Internet, Telecommunications Reform And Economic Development In Haiti

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Roxanne McElevane
Richard Kerby
Edward M. Malloy

SUMMARY

Internet in Haiti
Led by a dynamic private sector, the Internet has gotten off to a relatively good start in Haiti. Its development over the past five years contrasts with the continuing deterioration of the wireline infrastructure of the state-owned monopoly, Teleco.
Two Haitian firms, ACN and Netcom, have installed their own satellite gateways and used spread spectrum radio-communications technology to transmit the Internet to servers, thus bypassing the Teleco system. This Internet access appears adequate for those businesses, institutions and other entities, which have a number of computers to be served and which can afford the $7000-installation charge. ACN and Netcom also provide dial-up access to other customers as well as Internet access for two other ISPs, Globelsud and Companet. A fifth ISP, Hintelfocus, uses the MCI gateway to connect to the Internet. It is estimated that there are 3000 users of the Internet in Haiti.
Nevertheless, wireless bypass of Teleco can only go so far. The ISPs concur that the main obstacle to further development of the Internet is the lack of reliable telephone lines to provide dial-up access. Faced with the disincentive of below-cost tariffing for domestic service and perhaps in anticipation of the privatization scheduled for late 1999, this state-owned monopoly has neglected not only the expansion of its infrastructure but also its maintenance. Only 35,000-to-40,000 of its 60,000 lines is in operation at any time. Moreover in a desperate attempt to protect its plummeting earnings from international calls, Teleco has cut lines to at least one ISP for providing international voice service over the Internet, thus bypassing the phone gateway of Teleco (and its high international tariffs).

Telecommunications Regulatory Reform
The problems of the telecommunications infrastructure are clear to Haitian planners and foreign assistance providers. Underway is a three-prong reform aimed at introducing private investment, competition and adequate governmental regulation to the sector. First, the Haitian government has opened the doors to private wireless telephony providers, thus bringing much needed competition and expansion to the basic telecom infrastructure. The two most prominent entrants have American participation. Comcel has completed a long contractual process and is to begin offering service in early 1999. MCI cooperates in Haitel, a late entrant, which appears poised to begin commercial service by spring, 1999.

The second reform effort is the most challenging: the privatization of Teleco. With an outmoded and deteriorated infrastructure as well as a surplus of tenured workers, Teleco has little to offer a foreign investor except a huge pent-up demand for service, especially in rural areas. Private investors might also be dissuaded by the absence of a reliable and predictable telecommunications regulator who could assure a level playing field. The regulatory agency, CONATEL, frankly admits its inability to control Teleco, manage the spectrum, and determine fair tariffs and interconnection fees. Thus the third reform effort, the reorganization of CONATEL, is critically important to the future of telecommunications in Haiti. With World Bank support, a French firm, Gide-Loyrette Nouel (GLN), is in the last stages of its study of CONATEL's reorganization. One of the members of the Conseil de Modernization des Enterprises Publiques (CMEP), the government planning authority guiding the privatization of state-run enterprises, including Teleco, was open to receiving the comments of the FCC and other USG agencies on the GLN draft study.

Recommendations
With the Government of Haiti (GOH) already embarked in the right direction, USAID should consider over the short term providing technical assistance on privatization, regulatory reform, spectrum management and electronic commerce that complements the ongoing efforts of the World Bank. Worthy of close consideration by the GOH are the internationally accepted principles in the WTO Agreement on Basic Telecommunications Services and the attached reference paper on regulatory reform; e.g., national treatment, the removal of trade and investment barriers, transparency, as well as fair, timely and non-discriminatory interconnection. Recommended for the longer term are USAID-GOH cooperation on Internet applications for development in rural schools, medical facilities and community learning centers.

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