CPA TO AWARD MOBILE LICENSES IN IRAQ, OFFICIALS SAY

The Coalition Provisional Authority (CPA) is expected to announce the winners of the 3 regional mobile licenses in Iraq by Oct. 1, officials said at a conference on Iraqi telecom hosted by Information Gatekeepers Inc. (IGI) Mon. in Washington. The selection process turned out “to be more complicated than they thought in terms of the number of bids and the structure,” said Dept. of Commerce Dir.-Wireless Communications Div. Linda Astor.

Astor said the licenses would come from the Iraq’s Ministry of Communications, while the Selection Committee would decide who would be awarded the license. “Now we have a firmer date after going through extensive due diligence,” said Office of the Secy. of Defense Deputy Undersecy.- International Security John Shaw.

The CPA in July issued a request for proposals to provide mobile services in Iraq. It said then it would award the licenses for 24 months for northern, central and southern regions of the country and would require each applicant to bid for at least 2 regions “to encourage broad geographic coverage” and to “enable the rapid rollout of services to the main population centers.” The decision on the mobile licenses, which originally was expected Sept. 5, is now expected to be announced Oct. 1.

Until now, contracts have been awarded to Bechtel ($45 million), Motorola ($15.8 million) for police radio system and Lucent ($25 million) for 13 central offices’ fiber optic lines that had been destroyed during the war, IGI Consulting CEO Paul Polishuk said. He said other contracts had been awarded to MTC for Basra mobile systems, MCI for Baghdad cellular system, Raytheon for CPA mobile communications, Artel for Iraqi forum, Northrop Grumman for Internet in a box, Globe Comm Systems for international gateway and Bearing Point ($9 million) for IT infrastructure. Polishuk said Iraq, with population of 23.6 million people had 675,000 telephones, and the number of mobile users wasn’t available.

Contracting in the Middle East is different from anywhere else, Shaw said. “You wouldn’t put a company together if it didn’t involve elements of the family in it,” he said: “That is a part of a political process that has been accepted for a while… If you think California politics look strange, it’s nothing compared to what we have in Iraq.” In practical terms, he said, there was a “much deeper look [taken] at what was happening with the tenders that were made… at capabilities of strange combinations of people that were making bids” and “at the new [Iraqi] minister and extent to which he and other members of the government were moving themselves to put together these companies.” Shaw said any decision made was “truly political in a sense which enemies you are going to make within the Iraqi political process, which enemies you are going to make within a larger world of U.S. relations with other countries. Where you want to take the heat.” Meanwhile, he said “every day lost until we begin to put communications system in place means that there is a disconnect between military, CPA and… a voting public on the ground… It’s up to us” to try to do it as expeditiously as possible. “There should probably have been a much longer duration of military control,” Shaw added.

Shaw said the fact that a cellular telecom system had been prohibited in Iraq under Saddam Hussein’s regime, “raises a big question mark of where cellular telephony is going to go in Iraq.” Responding to a question on whether mobile systems in that country would be up and running within 2 months after awarding contracts, as originally expected, Shaw said the CPA had given “as optimistic projections as technically seem feasible. The difficulty is that we are not talking about expanding system here, in Washington, D.C.” He said security was one of the main issues for non-Arabic contractors but said: “I know a number of the bidders that have already put together their security systems, so that will be taken care of.”

Dept. of Commerce Dir.-Iraq Reconstruction Task Force Jay Brandes pointed at some positive changes in Iraq, which he said should encourage foreign investment there. He said U.S. and other foreign countries, which used to be prohibited from investing in Iraq, “now will be treated as an Iraqi company if they want to make investment in Iraq” with some restrictions. He said other recent developments included appointment of 25 new interim Iraqi ministers and establishing a Trade Bank of Iraq. “The primary goal of the Trade Bank [is that] it will allow you to conduct business, because most of Iraqi banks are not operational,” Brandes said. He said the Export-Import Bank had proposed a $500 million loan insurance program: “It’s still a proposal and Congress has till the middle of October to act on it, and if they don’t, it automatically goes into law.” He also said the Donors Conference in Madrid Oct. 23-24 “is going to give the donors an idea of what needs to be done to rebuild Iraq and how much it will cost.” He said 300 seats available at the conference would be divided among the coalition partners, and the U.S. would have 20 seats for private companies’ CEOs, which would be selected by the U.S. Chamber of Commerce.

Despite many obstacles, “there has been a movement from a sense of anguish and potential anarchy to the one of order and beginning of a really sizable move forward” in the Iraqi telecom sector, Shaw said. Brandes said out of a total of $2.4 billion U.S. funding provided for initial reconstruction of Iraq, about $41.6 million had been allocated for the telecom sector. Among major challenges, Brandes said, there were: (1) Security problems -- “one of the biggest obstacles of having reconstruction effort moving more quickly.” (2) The legal system. “There are really not that many commercial laws that really promote and support and protect investment,” he said: “That’s the [problems] that will have to be addressed in the future, probably in the next 2-3 years.”