Nowruz, Daily Newspaper, No. 146, Sep. 27th, 2001, Page 10
Author : Bahman Ahmadi
Word Count: 4542
Minister of Communications and Modern Technology Dr. Seyyed Ahmad Motamedi believes that slow trend of privatization in the communications sector in Iran is due to the fact that the sector has been under control of government for over 80 years. He maintains that if there is a place in the world where someone can have two-way international communications without control of and permission from the government, we will be the second one. By the end of the Third Five Year Economic Development Plan (March 2000 - March 2005), the number of Internet users in Iran will have reached 15 million. At present, networks in 74 Iranian cities are ready to be inaugurated and 70 centers all over the country have been connected to fiber optic.
Seyyed Ahmad Motamedi
Q: Privatization is one of the most important goals of the Third Five Year Development Plan and the government. It seems that this issue has not been given any attention in the communications sector. We are now on the second year of the Third Development Plan while there is still no sign of privatization in the Ministry of Communications and Modern Technology. Have nothing been really done in this respect or something have been done but its news have not leaked out?
A: We as officials in charge of the Ministry of Communications and Modern Technology believe in the Third Plan law and privatization. Perhaps, the special status of the ministry and frequent replacements of communications minister last year is one of the obstacles hindering the enforcement of privatization program. But since I was appointed to this post in last April, I have announced that privatization is on my agenda. So far we have received four procedural bylaws on privatization from the cabinet ministers. At present, I can say for sure that there is no specific problems or hindrances to the enforcement of privatization in the communication sector. We announced in June this year that we would cede pager as the first service to the private sector and we are now studying qualifications of bidders to announced the final winners in a month. Preliminaries have been taken for other sections and for some of them we have employed domestic and foreign advisors. Of course, the privatization of communications sector is different from that of other sectors because communications have been under full government monopoly for 60 years and post for 80 years, with only a small parts of the job being transferred to the private sector. We lack a reliable private sector or highly competent private company in this sector whereas we have more capabilities in the construction and industry sectors compared to the communications. Under such circumstances, if we cede a complicated network such as communications to a private sector that enjoys good financial status but lacks necessary expertise and experience, that company will certainly make loss while people will not receive satisfactory services. Furthermore, this needs a highly accurate instruction manual from technical point of view. In some advanced countries, there are instruction manuals containing up to 1,500 pages on connection of networks in the private and public sectors. Of course, in easier sections such as Internet and coffee-nets, efforts are underway to completely privatize networks of ministries such as ASP (suppliers of Internet services). Even, we have made necessary predictions for formation of private firms for this purpose in remote cities and towns by offering financial assistance to them. For privatization of the communications sector, we have divided capitals into three small, medium and large categories. Coffee-nets and postal service offices have been allocated for those possessing small capitals which will be responsible to render services to telephone and mobile subscribers as well as postal services. It has been predicted that there will be thousands of applicants for running these offices. For those with medium capitals, we intend to authorize them to offer telephone services and ASP (suppliers of Internet services) while those possessing large capitals will be permitted to offer mobile services. The last section needs a large amount of capital and have to pay high license fees and for this reasons, foreign companies are likely to be more successful than domestic ones which lack such high financial capabilities. In the last meeting of the Privatization Committee, it was decided that those sections that need huge investments should be tendered and companies participating in the tenders should be categorized in terms of their capital, manpower, equipment and experiences and in later stage and with completion of the procedural manual such jobs will be ceded to the private sector without any monopoly right.
Q: So, you have actually been at the stage of preparing procedural manual and no practical measures have been taken in this regard.
A: Yes. No practical steps have been taken in any of these sections. Moreover preparation of the procedural manual is a practical step towards privatization. However, we will certainly release necessary public notices for various sections as of next month until the end of the current Iranian calendar year (ending March 2002).
Q: In parts of your remarks, you said foreign companies could be active in offering mobiles to the private sector and for technical reasons they are likely to be winners in international tenders. Are there not any legal problems in this respect?
A: If foreign companies register in Iran or have partnership with an Iranian firm, there will be no specific legal problem. Moreover, the regulations that exist in the communications sector for foreign companies are like those in other sectors and the door is not closed to foreign investment. Necessary preparations have been made for this purpose and so far many applications have been received.
Q: Which companies for example?
A: I had better not mention any name. But these companies have been from Germany, Italy and France. We have notified to them to be ready until we prepare the procedural regulations.
Q: You said you have employed some advisors for transfer of some sections of the communications sector to the private sector. I want to know whether these advisors are Iranian or of foreign nationals.
A: We have used domestic advisors for certain sections and in other fields we have employed foreigners. We have launched a six month long plan in cooperation with the International Telecommunications Union (ITU) which is now nearing its completion. The plan includes the issue of privatization and the ITU experts are helping us in this respect. We will make use of domestic and foreign advisors if necessary from now on.
