Identifier
Created
Classification
Origin
06DUSHANBE464
2006-03-09 10:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Dushanbe
Cable title:  

U.S. GETS BUSY SIGNAL FROM TAJIK TELECOM

Tags:  PGOV ECON EINV CH TI 
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RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #0464/01 0681024
ZNR UUUUU ZZH
R 091024Z MAR 06
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 6925
INFO RUEHRL/AMEMBASSY BERLIN 1459
RUEHLO/AMEMBASSY LONDON 1424
RUCNCIS/CIS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1470
RUEHAK/AMEMBASSY ANKARA 1429
RUEHNE/AMEMBASSY NEW DELHI 1384
RUEHBUL/AMEMBASSY KABUL 1359
RUEHIL/AMEMBASSY ISLAMABAD 1410
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHMFISS/JOINT STAFF WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RUEPGDA/USEUCOM JIC VAIHINGEN GE
RUCNDT/USMISSION USUN NEW YORK 1010
RUEHBS/USEU BRUSSELS 0803
RUEHKO/AMEMBASSY TOKYO 1229
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 8047
UNCLAS SECTION 01 OF 02 DUSHANBE 000464 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN; TDA FOR SCOTT GREENIP AND DAN STEIN; COMMERCE FOR PHILIP DE
LEON AND DANICA STARKS

E.O. 12958: N/A
TAGS: PGOV ECON EINV CH TI
SUBJECT: U.S. GETS BUSY SIGNAL FROM TAJIK TELECOM

DUSHANBE 00000464 001.2 OF 002


UNCLAS SECTION 01 OF 02 DUSHANBE 000464

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN; TDA FOR SCOTT GREENIP AND DAN STEIN; COMMERCE FOR PHILIP DE
LEON AND DANICA STARKS

E.O. 12958: N/A
TAGS: PGOV ECON EINV CH TI
SUBJECT: U.S. GETS BUSY SIGNAL FROM TAJIK TELECOM

DUSHANBE 00000464 001.2 OF 002



1. SUMMARY: Despite the striking success of Indigo, a
U.S.-Tajik cellular service joint venture, China has taken the
lead in developing Tajikistan's telecom sector. Meetings with
Tajikistan's key telecom decision makers highlighted the growing
role of China and the European Bank for Reconstruction and
Development (EBRD),the lack of real regulation and the pitfalls
of letting the government control international connectivity.
The United States can play an important role in providing
technical guidance and assistance, but may end up taking a back
seat to other investors in the infrastructure projects. END
SUMMARY.

CHINA TAKING LEAD IN TELECOM


2. "Things have changed a lot in telecom in the last sixth
months," Communications Minister Said Zuvaydov told PolOff and
post's Commerce/BISNIS representative during a meeting with
Trade and Development Agency (TDA) telecom consultants February

28. Zuvaydov did not mince words or hide his disappointment.
"You [the United States] talked with me a year ago, and again
six months ago with visitors from Washington. We were ready but
there was nothing from the U.S." While the Tajik telecom sector
is already moving forward without major U.S. assistance, there
is a U.S. presence. Indigo Tajikistan and Indigo Somoncom,
joint ventures with Arlington, VA-based MCT Corp, are examples
of how American companies can operate successfully and
profitably in Tajikistan.


3. Zuvaydov reported that $70 million in assistance from the
Shanghai Cooperation Organization (SCO) would go towards his
ministry's top priorities: raising the quality of the fixed
lines; satellite connections; video conferencing capabilities
and e-government.


