Broadband for Central Asia and the road ahead...Broadband for Central Asia and the road ahead ......

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IDD/TP-09-05 (Version 1.0)

ESCAP Technical Paper

Broadband for Central Asia and the road ahead

Economic development through improved Regional Broadband Networks

Macro-level study of 4 selected broadband markets in Central Asia

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IDD/TP-09-01 (Version 1)

ESCAP Technical PAPER



Macro-level study of 4 selected broadband markets in Central Asia

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IDD/TP-09-05 (Version 1.0)

ESCAP Technical Paper Information and Communications Technology and

Disaster Risk Reduction Division



Macro-level study of 4 selected broadband markets in Central Asia∗

Authorized for distribution by Xuan Zengpei

October 2009

Abstract

The overall objective of this study is to identify country specific needs for broadband communication in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan with a view to developing a regional broadband network and to providing data and information to relevant stakeholders for further examination and discussion on this matter.

This study assesses the overall ICT development in the selected countries with a focus on the telecommunication sector and examined key ICT policy and regulatory frameworks which have impacts on the development of a regional and national broadband network. It also collected data and information on Internet and broadband usage and attempted to forecast future growth as an indication of a need for a regional broadband network.

The report finds that broadband telecommunication networks have been planned and developed in the four countries during the last few years and the number of broadband subscribers is increasing steadily in some countries and slowly in others. In general, the mobile market was found to be the key driver of growth of the overall telecoms market. Demand for Internet access has also shown high growth, with broadband access becoming increasingly popular. With increased demand for bandwidth of international channels, providing connectivity to the Internet seems to be growing accordingly.

Based on the findings, identified challenges and opportunities, the report also made concrete recommendations mainly on the need for strengthening regional cooperation for the development of such a broadband network among countries in the sub-region.

Disclaimer: The designations employed and the presentation of the material in this paper do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. References and maps obtained from external sources might not conform to the UN Editorial guidelines. Mention of a commercial company or product in this publication does not imply endorsement by ESCAP. The content in this document is the opinions and view points of the author's and not that of ESCAP or IDD and this publication has been issued without formal editing.

∗ Prepared by ESCAP consultant, Information and Communications Technology and Disaster Risk Reduction Division,

ESCAP, United Nations Building, Rajdamnern Nok Avenue, Bangkok 10200, Thailand. E-Mail address: [email protected]

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CONTENTS

Abbreviation ............................................................................................................................. v

I. Background......................................................................................................................... 1 A. Broadband trends in Asia and the Pacific .................................................................... 3 B. Tashkent workshop ...................................................................................................... 4 C. Why a feasibility study ................................................................................................ 6 D. Regional approach vs national approach ..................................................................... 7

II. Objective and methodology................................................................................................ 9

III. Reports on the four broadband markets............................................................................ 10 A. Kazakhstan................................................................................................................. 10

1. Overview of the telecommunications sector......................................................... 10 2. Policy and regulatory environment....................................................................... 13 3. Mobile market....................................................................................................... 14 4. Internet market ...................................................................................................... 15 5. Broadband development ....................................................................................... 15 6. International Internet bandwidth........................................................................... 18

B. Kyrgyzstan ................................................................................................................. 20 1. Overview of the telecommunications sector......................................................... 20 2. Policy and regulatory environment....................................................................... 24 3. Mobile market....................................................................................................... 24 4. Internet market ...................................................................................................... 25 5. National backbone and broadband services.......................................................... 26 6. International telecommunications access.............................................................. 27

C. Tajikistan.................................................................................................................... 29 1. Overall telecommunications sector development ................................................. 29 2. ICT policy and program........................................................................................ 30 3. Mobile communication market ............................................................................. 32 4. Internet and broadband markets............................................................................ 33 5. National backbones............................................................................................... 34

