Cablegate: Afghan Regulators Use Telecommunications Development Fund

VZCZCXYZ0001
PP RUEHWEB

DE RUEHBUL #2962 2690926
ZNR UUUUU ZZH
P 260926Z SEP 09
FM AMEMBASSY KABUL
TO SECSTATE WASHDC PRIORITY 1675

UNCLAS KABUL 002962

SENSITIVE
SIPDIS

DEPT FOR SCA/FO, SRAP, SCA/RA, EEB/CIP AND SCA/A
DEPT PASS AID/ANE
DEPT PASS OPIC FOR MORRIS
DEPT PASS TDA FOR STEIN AND GREENIP

E.O. 12958 N/A
TAGS: ECPS EAID EINV PREL PGOV AF
SUBJECT: AFGHAN REGULATORS USE TELECOMMUNICATIONS DEVELOPMENT FUND
FOR RURAL SERVICE EXPANSION

REF: A) 09 Kabul 2020
B) 09 Kabul 2920

1. (SBU) Summary: Following a three-year start-up, the Afghan
Telecommunications Regulatory Authority (ATRA) has begun to use its
$30 million Telecommunications Development Fund (TDF) to expand
telephone and Internet service to rural areas and to educate Afghan
telecommunications professionals. Since the TDF was created through
mandatory contributions from service providers, these companies are
now pushing the Afghan Government to use the fund for risk insurance
against insurgent attacks on cellular towers. The ATRA supports the
idea of having a system to provide risk insurance and has requested
USG assistance in creating the framework. Embassy Kabul will use
the September 26-29 visit by OPIC senior officials to explore
possible USG assistance. End summary.

The TDF: Finally In Use
-----------------------

2. (SBU) Created in 2006 with the help of the U.S. Trade Development
Agency, the TDF was intended to support telephone and Internet
services in Afghanistan's remote areas. All operators contribute
2.5 percent of annual revenues to the fund. As of September 12, the
fund contains roughly USD 30 million, ATRA Chairman Zakaria Hassan
told econoff. (Comment: Government officials have reported the
fund's capitalization consistently at this level for a year, despite
regular telecoms payments. End comment.)

3. (SBU) Chairman Hassan said the fund was first used in August to
build phone and Internet infrastructure in the provinces of
Badakshan, Nuristan, and Uruzgan. Afghan Wireless Communications
Company (AWCC) won the $2.5 million tender, which attracted few bids
due to the project's remote locations. On September 1, ATRA
announced a second tender for additional locations in the same
provinces. Hassan also plans to use TDF funds to construct a
telecenter containing landline phones and computers for public use.
Altogether, he expects to spend approximately $10 million of the
fund's capital on these three projects this year.

4. (SBU) Hassan said ATRA directs TDF project funds to districts
with no phone service and no planned service expansion by telecom
companies. Winning bidders must demonstrate the ability to provide
the greatest increase in service for the least subsidy and are
required to continue service as long as they operate in Afghanistan.
Subsidized providers cannot charge higher rates to rural customers.
ATRA's Universal Access Department manages the fund and the ATRA
board and the Ministry of Communications and Information Technology
(MCIT) must approve all projects.

ATRA Needs Technical Support for Risk Insurance
--------------------------------------------- --

5. (SBU) Afghan operators have asked ATRA to use TDF funds to set up
a risk insurance fund to replace towers damaged or destroyed by
insurgents (Ref A). The ATRA is supportive of the idea and is
willing to help fund such a scheme, but some issues need to be
resolved. For example, smaller operators who focus on the north and
west of the country do not want to subsidize the losses of larger
companies (mainly Roshan and AWCC) in the risky south. Under the
currently proposed plan every company would pay the same premium,
which Hassan believes is unfair. He added strong procedures need to
be in place to prevent fraudulent use of the fund and suggested a
committee comprised of telecom representatives approve each payment
for a destroyed tower.

6. (SBU) The Overseas Private Investment Corporation (OPIC) has
offered to help ATRA set up risk insurance and establish operating
procedures. Hassan requested an OPIC employee come to Kabul on a
short-term basis to help address operating issues. (Note: Embassy
has forwarded this request to OPIC's vice president. End note.) An
OPIC team is visiting Afghanistan September 26 - October 3, and we
will try to use that visit to explore the Afghan request.

TDF-Funded Training Programs Under Discussion
---------------------------------------------

7. (SBU) The MCIT, which oversees ATRA, also approached USAID for
assistance in identifying a partner for the Information and
Communication Technology Institute (ICTI), the State-run university
for technology professionals. Ministry officials seek to develop a
long-term relationship with a U.S. institution to enable student
exchanges and ensure ICTI degrees are recognized in the United
States. They plan to devote TDF funds to this purpose, and to
improve ICTI's facilities and faculty. USAID is investigating
possible partners to prepare a response.

EIKENBERRY

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