Q: It is said that a company has been set up and registered with the joint investments of the Industries Development and Renovation Organization, the Mostazafan and Janbazan Foundation (the Foundation for the Oppressed and Disabled War Veterans) and Sa-Iran (Iran Electronics Industries) to get a share in those parts of the communications sector to be ceded to the private sector. This company will be state-run in nature and not a private one. Is this true? Don't you think your statements that there is no reliable and acceptable communication firm in the Iranian private sector, strengthen this rumor?
A: I know nothing about this issue but what is of great importance to us is acting according to the law. If the said company is considered as a non-governmental entity by the law, it can participate in all tenders and if it is a state-run firm or is governmental in nature, it cannot get involved in this field. However, if the company is registered as a private one we cannot legally prevent it from entering into such activities. At any rate, we will not give any special advantage or concessions to such companies. It is sometimes said that state-run firms enjoy special advantages and but in response to these remarks I hereby announce that we will not give any concession to anyone. I, however, think that they will not be able to compete.
Q: With whom they should compete? You said we do not have a creditable private sector.
A: It will be established. Besides, because activity in the field of mobile needs high technical capabilities and huge investments, I don't think the company you mentioned will be able to engage in this field. Therefore, it seems that it will be necessary to make use of foreign companies in this respect. But as far as telephone services are concerned, domestic companies are able to render such services. No need to say that commissioning and offering mobile services in all Third World countries are carried out by foreign firms. Of course, in tendering such projects, we will take into account the national interests of the country and will not grant the plan to every company or bidder. This is because the issue is very sensitive and we must take the views of experts and cabinet ministers into consideration.
Q: It is said that certain top officials of the Islamic Republic of Iran have taken position against use of Internet and as a result the Ministry of Communications and officials of the Iranian radio and television have been instructed to impose some restrictions on the use of Internet. Is this true?
A: The macro policies concerning the use of information and Internet networks were outlined by the Leader of the Islamic Revolution (Ayatollah Ali Khamenei) one or two months ago. These policies are clear and transparent and he (the Leader) emphasizes the use and development of Internet. There is no officials in the Islamic Republic of Iran who may not believe in the development of communications networks. This is one of the priorities of the government of President Mohammad Khatami. I personally have not met any high ranking official who may be opposed to the development of communications networks. As for restriction as mentioned by you, can you name a place in the world where there exist no restrictions. There are a series of limitations in every part of the world. The liberal governments of Europe and the United States have enacted accurate and clear regulations for imposition of restrictions. They have very serious and tough regulations on security issues. In our country, we are now facing two extremist ways of thinking. Some believe that there should not be any restriction on the development of the Internet network at all because some domestic firms will benefit from lack of such regulations in order that they can do whatever they wish to do. Unfortunately, there have been some instances of this which caused some security problems for the country. What is the matter is the health of the society. There is another way of thinking which believes in absolute monopoly and absolute restriction. In this case, only a few specific people can have access to the network. We are opposed to both ways of thinking and believe in the development of the network. For this reason, we are to raise the total number of network users to 15 million by the end of the Third Economic Development Plan. At present, networks in 74 cities are ready for inauguration. We have cut the prices nearly by half and removed advanced payment requirement. While believing in development of network legally, at the same time we announce that there do exist certain restrictions.
Q: Development is something but how to use the network is something else. Will some restrictions be imposed in these fields?
A: There are not too many restrictions and they are like those imposed elsewhere in the world. There are almost no restrictions on coffee-nets and ASP except for a permit the applicants must get. However, we are sensitive to international telephone contacts. Not every body can engage in this field because there are certain regulations and laws.
Q: Is this due to its incomes?
A: No. Incomes from this sector is not very important to us. The Communications Ministry does not count on Internet incomes for the next few years. The incomes from Internet are nearly null compared to the revenues from other sectors.
Q: So, what is the reason for your sensitivity?
A: This is because of security issues. In every part of the world, making phone calls through Internet is either under monopoly of the state or fully controlled by it. If there is a place in the world where someone can have two-way international contacts without control of or permission from government, we will be the second country of this kind. The ministry's proposal is that the issue should not be monopolized. Both private and public firms should be able to do this. Of course, it is the High Council for Cultural Revolution that will make the final decision in this respect. If someone wants to get a permission, he or she must refer to the High Information Council which functions under the president's supervision.
Q: The High Information Council is not entitled by law to make legislation. Is it?
A: This council functions under the supervision of the government. Eight ministers are members of the council which is presided over by the president. In order for something to become law, it should be referred to the parliament (Majlis) or High Council for Cultural Revolution.
Q: It seems that the High Council for Cultural Revolution is not authorized by law to make legislation. Is this true?