D. Uzbekistan.................................................................................................................. 35 1. Overall telecommunications sector development ................................................. 35 2. ICT policy and regulation ..................................................................................... 38 3. Fixed line communication..................................................................................... 39 4. Mobile communication ......................................................................................... 40 5. Internet .................................................................................................................. 41 6. Broadband communication ................................................................................... 42 7. International bandwidth ........................................................................................ 46

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8. Challenges and future directions........................................................................... 47 E. Issues, market, potential, and policy environment..................................................... 48

1. Barriers to broadband usage.................................................................................. 48 2. Feasibility of a regional broadband network ........................................................ 54 3. Estimated development and maintenance costs.................................................... 57 4. Conclusions........................................................................................................... 57 5. Recommendations................................................................................................. 59

List of Tables Table 1: Telecommunication sector performance: Kazakhstan ..................................... 11 Table 2: Status of telecommunication services market of Kazakhstan.......................... 12 Table 3: Basic characteristics of the JSC Kyrgyztelecom network ............................... 22 Table 4: Telecommunication sector performance: Kyrgyzstan ..................................... 22 Table 5: TAE network in Kyrgyzstan ............................................................................ 27 Table 6: HSM SCO routing over the territory of Kyrgyzstan........................................ 28 Table 7: Telecommunication sector performance: Tajikistan........................................ 29 Table 8: Telecommunication sector performance: Uzbekistan...................................... 37 Table 9: Uzbektelecom fixed-line telephone tariffs....................................................... 40 Table 10: Estimated number of Internet users in Uzbekistan from 2009 - 2013 ............. 48 Table 11: Estimated International bandwidth needs in Uzbekistan from 2009 -1013..... 48 Table 12: Estimated usage rate of bandwidth in Uzbekistan from 2006 to 2008 ............ 50 Table 13: “Optimal” monthly fee for customers for unlimited traffic ............................. 53 Table 14: “Optimal” monthly fee for households for limited traffic................................ 53 Table 15: “Optimal” monthly fee for corporate users for limited traffic ......................... 53 Table 16: Reasons of not having access to the Internet at home...................................... 54

List of Figures

Figure 1: Impact of broadband: selected relationships from household and individual usage perspectives ......................................................................... 1

Figure 2: Average advertised broadband download speed in October 2007 in selected countries........................................................................................ 2

Figure 3: Total broadband subscribers in December 2008 in selected countries........... 3 Figure 4: Number of broadband users in selected country/area grouping,

2004 and 2007 ................................................................................................ 4 Figure 5: “New Silk-road Broadband Highway” ........................................................... 5 Figure 6: Existing TAE network in Central Asia........................................................... 7 Figure 7: National data transfer network in Kazakhstan.............................................. 18 Figure 8: Opportunities for further use of the JSC network in Kazakhstan

for developing the Asia – Europe transit route............................................. 19

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Figure 9: Break down of communication service market segments based on total revenue in Kyrgyzstan, 2006........................................................... 20

Figure 10: Kyrgyzstan telecommunication network ...................................................... 21 Figure 11: Number of subscribers of local and mobile communication in Kyrgyzstan 25 Figure 12: Number of mobile communication subscribers per 100 people

in CIS countries ............................................................................................ 32 Figure 13: Perspective scheme of primary telecommunication network of

JSC Tochiktelecom (satellite lines of communication, DAMA network).... 34 Figure 14: Backbone digital telecommunication network of Uzbekistan...................... 35 Figure 15: Fixed line, mobile and Internet usage rate and trends

(as a per cent of the total population), Uzbekistan ...................................... 38 Figure 16: Installed and used capacity (number of subscribers) of telephone stations,

