July 2000

Tunisia Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

1.Introduction and Summary

Mr. Ahmed Friaâ, Minister of Communications, announced, that the preliminary results of the technical-economic feasibility study of a Tunisian satellite with integrated service will be presented to the government soon. The minister qualified the first results of this study which were carried out by the space unit of technology suited in the technological park of the communications, as very satisfactory and informed that the Tunisian satellite is suggested to occupy a strategic place on the fixed orbits for purposes of guaranteed broad coverage and provision of good quality services.

Concerning "Tunisie Telecom", the Minister denied any privatization plans and explained that through a public flotation the government aims to follow the example set by the Tunisian Telecommunications Company of firms (Sotetel). Sotetel recorded positive results, a little after its introduction into the Stock Exchange, which pointed out the underlining need for continuing the efforts made to lower the tariffs and improve quality.

Regarding cellular telephony (GSM), the Minister announced that as of next July, he would proceed in the gradual distribution of new lines GSM, parallel to the work of extension in progress, aiming at making the capacity of the network exceed 300.000 lines.

As to the prospects of the electronic commerce, Mr. Ahmed Friaâ declared that the possibilities of the creation of a virtual currency are under examination in coordination with the Tunisian Post office. Furthermore, the presentation of a draft law on electronic commerce in the House of Commons is under preparation.

Regarding the postal services, Mr. Ahmed Friaâ announced the setting up this year of no less than 46 ATM of stamps (DAB) and the promotion of the services of the fast post service, which differ from those of the classical post. The Minister underlined the importance of these services for the industrial firms and claimed that two thirds of the missives sent abroad arrive to the recipients in 24 hours.

Evoking the indices of the infrastructure of the sector of communications, he indicated that the national network has 55 loops of optical fibres which will be operational in 2001 and new transformers giving access to approximately 1.000 post offices, urban and rural. Other indices by the Minister: to increase the number of subscribers to the telecommunications network to the symbolic figure of one million, and to increase the telephone coverage rate to 10,5%, until the end of April 2000. As for the number of the subscribers to GSM network, it exceeded 45.000 while that of the "Internet users", is estimated at 200.000.

The Minister announced on this subject a forthcoming "call for proposal" for the approval of new providers of Internet services (FSI). It should be noted that two operators have governed the private Internet market so far.

(Source: Ministry of Communications)

2. Information Society Policy

2.1 Historical overview and general legislation

The ministerial Council, held on 17th of May, under the presidency of the Head of the State, was devoted to the examination of the Code of the Communication project. This project realizes the recommendations made by the President of the Republic, concerning the updating of the legislation of the sector of communication, within the framework of the Code of telecommunications promulgated in 1977. These recommendations take into account the technological, commercial and organizational transformations within the sector, nationally and worldwide.

The Council reviewed the focal points of this project, which are:

• To guarantee the civil right to communicate and profit from the services provided by the modern networks.
• To ensure equal access to the services of the communications, to all citizens.
• To classify the activities in services and achievements, and to bring into service networks by defining the rights and the duties of all involved parts.
• To provide more flexibility to activities related to the sector and reinforce investments and creation of new jobs.

This project will be elaborate in its final form before it is submitted to the Council of Ministers.

2.2 Telecommunications and Internet

2.2.1 Telecommunications strategy

Mr. Ahmed Friaâ, Minister of Communications indicated that the Tunisian telecommunications strategy is based on three central axes.

The first axis is the guarantee of a modern infrastructure, in particular by developing connections to the world network of Internet and the realisation of a national Internet network structured with the creation of regional poles to improve the transmission quality.

The second axis refers to the legal framework of the sector. The Minister reminded that a draft law on exchanges and electronic commerce was adopted by the Council of Ministers and is currently being submitted to the Houses of Commons. Therefore a new Telecommunications Act will be promulgated soon. The third and last axis aims at making the Tunisians aware of the importance of the Internet and of new technologies.

