VZCZCXRO7489
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DE RUEHDS #3485/01 3440800
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R 100800Z DEC 07
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 8786
INFO RUCNIAD/IGAD COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ADDIS ABABA 003485 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EEB 
 
E.O. 12958: N/A 
TAGS: ECPS ECON ETRD EINV ET
 
SUBJECT: ETHIOPIA: TELECOMMUNICATIONS SECTOR UPDATE - PART I OF II - 
INFRASTRUCTURE 
 
SUMMARY 
------- 
 
¶1. This is part one of a two part cable on the Ethiopian 
telecommunications sector.  Part one covers current infrastructure 
and future plans while part two covers policy matters.  Meetings 
with Ethiopian telecommunications officials reveal a 
telecommunications and information and communication technology 
(ICT) sector that languishes in a monopoly state.  Ethiopia's closed 
telecom and ICT sector remain underdeveloped, even in comparison to 
other countries in sub-Saharan Africa.  While ambitious efforts to 
upgrade infrastructure are underway, government policies (septel) 
are likely to keep the sector underdeveloped. 
 
¶2. Ethiopia's telecom and ICT sectors lag behind the rest of the 
world, including neighbors in sub-Saharan Africa.  According to 
International Telecommunication Union (ITU) statistics for 2006, 
Ethiopia has 2.01 total telephone subscribers and 1.09 mobile phone 
subscribers per 100 people, the lowest in Africa.  In contrast, 
Kenya has 19.31 total subscribers and 18.47 mobile subscribers per 
¶100.  Even Somalia, suffering from decades of anarchy, outpaces 
Ethiopia on phone penetration with 7.29 total and 6.08 mobile 
subscribers per 100 people.  Similarly, Ethiopia has fewer internet 
subscribers (0.03 per 100 people) than Kenya (0.53) or Somalia 
(0.11).  END SUMMARY. 
 
TELECOMMUNICATIONS INFRASTRUCTURE AND FUTURE PLANS 
--------------------------------------------- 
¶3. Mobile and Fixed Telephony: The Ethiopian Telecommunications 
Corporation (ETC) reports a current subscriber base of 3 million 
fixed and mobile accounts.  Most customers are in Addis Ababa and 
other major cities.  The mobile phone system has experienced growing 
pains, with widespread service outages occurring twice in the two 
week period while Chinese company Zhong Xing Telecommunication 
Equipment Company Limited (ZTE) was launching 1.2 million phone 
lines added for the Ethiopian Millennium in September.  ETC mobile 
users consistently experience "network busy" messages and dropped 
calls. 
 
¶4. SMS messaging, which was discontinued in the wake of the disputed 
2005 elections, was restored for the Ethiopian Millennium 
celebrations in September.  (NOTE: Although ETC Director General 
Amare Amsalu stated that SMS was cut off in 2005 for purely 
technical reasons, messaging was discontinued in a time of civil 
unrest.  Most observers believe that the Ethiopian Government (GoE) 
shut off text messaging to prevent its use in organizing 
demonstrations.  END NOTE.)  An infrastructure  project currently 
underway with ZTE is expected to provide GSM mobile coverage to 85% 
of the country   The GSM expansion is part of a 1.5 billion USD 
overhaul of Ethiopia's telecommunications (see septel) and is 
expected to be completed by 2010.  ETC reports that provision of 
third generation CDMA mobile service will begin soon. Among other 
features, third generation will allow transmission of video over 
mobile phones.  Extensive expansion of fixed line service is not 
anticipated. 
 
¶5. ETC views expanding telecommunications to the rural population as 
its primary mandate.  Rural telecommunications is being expanded via 
fixed wireless service at the village, or woreda level.  ETC's goal 
is universal coverage, which it defines as one phone within 5km 
walking distance.  Of the 15,000 village-level units targeted for 
such fixed wireless service, 7,200 now have coverage in place.  Each 
woreda has at least one dedicated line each  for use by health, 
agriculture and education workers as well as one for public use. 
 
¶6. VOIP:  Voice over Internet Protocol (VOIP) calls are illegal in 
Etihopia, but a large number (estimated at over 100) of internet 
cafes in Addis Ababa currently offer clandestine VOIP service.  VOIP 
service is popular for international calls because of reduced costs. 
 According to ETC and its regulator the Ethiopian Telecommunications 
Authority (ETA), VOIP is prohibited because of a lack of bandwidth. 
  With ETC charging 0.23 USD per minute to terminate an 
international call, VOIP clearly represents potentially significant 
lost revenue for the GoE.  Recent reports indicate that entities are 
illegally terminating calls in Somalia and the Democratic Republic 
of the Congo, costing ETC up to 80 million birr (nearly 9 million 
USD) per year in revenue. 
 
