TELECOM IN TAJIKISTAN: SCENE-SETTER FOR USTDA CONFERENCE IN

UNCLAS SECTION 01 OF 02 DUSHANBE 000430

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND EINV ETRD PGOV TI
SUBJECT: TELECOM IN TAJIKISTAN: SCENE-SETTER FOR USTDA CONFERENCE IN
ALMATY

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1. (SBU) SUMMARY. While Tajikistan's presence at the upcoming
US Trade and Development Agency Telecommmunications Conference
in Almaty will be thin, the vibrant and competitive Tajik
telecom sector continues to attract both consumers and foreign
investment. Nine major companies serve approximately 800,000
mobile customers throughout the republic. Success brings
unwanted attention as well - President Rahmonov capriciously
decided to tax telecom companies on the importation of
equipment; and the Ministry of Transportation and Communications
has plans to create a single gateway to control digital traffic.
The government-owned land-based monopoly Tajik Telecom
struggles to keep up, despite official market interference.
Undeterred, the entrepreneurial Tajik cellular phone operators
debate pricing structures and "third generation" technology.
END SUMMARY.


2. (SBU) The Tajik Ministry of Transportation and
Communications is unlikely to play an active role at the April
3-5 conference in Almaty. Abdurahim Ashurov, head of the newly
combined Ministry and former Minister of Transportation, leaves
telecommunications issues to his deputy, Beg Zuhurov. Post
actively sought Zuhurov's participation in the conference, but
presidential administration reticence to allow travel by any
high-level ministerial personnel halted this opportunity. In
his stead, Nurinisso Boboeva, the Soviet-thinking head of the
Ministry's International Department, will attend, along with
Rahmonali Hasanov, General Director of Tajik Telecom, and Anora
Zakirova, Director of the Agency of Communication Regulations.
No private Tajik telecom operators plan on attending, due to a
lack of understanding of how the conference might help them.


3. (U) Major improvements in the country's telecommunications
infrastructure continue, however. According to recent news
reports, Kazakh Telecom is opening a representative office in
Dushanbe for the purpose of installing a fiber-optic network
connecting Kazakhstan and Tajikistan through Kyrgyzstan,
potentially extending to Afghanistan and Pakistan. (Comment:
Ironically, this occurred on the same day that Kazakh Air
indefinitely cancelled its Almaty-Dushanbe flight. One step
forward, two steps back. End Comment.) Under an agreement
signed in December 2006, China Development Bank will provide a
$73 million long-term loan to improve telecommunications
services in Tajikistan. The loan will be used to purchase
modern equipment for TK-Mobile and Tajik Telecom. The European
Bank for Reconstruction and Development is supporting
modernization of the country's telecommunications network
through investment in new digital switching and transmission
equipment in Dushanbe and regional centers.


4. (U) Foreign direct investment drives the development of
telecommunications services in Tajikistan through joint
ventures. The leading companies include: Indigo Somoncom,
Indigo Tajikistan, and Skytel - U.S.-Tajik joint ventures;
TK-Mobile and M-Teko with China; and Beeline and MegaFon with
Russia. The sprawling Tajik system functions on several
standards, including GSM, AMPS, CDMA450, CDMA20001X, 3G-UMTS and
3G. A liberal mobile licensing policy and comparatively low
market entrance cost have driven the rapid growth of cellular
operators and related competition between wireless standards.
Other contributing factors include the low penetration rates in
both fixed-line and mobile communications, and the rapid growth
in disposable income.


5. (U) An active telecom association regularly brings
together the heads of the Tajik cellular operators to discuss
pricing plans, government interference, and interoperability.
Operating within a culturally suitable brand of communal
capitalism, cellular companies set standard prices for

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connecting with each other. At an Embassy-hosted telecom lunch
February 21, EconOffs listened as all the major operators
discussed moving away from the "Receiving Party Pays" and
"Mobile Party Pays" models to the "Calling Party Pays" model,
which would make landline phone users pay for connecting with
cellular customers.


6. (U) As revenues in the telecom sector in 2006 approached
$70 million, the Tajik government moved to clamp down on the
industry by creating a Unified Communication Center. The center
would make all calls flow through a centralized system, allowing
the Ministry of Interior or other secuirty services to monitor
telephone calls, and supposedly increasing tax revenues.
Starting in early 2006, the cellular operators have vehemently
opposed reducing the efficiency of the network while removing
their customers' protections. The government backed off, but
has not entirely abandoned its goals to control more tightly the
flow of information -- and revenue.


7. (SBU) Comment: Despite the absence of top telecom-policy
makers, post believes the Almaty conference will provide the
Tajik officials a more Western-oriented viewpoint on regulating
the telecommunications industry, something sorely needed in a
Soviet-minded bureaucracy that is not yet part of the
information age. Meanwhile, the enormous potential for
expansion makes telecom one of Tajikistan's few appealing
investment sectors. End Comment.
JACOBSON