US embassy cable - 04DJIBOUTI488

UNCLAS SECTION 01 OF 02 DJIBOUTI 000488 
 
SIPDIS 
 
STATE FOR JULIE COOPER (EB/CIP/BA); 
STATE ALSO FOR AF/EPS ADA ADLER 
 
E.O. 12958: N/A 
TAGS: PGOV, ECPS, EINT, TINT, ETRD, ECON, CH, DJ 
SUBJECT: RECENT TELECOM DEVELOPMENTS IN DJIBOUTI 
 
REF: PRETORIA 973 
 
1. (U) SUMMARY: Djibouti has begun to market itself 
as a potential hub for trade activity.  It is trying 
hard to bring the country up to speed for the 21st 
century with significant reform and development in the 
telecommunications sector.  Already home to a hub for 
the SEA-ME-WE#3 (South East Asia-Middle East-Western 
Europe #3) transoceanic cable, Djibouti is hoping to 
be the site for bigger, better bandwidth as 
a termination point for the new SEA-ME-WE#4.  The two 
cables serve as connectors for Internet and 
telecommunications between Europe and Asia.  The #4 
cable is proposed to have eight times the bandwidth 
of the #3 cable.  The Government of Djibouti sees 
the #4 cable as a crucial piece in the 
telecommunications development puzzle.  Djibouti 
Telecom is currently preparing a bid and searching 
for the necessary funding that the connection to 
SEA-ME-WE#4 will need. END SUMMARY. 
 
2. (U) Telecommunications and Internet availability, 
connectivity and cost are some of the largest obstacles 
to conducting business in Djibouti.  Despite Djibouti's 
status as home to a large hub in the SEA-ME-WE #3 
transoceanic cable, the country only has a two-Megabit 
information capacity in its connection to the Internet. 
Djibouti currently has 270 access lines for the Internet 
available to individual customers.  These access lines 
have a maximum of 56Kbps connection speed.  Internet 
connections are extremely slow due to the overload of 
these access lines and cannot support most modern 
Internet technology, limiting the possibilities of 
business activities online.  However, Djibouti Telecom 
also offers the option for businesses to lease an access 
line of their own.  If a business chooses to lease an 
Internet access line, the highest bandwidth available is 
256Kbps.  The cost for leasing an access line is between 
US$ 1200 and US$ 2100 per month.  This cost prohibits most 
businesses from affording an access line of their own. 
 
3. (U) The average cost per month for Internet on a 
non-leased line ranges from US$ 16 to US$ 34 per month, 
depending on the plan chosen.  To put this into 
perspective with the Djiboutian economy, the reported GDP 
per capita is US$ 1,200 annually. (Note: This figure only 
includes those listed as citizens and does not factor in 
the fifty percent unemployment rate, meaning only half the 
population contributes to the GDP. End Note.)  These costs 
are prior to the 8.5 cents per minute rate charged for 
local calls, and the seven percent service tax that is 
charged on all telephone and Internet services.  If a 
Djiboutian spent just one hour per day online, the 
per-minute charges would be an additional US$ 153.  After 
all installation, taxes, monthly fees and per minute 
charges are added up and speed factored in, it is evident 
why most business who use the Internet do so only at 
Internet cafes. 
 
3. (U) Telephone lines and service in Djibouti are 
expensive and is considered a luxury to most Djiboutians. 
The average monthly cost for fixed line service is around 
six U.S. dollars.  The real cost is of course the per- 
minute charge.  The above mentioned price of 8.5 cents 
per-minute is a result of a January 2003 fifty percent 
price cut.  Since the option of GSM mobile phones has been 
introduced, with the ability to have less costly pre-paid 
usage, a number of people have requested cancellation of 
their fixed line, and opting instead to only use mobile 
phones.  Currently, Djibouti Telecom has approximately 
9,500 fixed lines available and 23,000 GSM service 
subscribers.  The actual number of fixed and GSM lines 
available is much lower.  The current overload of the 
telephone system causes connections to be unreliable and 
difficult to obtain, especially when dialing 
internationally.  International rates range from 90 cents 
per minute for Djibouti's immediate neighbors to $3.39 
per minute, with calls to the U.S. and most of the French- 
speaking western world falling in the $2.26 per minute 
category. 
 
4. (U) Djibouti Telecom is currently in negotiations to 
expand its bandwidth on SEA-ME-WE#3.  The company 
recently announced an increase to four megabits of 
information capacity.  Within six months, information 
capacity will increase to 45 Megs and ADSL service will 
be provided to individuals who want the increased 
bandwidth.  The Chinese government is funding a project 
to build a fiber-optic ring around Djibouti City to 
enhance the network capability of Djibouti Telecom. 
This project is critical to being able to increase the 
bandwidth and proceed with the overall development plan 
for telecommunications.  Though the project is scheduled 
for a completion date of 2005, it got off to a late start 
and a termination date has not been determined. 
 
5. (U) In the long term, a project spearheaded by South 
African Telecom (reftel) plans the construction of an 
Eastern African Submarine System (EASSy) to connect the 
east coast of Africa to the SEA-ME-WE#3 cable, starting in 
Mtunzini, South Africa and ending in Djibouti.  Djibouti 
Telecom has signed a Memorandum of Understanding and 
other preliminary agreements with the other telecom 
corporations along the East Coast.  Scheduled completion 
of this project is 2006. 
 
6. (U) The SEA-ME-WE#4 transoceanic cable is one of the 
most important development projects for Djibouti.  At a 
bandwidth eight-times greater than the #3 cable, 
SEA-ME-WE#4 is the project that would greatly impact the 
speed and quality of telecommunications over the next 
ten to twenty years.  After an unsuccessful negotiation 
last year, Djibouti is in the process of once again 
putting together a bid to the international consortium 
which is constructing SEA-ME-WE#4.  In order to bid on a 
connection, Djibouti will approach the banking community 
in order to appropriate around $30 million dollars in 
funding that access to the #4 cable will require. 
RAGSDALE