VZCZCXRO6476
PP RUEHMA RUEHPA
DE RUEHFN #0071/01 0561520
ZNR UUUUU ZZH
P 251520Z FEB 08
FM AMEMBASSY FREETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 1719
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 FREETOWN 000071 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EEB/CIP/BA 
 
E.O. 12958: N/A 
TAGS: AORC ECPS EINT SL
SUBJECT: TELECOMMUNICATION IN SIERRA LEONE: MYOPIC POLICY 
AND LIMITED CAPACITY 
 
REF: STATE 9659 
 
1.(U) SUMMARY: While there is great potential in Sierra Leone 
to expand the existing telecommunications sector, government 
policy, particularly related to the nascent internet provider 
industry, is creating hurdles that may prove insurmountable 
for small businesses. High fees excised by the government, 
coupled with unreliable electricity and the difficulty 
obtaining additional bandwidth, are serious impediments to 
the growth of the telecommunications sector in Sierra Leone 
and are indicative of the obstacles the country must overcome 
for Millennium Challenge Eligibility. END SUMMARY. 
 
¶2. (U) Discussions between the econoff, economic assistant, 
and representatives from various telecommunications companies 
revealed a common complaint - the sunk costs related to 
starting and maintaining an enterprise in the sector are 
extremely high. Leasing land from the government, 
constructing or leasing communications towers, and purchasing 
and maintaining generators for a constant power supply are 
all expensive ventures, making it hard for new companies to 
break into a market exhibiting growing demand. For internet 
service providers (ISPs), additional costs related to 
purchasing and increasing bandwidth are also high. 
 
¶3. (U) Cell phone companies are plentiful in Sierra Leone, 
and while the start-up costs are high, many turn a profit in 
short order. Celtel, Comium, Tigo, and Africel command the 
market, though new cell companies are entering the market on 
a regular basis. Sierratel, which is the international 
gateway operator and sole provider of land-line telephone 
service, will be expanding into cellular service shortly. The 
company received loans from partners in India and China to 
allow it to replace equipment and train staff, which will 
prepare Sierratel for the establishment of the Code Division 
Multiple Access (CDMA) wireless network (Note: Sierra Leone 
currently does not have a CDMA network, and its arrival will 
likely greatly improve the quality of cell service in the 
country. End note.). 
 
¶4. (SBU) ISPs, while also facing high costs related to Sierra 
Leone's limited infrastructure, have additional burdens that 
make it challenging to start and expand their businesses. New 
companies must pay high leasing fees to use existing towers, 
and companies seeking to grow are unable to access the 
bandwidth they need from established sources (Note: As the 
international gateway operator, Sierratel should be providing 
additional bandwidth at companies' request. Contacts, 
however, stated that Sierratel lacks the capacity to support 
this need. When such companies then contract other satellite 
systems, they must pay an additional fee to the Government of 
Sierra Leone (GoSL). Thus, small and growing businesses are 
hampered by the lack of infrastructure to provide for their 
bandwidth needs, and feel that they are unfairly penalized 
when they procure those services independently. End note.). 
Also, the National Telecommunication Commission (NATCOM) sent 
a letter to all ISPs on February 14, stating that they must 
pay 
 nearly $40,000 in new fees by March 1, or their companies 
will be shut down. Only one company, Comium, is sufficiently 
diversified in other ventures to afford these additional 
fees.  As one small ISP business representative indicated, 
paying these new fees will result in a higher cost to the 
consumer (Note: Regular customers already pay between $70 and 
$295 per month, depending on the speed of the connection. 
End note.), and will also prevent companies from expanding 
into new services or regions beyond Freetown and its 
surrounds. 
 
¶5. (SBU) NATCOM, a quasi-governmental office, has control 
over bandwidth, licensing, and all government-assessed fees. 
This is a relatively new body, having been formed in 2006 
following the passage of the Telecommunications Act. 
Businesses in the sector, particularly ISPs, feel that NATCOM 
has little understanding of the realities of the business 
world, and seemingly no vested interest in seeing companies 
succeed. The opinion was also expressed that NATCOM is taking 
a myopic policy stance by levying more fees on companies that 
have only just begun to break even, especially if they make 
good on their promise to close those that cannot pay the new 
fees and essentially create a monopolistic market (Comment: 
There are currently no indications that the new fees were 
created as a result of political collusion between NATCOM and 
specific companies. Given the dire fiscal straits the GoSL is 
currently experiencing, it is likely that NATCOM is assessing 
additional charges on a sector they know to be growing and 
assume to be profitable to boost government revenue. End 
comment.). 
 
 
FREETOWN 00000071  002 OF 002 
 
 
¶6. (SBU) COMMENT: While there are a number of opportunities 
for growth in the telecommunications sector, particularly 
with regard to the provision of internet services, current 
policies are posing significant challenges to any expansion. 
The limited capacity in the country, including the lack of 
regular electricity and needed bandwidth, places financial 
and technological burdens on new and established companies 
alike. Assessing fees that put infant enterprises in a 
fledgling sector in jeopardy runs counter to President 
Koroma's pro-business stance, but is unsurprising given the 
GoSL's desperate need for revenue. Bureaucratic obstacles are 
symptomatic of the business climate and, at present, hinder 
government's prospects for Millennium Challenge eligibility 
desired by Sierra Leone's leadership. Balancing the desire to 
support long-term business and technological development 
against the need to provide basic services to the population 
will be a challenge in both the short- and long-term for this 
administration. END COMMENT. 
PERRY