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[] WPO 15.05.03 MCI To Begin Rebuilding Of Iraqi Phones,

Washington Post
May 15, 2003
Pg. E1

MCI To Begin Rebuilding Of Iraqi Phones

U.S. Awards Contract For Small Network

By Christopher Stern, Washington Post Staff Writer

American telephone giant MCI has been awarded a contract to build a
small mobile phone network in Baghdad as the United States takes an
initial step to rebuild basic communications in a city ravaged by two
wars and 11 years of severe economic sanctions.

A working phone system is largely absent in much of the Iraqi capital,
apart from limited grids of wired networks. Many Westerners, including
military personnel, aid workers and journalists, have had to rely on
satellite phones, which typically do not work indoors. Even before the
most recent U.S. bombing, Iraq's telecommunications resources were
scarce and unreliable. Analysts estimate that the prewar telephone
network was capable of serving only three out of every 1,000 people.

Given the rudimentary state of telecommunications, there is growing
impatience in Iraq with the pace of the work to install a new system.
Sources at the Office of Reconstruction and Humanitarian Assistance have
begun complaining that MCI has fallen behind schedule in getting even a
relatively small system of 5,000 to 10,000 phones up and running.

Sources said the Defense Department, which awarded the contract, never
specified a completion date but the company had informed the government
that it should be able to finish by next month.

MCI spokeswoman Natasha Haubold said the company has been waiting in
line to ship the necessary equipment to Iraq but given the priority of
other humanitarian aid, such as food and clothing, the first delivery of
its gear was not completed until last week.

"We are on schedule for implementation in June," Haubold said.

MCIis a division of WorldCom Inc., which filed for bankruptcy protection
last year after disclosing a massive accounting scandal. WorldCom
expects to emerge from bankruptcy later this year and operate under the
name MCI.

The U.S. government has continued to be the Ashburn-based
telecommunications company's biggest customer throughout the current
scandal and bankruptcy process. Although it no longer operates a
wireless network in the United States, MCI played a role in getting a
similar mobile phone network into operation in Afghanistan.

Sources declined to comment on the value of the Baghdad wireless

Initially, telecommunications companies such as Lucent Technologies
Inc., Motorola Inc. and Qualcomm Inc. had hoped that the U.S. government
would award a far larger contract to rebuild most of Iraq's
telecommunications infrastructure. But Bush administration officials
earlier this month decided to leave that decision to the incoming Iraqi
government. Analysts have estimated that it may cost at least $900
million to put a state-of-the-art telecommunications network in place.

Speculation about a major telecommunications contract began to build in
March when Rep. Darrell Issa (R-Calif.) attacked the Defense
Department's plans even before they were disclosed.

Issa called on the Pentagon to award the contract to a company that
would use a wireless standard developed by Qualcomm, a
telecommunications firm based near his Southern California district.
Issa then introduced a bill that would have effectively required any
company that won the contract to use Qualcomm's Code Division Multiple
Access (CDMA) standard.

But sources confirmed yesterday that MCI's network would use the Global
System for Mobile Communication (GSM) standard that is more widely used
around the world, particularly in countries that neighbor Iraq.

Issa had been particularly critical of GSM because it was developed in
Europe by a consortium of countries including some nations, such as
France, that had opposed the U.S. invasion of Iraq.

"Obviously, we are disappointed that they didn't use a predominantly
U.S. technology," said Issa's chief of staff, Dale Neugebauer.

Neugebauer questioned the wisdom of awarding the contract at the expense
of U.S. taxpayers.

"There is tremendous commercial interest in building a cell-phone system
in Iraq and very little need for investment by the U.S. government,"
said Neugebauer.

Staff writer Peter Slevin contributed to this report.

Olivier Minkwitz___________________________________________
Dipl. Pol.
HSFK Hessische Stiftung für Friedens- und Konfliktforschung
PRIF Peace Research Institute Frankfurt
Leimenrode 29 60322 Frankfurt a/M Germany
Tel +49 (0)69 9591 0422  Fax +49 (0)69 5584 81                         pgpKey:0xAD48A592
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