Identifier
Created
Classification
Origin
06KABUL1201
2006-03-19 09:34:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kabul
Cable title:  

Afghanistan: Ambassador Gross Promotes

Tags:  ECPS EINV ECON PREL OPIC EAID PGOV AF 
pdf how-to read a cable
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RR RUEHIK RUEHYG
DE RUEHBUL #1201/01 0780934
ZNR UUUUU ZZH
R 190934Z MAR 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 8992
INFO RUEHZG/NATO EU COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 6840
RUEHIL/AMEMBASSY ISLAMABAD 2975
RUEHDBU/AMEMBASSY DUSHANBE 0149
RUEHEK/AMEMBASSY BISHKEK 4711
RUEHNT/AMEMBASSY TASHKENT 6816
RUEHTA/AMEMBASSY ALMATY 5172
RUEHAH/AMEMBASSY ASHGABAT 5613
RUEKJCS/OSD WASHDC
RUEKJCS/JOINT STAFF WASHDC
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUCNDT/USMISSION USUN NEW YORK 2327
RUEHGV/USMISSION GENEVA 5696
RUEHUNV/USMISSION UNVIE VIENNA 1169
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/NSC WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 04 KABUL 001201 

SIPDIS

DEPARTMENT FOR SA/FO, SA/A, EB
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR AADLER, JNELHYBEL, SHAMROCK

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECPS EINV ECON PREL OPIC EAID PGOV AF
SUBJECT: Afghanistan: Ambassador Gross Promotes
Transparent, Competitive Telecom/ICT Sector Growth

REF: (A) Kabul 497 (NOTAL)
(B) 05 Kabul 3803
(C) 05 Kabul 3728

KABUL 00001201 001.2 OF 004


8

UNCLAS SECTION 01 OF 04 KABUL 001201

SIPDIS

DEPARTMENT FOR SA/FO, SA/A, EB
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR AADLER, JNELHYBEL, SHAMROCK

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECPS EINV ECON PREL OPIC EAID PGOV AF
SUBJECT: Afghanistan: Ambassador Gross Promotes
Transparent, Competitive Telecom/ICT Sector Growth

REF: (A) Kabul 497 (NOTAL)
(B) 05 Kabul 3803
(C) 05 Kabul 3728

KABUL 00001201 001.2 OF 004


8


1. (U) Summary: Ambassador David Gross, U.S. Coordinator
for International Communications and Information Policy
visited Afghanistan February 25-27, 2006 to meet with
senior Afghan government officials, including Vice
President Massoud and the newly created Parliamentary
Committee on Communications, as well as private sector
representatives in the information and communications
technologies (ICT) sector. During his visit, Ambassador
Gross emphasized the importance of private investment to
the development of the telecom sector and the need for the
GoA to be consistent and transparent in its policies in
order to encourage further investment. He offered
continued USG cooperation with the Ministry of
Communications and assistance in obtaining technical
support and/or training from countries such as India and
multilateral organizations such as the International
Telecommunication Union. End summary.

--------------
Minister of Communications
--------------


2. (U) Ambassador Gross and Robert Watts of EB/CIP/BA met
with Minister of Communications Amirzai Sangin, whom
Ambassador Gross had met at the World Summit on the
Information Society in Tunis earlier in February. Sangin
was upbeat about the progress of the Afghan
telecommunications sector and praised USG assistance in
this area, especially for the District Communications
Network, which is bringing telephone, internet and fax
service to almost 350 villages in Afghanistan (Ref B) and
for technical assistance in the creation of the independent
Afghanistan Telecommunications Regulatory Authority (ATRA.)
(Note: Both initiatives are being funded by USAID. End

note.)


3. (U) Sangin also appreciated U.S. Trade and Development
Agency (USTDA) assistance on the GoAs fiber optic ring
project (Ref B) which included approximately USD 500,000 in
funding for a feasibility study and technical assistance in
preparation of the project bid package. The Ministry asked
for USTDAs further help in monitoring project
t
implementation. Sangin noted that the GOA is still
evaluating bids for the award of the tender, but plans to
move forward on the first phase shortly. Sangin hopes that
the completion of the ring will allow Afghanistan to be a
transit point for regional telecom traffic and enable
widespread domestic broadband ICT connectivity that would
otherwise not be available.


4. (SBU) Ambassador Gross stressed the need to maintain
transparency in the award process for the ring project. He
also emphasized the need to put to good use the Telecom
Development Fund (TDF) the Ministry has created through a
2.5 percent levy on the net revenue of private sector
mobile service providers, which already totals $5 million.
(Note: Companies contributing to the fund have voiced

KABUL 00001201 002.2 OF 004


concern that it has sat unused and could be a magnet for
corruption within the Ministry. End note.) Ambassador
Gross suggested that this fund could be used for expansion
of rural access to telecommunications, which is a Ministry
priority.


