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R 030915Z JUN 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 0076
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INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 MONROVIA 000435 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/W AND EEB/CIP/BA 
 
E.O. 12598: N/A 
TAGS: ECPS EINV ECON AORC LI
SUBJECT: LIBERIA: CELL PHONE COMPANIES FEND OFF REGULATOR 
 
REF A)  MONROVIA 165 
    B) 07 MONROVIA 987  Telecom Act 
 
¶1. (SBU) Summary:  Since passage of the Telecommunications Law a 
year ago (ref B), the Liberia Telecommunications Authority (LTA) has 
demonstrated a lack of sophistication in regulating the sector.  The 
Embassy, with other international partners, has raised concerns with 
the GOL regarding LTA's heavy-handed approach, which has the 
potential to discourage new investors and limit the willingness of 
current firms to invest in new technology.  There is a temporary 
truce in the LTA's high-profile campaign to raise money from the 
four cell phone companies, and the President has assured us 
everything is under control.  However, renegotiating GSM contracts 
has not yet begun and we are concerned that in addition to tainting 
the investment climate, LTA's crude approach may hamper growth of 
the sector and development in other areas such as access to fiber 
optic cables or universal access (Ref A).  End summary. 
 
The Imperial Regulator 
---------------------- 
 
¶2. (U) The Liberia Telecommunications Authority (LTA) is conducting 
a very public campaign to extract huge fees from Liberia's GSM cell 
phone companies.  The first salvo, in early April, was a demand from 
LTA Chairman Albert Bropleh for $150,000 within less than a week 
from each company as a "license application" fee.  As the cell phone 
companies all have valid licenses they saw no reason to pay such a 
fee.  The disagreement deteriorated to a campaign in the press 
designed to convince Liberians they are being cheated by the cell 
phone companies.  The cell phone companies have responded in kind, 
with full page ads and placing articles suggesting that LTA demands 
will lead to higher charges. 
 
¶3. (SBU) Embassy Monrovia has had first-hand experience as a target 
of LTA's efforts to secure unrealistic payments; during the POTUS 
visit in early February, LTA presented the Embassy with an 
unsubstantiated charge for $40,000.  (We bargained them down to 
$22,000.)  Bropleh is using similar tactics with the private sector. 
 
 
Independence equals Impunity 
---------------------------- 
 
¶4. (SBU) The 2007 Telecommunications Law (Ref B) established LTA as 
an independent regulatory agency under the policy guidance of the 
Ministry of Posts and Telecommunications, with a top priority of 
standardizing existing GSM licenses.  While there is ambiguity on 
the status of the GSM licenses, (Ref B) World Bank telecom experts 
who advised on the legislation tell us the existing licenses remain 
valid until they are renegotiated and that the renegotiation is 
intended to be collaborative.  (Note:  according to the law, LTA was 
supposed to have concluded renegotiation and standardization of the 
licenses within 90 days of passage of the law.  End note.) 
 
¶5. (SBU) While LTA's crude fundraising campaign reflects the lack of 
regulatory experience, the fact that these tactics can be conducted 
without check from other GOL agencies indicates a troubling weakness 
in the emerging regulatory framework.  LTA's lack of consultation 
with the industry is mirrored by its lack of consultation within the 
GOL, including with the Minister of Posts and Telecommunications, 
who has responsibility for policy oversight.  In an April 16 meeting 
with the Ambassador, the Minister of Posts and Telecom noted the LTA 
has said it reports only to the President.  MPT is trying to engage 
the LTA commissioners and be more aware of regulatory initiatives. 
In a May 13 meeting with the International Contact Group on Liberia, 
after a month of acrimonious media exchanges and a legislative 
hearing, President Sirleaf described LTA's tactics as "just working 
things out," and noted that the problem had been resolved. 
 
Private sector investment is essential 
-------------------------------------- 
 
¶6. (SBU) During the April 16 meeting at MPT, the Ambassador noted 
that a healthy and profitable GSM sector is important to Liberia's 
continued growth.  As payments to the GOL from cell phone service 
providers increase, the government could dedicate some of the 
revenue to providing universal service.  Sharply increased license 
fees for LTA, by squeezing profits, will reduce tax payments and 
investment.  Ambassador added that it is important that there be a 
strong firewall between the regulator (LTA) and the proposed 
state-owned Liberia Telecommunications Corporation (LTC), or it will 
undermine confidence.  The MPT officials said they see LTC as the 
backbone of the telecommunications system but realize it will need 
to be privatized at some point.  (Comment:  We are skeptical of GOL 
assurances that LTC will not compete with the private sector.  A 
"national security" justification for special treatment for LTC has 
been made by some in the GOL.  End note) 
 
Comment 
 
MONROVIA 00000435  002 OF 002 
 
 
------- 
 
¶7. (SBU) The GOL is right that all agreements signed by the 
transitional government ought to be reviewed and harmonized. 
However, despite physical security problems and the need to 
self-generate electricity, the GSM companies built an efficient and 
competitive sector in a country with no land-line phones, and 
extremely limited access to other communications.  They contribute 
8% of GDP and 18% of the budget but are under siege from the 
regulator-turned-revenue-agency. 
 
¶8. (SBU) Chairman Bropleh, his most experienced commissioner, and 
the Minister of Posts and Telecom, have been invited to attend the 
regional ICT conference in Accra July 8-10.  We hope exposure to 
more experienced regulators and industry best-practice may have a 
seasoning effect on his leadership.  LTA's aggressive tactics 
continue the tradition of focusing on large, successful firms for 
revenue and reflect the lack of internal GOL coordination.  While 
the GOL can make a credible case for the presumption that any 
agreement signed by the 2003-2005 transitional government is flawed, 
Liberia has a critical need for GSM revenue and for future 
investment, and LTA's tactics jeopardize both. 
 
BOOTH