4. Fixed lines are not always appealing to investors, noted
Zuvaydov, but necessary to help Tajikistan's economic
development and a government priority. According to Jafar
Rustamov, head of Tajik Telecom's administration, the company
committed to increase fixed line penetration 200% by adding
600,000 connections to the existing 300,000 fixed line

subscribers, and to start implementing a National Fiber Optic
Network by the end of the year, using Chinese technology and
equipment in both cases. In a March 1 meeting, Rustamov
described Chinese vendor Hua-Wei's fiber optic project having
three phases: Phase 1: installation of the backbone connections
with fiber optic cables at all 74 administrative centers and
connection to the Trans-Asia-Europe fiber optic highway at the
Tajik-Uzbek border (scheduled to be complete by late 2006);
Phase II: expansion to rural areas from administrative centers,
and connection to Trans-Asia-Europe fiber optic highway at the
Tajik-Kyrgyz border; and Phase III: connection of Tajikistan's
fiber optic network to Afghanistan and South Asia. The fixed
line capacity increase would be achieved through a series of
wireless modules, thus bypassing Tajikistan's unreliable Soviet
wiring.


5. Rustamov was more forthcoming than Zuvaydov, who declined to
mention the degree and specifics of Chinese investment in the
Tajik telecommunications sector. After Tajikistan proposed the
fixed line and fiber optic projects, said Rustamov, a Chinese
technical team visited to adjust the technical specifications
and brought a Tajik delegation to visit Chinese manufacturing
facilities. The contract with Hua-Wei includes a three-year
warranty, minimal advance payment and final payment upon expiry
of the warranty.

EBRD CONTROL OVER TAJIK TELECOM STRONG~


6. Rustamov also described in detail EBRD's influence over
Tajik Telecom. As part of a $10 million loan to Tajik Telecom
to create a regulatory body and restructure the company, EBRD

DUSHANBE 00000464 002.2 OF 002


retained the right to approve all Tajik Telecom transactions
exceeding $500,000. Tajik Telecom will begin loan repayments in
October 2006 for ten years. Rustamov had nothing but praise for
EBRD, noting its tender experience, technical expertise and work
with major European consulting firms have proven very useful for
the Tajik side. Rustamov did not think the relationship with
EBRD would hinder plans to privatize Tajik Telecom. After a
significant capitalization effort, Rustamov said, "We will make
Tajik Telecom as big and tasty a pie as possible, and then it
will be up to the government to determine how much of that pie
to sell to the private sector."

~BUT HAS NOT RESULTED IN INDEPENDENT REGULATION


7. EBRD's strong influence in the telecom sector has failed to
create an independent body capable of regulating Tajikistan's
burgeoning telecom industry, despite a $2 million grant to the
Ministry of Communications to establish such regulation. EBRD's
Fernand Pillonel told Post his bank had limited leverage over
the Ministry of Communications now that the grant was used up,
even though there were no tangible results. Zuvaydov admitted
he and his advisor were studying other models of telecom
regulations, including those of the United States and Europe,
but control still rests with the state-controlled Communications
Regulatory Agency, not an independent group.


8. Zuvaydov also admitted his plan for a single
government-controlled international gateway for Internet service
providers may have been inappropriate. (NOTE: In response to
his proposal in February, Tajikistan's Cellular Operator's
Association, Internet-users' Association and most large
telecommunications companies issued swift public statements
opposing the measure and asking the government's anti-monopoly
authorities to intervene. END NOTE.) Zuvaydov suggested two
gateways be established in Tajikistan, one government-run, and
one commercial.

WHAT NEXT?


9. Tajik Telecom introduced a Next Generation Network
technology March 1 (not without some interruption to telephone
service in Dushanbe) and launched its own mobile service in
February. There are seven mobile service providers, and nine
Internet providers, with the numbers growing every day.


10. However, opportunities in overall infrastructure projects
may be closing. China has locked up the National Fiber Optic
Network, and several Russian companies are in negotiations to
form partnerships with existing Tajik companies. When Tajik
Telecom privatizes, Rustamov's pie may likely go to those who
have cultivated good connections with the top level of the
government and who have already invested their own technology in
Tajikistan's telecom infrastructure, especially the fixed line
network.


11. COMMENT: If the United States wants to remain relevant in
Tajikistan's telecom sector, our best chance now is through
technical assistance. By helping establish a truly
independently regulated telecom industry, we can create the
conditions that will naturally attract U.S. and international
investors. We will also establish our credibility in telecom
and influence the handful of decision makers about the
advantages of working within a U.S. business model. END COMMENT.
HOAGLAND