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DE RUEHUM #0328/01 1850035
ZNR UUUUU ZZH
R 030035Z JUL 08 ZDK
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 2325
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHUL/AMEMBASSY SEOUL 3454
RUEHKO/AMEMBASSY TOKYO 3127
RUEHMO/AMEMBASSY MOSCOW 2335
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 03 ULAANBAATAR 000328 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, EAP/EX AND EEB/CIP 
STATE PASS TO USTR, EXIM, OPIC, USTDA 
BEIJING FOR FCS 
USDOC FOR ITA FOR ZGCROSS 
 
E.O. 12958:  N/A 
TAGS: ETRD ECCP BEXP PGOV ETRD EINV ECPS MG
SUBJECT:  EEB/CIP AMBASSADOR GROSS SURVEYS MONGOLIA'S ICT PROGRESS, 
CHALLENGES 
 
ULAANBAATA 00000328  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFIED --NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (SBU) SUMMARY:  Ambassador David A. Gross and Whitney J. Witteman 
of the U.S. Department of State's Bureau of Economic, Energy and 
Business Affairs visited Mongolia from June 21-24, during which time 
they met with senior Mongolian officials involved with setting and 
regulating ICT policies, representatives from the cellular 
telecommunications industry, the Ambassador and embassy officers, 
and visited USAID projects.  Ambassador Gross praised the efforts of 
both the Government of Mongolia and private enterprise to expand 
connectivity to better serve both rural and urban customers, and he 
encouraged the GOM to continue to pursue technology neutrality and 
open Internet policies and regulations that have been so successful 
elsewhere.  Post and Ambassador Gross will consider further efforts 
to expand cooperation. END SUMMARY. 
 
Meeting with GOM ICT Policy and Regulating Agencies 
--------------------------------------------- ------ 
¶2. (SBU) U.S. Coordinator for International Communications and 
Information Policy, Ambassador David A. Gross, and Whitney J 
Witteman, Director for EU, East Asia & Pacific in the Office of 
International Communications and Information Policy, visited 
Mongolia June 21-24.  Ambassador Gross met in separate meetings with 
the Chair and Vice-Chair of the Information Communication Technology 
Agency of Mongolia (ICTA), the Chairman of the Communication 
Regulatory Committee (CRC), and the CEOQ the state-owned 
fixed-line telecommunications company, Mongol Telecom.  The ICTA, 
under the authority of the Prime Minister of Mongolia, develops ICT 
policies for Mongolia and works with public and private entities to 
execute those policies.  Key among these policy initiatives are 
efforts to create more effective fiber-optic links between Asia and 
Europe, using Mongolia as a bridge.  Currently, Mongolia is a 
terminal point for most traffic.  The ICTA, using concepts developed 
from earlier assessments conducted by the Millennium Challenge 
Account (MCA), has sought U.S. investment and management to 
encourage more internet traffic between Europe and Asia flowing 
through Mongolia as a way to generate fees that would go to the 
Mongolian government and the operators. 
 
¶3. (SBU) In addition, ICTA reps articulated their goal of linking 
all Mongolian citizens to both the Internet and telephony.  The Vice 
Chair explained that while relatively high percentages of the 
population had cellular and IT links-for instance, 176 out of 320 
soums (counties) have access to regular, reliable mobile service, 
many rural and sub-urban users in Ulaanbaatar's outlaying districts 
still lacked any sort of reliable links to mobile and Internet 
services provided by the GOM, let alone links to the other 
commercial and non-commercial Internet sites.  These deficiencies 
prevent the GOM from capitalizing on the delivery of open, 
transparent e-government services nationwide.  The ICTA Chair 
concluded by explaining his intention to merge the CRC, the ICTA, 
and other disparate ICT programs into one ministry combining policy, 
implementation, and regulation--a reform that he felt would make 
developing the sector more seamless and efficient.  He explained 
that this merger would be relatively easy to achieve as a broad 
consensus for it existed among the agencies and other political 
institutions. 
 
¶4. (SBU) The CRC Chair echoed most of the ICTA's sentiments. 
However, he strongly disputed the ICTA's claim that the CRC wanted 
to or would willingly accept merging with the ICTA.  Although he did 
not explain his reasons for rejecting such a merger (other than 
general issues of rule of law), it was clear that he did not approve 
of the concept, noting simply that it would not be easy to curtail 
the CRC's mandate.  Its existence as an independent, self-funded 
regulatory agency was established by laws, which would not be easy 
to change.  The transition to digital television (DTV) was also 
raised.  The CRC Chair explained that they are considering moving to 
such a standard in the next couple of years and planned to adopt the 
European DTV standard.  Ambassador Gross noted that the EU's 
standard was certainly usable but cautioned that complete adoption 
and implementation in Europe was years away.  He suggested that the 
Mongolians monitor the U.S. experience implementing the U.S. 
standard, set to occur in February 2009, and he invited further 
dialogue on the subject. 
 
