Identifier
Created
Classification
Origin
05ABUDHABI1315
2005-03-23 08:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Abu Dhabi
Cable title:
SCENESETTER FOR VISIT OF AMBASSADOR DAVID GROSS TO
how-tonull Diana T Fritz 12/06/2006 03:06:47 PM From DB/Inbox: Search Results Cable Text: UNCLAS ABU DHABI 01315 SIPDIS CXABU: ACTION: ECON INFO: MEPI P/M AMB DCM POL DISSEMINATION: ECON CHARGE: PROG APPROVED: CDA:RALBRIGHT DRAFTED: ECON:OJOHN CLEARED: CGD:MCARVER VZCZCADI096 PP RUEHC RUEHZM RUEHYN DE RUEHAD #1315/01 0820801 ZNR UUUUU ZZH P 230801Z MAR 05 FM AMEMBASSY ABU DHABI TO RUEHC/SECSTATE WASHDC PRIORITY 8843 INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY RUEHYN/AMEMBASSY SANAA PRIORITY 1334
UNCLAS SECTION 01 OF 02 ABU DHABI 001315
SIPDIS
SENSITIVE
STATE FOR EB/CIP AND EB/TPP/BTA
E.O. 12958: N/A
TAGS: ETRD ECON ECPS OTRA TC
SUBJECT: SCENESETTER FOR VISIT OF AMBASSADOR DAVID GROSS TO
THE UAE
UNCLAS SECTION 01 OF 02 ABU DHABI 001315
SIPDIS
SENSITIVE
STATE FOR EB/CIP AND EB/TPP/BTA
E.O. 12958: N/A
TAGS: ETRD ECON ECPS OTRA TC
SUBJECT: SCENESETTER FOR VISIT OF AMBASSADOR DAVID GROSS TO
THE UAE
1. (SBU) Summary: Embassy and Consulate General welcome the
visit of Ambassador David A. Gross, U.S. Coordinator of
International Communications and Information Policy. The UAE
has both a rapidly growing economy and a rapidly growing
population, which makes it an attractive market for U.S.
companies. The UAE only issued the law breaking Etisalat's
telecom monopoly last April, and the new regulatory authority
is still establishing itself. The relative newness of the
authority and the lack of implementing regulations
complicated discussions of the telecommunications chapter
during the first round of FTA negotiations. End Summary.
Economic Background
--------------
2. (U) The UAE has followed a market-oriented growth strategy
aimed at diversifying the economy. It is the third largest
economy in the Arab world behind Saudi Arabia and Egypt.
2004 GDP was approximately $85 billion, with a per capita GDP
of more than $20,000. Oil accounts for about 30 percent of
the UAE's GDP. There are over 500 U.S. companies physically
present in the UAE, and the U.S. trade surplus is
significant; in 2004 U.S. non-military exports to the UAE
were $4 billion, while imports were $1.1 billion. With an
estimated economic growth rate in 2004 of 6.6% (or higher),
the UAE can be a growth market for U.S. exports in goods and
services. The UAE is a member of the GCC Customs Union,
which has fixed tariffs on most goods at 5% (cigarettes at
100% and alcohol at 50% are two notable exceptions).
The Telecom Environment
--------------
3. (U) As a rich, rapidly developing country, the UAE has a
modern and growing telecommunications infrastructure.
According to Etisalat's figures, at the end of 2003, there
were 1.13 million fixed line subscribers in the UAE
(approximately 28 per hundred residents) and 3 million GSM
subscribers (74 per hundred residents) in the country. There
were also approximately 317 thousand dial-up internet
connections and 24 thousand cable modem internet connections
serving an estimated 1.4 million users. Given the wealth of
the UAE and the rapidly growing population, we expect that
the demand for telecommunications services will continue to
grow rapidly.
4. (U) In April 2004, the UAE issued Federal Law number 3
(Law 3/2004) breaking Etisalat's monopoly. The law
established a Supreme Committee to oversee the
telecommunications sector and an independent regulatory
authority (the Telecommunications Regulatory Authority).
Etisalat remains a 60% UAEG owned entity. (Note: The
federal government is largely funded by contributions from
the Emirate of Abu Dhabi and, to a much lesser extent, Dubai.
Etisalat is the major independent source of revenue for the
federal government.) The Supreme Committee decision
requiring new telecom providers to pay royalties to the
federal government probably is an effort to balance
liberalizing the telecommunications sector and maintaining an
independent source of federal government revenue.
5. (U) Law 3/2004 gives the Supreme Committee the authority
to issue licenses to companies to offer telecommunications
services. The law does not specify the mechanism by which
the authority will issue licenses, nor does it specify
whether the licenses will cover the entire range of
telecommunications services or only particular sectors (i.e.
