US embassy cable - 03DUBAI2696

C O N F I D E N T I A L  DUBAI 2696 
 
 
E.O. 12958: DECL: 06/27/2013 
TAGS: PGOV, PREL, PINR, IR, TC 
SUBJECT: IRANIANS EAGER TO JOIN THE INFORMATION AGE, BUT 
TEHRAN HAS SECOND THOUGHTS 
 
1. (U) CLASSIFIED BY ACTING CONSUL GENERAL JOHN LANCIA FOR 
REASONS 1.5 (B) AND (D). 
 
2. (C) SUMMARY: IRANIAN USE OF THE INTERNET AND CELLULAR 
COMMUNICATION IS RAPIDLY EXPANDING AND THE TREND LOOKS SET 
TO CONTINUE. CONOFF SPOKE WITH A SOFTWARE ENGINEER AND AN 
INTERNET/TELECOM COMPANY OWNER IN MAY ABOUT IRANIAN USE OF 
THE INTERNET AND MOBILE PHONES. THEY INDICATED THAT BOTH 
BUSINESSES ARE GROWING STEADILY DESPITE IRAN'S POOR 
INFRASTRUCTURE. THE REGIME, HOWEVER, MAY BE HAVING SECOND 
THOUGHTS ABOUT THE FREE FLOW OF INFORMATION. IN MID-MAY 
TEHRAN TOOK MEASURES TO CURTAIL ACCESS TO SOME WEBSITES IT 
DEEMS IMMORAL OR THAT DISSEMINATE ANTI-REGIME POLITICAL AND 
SOCIAL VIEWS, BUT THEIR EFFORTS MAY PROVE FUTILE. CONOFF 
POLLED IRANIAN VISA APPLICANTS IN MAY AND JUNE ABOUT THE 
IMPACT OF THE GOVERNMENT FILTERING AND FOUND MOST 
INTERVIEWEES' USE OF THE INTERNET UNAFFECTED BY THE NEW 
MEASURES. MOST OF THOSE SURVEYED SAID THAT FILTERING MAY 
PREVENT THEM FROM LOOKING UP SPECIFIC SITES ASSOCIATED WITH 
PROMINENT IRANIAN DISSIDENTS OR PRO-REFORM NEWSPAPERS, BUT 
IT WAS HAVING LITTLE IMPACT ON THEIR ABILITY TO GET NEWS 
ABOUT CURRENT EVENTS IN IRAN, WHICH FOR THEM WAS MORE 
IMPORTANT. END SUMMARY. 
 
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IRANIANS LINING UP TO DIAL UP 
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3. (C) URBAN IRANIANS ARE CLAMORING TO BE CONNECTED TO THE 
INTERNET AND IRANIAN BUSINESSES ARE STEPPING IN TO MEET THE 
RISING DEMAND, ALTHOUGH NOT WITHOUT OBSTACLES. CONOFF SPOKE 
WITH A SOFTWARE ENGINEER AND THE OWNER OF A SMALL INTERNET 
COMPANY IN TEHRAN IN MAY TO GAIN INSIGHTS INTO IRAN'S LEAP 
INTO THE GLOBAL INFORMATION AGE. ACCORDING TO THE U.S.- 
TRAINED SOFTWARE ENGINEER, IRAN'S INTERNET SERVICES ARE 
DOMINATED BY A HANDFUL OF LARGE COMPANIES, ALTHOUGH A 
NUMBER OF SMALL COMPANIES ARE SURVIVING DUE TO SHEER DEMAND 
VOLUME. THE ENGINEER SPECIFICALLY MENTIONED PARS ONLINE, 
WHICH IS PATTERNED AFTER U.S.-BASED AMERICA ONLINE, AS ONE 
OF THE BIGGEST AND MOST RELIABLE PROVIDERS OF INTERNET 
SERVICES IN IRAN. THE OWNER OF A SMALL INTERNET COMPANY IN 
IRAN SHARED HIS VIEWS ON THE BUSINESS ENVIRONMENT FACING 
TELECOM COMPANIES IN IRAN. HE SAID HIS COMPANY WAS ONE OF 
HUNDREDS IN TEHRAN THAT WAS SEEKING TO CAPITALIZE ON THE 
BOOM IN INTERNET, CELLULAR, AND CALLING CARD SERVICES IN 
IRAN. HOWEVER, HE LAMENTED THE LACK OF PRIVATIZATION WITHIN 
THE INDUSTRY, FOREIGN COMPETITION WITHIN THE MARKETPLACE, 
AND THE SLOW PACE WITH WHICH IRANIAN INSTITUTIONS WERE 
ADAPTING TO LARGE-SCALE USE OF THE INTERNET. FOR EXAMPLE, 
HE SAID THAT IRAN HAS NO E-COMMERCE CAPABILITY, WHICH 
PREVENTS IRANIAN BUSINESSES FROM ADVERTISING AND 
CAPITALIZING ON THE HUGE GROWTH IN INTERNET USE. HE 
CONTINUED BY SAYING THAT IRANIAN BANKS KNOW OF THE 
TECHNOLOGY, BUT WERE SLOW TO ADAPT, RESULTING IN THE LOSS 
OF MILLIONS OF DOLLARS OF POTENTIAL REVENUE. 
 