Uzbekistan .................................................................................................... 39 Figure 17: Telephone stations’ digitalization trends, Uzbekistan.................................. 39 Figure 18: Mobile usage rate and user trends, Uzbekistan ............................................ 40 Figure 19: Uzbekistan Internet growth .......................................................................... 41 Figure 20: Internet usage rate and user trends: Uzbekistan ........................................... 41 Figure 21: Internet public access points by year, Uzbekistan........................................ 42 Figure 22: Residential broadband subscription trends (estimates), Uzbekistan ............ 43 Figure 23: Residential broadband access speeds, Uzbekistan ....................................... 43 Figure 24: Corporate broadband subscription trends (estimates), Uzbekistan .............. 44 Figure 25: Corporate broadband access speed, Uzbekistan ........................................... 44 Figure 26: Corporate broadband Internet usage rate by regions of Uzbekistan............. 45 Figure 27: International Internet bandwidth trends by year, Uzbekistan....................... 46 Figure 28: International bandwidth loading (Sharq Telecom ISP), Uzbekistan ............ 47

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ABBREVIATIONS

ADB Asian Development Bank

ADSL asymmetric digital subscriber line

AIC Agency for Information and Communication

ATS analog telephone switchboard

BBC British Broadcasting Corporation

CDMA code division multiple access

CIS Commonwealth of Independent States

DAMA demand assigned multiple access

DSL digital subscriber line

DWDM dense wavelength division multiplexing

EBRD European Bank for Reconstruction and Development

ESCAP United Nations Economic and Social Commission for Asia and the Pacific

ETTH Ethernet

FOCL fiber optical communication line

Gbps gigabit per second

GDP gross domestic product

GPRS general packet radio service

ICC International Center of Communication

ICT information and communication technology

IFC International Finance Corporation

IP Internet protocol

IP/MPLS Internet protocol/ multi-protocol label switching

ISDN integrated services digital network

ISP Internet service provider

ITU International Telecommunication Union

JBIC Japanese Bank for International Cooperation

Kbps kilobit per second

LAN local area network

LCF linear-cable facilities

MB megabyte

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Mbps megabit per second

MIGA Multilateral Investment Guarantee Agency

MMS multimedia messaging service

NGN next generation networks

OECD Organization for Economic Co-operation and Development

OSI open system interconnection

PDH plesiochronous digital hierarchy

RCC Regional Commonwealth in the field of Communications

RS rural settlements

SCO Shanghai Cooperation Organization

SDH synchronous digital hierarchy

SHDSL single-pair high-speed digital subscriber line

SMS short message service

TAE Trans Asia Europe

UzACI Communication and Information Agency of Uzbekistan

VAT value added tax

VoIP voice over Internet protocol

WAP wireless access point

WLL wireless local loop

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I. BACKGROUND

An Organisation for Economic Cooperation and Development (OECD) report published in 2007 said that 60 per cent of net users in OECD member countries were using broadband, while, countries that had switched to fiber optic networks offered the lowest prices and best speeds. According to the report "Broadband is very quickly becoming the basic medium for service delivery on both fixed and wireless networks".1 Broadband prices for DSL connections across the 30 OECD member countries fell by 19 per cent and access speeds increased by 29 per cent between October 2005 and 2006. Cable TV service providers were offering broadband prices and speeds along a similar trend. Ian Fogg, a telecom analyst from Jupiter Research, commented on the OECD report in a BBC article2 saying that consumers are attracted to cheap prices due to the fragmented nature of the broadband market making the entry price of broadband critical for comparisons.

Criterion Economics, a consulting firm which has provided regulatory or litigation consulting to AT&T and Nippon Telegraph & Telephone, did a study in 20033 and found that ubiquitous adoption of current-generation broadband technologies would result in a US$179.7 billion cumulative increase in gross domestic product in the United States of America, while sustaining an additional 61,000 jobs per year over the next 19 years. The study estimated that rapid and ubiquitous deployment of residential broadband technology could create 1.2 million jobs.

One of the benefits information and communication technology (ICT) has brought about in the area of socio-economic development is enhanced capability to make evidence-based decisions or informed decisions, driven by expansion of access to ICT among previously un-connected segments of the population and deepening of ICT usage. The introduction of broadband technology is expected to accelerate the speed of these processes as well as widen the range of services and products users could enjoy. A recently published OECD report4 highlighted the accelerated pace of activities and various impacts of broadband introduction among OECD countries as shown in Figure 1.