 
ULAANBAATA 00000328  002.2 OF 003 
 
 
¶5. (SBU) Ambassador Gross acknowledged the many challenges faced by 
the GOM as it tries to establish high levels of connectivity in the 
least densely populated country in the world, but praised Mongolia's 
obvious accomplishment in going from essentially zero mobile phone 
and ICT penetration to over 50% in little over decade.  He 
attributed this progress to Mongolia's commitment to competitive 
markets for mobile phone carriers and its open policy on Internet 
traffic (Mongolia, unlike both of its neighbors, does not filter or 
monitor users' online activity) as well as the GOM's stated policy 
of technology neutrality.  Establishing service parameters, and 
allowing users and firms to decide what solutions best meet their 
needs has led to ICT penetration rates that any emerging nation (and 
some developed ones) would envy.  The Ambassador added that the GOM 
was correct to focus on completing its national coverage of high 
speed wireless networks (including mobile phone networks) as they 
would be the most effective way to deliver a full range of IT 
services to currently underserved populations.  Ambassador Gross 
also raised the issue of WiMax in Mongolia.  Both agencies explained 
that Mongolia had awarded licenses to two WiMax providers for 
data-only services and that their licenses did not allow them to 
provide mobile phone services.  GOM officials said they intend to 
issue other high speed wireless or "3G" licenses during the upcoming 
year.  The Ambassador quizzed them on their sense of implications of 
WiMax for service provision, especially in terms of WiMax as 
competitor of existing ICT providers.  The CRC Chairman explained 
that their decision so far to restrict WiMAX licenses to data-only 
was made to protect the initial investment of the firms who 
purchased licenses to operate cell phone networks. 
 
Meetings with Private Industry 
------------------------------ 
 
¶6. (SBU) Ambassador Gross and post hosted lunch for senior 
executives of the three major local cellular service providers, 
Mobicom, Skytel, and Unitel, whose firms collectively control 95% of 
the market.  Mobicom, the largest firm with nearly 65% of the 
cellular market, is also an ISP.  The Ambassador queried the three 
executives about their relations with the ICTA, the CRC, and other 
government entities.  They gave a generally positive assessment of 
the GOM's roll in promoting ICT in Mongolia, noting that it was 
neither restrictive nor particularly proscriptive regarding what 
sort of technologies to use to deliver services consistent with 
their licenses.  Their primary complaint was that occasionally the 
ICTA intervened on pricing decisions, ordering them to lower or 
restrict their prices.  Although they claimed that neither the ICTA 
nor the CRC had a formal legal or regulatory authority to mandate 
price levels (beyond, say, delivering life-line service to poor 
customers), the firms tended to abide by ICTA price level demands. 
They also criticized the CRC for its plan to issue "too many" WiMax 
licenses.  The existing five cellular operators are to receive 3G 
licenses for mobile services; and the CRC plans to auction off 
additional competing wireless licenses.  3G services, including 
WiMax, are ideal for new and potentially lucrative data services and 
the firms expressed a concern that there might be too many entrants 
providing those services as they transition away from current 
businesses models that generate income and profit from providing 
voice services, especially in light of Mongolia having only about 
2.7 million people.  Ambassador Gross acknowledged their concerns, 
but then explained how Indian firms, faced with radically low rates 
for voice services, have begun to provide a range of other services, 
which has boosted their margins.  He advised the firms to consider 
that their dominance in the cellular networks gave them a good 
avenue to provide such services to their markets. 
 
Comment 
------- 
 
¶7. (SBU) Post wishes to express its appreciation to Ambassador Gross 
and Director Witteman.  Key USG aims to encourage Mongolia to 
continue and deepen its open, technologically neutral ICT sector 
were met.  The visit also allowed Ambassador Gross and post to 
identify additional targets of opportunity.  First, Ambassador Gross 
noted that Mongolia and the U.S. share key values and approaches to 
the promoting ICT, and that Mongolia's support for USG positions 
should be enhanced by supporting and encouraging Mongolian 
participation in international fora, such as next January's ITU 
 
ULAANBAATA 00000328  003.2 OF 003 
 
 
meeting in Geneva (to be hosted by the FCC).  Consequently, 
Ambassador Gross and post agreed to encourage high-level visitors to 
come to Mongolia in the upcoming months, to consider and advise on 
funding sources to underwrite GOM travel to important events and 
trainings, and to help Mongolia identify its own ICT needs and 
advise on approaches to satisfying those needs.  In addition, post 
will continue to explore and report Mongolia's adoption of 3G 
technologies including WiMax, as well as examine how committed the 
CRC is to adopting the EU's DTV standard.  Lukewarm support for a 
lagging EU approach may open an avenue for the US DTV standard. 
 
¶8. (U) This message was cleared by Ambassador Gross. 
 
Minton