4. (C) FOR MOST IRANIANS ACCESS TO THE INTERNET IS EASY, 
ESPECIALLY AMONG THE YOUNG, AND IT IS STEADILY GAINING 
ACCEPTANCE AMONG ALL LEVELS OF SOCIETY. ACCORDING TO THE 
SOFTWARE ENGINEER THE FIRST STEP INVOLVES BUYING A PREPAID 
INTERNET CARD, WHICH ALLOWS IRANIANS TO DIAL UP FROM ANY 
CONNECTED PC AND GAIN ACCESS. THE CHARGE IS RELATIVELY 
CHEAP FOR IRANIANS, ACCORDING TO SEVERAL STUDENTS CONOFF 
SPOKE WITH IN JUNE, RUNNING BETWEEN 2000 TO 4500 IRANIAN 
RIALS (IRR) PER HOUR (.24 TO .55 USD WITH 1 USD = 8170 IRR 
AS OF 23 JUNE 2003). BOTH THE ENGINEER AND THE INTERNET 
BUSINESS OWNER ESTIMATE THAT THERE ARE APPROXIMATELY 2 
MILLION INTERNET USERS IN TEHRAN. BOTH SAID THAT IRAN'S 
TELECOMMUNICATIONS AUTHORITIES ARE PLANNING FOR A SURGE OF 
UP TO 20 MILLION USERS NATIONWIDE WITHIN THE NEXT FIVE 
YEARS. 
 
5. (C) THE BOOM IN INTERNET SERVICE IS HAVING AN EFFECT ON 
RELATED BUSINESS SECTORS, SUCH AS COMPUTER SALES. THE 
SOFTWARE ENGINEER SAID THAT BUSINESS OPPORTUNITIES ABOUND 
IN THE COMPUTER FIELD, SPURRED BY IRANIANS' DESIRE TO BE 
CONNECTED TO THE WORLD. HE CONTINUED BY SAYING THAT THE 
TREND IN GOVERNMENT AND INDUSTRY IS TO COMPUTERIZE, AND 
SIGNIFICANT FUNDS ARE BEING SPENT TO MODERNIZE ALTHOUGH THE 
PROCESS IS MOVING SLOWLY. FOR EXAMPLE, AN EMPLOYEE OF 
IRAN'S CENTRAL BANK SAID THAT CURRENTLY THERE WAS NO 
COMPUTER SYSTEM ALLOWING THE CENTRAL BANK OR OTHER BANKS IN 
TEHRAN TO COMMUNICATE WITH BRANCHES IN OTHER CITIES. THIS 
SHORTFALL SEVERELY LIMITS THE CENTRAL BANK'S AUDITING 
CAPABILITY, AND THE BANK'S MANAGEMENT HOPES COMPUTERIZATION 
MAY SOLVE THE PROBLEM. THE ENGINEER WENT ON TO SAY THAT 
PERSONAL COMPUTERS WERE WIDELY AVAILABLE IN IRAN. MOST 
SYSTEMS RELIED ON IMPORTED PARTS, WHICH WERE THEN ASSEMBLED 
IN IRAN. HE ESTIMATED THE COST OF A COMPUTER TO BE ROUGHLY 
4.1 MILLION IRR (APPROXIMATELY 500 USD WITH $1=8170 IRR AS 
OF 23 JUNE 2003), NOT ENTIRELY OUT OF REACH FOR MIDDLE 
CLASS IRANIANS. HE INDICATED THAT GETTING SPECIALIZED 
EQUIPMENT, LIKE NOTEBOOK COMPUTERS, WAS MORE DIFFICULT, BUT 
A LOT OF COMPUTER EQUIPMENT FROM ASIAN MANUFACTURERS IN 
KOREA, CHINA, AND JAPAN IS FLOWING INTO IRANIAN MARKETS. 
 