(Source: Speech of Mr. Ahmed Friaâ, Minister of Communications, at the time of the opening of a national seminar organised by the Chamber of Commerce of Tunisia on "The challenges of the immaterial economy at the dawn of the third millennium")

2.2.2 Tunisia - Japan: Three signature loan agreements

The Tunisian Minister of Communications, Mr. Ahmed Friaâ, and Hirochi Yasuda, CEO of JBIC (Japan Bank for the International Cooperation) signed an agreement under the terms of which JBCI grants a loan of 8,653 Billion Yen, under advantageous conditions, to "Tunisia Telecom". This loan will serve to co-finance several projects of modernization of the national telecommunication system, aiming to diversify benefits and to a greatest cover of the various geographical regions of Tunisia.

2.2.3 Tunisia ties up as a service provider with Thuraya

Thuraya’ s pursuit to offer global satellite telecommunications services to countries in its coverage area has advanced with the signing of Tunisia as its latest service provider. The contract was signed in Tunis on 28 April 2000, by Thuraya Chairman Mr Mohammad Hassan Omran and the General Director for Tunisie Telecom, Mr Ahmed Mahjoub. The agreement provides Tunisie Telecom with the rights to distribute and market Thuraya’s products and services in Tunisia. This includes the distribution of user terminals and SIM cards, as well provisions to oversee customer care aspects such as billing and pricing. This union provides great opportunities for both sides, enabling Thuraya to offer its state-of-the-art satellite telecommunication services for the Tunisian market.

2.2.4 Expansion of telecommunications network

Tunisia will be equipped, by the end of year 2001 with a network of 6.000 kilometres fibre-optic cables. This network will guarantee the continuity of telecommunications both within Tunisia and between the areas of Tunisia and the external world.

2.2.5 Alcatel wins Tunisian network extension

Tunisie Telecom, the fixed and mobile operator of Tunisia, has awarded Alcatel a contract for the extension of its GSM network. The deal, worth EUR26 million, will involve the rollout of new base stations in the capital Tunis as well as in other major cities and tourist destinations including Bizerte, Hammamet, Sousse, Sfax, Gabes and Djerba. The capacity of the network will be increased from 50,000 to 120,000 subscribers. The contract also includes a provision for the installation of a GPRS solution, which will allow Tunisian subscribers access to the Internet via their mobile handsets.

2.2.6 Tunisia's strategy for Internet

Internet is the infrastructure of the new millennium for Tunisia. The key identified projects that describe the strategy planned for this sector and which are programmed for the decade to come are:

• the development of the national network and its evolution towards Internet 2
• the technological survey and the follow-up of the evolution of the protocols of communication (IPV6)
• the project "Paperless Class"
• the project of telelearning through the networks of education RNU and EDUNET
• the project of Tele medicine through the network of health RNS

2.2.7 Seminar on Internet and E-commerce

The regional committee of the COI (Conciel d'Ordre des Ingineurs), in collaboration with the National School of Engineers of Monastir organised a seminar on June 10th. It focused on "Internet and E-commerce" and the study of the legal and organisational aspects of the e-commerce.

2.3 Electronic Commerce

2.3.1 Digital Economy and E-commerce

President Zine El Abidine Ben Ali chaired the ministerial Council devoted to the examination on the program of the Digital Economy (Immaterial Economy) and E-commerce. The Council reviewed the results of the commission's work, which was charged with the examination of the aspects of the Digital Economy and E-commerce programs.

The action plan, adapted by the Council had the following key points:

• to promote and ensure electronic services (administrative, commercial and economic)
• to develop a national strategy for the sectors of communication, information and the scientific research related to them
• to provide to all students, under the age of 16, education and training that ensures the best use and exploitation of information and communication technologies
• to create Tele working jobs in the areas and the districts with strong demographic density
• to continue reinforcing the infrastructure of the communications
• to evaluate the pilot project of e-commerce and promote e-commerce at the local and foreigner level
• to find suitable formulas that guarantees the security of electronic transactions (specially focused on post offices and banks)
• to proceed to the realisation of Tele learning pilot projects at the higher educational institutions
• to work towards a better control of the cost of services and to simplify the procedures

2.3.2 Commerce One to establish business site in Middle East

Commerce One Inc., a builder of Internet market places where business suppliers and buyers conduct commerce, reached an agreement with a group of Middle Eastern investors to expand into the region. Commerce One Middle East, is expected to provide businesses in fourteen nations in the region - Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, Turkey, United Arab Emirates and Yemen - with a system conduct commerce on the Internet. It will be based in Dubai, United Arab Emirates.