Figure 1: Impact of broadband: selected relationships from household and individual usage perspectives

Source: OECD5

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Average advertised broadband download speed by country - October 2007 Megabits per second

93.7

44.2 43.3

21.413.6 13.1 13 12.1 12.1 11.8 10.7 10.6 9.2 8.9 7.8

Japan

France

Korea

Swed

en

New Zeal

and

Italy

Finland

Portugal

Australi

a

Norway

Luxembourg UK

German

y US

Canad

a

According to the International Telecommunication Union (ITU) definition, broadband refers to an Internet connection speed of 256 Kbps or higher as the total throughput in both directions. This statistical indicator is defined irrespective of type of access or type of device used for Internet access, or method of payment. As Figure 2 shows, the advertised broadband speeds vary from place to place and are governed by factors arising due to regulations, available infrastructure and demand.

Figure 2: Average advertised broadband download speed in October 2007 in selected countries

Source: OECD6, “Korea refers to the Republic of Korea, while “US” should read as “USA”.

Improved productivity through high speed Internet access opens up a multitude of benefits for residential users, students, government organizations and businesses. A fast connection means easy access to information on the World Wide Web, and improved efficiency when negotiating and transacting. Communication through broadband telephony (Voice over Internet Protocol - VoIP) reduces communication costs while more discerning users opt for more advanced services such as video on demand to satisfy social and educational needs. However, the main allure of 24 hours a day fast connections is that more and more people are able to keep in touch and network with their peers more readily.

Although the United States records the largest number of broadband subscribers in the world (see Figure 3), a recent report released by Washington DC-based Baller Herbst Law Group warns that it is falling behind on broadband deployment. The report says that aggressive actions and measures are necessary to keep the country competitive and recommends making 100 Mbps access available to all Americans by 2012 at affordable rates, with expansion to 1 Gbps by 2015.7

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Figure 3: Total broadband subscribers in December 2008 in selected countries (in millions)

Source: OECD8, “Korea refers to the Republic of Korea, while “US” should read as “USA”

A. Broadband trends in Asia and the Pacific

The Asia and Pacific region has been at the forefront in embracing and capitalizing on broadband technologies. According to a recent article, the Philippines is the second fastest growing broadband market in the world, after Greece, with total broadband growth at 157 per cent.9 In December 2007, Malaysia unveiled its plan to invest US$ 4.46 billion over the next 10 years to roll out high-speed broadband services across the country. 10 In India, where the broadband revolution has already started, the number of broadband subscribers is expected to reach 20 million by 201011 and drives the country to the next stage of economic growth.

Although the broadband growth and dynamism in these countries are quite impressive, there are alarming signs and trends cropping up in the region. In a recent report on next generation networks (NGN),12 the International Telecommunication Union (ITU) pointed out that 70 per cent of broadband subscribers were located in high-income countries in 2006. Among low income countries, more than 95 per cent of broadband subscribers were located in two countries: India and Viet Nam. Among the lower-middle income grouping, 2004 and 2007 group, China accounted for 94 per cent of broadband subscribers. In contrast, only 46,000 subscribers were registered among the 22 out of 50 least developed countries worldwide illustrates the increase in the number of broadband users in selected countries from 2004 to 2007.

A study published in 2005 13 grouped the countries in Asia and the Pacific into three categories. The first group enjoys the widespread availability of broadband networks (Republic of Korea; Hong Kong,China; Japan and Singapore). The second group includes countries that plan to or is implementing broadband initiatives, such as Malaysia, China, Thailand, Indonesia and the Philippines. The third group is characterized mainly by limited basic telephone lines across the country. The dynamic development of the second group of countries moving up the

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ladder is what we have been witnessing, but most of the countries in the third category are largely left behind in bringing the benefit of reliable and robust broadband connections to communities and individuals.

