* Decision by Council of Ministers ends years of stalemate over 3G
* Iraq had wanted to auction 3G licences for minimum $307 mln each
* Top mobile operator Zain Iraq welcomes new decision as "positive step"
By Matt Smith
DUBAI, May 6 Iraq has granted its three mobile operators the right to provide third-generation (3G) services, reversing an earlier decision to hold a multimillion dollar auction and ending years of stalemate that has hurt the development of its largest non-oil sector.
Iraq is one of the few countries in the Middle East still reliant on 2G networks, which allow for only the most basic online services, while fixed Internet is expensive and unreliable. Such problems mean just 7 percent of Iraqis are online, according to the International Telecommunication Union.
But after years of deliberation, the General Secretariat of the Council of Ministers has "announced the approval of granting mobile phone companies operating in Iraq the right to use the third-generation frequencies", according to statement on Secretariat's website.
The statement did not provide further details and it is unclear when the operators - Zain Iraq, a unit of Kuwait's Zain , Ooredoo subsidiary Asiacell and Orange affiliate Korek - will receive the frequencies required for 3G, which allows for faster mobile Internet access, enabling users to access web-based videos or other data-heavy applications.
Hayder Ahmed, head of corporate communications for Zain Iraq, the country's top mobile company by subscribers, told Reuters via email that the Council's decision was "a positive step for the development of the telecom industry in Iraq", but added his company had yet to be told the government's conditions for launching 3G.
In February, sources told Reuters the Council of Ministers had agreed in principle to auction 3G licences, including radio spectrum, for a minimum of $307 million each. Last month, Mohammed Noori, head of regional and international department at Iraq's Ministry of Communications, confirmed to Reuters there was a plan to sell licences at this minimum price.
Operators opposed such a move, arguing the $1.25 billion they had already paid for their 2G licences in 2007 was much more expensive than even the charges in Europe when factors such as gross domestic product, population and revenue-per-user were considered.
Speaking before the Council's decision to grant operators the right to use 3G services without holding an auction, Peter Lyons, Director of Middle East and North Africa at mobile industry body GSMA, described the mooted licence fee as "completely beyond what would be a reasonable price".
Analysts said charging for 3G licences and spectrum would hurt operators' ability to roll out 3G services, as they could have put this money towards boosting networks and expanding coverage. (Editing by Pravin Char)