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REGIME, OTHER OBSTACLES IMPEDE THE FLOW OF INFORMATION 
--------------------------------------------- --------- 
 
6. (U) TEHRAN'S EFFORTS AT CENSORSHIP OF THE INTERNET 
APPEAR TO BE ON THE RISE. IRAN'S MINISTRY OF POST, 
TELEPHONE, AND TELEGRAPH (MPTT) BEGAN FILTERING THE FIRST 
OF AS MANY AS 15,000 WEBSITES ON 10 MAY, ACCORDING TO 
IRANIAN PRESS. THE FILTERING BEGAN FOLLOWING A DECREE FROM 
IRAN'S SUPREME CULTURAL REVOLUTION COUNCIL, WHICH FORMED A 
THREE MEMBER PANEL COMPRISED OF THE INTELLIGENCE MINISTRY, 
MINISTRY OF ISLAMIC CULTURE AND GUIDANCE, AND THE NATIONAL 
BROADCASTING AUTHORITY TO IDENTIFY PROHIBITED WEBSITES. 
MINISTER OF THE MPTT, SEYYED AHMAD MO'TAMEDI, SAID IN MID- 
MAY THE REASON FOR THE FILTERING WAS TO PREVENT ACCESS TO 
IMMORAL SITES AND TO PREVENT THE DISSEMINATION OF ANTI- 
REGIME POLITICAL AND SOCIAL VIEWS VIA THE INTERNET. 
HOWEVER, DURING THE FIRST ROUND OF FILTERING A NUMBER OF 
DOMESTIC- AND FOREIGN-BASED NEWS SITES WERE SHUT DOWN, 
ACCORDING TO THE PRESS. INCLUDED AMONG THESE WERE POPULAR 
PRO-REFORM SITES SUCH AS EMROOZ, ASR-E NOW, AND AFTAB; 
SITES ASSOCIATED WITH SOME OF IRAN'S MOST WELL KNOWN 
DISSIDENTS SUCH AS DARIUSH FORUHAR AND AYATOLLAH HOSSEIN 
ALI MONTAZERI; AND SOME WESTERN-BASED PERSIAN LANGUAGE 
SITES INCLUDING RADIO FARDA AND RADIO LIBERTY. 
 
7. (C) DESPITE THE REGIME'S STEPS TO BLOCK INTERNET ACCESS 
THEIR EFFORTS MAY ULTIMATELY PROVE FUTILE. ACCORDING TO 
SEVERAL STUDENTS AND PROFESSIONALS CONOFF SPOKE WITH IN 
LATE MAY AND JUNE, THE NEW, STRONGER GOVERNMENT FILTERS 
DEAL SPECIFICALLY WITH POLITICAL AND NEWS SITES TEHRAN 
VIEWS AS ESPOUSING ANTI-REGIME MESSAGES. MOST INTERVIEWEES 
CITED FEW PROBLEMS IN GAINING ACCESS TO MAJOR NEWS 
WEBSITES, SUCH AS CNN OR BBC, TO VIEW CURRENT INFORMATION 
ON IRAN, WHICH, ACCORDING TO THE INTERVIEWEES, WAS MORE 
IMPORTANT THAN HAVING ACCESS TO DISSIDENT WEB PAGES. IN 
ADDITION, SOME IRANIAN OFFICIALS HAVE QUESTIONED THE 
EFFECTIVENESS OF FILTERING, ACCORDING TO THE PRESS. THE 
DEPUTY FOR LEGAL AND PARLIAMENTARY AFFAIRS FOR THE MPTT IN 
LATE MAY SAID THAT CURRENTLY WEBSITES EXIST THAT OFFER A 
WAY AROUND FILTERING AND THE NEW RESTRICTIONS WILL NOT 
PROVIDE A COMPLETE BLOCK OF SITES DEEMED INAPPROPRIATE BY 
THE REGIME. THE INTERNET BUSINESS OWNER OFFERED HIS VIEWS 
ON THE ISSUE, SAYING THAT CENSORSHIP WAS NOT AN ISSUE FOR 
MOST INTERNET SERVICE PROVIDERS BECAUSE THEY USE FIBER 
OPTIC NETWORK CONNECTIONS THROUGH DUBAI TO LONDON, WHICH TO 
DATE HAVE ESCAPED CENSORSHIP FROM GOVERNMENT AUTHORITIES. 
THE ONLY PROBLEMS OCCURRED WITH THOSE PROVIDERS RELIANT ON 
SATELLITE CONNECTIONS, WHICH THE GOVERNMENT COULD MORE 
EASILY INTERRUPT. 
 