A: This has nothing to do with us. Making decision on where regulations and approvals must be referred to, so as to become law, rests with the president himself. Moreover, it has been common for the High Council for Cultural Revolution to make legislation on matters related to itself. Wherever, we need legislation, we will refer to the president.
Q: It is said that the Islamic Republic of Iran's Broadcasting (IRIB- radio and television organization) is one of the sponsors of the Internet. Is this true?
A: No. We are strongly opposed to this measure of the IRIB. Their activities must be within the limits of the radio and television organization. Establishing two-way communications is among the duties of the Communications Ministry. In all bylaws (so far approved) all these duties have been entrusted to the Communications Ministry. Of course there are certain people who hold contrary views but we are fully opposed to this. Nothing has been approved to the effect that the IRIB can function like a ministry. This is not a common practice elsewhere in the world. Internet is part of the ITU (International Telecommunication Union) which has named this year as the Year of Internet.
Q: In May this year you promised that both the price and speed of Internet would change, but it seems that the speed of the network has not increased and the price has remained unchanged.
A: No. It is not so. The speed (of the Internet) has increased and the prices have declined. Pushing down the prices required that a series of measures be taken one by one which have been completed, leading to an up to 50 percent reduction in the prices. Advanced payment requirement has also been removed. Before this, applicants had to pay 200 million rials as advanced payment. Now we have removed this requirement and cut down subscription fees by 40 to 50 percent.
Q: Does this apply to ASPs?
A: This applies to all those applying for access to the Internet. This has served to increase the number of applicants. The speed of the network has also been increased.
Q: But this is not tangible in case of Internet users!
A: No, it has changed. I myself as an Internet user very well feels the change in the network speed.
Q: But this change is not tangible for most of people and users!
A: I am sure their problem emanates from their telephone lines. So far, we have spent over 1,000 billion rials on the network and have connected 70 centers in the country with the fiber optic. At present, we have no problem in Tehran. A two way 150 megabyte line with high speed is now active between Tehran, Isfahan and Shiraz. We have increased the speed of international communications lines from 44 to 88 megabytes and the figure is to increase by 155 megabytes by the year end. I am sure that by the end of the current Iranian calendar year (ending March 21, 2002) we will have had the strongest Internet network in the region. Before cutting down the prices, there were no applications for ASP in the southern Province of Hormuzgan but at present we have received 17 applications for ASP in that province.
Q: Suppliers of Internet and ASP services claim that no consultations have been made with them in compiling bylaws although you said they were being looked at as a guild and that you should at least have more cooperation with them.
A: We have compiled bylaws for coffee-nets in cooperation with their guild. The secretary of the High Information Council is in contact with them. We are now helping them emerge as an independent guild. Contrary to what some may believe, we look at them (coffee-nets) as our colleagues. We believe that the Internet sector is the biggest job creating center in the private sector.
Q: But some believe that in compiling the bylaws, no attention had been paid to their views and experiences.
A: We cannot release public notices for compilation of each and every bylaw in order to collect the views of others. The views are quite clear. The guild issued a bylaw which we used it temporarily. Moreover, we have proposed to the High Council for Cultural Revolution that the guild be entrusted with the task of issuing permits to applicants. Of course, our proposal has not been approved by the High Council for Cultural Revolution despite being already passed by the High Information Council. We believe that we should render financial assistance to applicants in other Iranian cities. Meanwhile, we are likely to further cut down on the prices in the future. When we are connected to the international fiber optic network in the next few months, the cost price will be much lesser than satellite communications.
Q: It is said that the Microsoft company of the U.S. is to send a satellite to the space in the next one or two months which will enable Internet users throughout the world to get connected to the international network by means of a dish which is much smaller than those used for receiving satellite TV programs. In that case there will be no need for applicants to refer to your ministry for this purpose. What will be your reaction to this?
A: If we can offer better and less expensive services to our customers, they will not need to use satellite.
Q: The radio and television organization (IRIB) had made similar claims about TV programs but in practice something else happened.
A: The IRIB never authorized use of satellite TV channels.
Q: Yes. But people are now using it and this is on the rise.
A: We do not want this to happen again in case of Internet. We believe in the development and promotion of the network and like many other countries we will impose restrictions on its negative points.
Q: Your excellency, Mr. Etemadi, the radio and television organization offered similar reasoning for its drive to confront and compete with satellites but it has not gained any success. Despite increase in the number of IRIB channels, the demands for use of satellites are on the rise.
A: You are trying to forcibly convince us that we will impose restrictions.
Q: Let us not call it restriction but technological progress will prepare the ground for everybody to get connected to the international network without having to refer to your ministry.
A: Everybody can do this if he or she wishes to do so.
Q: What will you do in return?
