Palestinian Authority cellphone company Wataniya Mobile is threatening to seek $400 million in compensation if Israel fails to hand over by September 15 promised frequency allocation needed for its launch. Israel's alleged refusal to allocate enough of the promised frequency to a second PA cellphone company is poised to jeopardize the anticipated launch of competition among mobile networks in the PA. Wataniya Mobile is threatening to withdraw from its mid-October launch and will demand a refund for what it says it has laid out in infrastructure and licensing fees. The company, which has been awarded the license to set up a new mobile network to compete with the existing Palestinian Jawwal cellphone service, said it was promised a minimum frequency allocation of 4.8 megahertz in Israel. This agreement was agreed upon between the government of Israel and the PA in 2008. However, Wataniya said Israel would only be apportioning 3.8 megahertz. Wataniya said the present allocation was not enough to let them go ahead with the scheduled launch. The United States and the European Union have been pushing for cellphone competition in the PA as a way to stimulate economic development. Together with Middle East envoy Tony Blair, they have been pressuring Israel to release the frequencies. Communication Ministry spokesman Yehiel Shavi said the promised allocation should be sufficient for the Palestinians at this stage. "The Communications Ministry and the government of Israel have allocated frequencies to the Palestinian phone company Wataniya according to our commitment," he said. "We believe that at this stage, in order for the company to begin its activities, the allocation of 3.8 megahertz is adequate. In the future, the government of Israel will increase the frequency allocation to 4.8 megahertz, as it has committed to do." Wataniya won the license to set up a second mobile service after bidding $355m. in 2007. It has invested some $270m. so far on setting up state-of-the-art networks and facilities. Wataniya Mobile is owned by Kuwait's National Mobile Telecommunications Co. and the Palestine Investment Fund. Meanwhile, the sole mobile operator Jawwal is seeing a surge in cellphone use during the Ramadan holiday period. Palestinians who are confined to the Gaza Strip have been using their cellphones to send SMS Ramadan greetings to the West Bank and elsewhere in the Arab world. Jawwal is reportedly allowing Gazan customers to send the SMS greetings free of charge.