8. (C) THE INTERNET COMPANY OWNER, WHO WORKS BOTH IN IRAN 
AND THE UAE, CHARACTERIZED IRAN'S COMMUNICATIONS 
INFRASTRUCTURE AS 'A MESS,' AND A SERIOUS IMPEDIMENT TO 
FUTURE GROWTH OF THE INDUSTRY. HE SAID SERVICE PROVIDERS 
OFFERED ALL TYPES OF SERVICES INCLUDING DIGITAL SERVICE 
LINES (DSL) AND DIAL UP INTERNET CONNECTIONS, BUT OFTEN 
CONNECTIONS WERE UNRELIABLE. HE SAID APPLICATIONS FOR DSL 
CONNECTIONS TAKE UP TO NINE MONTHS FOR INSTALLATION, WHILE 
IN MOST WESTERN COUNTRIES, AND EVEN IN DUBAI, IT TAKES ONLY 
2-4 DAYS. HE SAID THAT MANY NEW BUILDINGS BEING CONSTRUCTED 
IN TEHRAN DO NOT TAKE INTO ACCOUNT POTENTIAL INTERNET 
USAGE. USUALLY, A CONTRACTOR WILL ONLY APPLY FOR 40-50 
CONNECTIONS IN A RESIDENTIAL COMPLEX OF 120 APARTMENTS, 
MEANING ADDITIONAL CONNECTIONS HAVE TO BE INSTALLED. ALL IN 
ALL HE SAID INTERNET SERVICE WAS UNEVEN, BUT THE SECTOR HAD 
POTENTIAL IF ITS INFRASTRUCTURE WOES WERE RESOLVED. THE 
ENGINEER ASSESSED IRAN'S INFRASTRUCTURE AS "OK" WITH NEW, 
FASTER CONNECTIONS BECOMING AVAILABLE. HOWEVER, PROBLEMS 
REMAINED WITH SMALLER COMPANIES WHOSE SERVERS COULD STILL 
BE EASILY OVERLOADED, LEAVING MOST IRANIANS WITH UNRELIABLE 
SERVICE. 
 
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CELLULAR COMMUNICATION IN IRAN: BUSY SIGNALS ON THE RISE 
--------------------------------------------- ----------- 
 
9. (C) THE INTERNET COMPANY OWNER ALSO SPOKE ABOUT IRAN'S 
EXPANDING MOBILE PHONE SECTOR. HE ESTIMATED THAT CURRENTLY 
THERE WERE MORE THAN 1.5 MILLION CELL PHONES IN TEHRAN WITH 
MORE BEING ADDED EVERY DAY. ACCORDING TO IRANIAN PRESS, THE 
MPTT IS UNDERTAKING AN EXPANSION EFFORT NATIONWIDE TO 
INCREASE THE NUMBER OF USERS OF THE MOBILE COMMUNICATIONS 
NETWORK FROM TWO TO FIVE MILLION. THE BUSINESS OWNER 
CONTINUED BY SAYING THAT ONE OF THE MAJOR OBSTACLES TO 
DOING BUSINESS WAS THE MONOPOLY ENJOYED BY THE 
TELECOMMUNICATIONS COMPANY OF IRAN (TCI). PRIVATIZATION 
TALKS WERE CURRENTLY UNDERWAY, AND ACCORDING TO AN IRANIAN 
CONSULTANT CONOFF SPOKE WITH IN JUNE, DEPUTY MINISTER FOR 
PROGRAMMING AT THE MPTT, NASROLLAH JAHANGARD, IS 
SUCCESSFULLY SPEARHEADING THE EFFORT TOWARDS A CONCLUSION. 
THE BUSINESS OWNER CONTINUED SAYING THAT TCI WAS COMPETING 
WITH SMALLER COMPANIES, HAVING RECENTLY SLASHED THEIR 
CELLULAR RATES BY UP TO 70 PERCENT, AND WERE LOOKING TO 
QUASH THEIR COMPETITION BEFORE PRIVATIZATION TOOK PLACE. 
 