GSM licenses). We understand that the UAE will permit a
second fixed line provider. In the short run, most observers
believe that Etisalat will be able to weather increased
competition. It has a strong revenue base and has invested
in infrastructure in the UAE as well as in regional markets,
such as Saudi Arabia. (It recently won the second mobile
phone operating license in Saudi Arabia.)
FTA Negotiations
--------------
6. (SBU) The lack of information regarding the future of the
telecommunications sector and the relative newness of the
regulatory authority hampered discussions of the
telecommunications chapter during the first round of FTA
negotiations from March 8-10. According to the Director
General of the Telecommunications Regulatory Authority, the
UAE is considering new telecommunications regulations, but he
was unwilling to describe those regulations to U.S.
negotiators.
ALBRIGHT
SIPDIS
SENSITIVE
STATE FOR EB/CIP AND EB/TPP/BTA
E.O. 12958: N/A
TAGS: ETRD ECON ECPS OTRA TC
SUBJECT: SCENESETTER FOR VISIT OF AMBASSADOR DAVID GROSS TO
THE UAE
1. (SBU) Summary: Embassy and Consulate General welcome the
visit of Ambassador David A. Gross, U.S. Coordinator of
International Communications and Information Policy. The UAE
has both a rapidly growing economy and a rapidly growing
population, which makes it an attractive market for U.S.
companies. The UAE only issued the law breaking Etisalat's
telecom monopoly last April, and the new regulatory authority
is still establishing itself. The relative newness of the
authority and the lack of implementing regulations
complicated discussions of the telecommunications chapter
during the first round of FTA negotiations. End Summary.
Economic Background
--------------
2. (U) The UAE has followed a market-oriented growth strategy
aimed at diversifying the economy. It is the third largest
economy in the Arab world behind Saudi Arabia and Egypt.
2004 GDP was approximately $85 billion, with a per capita GDP
of more than $20,000. Oil accounts for about 30 percent of
the UAE's GDP. There are over 500 U.S. companies physically
present in the UAE, and the U.S. trade surplus is
significant; in 2004 U.S. non-military exports to the UAE
were $4 billion, while imports were $1.1 billion. With an
estimated economic growth rate in 2004 of 6.6% (or higher),
the UAE can be a growth market for U.S. exports in goods and
services. The UAE is a member of the GCC Customs Union,
which has fixed tariffs on most goods at 5% (cigarettes at
100% and alcohol at 50% are two notable exceptions).
The Telecom Environment
--------------
3. (U) As a rich, rapidly developing country, the UAE has a
modern and growing telecommunications infrastructure.
According to Etisalat's figures, at the end of 2003, there
were 1.13 million fixed line subscribers in the UAE
(approximately 28 per hundred residents) and 3 million GSM
subscribers (74 per hundred residents) in the country. There
were also approximately 317 thousand dial-up internet
connections and 24 thousand cable modem internet connections
serving an estimated 1.4 million users. Given the wealth of
the UAE and the rapidly growing population, we expect that
the demand for telecommunications services will continue to
grow rapidly.
4. (U) In April 2004, the UAE issued Federal Law number 3
(Law 3/2004) breaking Etisalat's monopoly. The law
established a Supreme Committee to oversee the
telecommunications sector and an independent regulatory
authority (the Telecommunications Regulatory Authority).
Etisalat remains a 60% UAEG owned entity. (Note: The
federal government is largely funded by contributions from
the Emirate of Abu Dhabi and, to a much lesser extent, Dubai.
Etisalat is the major independent source of revenue for the
federal government.) The Supreme Committee decision
requiring new telecom providers to pay royalties to the
federal government probably is an effort to balance
liberalizing the telecommunications sector and maintaining an
independent source of federal government revenue.
5. (U) Law 3/2004 gives the Supreme Committee the authority
to issue licenses to companies to offer telecommunications
services. The law does not specify the mechanism by which
the authority will issue licenses, nor does it specify
whether the licenses will cover the entire range of
telecommunications services or only particular sectors (i.e.
GSM licenses). We understand that the UAE will permit a
second fixed line provider. In the short run, most observers
believe that Etisalat will be able to weather increased
competition. It has a strong revenue base and has invested
in infrastructure in the UAE as well as in regional markets,
such as Saudi Arabia. (It recently won the second mobile
phone operating license in Saudi Arabia.)
FTA Negotiations
--------------
6. (SBU) The lack of information regarding the future of the
telecommunications sector and the relative newness of the
regulatory authority hampered discussions of the
telecommunications chapter during the first round of FTA
negotiations from March 8-10. According to the Director
General of the Telecommunications Regulatory Authority, the
UAE is considering new telecommunications regulations, but he
was unwilling to describe those regulations to U.S.
negotiators.
ALBRIGHT