A: If someone install a two-way satellite dish, we will certainly prevent him or her. Nobody is entitled to have two-way contacts without referring to us. It will be easy for us to control this from technical point of view. If someone embark on installing a two-way antenna, it will be easily detected by our devices and equipment. TV satellite dishes are one-way antenna because they only receive TV waves and this is why they cannot be controlled. Moreover, it is none of our business to control TV satellite dishes. I am in charge of the communications of the country and our policies are the same as the government's. If we want to prevent someone from installing unauthorized two-way antenna, we will certainly do so. Anybody wishing to use it can get a permit from us. We had already made a proposal to this effect.
Q: You mean you have suggested that people can use satellite dishes after referring to you?
A: Not people. Companies can do this. However, I can assure you that people will not do this because in that case the cost price for them will be five times as much the price we are now offering them. Restrictions will be imposed on only commonplace sites. We are sure that no one else will be able to compete with our services. Our motto is 'cheap services with high quality'.
Q: Mr. minister, have you happened to make a call by your mobile and hear this message that 'access is denied'?
A: It makes no difference for a mobile to make a call with someone a meter away or two kilometers away. It by itself cannot establish contact rather it should pass several stages in order to establish contact. Like many other people, I have had such an experience and heard such a message.
Q: What do you think is the reason for mobile subscribers to get different results by changing their positions by a few meters while talking on the phone?
A: There is no doubt that mobile network in Tehran has some problems. Since we started our work in last February, we have increased capacities of Tehran network by between 36 and 61 percent. Based on statistics, we have managed to increase the speed of operation five folds. There have been no flaws in installation of equipment and we have expected the situation to improve since last March.
Q: Why did it not improve?
A: The problem arose from imperfect design. The advisor, we employed, using latest foreign software and existing data on the Tehran mobile network, reached the conclusion that the design had been imperfect. When the plan was launched in 1994, there were some flaws in the system. Of course, the technology and equipment chosen and used were completely up to date in the world at that time. The initial plan was based on 100,000 lines but later the number increased to 300,000 and then to 800,000. There existed no comprehensive plan to this end which could be used as the base for development of the network. No plans were enforced to improve the network either. This has resulted in us not being able to locate proper place for erection of our antennas. The advisor has opined that many of the existing antennas have to be displaced. There are many frequency interventions. The directions of antennas have not be chosen correctly and there are some problems with some network softwares. On the one hand, we are sorry why the initial design was defective and on the other we are glad that we have detected the main problem to a large degree. We have launched efforts to improve the network and our experts are working round the clock in three consecutive working shifts to remove problems. Of course, the problems arising from frequency interventions and redirection of antennas can be solved quickly but relocation of the antennas need more time. Simultaneous with this, we are now busy compiling a comprehensive plan for the Tehran network.
Q: When do you think these problems will be solved?
A: I will announce the exact date after the advisor gives us his final view. In political affairs it is easy to announce a date but in technical and engineering affairs telling the time is the task of experts. However, I guess that the foreign advisor will most probably confirm the domestic advisor's viewpoints. Three months after we receive the advisors' views, we will witness an improvement in the status of the network. Of course, such an improvement will not be one hundred percent but rather fifty percent at least. Afterwards, we will begin accepting new subscribers in accordance with the network capacity.
Q: You mean the prices are artificially high now!
A: No. The real price is what is offered on market. We deliver mobile at a lower price than its market value. No doubt that the prices will go down after new series of mobiles are delivered to applicants. We do not insist at all on keeping the prices stable. We sometimes ask ourselves this question whether our mobile and its related services are cheap or they are expensive compared to other countries of the world. According to a report released by the International Telecommunications Union (ITU), Siemens company of Iran is offering the least expensive services among 75 countries of the world. Of course, some countries either receive advanced payment or receive nothing at all, but their monthly subscription fee is very high. We are going to use two pricing methods for our services in the future, or in other words, we will remove advanced payment requirement but increase subscription fee.
Q: What did happen to the Zohreh satellite project?
A: Discussions on this satellite date back to 1986. Of course, the project has many proponents and opponents. So far we have paid 20 million dollars for renting some points on it. Based on a decision approved by the Majlis and National Security Council, we, too, are in favor of the implementation of the project and we are now passing through its final stages. We have also picked the company that is to put the satellite on the orbit.
Q: What is the name of that company?
A: I cannot reveal its name. It is now at the stage of signing contract. Although we enjoy necessary authorities to finalize the contract, due to the sensitivity of the issue, we have preferred to let the government make the final decision. The contract will probably be finalized this year.
Q: What is the reason for opposition to the project?
A: Some do not consider it to be economical and some experts and members of parliament believe that it has no justification. Of course, the price to which we and the foreign company have agreed is economical. Moreover, the parliament (Majlis) has permitted us to buy at least one of our desired points on the satellite in case the price turn out to be uneconomical.
Q: How much is the final price?
A: Let me not disclose the final price because the contract is in its final stage. We have not even revealed the price for the parliament. However, it is very reasonable and much less than those initially offered.