Wired

U.S. mobile telephone companies have been shut out of one of the most potentially lucrative markets in post-war Iraq, losing bids on three telecommunications licenses to Middle Eastern and European rivals.

On Monday, the U.S.-led occupation authority announced the licenses to operate mobile phone networks and sell service to Iraqis would go to Asia Cell, the main operator in the Kurdish northern region of Sulaimaniya; Orascom, an Egyptian telecom firm; and Atheer, a Kuwaiti-led conglomerate that includes Kuwaiti-based MTC and the British telecom provider, Vodafone.

The absence of U.S. companies may come as a surprise to some observers, given that American firms have won the most high-profile contracts for rebuilding Iraq. The mobile networks will be run on the GSM platform, the predominant standard in the Middle East and Europe. The U.S.-favored CDMA platform was rejected, which essentially shuts out dominant American companies like Qualcomm and MCI WorldCom.

Telecom mainstays such as MCI, Motorola and Eriksson all attempted to serve as partners on some of the more than 100 bids occupation authorities and newly appointed Iraqi ministers have sifted through for the past several months.

The licenses are for specific regions of Iraq. Asia Cell will handle the north, where it already has a customer base; Orascom will take the central region, which includes Baghdad and its 6 million citizens; and Atheer will set up in the south, which includes the British-controlled city of Basra, where MTC-Vodaphone already supplies service for the U.S. and British authorities.

So as many Iraqis as possible can get access to mobile phone plans quickly, the licenses require each company to build networks first in their own regions. The company that builds its network fastest will be the first allowed to start building in the other two regions, where they could offer competing service.

"The race is on," Haider Al-Abadi, the U.S.-appointed communications minister, said in prepared remarks. "Iraq needs pervasive mobile communications and it needs them now."

After major construction and oil services contracts, the two-year mobile phone licenses are presumed to be the most valuable deals, although precise values can't yet be determined. Iraq's telecom infrastructure isn't as advanced as other Middle Eastern countries. Telecom executives have said they hope that by implementing the most contemporary technology now, Iraq could become an essentially wireless nation.

"The mobile phone licenses will be both an engine of growth and a terrific business opportunity," said Euan Rellie, an industry analyst and the managing director of Business Development Asia in New York. "Mobile phone networks have been crucial to economic development in China, Asia and the rest of the Middle East."

However, companies may wait some time to turn a profit, Rellie said. "The license duration of only two years will make it hard for licensees to recoup their investments, while security will be a big issue going forward."

The award had been expected weeks ago, and was reportedly delayed partly because of Iraqi minister Al-Abadi's desire to thoroughly vet the competitors.

"This is an important day for Iraq, and I make no apology for the fact that it has been a little slower in coming than had been expected," Al-Abadi said in his remarks.

The fact that Iraqi-owned companies or conglomerates didn't fare better doesn't sit well with some executives. Asaad Alnajjar, an executive with Zagil Wireless, which launched a bid, said he would send a messenger to U.S. occupation headquarters in Baghdad on Tuesday to find out why his company wasn't selected.

"Iraqis should be leaders in [rebuilding] Iraq," Alnajjar said.

Alnajjar, whose company is incorporated in Delaware, said that the United States was a conquering force in Iraq, and that "as an American company, we should expect some active role, not zero like the way it is now."

At least one French company could profit from the new licenses. Telecom giant Alcatel is a partner of Orascom, which won the most sought rights to the central region. As recently as this summer, Defense Department officials had hinted that, whether the Bush administration liked it or not, companies from nations that didn't support the U.S.-led war would have to be brought into the rebuilding efforts.

The international spread of the awards, "will be well regarded," Rellie said, "and makes a welcome change from the award of contracts to U.S. firms who are perceived as being cronies of the Bush administration."

Big Biometrics Business

Biometrics security company Identix has won a five-year contract with the Homeland Security Department, a move that bodes well for its future as a leading player in border security.

Under a blanket purchase agreement, the department will purchase about $27 million in fingerprint scanning technology over the next 60 months, the company said in a statement. The scanning tools and associated desktop computer systems will be deployed with the Bureau of Citizenship and Immigration Services, as well as to "other select departments within" Homeland Security, according to the statement.

The department could spend more or less than $27 million, because the figure is based on an initial estimate of what's needed. The purchase agreement also has no minimum or maximum purchasing requirements.

Joseph Atick, Identix's chief executive officer, said the deal "could prove to be one of the largest biometric live scan contracts ever issued, worldwide." His company is recognized as a front-runner in Homeland Security's upcoming US VISIT contract to biometrically scan and identify all foreign visitors as they enter and exit the country.

Currently, the immigration bureau uses fingerprint scanners to capture images that are then sent to the FBI to use in criminal background checks. The prints are also checked prior to granting immigration benefits.