Mark Hoffman, Commerce One chairman and chief executive, said in a statement: "The launch of Commerce One Middle East is a very important opportunity for us to develop e-commerce throughout the Middle Eastern marketplace. We believe that there are large efficiencies to be gained by everyone and we are delighted to be extending the Global Trading Web to this region." (Source: Reuters)

2.4 Education and research

2.4.1 Distance education

The National Commission on Distance Education (Internet and Education) under the auspice of Mr Ahmed Friaa, Minister of Communication held a meeting on April 13 to discuss the details of a pilot project on distance education being instigated by this Commission. All participants of the project presented a technical proposal at this meeting. These participants include ISETCOM, ATI, IRSIT, CERT, SUPCOM, SOTETEL, ONP and Tunisie Telecom, each being allocated specific tasks from preparing a technical study and installing a model to collecting course contents and evaluating the financial aspects.

2.4.2 Scientific search and technology

A ministerial Council, held on May the 20th, under the presidency of President Zine El Abidine Ben Ali, was devoted to the technology and scientific research sector. The Chief of the State decided to gradually increase the funds allocated to scientific research so that it will reach 1% of Gross National Product (GNP) in the year 2004. In view of that decision, the council has reviewed the various elements of the national system of scientific research and the prospects of its development. The President of the Republic decided to increase the funds allocated to scientific research by 15% starting from the budget of year 2001.

Aiming at the promotion and reinforcement of the scientific research sector, the council decided the following measurements:

• To complete the structuring of the national system of scientific search
• To find new methods so that private companies participate in the funding of the research sector
• In order to meet the needs for the managing staff and research, to promote the educational level of the human resources in the field of scientific search, by developing a coherent training program for the two cycles of the doctorate and the post-doctoral studies
• To establish new ties between research centres and the private sector
• To develop a plan that evaluates the activities and the structures of the scientific research sector.

2.5 Labour

2.5.1 Tele working jobs creation

The furtherance of project related to the consolidation of communication systems and the post and their generalisation in all geographical regions has retained the attention of the President Zine El Abidine Ben Ali during the hearing that he granted to Mr. Ahmed Friaâ, Minister of Communications. The Head of the State has ordered to strengthen electronic data transmission, to work for its gradual generalisation and to create Tele working jobs, in order to allow citizens and enterprises to undertake many interior and exterior level operations and to profit from tele-working administrative and economic tasks. He has also recommended to further consolidating the training and the reorientation of agents active in this sector and to associate Tunisian competence established abroad so that they contribute to this important action.

2.6 Access for all

Communications: To ensure the users of more diversified and more developed services

The President of the Republic expressed to the Prime Minister and to Minister of Communication his concern for the development and the diversification of the services of the communications network and in particular the introduction, to public use, of new services like the use of phone cards.

3. International relationships and agreements

3.1 Agreement of co-operation between Tunisia and Algeria

Mr. Ahmed Friaâ, Minister of Communication and Mr. Mohamed Maghlaoui Minister of Communication of Algeria, met in Tunis and discussed issues concerning the communication sector and the prospects for its development. They signed an agreement emphasising the importance of furthering the partnership and co-operation of the two countries in the communications related sectors, especially in communication technologies, the structural organisation of the sector, the training and sharing of experiences.

3.2 Tunisia-Japan: Examination of the bilateral co-operation in the field of information technologies

Mr. Fethi Merdassi, Minister for the International Co-operation and External Investment during his visit in Japan (14 to 17 May) discussed, with Japanese officials, new means of promoting new information technologies within the framework of the bilateral co-operation.

4. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders

4.1 Tunisie Telecoms wins Mauritania mobile licence

Tunisia's state telecommunication operator Tunisie Telecoms won a license to operate Mauritania's first mobile GSM telephone system. Tunisie Telecoms was associated with Mauritanian partners in the deal worth $28 million in the first privatisation of the Mauritanian telecoms system. Tunisie Telecoms won the deal despite competition with foreign operators, including France Telecom. Tunisie Telecoms is controlled by the Tunisian state and is the country's sole telecoms operator. But the government intends to give out another license to a private operator to run a second mobile phone system.