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Briefing on the Status of Telecommunication Services in Iraq

Presenters: Linton Wells II, PDASD (Networks and Information Integration)
August 01, 2003

(Briefing on the status of telecommunications services in Iraq. Participating were Linton Wells II, principal deputy assistant secretary of defense for networks and information integration, and Ronald Jost, director of wireless.)

Staff: Good afternoon. I apologize for the last-minute change in the briefing times.

This afternoon we have Dr. Linton Wells, our principal deputy assistant secretary of Defense for Networks and Information Integration. Dr. Wells recently returned from Iraq, where he saw firsthand how services connecting American and Iraqi officials and emergency responders are coming together. Dr. Wells will make a few remarks and then he'll take your questions.

And now, Dr. Wells.

Wells: Thank you. I was in Iraq about two weeks ago. It was an absolutely fascinating experience. Had a chance to learn a lot.

I went out there to try to find information in three general areas.

First, what can we do to support our folks out there on the ground better?

Second, how to understand, again better, the different telecommunications systems that are working in Iraq? There are really three tiers to think of. One is the military tier, which is, you know, again, what the U.S. military is operating on. The next is the Coalition Provisional Authority, or CPA, which really has two different pieces. One is their internal communications, and the other is the way they outreach to their Iraqi counterparts. The third is the reconstruction of Iraq's telecommunication infrastructure.

So with that -- with that as background, I wanted to understand how we could introduce more competition, how we could better move the ball forward in each of those tiers in such a way that promoted the harmonization of them as we went forward. You don't want to have, you know, to simplify, one wind up working on 110-volt and the other working on 220-volt. So eventually these need to come together.

I found that telecommunications absolutely supports each of Ambassador Bremer's strategic priorities. He set five: the security, restoration of essential services, government, promotion of the economy, and bringing in international participants. And again, the telecoms is critical to all of these.

If I were to summarize where we are right now, the military is still largely operating off of the tactical communications that it brought with it to fight the war. And one of the issues that needs to be addressed as we rotate people, begin to set up the rotations of the signal corps people, as we try to make use of the privatization of the Iraqi assets, we can fit that into the military needs as well.

The internal communications of the CPA, I would say, are insufficient, but improving. And a particular problem is regional connectivity. And so people are working very hard to get comms from Baghdad out to the provincial governors.

Some of the ongoing actions: There's a Raytheon contract that provides the internal CPA communications. This is supplemented by the military. There are ongoing contract to increase capabilities. For example, satellite internet terminals are being provided by Northrop Grumman. The Baghdad cellular network is being provided by MCI. Iraqi Forum, which is where the various nongovernmental organizations and Iraqi groups meet, is handled through a contract with Artel.

In addition, a recent DISA contract, Defense Information Systems Agency, for $50 million will provide a much-needed additional capability and also free up the military from their direct CPA support.

In addition to this, DISA is standing up a technical management support office in support of the CPA, so we will have, again, more people with technical backgrounds to support those on the ground forward.

In the future, the Army is going to be assuming executive agency for all of the CPA activities, and of course that will transition to the telecommunications as well.

And sort of turning to the Iraqi civil sector reconstruction, the objective is to return the Iraqi telecommunications system to its prewar capability to enable government operations, but also, and very importantly, to introduce advanced technologies. There were a number of areas in which the Iraqi telecommunications system before the war was significantly disadvantaged, and we don't just want to rebuild that.

Currently, there's limited wire-line telephony services in most major cities. Baghdad itself has minimal telecommunications. Major switches were damaged, but they are under repair. This is important, because most inter-city switching goes through Baghdad, and this limits the countrywide capability until the Baghdad switches are fully up.

Fiber optic lines connecting the cities are being repaired, but there is an ongoing problem with sabotage that's being addressed as it occurs. Thus physical security is still an impediment and an important issue.

An important ongoing action is USAID is working a contract with the Bechtel Corporation to conduct emergency repairs to the telecommunications infrastructure. In particular, they are repairing inter-city connections and doing emergency repairs in Baghdad that allow utilities, hospitals, government offices, schools, et cetera to be able to communicate.

