FIRST CYBER CAFES IN BURMA: "VIRTUAL" ACCESS

UNCLAS SECTION 01 OF 02 RANGOON 001000

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV, EB/CIP
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: N/A
TAGS: ECPS SCUL ECON PGOV BM
SUBJECT: FIRST CYBER CAFES IN BURMA: "VIRTUAL" ACCESS


1. (SBU) Summary: With the government's support and prodding,
several select private sector computer firms are testing the
uncharted waters of public Internet access. GOB support for
information technology and the country's nascent IT sector is
encouraging, if a bit precocious considering the country's
decrepit economic state. However, the realities are not as
impressive: the Internet remains heavily censored and well
beyond the means of all but a few individuals and businesses,
the few cyber cafes that have opened to date are losing
money, and the regime and its cronies retain a monopoly on
provision of Internet services. End summary.

Background: Internet in Burma


2. (U) The first stab at "wiring" Burma came in 1998-99 when
a private company began offering e-mail service. The GOB,
planning at about the same time to introduce its own e-mail
and Internet service through parastatal Myanma Post and
Telecommunications (MPT),expropriated the private business
and officially "introduced" the Internet to Burma in 2000
through the mptmail.net.mm domain. Later, the military
controlled "private" IT firm Bagan Cybertech took over as the
country's primary Internet Service Provider (ISP). Bagan
Cybertech constructed the Bagan IDC & Teleport facility at
the shiny new Myanmar Information and Communications
Technology (MICT) Park in Rangoon in 2002. Since then, Bagan
Cybertech has provided censored Internet and Bagan Net
(Intranet) access to private companies and individuals.


3. (U) Bagan Net is available to most all who can afford the
exhorbitant, by local standards, start up and usage fees. It
currently offers about 2,000 sites and has roughly 16,000
subscribers. According to one IT industry representative,
companies and individuals can apply to Bagan Cybertech to add
specific sites to the Intranet, and Bagan Cybertech usually
approves these applications -- unless the site is
objectionable. Internet access, which is available only to
carefully vetted individuals, companies, and the diplomatic,
UN, and NGO communities, has many Internet sites accessible.
However, all obvious anti-government websites such as
BurmaNet and Irrawaddy are blocked. Likewise pornographic
sites, some religious sites, and free e-mail sites (e.g.,
Hotmail, Yahoo) are blocked. There are about 1,000 current
Internet subscribers. Authorities of Bagan Cybertech, in
full collaboration with Military Intelligence (MI),have
complete authority to make decisions on granting Internet or
Intranet access after investigating applicants.


4. (SBU) The cost for Internet access is still high for
ordinary people, especially to get broadband -- essential in
a country with a decrepit telecommunications infrastructure.
Bagan Cybertech is selling an Internet package with optional
broadband wireless telephone line for an astronomical $19,000
for individuals and $22,000 for private companies. Aside
from the cost of the telephone line, Bagan Cybertech has
several packages for Intranet service which range from 8,000
kyat (about $8) a month for 10 hours to 40,000 kyat (about
$40) a month for unlimited usage. All packages require a
60,000 kyat ($60) annual fee and provide one e-mail account.
Bagan Cybertech's Internet packages, available to only
handpicked individuals and companies, is far more expensive.
Private customers pay 24,000 kyat ($24) a month for 20 hours
or 72,000 kyat ($72) a month for unlimited use. Companies
are charged 76,000 kyat ($76) a month for unlimited usage.
The average Burmese worker makes about 500-800 kyat/day, so
the cost of Intranet/Internet access is out of reach to all
but expatriates and the wealthiest Burmese.

Cyber Cafes: An Unecessary Luxury For Most


5. (SBU) The government, which has rhetorically made IT
development a key plank in its platform of "modernization" of
the Golden Land, announced in mid-2003 that select private
firms would be given permission to open cyber cafes. These
cafes would ostensibly give the general public access to the
rarefied Internet (vs. Intranet) without the huge expense or
invasive vetting procedure. The option to open a cafe would
be given to the fifty shareholders of the Myanmar Information
and Communications Technology Development Corporation
(MICTDC),an IT development and "venture capital" firm funded
and controlled by the government but operated by Bagan
Cybertech and fifty private firms. In May, the first two
companies, Maykha Networks Co. and Fortune International Co.,
bit on the offer. Subsequently nine other companies opened
internet cafes in the Rangoon area, and twenty-one total
licenses were issued. Maykha Networks Co. is owned by Dr. Ye
Naing Win, son of SPDC Secretary One, General Khin Nyunt, and
Fortune International Co., which now has three cafes open, is
run by a successful businessman with close government ties.
Dr. Ye Naing Win also runs Bagan Cybertech.

6. (SBU) The other companies given licenses thus far to open
cyber cafes are:

1) CTT Co.
2) Geocomp Co.
3) Intelet Co.
4) KMD Co.
5) MCC Co.
6) Myanmar Datacom Co.
7) Maxtech Co.
8) MIT Co.
9) Noble Land Co.
10) TKK Co.
11) United Engineering Co.
12) Winner Co.
13) Forever Group Co.
14) Cyber Land
15) Yuzana Group. Ltd.
16) Myanmar Millenium Group.
17) Raynet


7. (U) On top of paying initial equipment and Internet
hook-up costs, private firms wishing to open a cyber cafe
must shell out 200,000 kyat ($200) for a license and pay
50,000 kyat ($50) a month to MICTDC. Rent and other
operating costs for the cafes run about 1.5 million to 2
million kyat ($1,500-$2,000) per month. Initially the new
cyber cafes charged 1,000 kyat ($1) per hour for Internet
access, but raised their fees to 1,500 kyat per hour
beginning in June. The cafes are open to all comers, but
each visitor (Burmese and foreigner) must register, giving
detailed personal data in exchange for a login number that
can be used by authorities to track an individual's site
visits. Access to the Internet via a cyber cafe does not
include a private e-mail account.

Still in the Red


8. (SBU) Surfing at a cyber cafe is extremely expensive for
ordinary people, and Internet awareness and education are
still quite low for the average Burmese. Thus the cyber cafe
pioneers are not yet turning a profit. One cyber cafe
manager said he needed at least 45 visitor/hours per day -- a
steep target in these tough economic times. However,
profitability is not likely the first priority. Several
officials from companies that have opened, or who are
considering opening cyber cafes, admitted that they'd done no
market research or business analysis of any sort. Some
opened the cafes as learning centers for their more
profitable computer classes, others may be giving in to
government pressure to advance the regime objective of a
"wired Burma," possibly in return for a lucrative favor later
on.
Martinez