TRANSPORTATION AND COMMUNICATIONS MINISTER ON

UNCLAS ATHENS 000445

SIPDIS

STATE FOR EB/CIP
USDOC FOR ITA/MAC/EUR/CALVERT
USDOC FOR ITA/MAC/EUR/OEE/EED/JBURGESS

E.O. 12958: N/A
TAGS: ECPS EINV GR
SUBJECT: TRANSPORTATION AND COMMUNICATIONS MINISTER ON
INTERNET PENETRATION IN GREECE AND OPPORTUNITIES FOR
INVESTMENT


SUMMARY
--------------


1. In a February 7 meeting, Transportation and
Communications Minister Liapis informed the Ambassador about
projects to expand broad band connections to the Greek
regions and install optical fiber rings in 50 cities. He
said that participation by U.S. firms in these projects would
be welcome, and GoG tenders will be announced in the near
future. Liapis also vowed that the GoG will take steps to
implement EU directives on telecommunications deregulation.
End Summary.


2. In a February 7 meeting with Minister of Transportation
and Communications Mikhalis Liapis, the Ambassador inquired
about efforts to extend internet penetration in Greece.
(Note: Greece has the lowest internet penetration in Europe:
only 19.6 percent for private households and 20 percent for
Greek businesses). The Ambassador noted that wider diffusion
of internet usage would make Greece more attractive to U.S.
investors, especially firms offering financial services or
wishing to use Greece as base to extend to other Balkan
countries. Minister Liapis pointed out that high costs and
the limited availability of broad band connectors are among
the main obstacles to wider internet usage. (Note: The state
telecom company (OTE),which has a near monopoly on Greece's
telecom backbone infrastructure, is notorious its for high
interconnect fees and poor service).


3. Liapis noted that his government is taking advantage of
EU-sponsored information society intiatives to encourage
private companies and public agencies to invest in
information technology. There is a 185 million euro fund
(co-financed by the GoG and the EU Third Community Support
Framework) to extend broadband access to regions outside
Athens and Thessaloniki. He said Greece would welcome
participation by U.S. companies in preparing the feasibility
studies for that project. He said there are plans to install
optical fiber rings in 50 Greek cities, and that GoG will
announce tenders for that project in the near future.


4. Liapis said the government's objective is to absorb EU
funds earmarked for IT programs as quickly as possible.
(Note: Over the past year, the GoG reportedly approved about
30 IT projects with a budget of 100 million euros. The
information society program announced by the GoG on February
1 has a total budget of 2.7 billion euros, including EU
community support funds and companies' contributions to be
invested by 2006). Liapis also stated that GoG is ready to
apply EU directives on IT and fulfill its obligations.


5. Comment: Last year, the EC was forced to take Greece to
the European Court of Justice because of its failure to
incorporate several EU directives regarding the deregulation
of the telecommunications market. The EC has also taken
Greece to task for lack of progress in promoting IT
investments that would help the country converge with its EU
partners. It appears that the government, prompted by EU
criticism as well as the need to enhance Greece's
competitiveness and attractiveness for FDI, is taking some
long overdue steps to address the country's shortcomings in
the diffusion of computer and telecommunications
technologies.

WALLES