Figure 4: Number of broadband users in selected country/area grouping, 2004 and 2007

Source: ESCAP and ITU14

Broadband technologies – be it fiber, wireless or satellite – should be encouraged to provide connectivity not only in the industrialized but also developing country context. It is no longer a luxury for the urban dwellers, but a critical foundation of an information society where an increasing level of decision-making takes place based on data, information and knowledge.

B. Tashkent workshop

Recognizing the importance of broadband technologies, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) organized the regional workshop on “Broadband and ICT Development for Improved Communication in Central Asia”15 in July 2007 in Tashkent, Uzbekistan. The workshop, attended by over 100 experts from Central Asia and

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other countries, was successful in raising awareness among the participants on the limitations of the current regional telecom infrastructure, which may not be able to accommodate the growing ICT needs of the region. The workshop adopted the “Tashkent Statement”16 which recognized the importance of a regional broadband network in Central Asia and recommended various actions to the respective stakeholders such as governments, private sector and international, regional organizations, financial institutions and donors.

The “New Silk-road Broadband Highway” 17 was proposed during the workshop on broadband and ICT development for improved communications in Central Asia 18 as an alternative broadband network to diversify the route and reduce network vulnerability. Although the idea was welcomed during the workshop, a concrete feasibility at the national level could not be determined. Therefore, workshop participants expressed their views on having a regional network that would be useful and much needed, although the feasibility at the national level needed to be examined carefully. Thus, based on the discussions and Tashkent Statement which was adopted during the workshop, ESCAP decided to undertake the national feasibility studies in four countries to examine if a regional broadband network would fit into an overall development of ICT sector and development frameworks of the countries, without specific endorsement of the proposed idea or going into details of the proposed diagram.

Figure 5: “New Silk-road Broadband Highway”

Source: Presentation made by NTT West and InfoCom during the Tashkent workshop in July 200719

The proposed idea was made by the NTT West and InfoCom group based on the findings and observations:

• Internet traffic among Central Asian countries increased very rapidly

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• The existing Trans Asia Europe (TAE) network was designed for telecommunications, not for broadband communication

• Route diversification with optical fiber cables is necessary to reduce network vulnerabilities

• At the same time, new backbone optical fiber cables will be required to meet rapidly growing communication needs of Central Asian countries

• Such a new broadband network would also benefit Asian countries, since it would represent an alternative route to Europe

The group recommended that any such backbone should have enough spare capacity to accommodate future growth and put in place a loop structure to increase reliability, based on the IP-based new generation network (NGN) platform.

C. Why a feasibility study

During the Tashkent workshop, some member States demonstrated keen interest, while the others inquired about details of the proposal and the compatibility with national policy and regulatory frameworks. Taking into account the need for regional cooperation in materializing any regional broadband networks, the workshop recommended that international and regional agencies should promote the development of the regional broadband network in Central Asia in partnership and collaboration with governments, private sector and other stakeholders, while complementing national efforts in enhancing broadband penetration and strengthen capacity building and regional cooperation.

In this regards, conducting a national feasibility study in selected Central Asian countries was recommended as a useful tool to identify country specific needs for broadband communication and to incorporate them into the process of designing and planning a regional broadband network, if it is found feasible and viable. The study is also expected to promote discussions among key stakeholders at the national and regional levels and further examination of the details of the regional broadband network in Central Asia.

Thus, the overall objective of this study is to identify country specific needs for broadband communication in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan with a view of developing a regional broadband network and to provide data and information to relevant stakeholders for further examination and discussion on this matter.

This study assessed the overall ICT development in the selected countries with a focus on the telecommunication sector and examined key ICT policy and regulatory frameworks which have impacts on the development of a regional and national broadband network. It also collected data and information on Internet and broadband usage and attempted to forecast future growth as an indication of a need for a regional broadband network.

This study targets policy and decision makers working in the area of ICT as well as related sectors for their consideration in the relevant policy and decision-making processes.