They're also working at the Baghdad International Airport to establish a land-mobile radio service. And the wireless communication public offering -- there was a bidders conference yesterday in Amman, Jordan, that I'll talk about more in a minute.

In the future, we hope to have the wireless contracts awarded, say, by early September. At the same time, we need to recognize that significant additional funds are going to be needed in order to rebuild the civil Iraqi infrastructure. And these are probably going to be resources that will -- it will stretch the limits of the available funds to either the Coalition Provisional Authority or the Iraqi government, and this is an issue that needs to be addressed.

We need to work very carefully at getting an integrated architecture. I mentioned the harmonization of these three pillars. We need to put together an overarching approach that looks at the the devolution of the military from its present tactical communications, the build-out of the Iraqi civil communications, and the merging, if you will, of the Coalition Provisional Authority into one of these two approaches over, say, a year to 18 months.

Security is critical. Not only do we need to protect against the infrastructure sabotage; we need local and national 911 capabilities for first responders, and we are working with the CPA to develop proposals to meet that need.

And then finally, there needs to be a regulatory framework not only to determine how licenses are awarded, how spectrum is allocated -- the sort of things you need to establish a vibrant civil economy.

I mentioned the bidders conference. This was, by all accounts, quite a -- quite an active event. I understand there were over 400 personnel in attendance from several hundred different companies. The bids at this point are due at 10 a.m. on the 14th of August. Key point in this solicitation is that it will be technologically neutral. That is absolutely intended, and we've spent a lot of time working to ensure that there is an equal opportunity for GSM, CDMA, or for that matter, even the future UMTS -- which is also known as wide-band CDMA, or the next generation of GSM -- to have an equal opportunity to compete. The criteria for decision will be best value for the Iraqi people. There will be three regional licenses, and the reason for this is to ensure a rapid roll-out across the country of these capabilities. In other words, the concern was, if you had just national licenses, that would be concentrated in Baghdad or Basra, Mosul, and you wouldn't get the cell phone capabilities out to the smaller cities. The regional approach is intended to promote that.

It's possible there may be some adjustments to the solicitation. They'll be posted to the website in the next few days, but that's where we stand right now. Obviously, out of the bidders conference, you get feedback, and that's what's being considered.

The most up-to-date information is contained on the Web site:  http://cpa-iraq.org.  And if you drill down on that, there's a ‘bid information’ section, and then also, under the Ministry of Transport and Communications, you can find the information about the current state of the bidding.

One thing I would like to point out that we saw -- I think it was a really hopeful sign -- was up in the North -- again, around Mosul -- the 101st Airborne Division is doing extraordinary work between the troops working with Iraqis to reconstruct switches, set up Internet cafes, install fiber optic capability in the local university there. It's really a success story of soldiers working with Iraqis for very economical use of resources to get terrific values.

So with that, please let me take your questions.

Q: Can I ask you, what was the intent of the bar on partly-owned -- partly-state-owned companies from bidding for the local phone licenses? And what do you think the effect of that will be? And also, could you amplify on the feedback that you received from Amman?

Wells: Well, I think we feel that having a significant share of Iraq's telecommunications systems controlled by a company with major foreign government ownership is not necessarily in the best interest of the Iraqi people. At the same time, we feel that through teaming, through consortia, through various kinds of arrangements, a wide band of bidders, including those that have government ownership, will be able to compete within the guidelines of the tender. So, I mean, people have characterized this as: "Oh, my God, it's absolutely excluding, say, the Middle Eastern telecommunications companies because they tend to have a large government presence." We don't see that at all. You need to put together the consortium, or the bidding team, that would address that.

Q: Feedback from Amman?

Wells: Well, the feedback from Amman has been, I think, very positive. There have been people who have asked if this was intended to generate some questions, and there have been questions addressed, including some of the points like you raised. Some questions are, you know, will there be enough in the 800-megahertz band to allow active CDMA participation? Absolutely. Does this unfairly advantage American companies? No, we don't think so because there will be opportunities, as we say, through consortium for lots of different people to apply.

