Telecommunications:

U.S. companies will find opportunities in resuscitating Iraq's telecommunications ("telecom") sector. There were as of April 2003 less than three phones for every 100 people. The state-owned Iraq Telecommunications and Posts Company is the sole provider of both landline telecom and postal services in Iraq. Given the current state of Iraq's telecommunications infrastructure, quickly establishing a functioning telecom system in Iraq is an economic development priority. The World Bank estimates that in 2004, telecom rebuilding will need $1.04 billion, and from 2005 through 2007, the sector will need $2.3 billion. At the Madrid Donors' conference on Iraq, a goal of increased teledensity to 10 percent was set for 2007. To reach it, private investment will be required.

Since the fall of the Hussein regime, sales of satellite receivers and other digital equipment has been explosive. Anecdotal evidence points to thousands of DVDs, CDs, Digital Video Broadcast equipment, and media players making their way to Iraq. Harris Corporation recently won a $96 million contract through the Department of Defense to restore Iraq's media outlets, including its television networks.

CPA Order # 11 provides for the Iraqi Ministry of Transportation and Communications to be the licensing and regulatory body for all commercial telecommunication services in Iraq. The PMO Communications RFP can be found on the Program Management Office website at www.rebuilding-iraq.net.

Since May 2003, CPA has reinstated telephone service for 52,300 subscribers, and continues to make progress in restoring service to customers, especially in Baghdad. There are now 635,000 active telephone subscribers in Iraq, giving a penetration rate of 2.5 percent. CPA has repaired 16 telephone switches since May 2003. Six switches out of 203 are still inoperable. ITPC is now fully crewed and equipped at all of these switches and is able to connect as many as 2000 lines per day per switch. The satellite gateway for international calling is fully operational, however ITPC continues to block outgoing calls. Inbound calls are being received.

The Communications Minister announced the winners of the competition for mobile licenses in late 2003. The northern region license was awarded to Asia-Cell, a Kurdish Iraqi company. An Egyptian company, Orascom, won the central region license. A Kuwaiti company, Atheer, won the license for the South. Cell phones are now being distributed and the network, although now small, has begun to function.

Two hundred sixty-three post offices have been restored and are now functioning. Estimated daily mail volume at the Central Post Office is 1,000 pieces per day. The CPA has completed the assignment of 10,000 radio frequencies for the Iraqi police forces.

There are opportunities for U.S. firms to establish Internet access in Iraq. Since the previous Iraqi regime considered the Internet a direct threat to the status quo, it was scarcely available. The State Company for Internet Services has 60,000 subscribers, of which only half were operating before the war. Internet centers charged a $55 annual membership fee and Iraqi companies had to pay between $2,500 and $8,000 per year to install the Internet in their offices. Computer equipment was also restricted, with only 15 percent of the population thought to be able to use a computer. Dramatically increasing the number of computers in Iraq and accelerating Internet access throughout the country will facilitate economic development in Iraq.