NEW TELECOM MINISTER IDENTIFIES PRIORITIES,

C O N F I D E N T I A L SECTION 01 OF 03 ALGIERS 001279

SIPDIS

E.O. 12958: DECL: 12/07/2018
TAGS: ECON PREL ETRD AG
SUBJECT: NEW TELECOM MINISTER IDENTIFIES PRIORITIES,
OPPORTUNITIES

REF: A. 07 ALGIERS 1581

B. ALGIERS 190

Classified By: Ambassador David D. Pearce; reasons 1.4 (b) and (d).


1. (C) SUMMARY: Minister of Post and Telecommunications Hamid
Bessalah laid out for us an ambitious internet and telecom
agenda that includes requests for U.S. engagement and
assistance as well as opportunities for U.S. investment.
Bessalah is a first-time minister who assumed his post in the
June 23 cabinet reshuffle, tapped by Bouteflika to address
two key priorities: internet penetration and the
privatization of part or all of Algerie Telecom. Bessalah
told us that a key part of Algeria's vision for the next five
years is to increase the number of trained IT engineers and
to launch portals for e-government and the provision of basic
citizenship services and information. During a November 26
introductory meeting with Bessalah, the Ambassador pointed
out the need to connect university research and development
to the private sector, as occurs in Silicon Valley. Bessalah
was enthusiastic about such avenues of engagement, welcomed
U.S. expertise in making it happen, and stated flatly that he
"saw no future" for Algeria without IT development.
Bessalah's comments about Open Skies are reported septel.
END SUMMARY.

A NEW FIVE-YEAR PLAN
--------------


2. (C) Bessalah began his meeting with the Ambassador by
laying out the goals his ministry would be pursuing as part
of President Bouteflika's new five-year plan, to run from
2009 to 2013. He said the cabinet is in the final stages of
discussing the plan, which would be unveiled "in the very
near future." Bessalah told the Ambassador that the
economics portion will be based heavily on technology, with
an emphasis on telecom infrastructure, particularly broadband
capacity, much of which will be developed through Algerie
Telecom. Bessalah asserted that the government "will
intervene" to subsidize the development of this information
highway, "as it did with the actual highway." E-government
initiatives will also feature prominently in the plan, which
will include online citizen services to enable the government
"to approach the people." In addition to e-government
services, Bessalah said there is a real need for simple
information portals in urban neighborhoods that will provide
information about local events and opportunities. Bessalah
connected these initiatives to the future development and
stability of Algeria, stating that "I cannot see a future
without information technology."


3. (C) Also included in Bouteflika's telecom and IT agenda
for the next five-year plan is the development of e-commerce,
Bessalah said, which will be linked to liberalizing payments
by cards with a chip. The Ambassador pointed out that this
would also help the tracking of terrorist financing, and
Bessalah agreed, adding that this development would have to
come in tandem with protection against cybercrime. Bessalah
said that U.S. firms are known to be strong in the areas of
encryption (PKI) and data protection, and said Algeria would
benefit from this expertise and possible investment.
Bessalah added that Algeria was planning a backup information
center to preserve data, along with a program to finance the
training of both engineers and content providers.

A LAPTOP IN EVERY POT
--------------


4. (C) On the consumer end, Bessalah referred to Bouteflika's
goal of providing each student with an affordable laptop,
saying this was in development through partnership with Intel
and Microsoft (reftels). An additional program to place one
computer in each family was to be accelerated, according to
Bessalah, and said his ministry was looking at ways to
segment the population and aim this effort at particular
demographics rather than at the entire population. He also
said the government would provide assistance to cybercafe
development, to increase penetration and also to promote
internet centers as community spaces and gathering places for
young people. Bessalah said there are currently some 5000
cybercafes across the entire country. In addition, Bessalah
mentioned the technology park under development at Sidi
Abdellah, near Zeralda in the western suburbs of Algiers.

ALGIERS 00001279 002 OF 003


The 100-hectare park is currently under development and is
intended to provide buildings and infrastructure to
accelerate the development of new IT companies and offer an
environment "rich with ideas" for established IT entities.

THE PROBLEM OF EXPERTISE
--------------


5. (C) Algeria can currently produce up to 5000 IT
specialists per year, at two institutes located in Oran and
Algiers. The Oran center focuses on telecom engineering
while the center in Algiers focuses on IT, and both offer the
equivalent of a nationally-recognized Masters degree.
Bessalah explained that training is a serious problem if it
is not then followed by attractive salaries and a job market
to match. The result has been a brain drain, as he said "you
will find lots of Algerian IT experts all over the world."
IT engineers, Bessalah told the Ambassador, do not earn
enough in the public sector, which complicates his task of
modernizing the Algerian government's IT infrastructure.

OPPORTUNITIES FOR THE U.S.
--------------


6. (C) Bessalah said that because of this dynamic, Algeria
needed U.S. expertise at the university level, particularly
in engineering and technology development. The Ambassador
suggested that the key to avoiding the brain drain and
keeping home-grown expertise at home was to link university
engineering and research and development programs to the
private sector, according to the "Silicon Valley model."
Bessalah agreed, saying that Algeria's universities were not
producing a product that connected to the actual job market
and needs of the country. He asked the Ambassador for
assistance in linking the Oran and Algiers training centers
with U.S. university programs.

GUN-SHY ON TELECOM PRIVATIZATION
--------------


7. (C) In the telecom sector, Bessalah noted that low
consumer prices for mobile phone service are the result of a
liberalized market that features three competing service
providers. The sector was opened up by ordinance 2000-03,
which allowed privatization and competition for both fixed
and mobile phone service. Since then, Bessalah's ministry
has crafted different levels of opening in the areas of
licensing, bidding and authorization of service. However,
Bessalah's emphasis on Algerie Telecom's land-line
infrastructure as the backbone for looming broadband
development has also resulted in a protectionist effort to
insulate parts of it from true competition. Earlier this
year, Egypt-based Orascom pulled out of its LACOM land-line
venture after the post and telecom regulatory entity within
Bessalah's ministry refused to grant it more lines. LACOM
had started with an initial 12,000 lines, and had quickly
proved far more efficient at initiating service and billing,
according to our local staff. There is currently no
land-line competitor for Algerie Telecom, as Bessalah
prepares to use it as the vehicle for Bouteflika's
information infrastructure campaign.

COMMENT: BESSALAH'S UPHILL BATTLE
--------------


8. (C) Bessalah is an expert in his field -- a novelty in the
Algerian cabinet that often places political loyalty above
actual knowledge or competence. His vision for Algeria's
info-highway development offers hope, and he is the first
minister we remember seeing actually take notes during a
meeting with the Ambassador. As Bessalah indicated,
Bouteflika is not pleased with the rate of internet
development and we expect that it will be a prominent part of
the next five-year plan currently under consideration by the
cabinet. However, Bessalah seems aware that he will be
swimming upstream, lacking sufficiently trained human
resources to achieve rapid progress. Training 5000 IT
experts per year, he conceded, is not enough, especially when
many of them end up overseas. We will look for ways to use
our exchange programs to provide Bessalah's ministry with
greater detail on the private sector-university relationship
that drove sustainable technological development in Silicon
Valley. Bessalah is a fresh face in Bouteflika's cabinet,

ALGIERS 00001279 003 OF 003


and represents another ministry keen on cooperation, ready to
welcome U.S. experts in the field of information technology
and computer education -- and the English language training
that accompanies it.
PEARCE