Israel and the Palestinian Authority signed an agreement to allow a long-awaited third-generation (3G) mobile network in Gaza and the West Bank, they said on Thursday.
Israel said the decision was made after it concluded a security examination as well as other work with the Communications Ministry.
Under interim peace accords, Israel effectively has final say in allocating radio frequencies in the West Bank, where the Palestinian Authority exercises limited self-rule.
Palestinian mobile operators Paltel and Wataniya, still using 2G technology and losing money, want to offer 3G to meet surging demand for data bandwidth for social media applications. 3G is mobile phone technology that allows users to make calls, texts and access the internet. 2G allows calls and limited data transmission.
Thursday's agreement "will enable the companies benefiting from the service to begin coordination with the Palestinian ministry of telecommunication to begin the implementation of the agreement on the ground," said Hussein Al-Sheikh, Palestinian Minister of Civil Affairs, in a statement posted by the Palestinian official news agency WAFA.
In the past Israel has told the Palestinians there were not enough frequencies for 3G and that they should lease access to them from Israeli providers.
Earlier this year, Israel's Communications Ministry allocated a number of high-speed 4G frequencies to Israeli mobile phone operators.