And finally, as I mentioned, there may be some adjustments to the website and the tender here in the next few days. This is all being actively considered by the CPA in Baghdad, and we'll weigh what comes in and see what adjustments are needed.

Q: What do you estimate the cost of all these contracts to be? How much is this going to cost, and where is that money going to come from?

Wells: Well, the money for the contracts will come from the bidders. These are --

Q: No, I mean to pay the people who are going to do the work?

Wells: Well, that's part of -- I mean, when you bid on a license, if you win the the license, it will be the responsibility of the company to pay the people to do the work.

Q: Right, but who's going to pay the contractors?

Wells: Your contractors will pay -- will pay for the licenses and then recover their investment over the 24-month period of the contract through the various fees. And one of the points for example, it's required -- some of the questions we got, for example, is on roaming. It requires that there be interoperability between the different regions and perhaps between adjacent nations if you're in that part of the country. And this was expressly designed to cause bidders to state up front what they would have to do and get their assumptions on the table. Let's say there was GSM in one region and CDMA in another. That has to be thought through before the systems start going in so the costs can be estimated and the bid structures -- the fee structures -- can be designed. So the intent is to make it interoperable.

Q: And the cost of all of this?

Wells: I don't know. Ron, have you heard a total estimate of how much the cost might be?

This is Ron Jost. He's my director of wireless, who's been a key part of this.

Jost: I'm sorry, we don't know the total cost because part of the solicitation is to have the bidders submit what they'll have for coverage, what they'll have for their own infrastructure. And even then, we can estimate the cost from that, but at this point it's their cost -- it's not our cost. We have asked the bidders what the cost would be to a subscriber for a couple of different plans, like we all probably have cell phones, and that will be part of their submission. So we'll know what the subscribers' fees will be, but the actual implementation cost is up to the bidders' needs to meet the coverage and call blockage, call capacity.

Q: Can we just go back to the issue of GSM and CDMA and state-owned companies?

Wells: Sure.

Q: Are the state-owned enterprises that are feeling that they're going to be excluded -- are they just flat-out wrong in assuming that? I mean, everything that I've read or seen about the reactions to the rules have said that these state-owned enterprises seem to feel like they won't be able to participate in this and that it is going to lock in -- it's pretty much going to lock you into a GSM system -- sorry, a CDMA system.

Wells: I think it's absolutely not right. In fact, we've been hearing complaints from the CDM guys saying it's going to lock you into a GSM system. So that suggests it's probably about right. But in terms of the state-owned bidders, we certainly don't want to have a, you know, sole-source bid by a company that's 95 percent owned by a foreign government running one-third of the Iraqi cellular system. On the other hand, it probably would be wise for a consortium to put up somebody who has the regional knowledge, to have at least a member of the consortium who has regional knowledge.

So I really don't think that there's anything in this that precludes a state-owned entity from participating, but they'd have to do it in the consortium in such a way that you don't lead to a dominance of a foreign government owner within the license that they're getting. I’d leave it to the consortium to decide how they do that, but I certainly see no reason why you could not have, as a member of a consortium, say, a regional telecommunications company in the area. But I'm not prejudging that. Quite expressly it was designed to allow for the maximum flexibility in bidding.

I'm sorry, there was one here first.

Q: Sir, what was the extent of the former regime's cell set-up? And if there was any infrastructure left over, are these guys going to be able to build on that?

Wells: There are about 320 cell phone towers around the country. But in point of fact, I understand there was no operating cell phone system except in the far North -- in the Kurdish regions -- before the war. And so yes, those towers and that equipment -- certainly the bidder can take advantage of it.

Q: And a fiber-optic system?

Wells: There's a lot of fiber optic. I mean, the major inner-city routes are fiber-optic. There are some fiber optics, some microwave. But by and large, there's about 3,000 kilometers of long- haul communications, mostly fiber-optic, around the country.

Q: GSA yesterday proposed MCI WorldCom for debarment. How is that going to affect DOD's current and future wireless projects?