5. (U) Minister Sangin welcomed past support from the
International Telecommunications Union (ITU) and agreed to
work with Ambassador Gross at the World Telecommunications
Development Conference in Doha March 7-15 to seek continued
support from the ITU for capacity building. Ambassador
Gross suggested developing a partnership between ATRA and
the well-run Telecom Regulatory Authority of India, which
the Indian Government has shown an interest in. Ambassador
Gross also noted the training opportunities for Ministry
staff being provided through the U.S. Telecommunications
Training Institute.

--------------
ATRA
--------------


6. (SBU) Ambassador Gross visited the operations of the
Telecommunications Regulatory Board, which will formally
become ATRA on March 21, and met with its newly appointed
members. ATRA has 75 employees and is hiring 30 more to
manage spectrum and licenses for Afghanistan's telephone
network, wireless providers, 150 FM stations and 50 TV
stations. It will also set regulatory policy and will
therefore have a substantive impact on the growth of the
telecom sector (Ref A.)

--------------
AfghanTel
--------------


7. (U) Ambassador Gross met with Jamal Noorzai, CEO of
State-owned AfghanTel, which runs the District and
Government Communications Networks and provides fixed line
telephone service (Ref B.) As of January 10, full mobility
of service has been authorized for its previously limited
wireless local loop networks and AfghanTel is busy
developing its network in preparation for a full roll-out.
AfghanTel was corporatized in September 2005, the first
step on the road to privatization. Ambassador Gross
stressed the need for a transparent, competitive sales
process in order to ensure that the GOA receives maximum
revenue for the company.

--------------
First Vice President Zia Massoud
--------------


8. (SBU) Ambassador Gross met with First VP Zia Massoud,
accompanied by Ambassador Neumann. While Massoud voiced
support for free market principles, he expressed
frustration with still-poor ICT services in remote areas.
He reported that he had recently met with UAE state telecom
monopoly Etisalat, which has offered $300 million to
acquire AfghanTel and promised to expand service to the
entire country. Ambassador Gross warned that if the long
planned sale is not conducted by an open competitive
bidding process, the GOA will likely forgo significant
revenue, questions would be raised about transparency that

KABUL 00001201 003.2 OF 004


could damage the confidence of other potential investors in
the sector, and the public confidence in the GoAs broader
state-owned enterprise privatization process would suffer.
(Note: Ref A notes

--------------
National Assembly Communications Committee
--------------


9. (U) Ambassador Gross met with the newly formed Meshrano
Jirga (lower house) Communications Committee of the Afghan
National Assembly, chaired by Khalid Farooqi. The hour
long exchange was lively; some committee members clearly
understood the role of competition in ensuring quality
service and low prices for consumers, while others,
including Vice Chair Kohi, called for an entirely state-run
system. Ambassador Gross emphasized that private sector
competition is the best way to foster competition and that
a properly used TDF could be used to help subsidize service
to remote areas. He also stressed the need for cooperation
between the Committee and the rest of the GOA in building
communications systems so that members can communicate with
constituents.

--------------
Ministry of Women's Affairs
--------------


10. (U) Ambassador Gross toured the Cisco Networking
Academy at the Ministry of Women's Affairs and met with
Minister Dr. Masouda Jalal. Cisco has set up three
Networking Academies in Kabul through a Global Development
Alliance with USAID. Women account for 32 percent of the
1000 students enrolled annually country-wide. Ambassador
Gross visit to the academy and talk with the students was
widely covered by the Afghan media.

--------------
Private Sector Players
--------------


11. (U) Finally, Ambassador Gross had the opportunity to
meet with U.S. private sector players involved in ICT in
Afghanistan. Roshan CEO Karim Koja gave a readout on
private sector concerns with GOA policies. Roshan and
competitor AWCC, both mobile service providers with U.S.
equity (Ref C,) have jointly protested what they feel is
excessive GOA telecom (or ICT) sector-specific taxation.
Their tax burden currently includes a Business Receipts Tax
(BRT) that is ten percent of net revenue, a licensing fee
of an additional ten percent and a TDF fee of 2.5 percent.
The companies are negotiating a joint settlement that would
cap their tax burden at 14.5 percent. Koja also emphasized
private sector concerns with the privatization of
AfghanTel, which both Roshan and AWCC insist must result in
the settlement of AfghanTel's contractual interconnection
liabilities to the private operators, estimated at USD 5-7
million. Both companies also emphasized that if AfghanTel
is licensed as a mobile operator, it should be treated
equally to the private sector licensees.


12. (SBU) COMMENT: Ambassador Gross visit and message of
support for private sector investment and transparent,
competitive GOA policies in ICT was timely. The well-

KABUL 00001201 004.2 OF 004


managed Ministry of Communications, under the leadership of
technocrat Sangin, has recently come under pressure by GoA
interests who believe that mobile telecom providers are
earning excessive profits or who see transparent
privatization tender discipline as limiting opportunities
for rent seeking and corruption (Ref A.) Post welcomes
follow-up by EB/CIP/BA on promised support to the GoA and
will continue to encourage the GoA to be consistent and
transparent in its telecom and ICT policies in order to
promote further investment in this dynamic sector of the
Afghan economy.

Norland