10. (C) THE INTERNET COMPANY OWNER ALSO SPOKE ABOUT THE 
CURRENT BUSINESS LANDSCAPE IN THE TELECOM SECTOR, PROBLEMS 
FACING THE INDUSTRY, AND THE IMPACT OF FOREIGN COMPANIES. 
HE SAID THE PROCESS TO START HIS BUSINESS WAS QUITE SIMPLE. 
IRANIAN BANKS OFFERED FAVORABLE RATES ON BUSINESS LOANS AND 
THE GOVERNMENT SUPPORTED NEW TELECOM COMPANIES BY NOT 
REQUIRING THEM TO PAY TAXES. HOWEVER, HE WAS PESSIMISTIC 
ABOUT THE NEXT TWO YEARS BECAUSE THE IRANIAN MARKET WAS 
VIRTUALLY CLOSED AND FEW OPPORTUNITIES EXISTED FOR IRANIAN 
COMPANIES TO EXPAND INTO OVERSEAS MARKETS. ONE MAJOR 
PROBLEM WITHIN THE INDUSTRY WAS POOR PLANNING RELATED TO 
CELL PHONE TOWERS. THERE WERE NOT ENOUGH OF THEM, WHICH IN 
TURN, PROVIDED POOR CONNECTIONS AND NOT ENOUGH COVERAGE FOR 
THE VOLUME OF DEMAND. HE ALSO LAMENTED THE FOREIGN 
COMPETITION IRANIAN COMPANIES HAD TO FACE. CURRENTLY MODELS 
FROM FOREIGN COMPANIES SUCH AS NOKIA AND ERICSSON WERE VERY 
POPULAR, AND COMPANIES FROM CHINA AND KOREA (SAMSUNG) WERE 
DOMINATING THE IRANIAN MARKET. IN ADDITION, EUROPEAN 
MANUFACTURERS SUCH AS NOKIA AND ERICSSON HAD RECENTLY WON A 
CONCESSION FROM TCI TO MANUFACTURE AND DISTRIBUTE SIM CARDS 
UNDER THEIR OWN BRAND NAME IN IRAN, GIVING THEM A STRONGER 
PRESENCE WITHIN THE DOMESTIC MARKET. 
 
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NO HOLDING BACK THE TIDE 
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11. (C) COMMENT: IRANIANS ARE DETERMINED TO LEAP INTO THE 
INFORMATION AGE, DESPITE THE REGIME'S HESITATION, BY FULLY 
EMBRACING MODERN TECHNOLOGIES SUCH AS THE INTERNET AND 
MOBILE PHONES. IRAN IS EXPANDING ITS INTERNET AND MOBILE 
PHONE SYSTEMS WITH THE ONLY OBSTACLE BEING THEIR OWN 
INFRASTRUCTURE. THESE UPGRADES WILL REQUIRE SIGNIFICANT 
INVESTMENTS OF MONEY AND TECHNICAL EXPERTISE TO RECTIFY, 
BUT IT CAN BE DONE. CONSERVATIVE ELEMENTS OF THE 
GOVERNMENT, HOWEVER, APPEAR DETERMINED TO STEM THE FREE 
FLOW OF INFORMATION. THEIR FOCUS IS ON THOSE WEBSITES 
ESPOUSING ALTERNATIVES TO THE CURRENT REGIME, BUT BASED ON 
INTERVIEWEES' ACCOUNTS THEY ARE FIGHTING A LOSING BATTLE. 
TECHNICAL SHORTCOMINGS PREVENT BLOCKING "PROHIBITED" SITES 
ENTIRELY, AND MOST IRANIANS CONOFF SPOKE WITH ARE GETTING 
THE NEWS THEY WANT DESPITE TEHRAN'S EFFORTS. TEHRAN COULD 
EXPAND FILTERING TO INCLUDE MAINSTREAM DOMESTIC AND 
WESTERN-BASED MEDIA SITES OR PROHIBIT INTERNET ACCESS ALL 
TOGETHER. HOWEVER, SUCH STEPS WOULD LIKELY ENGENDER A 
BACKLASH FROM INTELLECTUALS, STUDENTS, AND OTHER MIDDLE- TO 
UPPER-CLASS IRANIANS WHO HAVE COME TO SEE MODERN 
COMMUNICATIONS METHODS AS CENTRAL TO DAILY LIFE. END 
COMMENT. 
 
 
LANCIA