Wells: We can continue to execute the contracts that are already in place. If we wish to execute new contracts, that requires a -- I'm sorry -- to wish to extend the contract requires solicitation by the agency head. But basically I see no immediate impact on our existing contracts, and we'll evaluate with general counsel where we go from there.

Ma'am?

Q: You mentioned 911 service. On the wireless systems, are they being required to put in some kind of location-base?

Wells: You mean an E-911?

Q: Yeah.

Wells: I don't know -- I don't think so.

Jost: Not in this phone solicitation. CPA’s running it.

Q: (Off mike.) -- there. That's why I'm saying I was wondering --

Wells: Yeah. The full solicitation package is available on the Web, if you want to take a look at it. But --

Q: Yeah, I -- that's what I -- but when you mentioned 911, I didn't know if that had been talked about in Amman, for example.

Wells: No, ma'am. And it's very important to find a way to tie together, because there are so many dispersed parts of the country, out in the desert borders and things like that -- the first responders and the border patrol and the nongovernmental organizational vehicles and the CPA vehicles. And that's the kind of network we're trying to put together so that you can call from, you know, say, an HF radio in one vehicle, have it trigger a cell phone call to somebody else or a call from a cell phone and have it be able to reach a vehicle, that sort of interoperable network, but not an E-911 to my knowledge.

Q: Just wanted to ask a question of whether the question of legitimacy figures into these bids and contracts. I mean, what assurance that the bidders will have that, you know, that the money that they put up, the investments that they make will -- you know, that they'll have that contract over a long period of time.

Wells: Well, the contracts will be for 24 months. And so the business decision has to be to decide either to recover your investment within 24 months, or estimate, or bet ahead, if you will, that you'll be able to continue. But after 24 months, the Iraqi government in place at that point will have the decision to make whether to continue or whether to start over again or buy out the license. Anyway, so these licenses are only for 24 months.

Q: And is that a realistic period for people to, you know, make an investment and have something to show for it?

Wells: Sure. Sure. I mean, is it shorter than normal? Yes. Can you recover the investment? We think so. And the fact that there were, you know, multiple hundreds of people in the bidders conference suggests others feel that way too. I mean, again, some people are estimating this is an in into a very lucrative future telecommunications market in Iraq, and they may want to make that kind of decision. We're only offering this license for 24 months though.

Q: Sir, how soon will these cell phone systems be up and running?

Wells: Well, if the award is given in, say, early September, the specification actually calls for beginning the roll-out at the end of September, so. So that could be -- and then there are two -- what? two-, four-, six-, 12- and 24- month gates that the bidders have to specify where they plan to be at. There's also incentive for people to roll out faster, because once they've met a series of performance gates in their region, they can then expand their coverage nationwide. And this was part of the incentive to go to the three different regions so that if people, you know, did a good job, not just expanded the coverage but met the quality of service and the user expectations, once they'd filled out the region, they could extent the competition nationwide. So I think it should come fairly quickly.

Q: If a carrier or a bidder were to say they were going the CDMA way, would that mean for the interoperability, say, essentially with the neighbors in the area, they would have to offer dual-mode handsets for GSM? Because my understanding is most of the countries in that area use GSM.

Wells: In their bid, they would have to put together a technical proposal on how they would handle interoperability with either the other regions or the -- you know, or the nation -- or the adjacent nations. If that may turn out to be dual-mode handsets, perhaps. I'm not going to prejudge it -- just that they have to work it through in their bid.

Q: You said security was critical. What kind of security are we talking about? How many people are we talking about here?

Wells: I don't know how many people we're talking about. We're talking about the fact that in some -- in some parts of the country, in remote unattended areas, the fiber optic lines tend to get cut in the middle of the night and things like that. And so, we need to find a way to ensure that that's -- the service is sustained.

Q: So we're going to have to have troops guarding fiber optic lines, or Iraqi police forces or security forces or something --

Wells: I'm not prepared to say it's going to be U.S. troops. Ideally, you'd work with Iraqi authorities to find Iraqi security forces of some sort to do that guarding.

Q: How many of these lines will we be talking about?

