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Is A Telecommunications Monopoly Disconnecting Ethiopia From The Future?

Is A Telecommunications Monopoly Disconnecting Ethiopia From The Future?

Mobile-phone penetration, which averages 70 percent of the population elsewhere in Africa, is closer to 25 percent in Ethiopia, and government control of telecommunications could be to blame for “disconnecting Ethiopia from the future,” according to an editorial in TheEconomist.

Ethiopia is Africa’s last big telecoms monopoly – and it has one of Africa’s last big untouched telecoms markets, the editorial said. Absence of competition has seen a country of more than 80 million lag behind the rest of the continent in an industry that has generally burgeoned along with economic growth.

Yet hopes have always been high that other companies might get a chance in Ethiopia.

About 2.5 percent of Ethiopians have access to the internet, compared with 40 percent in neighboring Kenya, the editorial said.

Ethiopia’s leaders are as keen as any to reap economic benefits of modern telecoms but they fear the political ramifications. Pesky dissidents become even more irritating when wired, the editorial said.

The Committee to Protect Journalists, a New York-based free-speech lobby, said the Ethiopian government conducted a “systematic effort to control all forms of communications” after it passed laws imposing prison sentences of up to 15 years on anyone caught bypassing online censors.

Yidnek Haile, a student in Addis Ababa, was arrested two years ago for showing customers at an internet café how to make online calls.


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Ethiopia has now entered into a $1.6 billion agreement with China’s two leading telecoms-equipment companies to upgrade its network. The deal with Huawei and ZTE will preserve Ethiopia’s state dominance and further put off the opening up of one of Africa’s largest economies, the writer says.

Some saw a deal in 2010 between France Telecom and Ethio Telecom as a step towards privatization and competition. It drove down calling costs but appears to have faltered with the recent departure of Bruno Duthoit, the French CEO, the editorial said. Little further improvement is likely now, said Markos Lemma, a local entrepreneur.

What the Ethiopian government wants from China is cheap loans and more control over its citizens, the writer says. The new deal will provide loans to buy a Chinese-built 4G broadband network for the capital, Addis Ababa, and an expanded 3G network for the rest of the country. A similar deal with the same companies in 2007 expanded Ethiopia’s mobile-phone subscriber base but did little to shorten its digital lag.

Prime minister Hailemariam Desalegn has dubbed the telecoms industry a “cash cow” needed to pay for a rail link to neighboring Djibouti. Ethio Telecom fattens state coffers by more than $300 million a year. Customers grumble that its slogan should be “Disconnecting Ethiopia from the future.”

The government could earn as much as $3 billion from auctioning licences, the writer asserts, but its powerful security services have routinely objected.