root. There, a nephew of KDP leader Massoud Barzani was also starting a cellular service. He named it Korek, after a famous Kurdish mountain.


Keeping the cellphone signal alive in the rugged mountains was a huge challenge that required dotting the landscape with extra towers. KDP gave Korek a monopoly to operate in Erbil and another Kurdish province under the party's control.

Asiacell's Mr. Rasool says he helped Korek procure the cellular technology and insists Asiacell was the first service provider in Iraq. Korek officials dispute the account and say Korek was the true pioneer. Both companies continue to claim to be first in their promotional materials.

After Mr. Hussein was toppled in 2003, the U.S. occupation authorities granted three mobile licenses to cover Iraq. As the only two incumbent operators, Asiacell and Korek both wanted a license. Asiacell prevailed, an outcome that has left Korek bitter to this day. (The other two companies that won licenses are Iraqna, a unit of Egypt's Orascom Telecom Holding; and MTC Atheer, part of Kuwait's MTC Group.)

Armed with the national license, Mr. Rasool took Asiacell national. Its service is now available in Baghdad and other cities. Asiacell built towers in Erbil, too, thinking its national license would allow it to operate anywhere in Iraq.

Mr. Rasool dispatched Othman Faraj to serve as his representative in Erbil. The two had met in the 1990s when both were running chicken slaughterhouses. Mr. Faraj set up shop behind a grimy red sign reading "Asia Telecom."

On Oct. 4, he flipped a switch, and Asiacell's signal went live. Within four hours, the local ministry of communications dispatched two police officers who escorted Mr. Faraj to the control room and asked him to turn the signal off. "They set up towers without permission and kept trying to switch them on," says Nawzad Junde, Korek's managing director. The local communications ministry says Asiacell can't operate in Erbil, because it doesn't have a local license.

Korek itself has strayed from its home turf. Last year, the company plunked down a tower in Baghdad's International Zone. Korek also has been trying to make inroads on Asiacell's home turf. There, a small company called Sanatel had challenged Asiacell's monopoly, only to face intense pressure from Asiacell in local courts.


In 2005, Korek struck a roaming deal with Sanatel, which gave Korek a foothold in Suleimaniah. Like many others, Mr. Hassan, the art-gallery manager, signed up with Sanatel so he could reach his girlfriend in Erbil.

Asiacell was outraged. A few months ago, plainclothes gunmen showed up at one of Sanatel's towers, attacked the guards, and turned off the signal, says Rebwar Khan, a Sanatel manager. Mr. Khan is convinced Asiacell was behind the attack. Asiacell denies it was involved. "We don't have gunmen," Mr. Rasool says.

In August, Iraq's central government auctioned off three new national licenses. With neither prepared to lose, Asiacell and Korek helped bid up the price to a mammoth $1.25 billion and snatched two of the permits. The third went to the Kuwaiti operator MTC Atheer; Iraqna withdrew from the bidding.

The license terms obligated the Kurdish companies to hold talks on connecting their long-divided networks. They hope to link their systems on Saturday, a breakthrough eagerly awaited by their customers.

On a recent day in his art gallery, Mr. Hassan fumbled with his two handsets and complained about the petty rivalry. To stay in touch with his girlfriend, he had to buy a second phone and pay new subscription charges, which puts a big dent in his monthly income of $200.

In carving up Kurdistan, he says, "the companies didn't take the interests of the people into consideration."

Write to Philip Shishkin at philip.shishkin@wsj.com