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