TELECOMS: LACK OF ELECTRICITY AND BANDWIDTH

UNCLAS COTONOU 000111

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR EEB/CIP/BA
AF/W FOR DBANKS

E.O. 12958: N/A
TAGS: ECPS EINT BN
SUBJECT: TELECOMS: LACK OF ELECTRICITY AND BANDWIDTH

REF: STATE 9659

1.(U) Summary: In conversations with EconOff, business leaders in
Benin's mobile telephone and internet provider sectors related the
challenges and opportunities they face. The mobile telephone
providers highlighted the lack of a stable power supple and a
saturated market (5 mobile phone providers for a population of 7.9
million) as obstacles to growth. The internet service providers
bemoaned the high prices they pay Benin Telecom, a parastatal
telecommunications company, and the low bandwidth that is available
as inhibiting factors to the development of internet access in
Benin. End Summary.

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Mobile Phones: Where's the electricity?
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2.(U) According to Talibi Haidra, the Director General of MOOV
Benin, a local mobile telephone provider, the major impediment to
the growth of the mobile telephone sector in Benin is lack of access
to a stable source of electricity. According to Haidra, each of his
transmission facilities must have a back-up generator to provide
power during frequent power outages. Additionally, several of the
transmission facilities are located in areas which are not served by
the electrical grid, which requires MOOV to maintain two generators
at each location providing power 24/7. This results in higher
prices for consumers as electrical power is expensive when generated
by MOOV instead of procured from the grid.

3.(SBU) Haidra also cited uneasiness with the GOB's licensing scheme
as a possible impediment to growth. Citing irregularities in the
licensing agreements negotiated by a previous administration, the
GOB annulled the licenses of all of Benin's mobile phone providers
and required re-negotiation of the licenses and additional payments,
in 2007. While Haidra believes the situation has been resolved, he
underlined that such changes in government policies discourages
investment in the sector. Haidra also felt that the GOB, with five
operators for approximately eight million people, had issued too
many licenses with the competition now demanding prices so low that
quality will suffer.

4.(U) Haidra identified internet provision as a possible sector for
growth. MOOV recently began offering internet access over its
network and Haidra projects that he will eventually have around
50,000 customers for this service. Haidra stated that the
manufacturers of the pylons for his transmission antennas and VSAT
equipment were American but he procured the equipment through
regional re-sellers. American companies may have an opportunity to
sell directly to local mobile phone service providers if they
desire.

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ISP's: A lack of bandwidth
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5.(U) Internet access in Benin is provided through three different
vehicles: dial-up, ADSL, and wireless connections. In discussions
with the internet service providers association in Cotonou several
obstacles to improved service were revealed. Internet service is
provided to Benin by fiber optic cable. At present Benin Telecom,
which re-sells the access, subscribes to a 155 mbps connection with
the intention to upgrade to two gbps in April 2008. Benin Telecom
then resells internet access, at extremely high prices, to private
internet service providers, as well as to its own customers.

6.(U) These high prices are passed onto consumers which slows the
growth of the market. For example, a 128 kps ADSL connection costs
approximately 75 USD a month. A one mps connection costs
approximately 1,000 USD a month. Internet service in Benin is also
expensive because of the lack of a local routing system for local
internet traffic. Without such a system all traffic is routed
internationally resulting in higher prices for local internet
service providers. The equipment for such a system has been
delivered to Benin Telecom but the company has not installed it.

7.(SBU) Comment: The major impediments to telecommunications and
internet access in Benin are a lack of electricity for mobile phone
operators and a lack of business acumen at Benin Telecom, the public
telephone company. Problems with the electricity supply await
government intervention to increase supply and the area covered by
the electrical grid. The problems at Benin Telecoms could be
resolved by business leadership which understood the cost benefits
of negotiating a better price for access with its fiber optic
internet provider and then passing on those cost savings to
customers which in turn would drive an expansion in the market and
more profits in the long run. End Comment.