Wells: Well, as I mentioned, there are about 3,000 kilometers of lines. Of that, the cuts thus far have been centered in sort of two to four areas -- some in the north around the places where you would expect; around Bayji and Tikrit, and then some in the southwest of Baghdad. So, it's not as though – but we're not talking about every centimeter of 3,000 kilometers. We're probably talking about a few hundred kilometers in a few particular regions.

Q: Okay, so if one part of a fiber optic line in that area was cut, that would be it, right?

Wells: Well, I mean, one of the reasons, one of the advantages of getting this nationwide cell phone service -- or, cell phone service throughout the region, is now you have ways to get around the fiber optic line cut. It may be that you would want to eventually parallel the fiber optic line with, say, a microwave system. It may be you want to have a satellite backhaul from, say, Mosul back to International Gateway in Baghdad, and then have that -- communicate that way between cities. So, you know, under the old system, where there was only one link, the answer is yes; you cut it and that's it. As the system builds out, there will be lots more flexibility.

Q: Have you seen security breached with the systems that you're trying to create right now?

Wells: Security breached?

Q: Have you seen any lines being cut? Have you seen any sort of attacks by guerrilla forces trying to cut lines, or any kind of interference by enemy -- by enemy forces right now?

Wells: Well, yeah, there have been cuts to the long-line systems. And they get fixed, and then they're up for a while, and then somebody will cut somewhere in a similar place or another place. So this is -- I guess what I'm saying is, security of the long lines is not yet stabilized.

Q: You mentioned the fiber optic lines are being repaired. Is the 3,000 miles of lines that existed --

Wells: Kilometers.

Q: Kilometers, sorry. Is that sufficient infrastructure? Is the idea to have the wireless pick up the rest? Or are there any plans to build out the fiber optic?

Wells: Well, that's what I'm saying. We need to understand the total architecture and how much -- how much we want to rebuild the fiber optic backbone. I mean, there are advantages in having a high-speed data backbone, for example. How much you want to rely on cell phone -- how much you wanted to do wireless backbone, say, for wireless Internet and WI-FI and this sort of thing. So there are a number of different architectures, and we haven't settled on the final one yet.

Q: Is the general feeling that there will be a need to expand the fiber optics, or --

Wells: I -- Ron, do you have a sense?

Jost: I think that generally, it probably would be expanded. But at this point, we're going to take it one step at a time. And until the region stabilizes security-wise, we'll keep the fiber the way it is or go inside of the cities with fiber.

Wells: If you look at the loops, there's sort of a -- Baghdad here. There's a loop that kind of goes up into the northwest. There's a series of lines that go out to the west and southwest. There's a loop that goes down to the southeast. And off that fiber optic loop right now, there are a number of cities that don't have any significant landline coverage. So whether those are best -- and if you're talking about a city of 5,000 people, maybe it's better to do it by cell phone. If you're talking about a city of 25,000, maybe it's better to run a landline out there, and that's what we're just trying to sort out.

Sir.

Q: Can I return to the issue of the -- (Inaudible.) -- data and -- (Inaudible.). The rules are that any of these firms that have -- what is it -- more than 5 percent stake held by the government, they couldn't alone bid, but they could be part of a consortium?

Wells: They could be part of a consortium.

Q: Regardless of how much of that company is held by government?

Wells: This is what the CPA needs to work out. And as I say, we've gotten feedback. They're thinking through some things, some adjustments, may be posted on the website, and it's just being worked now.

Q: Could you help me understand who's making this decision, who the group of people are? Is there any Iraqi voice in the decision?

Wells: The group of -- the decisions will be made in Baghdad, and --

Q: By?

Wells: They'll be there, and it'll be done, I think, similarly to the kind of, you know, formal solicitation review board that, you know, we're used to, and I can't say right now what the participation of the group will be.

Q: Would it be somebody from the CPA making the contracting decisions?

Wells: Yeah, the contract will be let through the CPA. Clearly the decision -- all I can say right now is it's going to be made in Baghdad, and the CPA will have a large voice in it, and I can't go further.

Let me take one more question. (Pause.) Or not. Thank you very much. Appreciate it.

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