¶7. Internet: ETC is the sole provider of internet service in 
Ethiopia.  Licenses have been granted for "virtual internet service 
providers" which will buy bandwidth from ETC and re-sell service. 
These providers are not yet operative due to bandwidth constraints, 
but ETC Chairman Amare is optimistic that they will begin offering 
service in Addis Ababa within a few months.  Ethiopia has 0.03 
internet subscribers per 100 people, one of the lowest in the world. 
 Most access is provided in internet cafes at a cost of 0.15-0.20 
birr per minute.  Nearly all internet cafes and private users have 
dial-up access at 56k bps. 
 
ADDIS ABAB 00003485  002 OF 002 
 
 
 
¶8. Broadband access, while available, is prohibitively expensive, 
with a set-up cost of over 10,000 USD and monthly charges of over 
5,000 USD for a 2MB leased line (compared to 17 USD installation and 
7 USD monthly for dial-up).  Moreover, Ethiopia's broadband is 
described as "fractured" and provides speeds only marginally faster 
than a dial-up connection.  U.S. company Cisco announced in August 
that it would replace, for free, Ethiopia's broadband connection 
with a ring net fiber optic solution.  ETC expects the upgraded 
broadband to come online in summer 2008.  In the wake of the 2005 
elections, users reported that many websites including 
opposition-oriented sites and blogs were inaccessible using ETC. 
Pro-opposition blogs and websites continue to be inaccessible in 
Ethiopia.  Although ETC denies any blocking, the sites were (and 
continue to be) accessible by using anonymizer websites and proxy 
servers. 
 
¶9. Fiber Optic: There are currently 4,000 kilometers of fiber optic 
cables laid throughout Ethiopia, with another 24,000 kilometers of 
fiber in the country awaiting installation.  Ethiopia's fiber 
network connects at the Sudanese border to the submarine cable 
landing at Port Sudan, which is part of the Fiber Optic Link Around 
the Globe.  There are plans for additional connections to submarine 
cables.  One, a project by U.S. company SEACOM, would land at the 
Somaliland Port of Berbera.  Another, the East African Submarine 
Cable System (EASSy) would land in Mombassa, Kenya and Djibouti. 
Both the ETC Board Chairman Debretsion and ETC Managing Director 
Amare indicated that negotiations are progressing with SEACOM, and 
that project is likely to come online well before EASSy.  According 
to Amare, however, security at Berbera port is a concern. 
 
 
ICT INFRASTRUCTURE AND PLANS 
---------------------------- 
 
¶10. The Ethiopian ICT Development Agency (EICTDA) Head Ato 
Debretsion (who is also the ETC Board Chairman and former Deputy 
Director of the National Intelligence and Security Service) 
highlighted current e-government applications.  Woreda Net is 
designed to provide ICT services such as video conferencing, 
directory services, mail services, voice services, and Internet 
connectivity to the federal-level, regional-level and Woreda-level 
(county-equivalent) government entities.  Ato Debretsion highlighted 
Woreda Net's use in conducting court hearings from rural areas via 
video conferencing.  Additional planned e-government applications 
include agricultural marketing, health and education programs. 
Additionally, EICTDA has preliminary plans to develop an IT park 
where companies can develop software and other applications. 
Debretsion sees potential for Ethiopia to become an outsourcing 
center similar to India.  While the Council of Ministers has agreed 
that ICT is a sector that deserves attention and incentives, the 
details of any incentive package for investors are to be 
determined. 
 
COMMENT 
------- 
 
¶11. The Ethiopian Government's tight controls and insistence on 
being the sole provider of telecommunications and ICT infrastructure 
and service has left the country's telecommunications system is 
woefully underdeveloped.  The low telecommunications penetration 
rate has had had a stunting effect on achieving broader economic 
growth, particularly in rural areas.  With its highly rural, 
scattered and agriculturally-based population, the GoE recognizes 
the need to expand telecommunications to the far reaches of its vast 
territory but insists on maintaining control of modalities for 
implementation.  Currently telecommunications services reach only a 
fraction of the country's 80 million citizens, and most of them are 
in urban areas.  The GoE is undertaking ambitious activities to 
quickly expand coverage, which, if successful, will offer new 
opportunities for economic growth and development, especially in 
rural areas, but without engaging the private sector, progress will 
remain slow in coming.  END COMMENT.