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D. Regional approach vs national approach

This study takes into account complimentary and reinforcing factors at the regional and national levels in developing a regional broadband network. The very essence of the Internet requires the maximum co-operation among countries (especially neighbouring countries) in order to improve the efficiency and effectiveness of ICT usage through land-based communication networks. In this regard, it is obvious that any enhancements of network capacities directly depend on co-operation at the regional and international levels with other countries, especially, in the case of Uzbekistan, where more than 90 per cent of the Internet traffic is international Internet traffic, which transits through the territories of several countries. The development of regional broadband networks also depends on integrated and harmonized development of national networks in individual countries of the region, so that the benefits could reach its citizens.

Currently, the TAE20 fiber optic cable network serves the countries in Central Asia. The construction, started in the mid-90s, passes through Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan and connects Central Asian, Eastern Asian and European regions. Initially, this network was intended mainly for the transmission of telephone traffic.

Figure 6: Existing TAE network in Central Asia

Source: Website of TAE21

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However, the rapid development of the Internet has correspondingly resulted in the rapid growth in the volume of international data traffic and the bandwidth of the existing TAE network was found to be insufficient to meet the growing demand. For this reason, currently many countries that are covered by the TAE networks are expanding its capacity. For example, at one of the meetings of the Shanghai Cooperation Organization (SCO) the construction of a high-speed information highway with a large bandwidth and high reliability level was proposed to link China, Kyrgyzstan and Uzbekistan.

During the meeting of the telecommunication authorities of CIS countries within the framework of the 38th session of RCC (Regional Commonwealth in the field of Communications) Board that was held in Astana, Kazakhstan (12-14 November 2007), Uzbektelecom signed several agreements with Russian Federation telecom operator, Rostelecom, on further cooperation on “universal intellectual communication services”. 23 In one of the agreements, the parties agreed to significantly expand the capacity of existing bandwidth and provide Uzbektelecom with access to the Internet via data networks of Rostelecom. It is expected that following this agreement, and after the expansion of international bandwidth of Uzbektelecom, local Internet service providers (ISPs) will also expand their bandwidth offered to their customers. Another key achievement in 2007 was the expansion of the communication channel among Uzbekistan, Kazakhstan and the Russian Federation, despite a prolonged period to come to a settlement on this problem.

It is clear that broadband communication needs in the Central Asian region are growing extremely fast resulting in the need for frequent upgrading of the international Internet bandwidth capacity. This is equally true for Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, as well as for other countries in the region because the telecommunication markets in these countries are rapidly expanding.

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Presently, the international Internet bandwidth capacity of Uzbekistan is equal to 362 Mbps for a population of about 26 million people. In comparison, in Kazakhstan the bandwidth is equal to 3 Gbps and has doubled during the last year (the population of Kazakhstan is about 16 million), while in Kyrgyzstan the bandwidth is equal to 64 Mbps (the population of Kyrgyzstan is slightly more than 5 million) and in Tajikistan the licenses for the acquisition of international channels are given to several operators, but the total international Internet bandwidth does not exceed 64 Mbps.

Given such relatively low Internet access speeds in the countries, except in Kazakhstan, the cost of Internet access becomes quite high and affects the development of broadband services in the domestic markets of these countries. All of this suggests that the expansion of a regional broadband network is a fundamental element to satisfy the growing broadband communication needs in the mentioned countries.

The rapid growth of Internet usage also suggests that the issue of implementing the projects for connecting the Asian and European countries with broadband communications networks is very urgent. The countries in the region fully realize the necessity of such networks due to the above and other reasons, and are equally interested in such networks.

The advantages of the regional approach is that it will assist in balancing the interests of each country, which can be expressed quite independently by each country by taking into account the internal bandwidth needs. The main issue here is the continuity of all possible benefits for each of the participating countries and their interdependence, which would require taking into account the interest of neighbours and the region as a whole. The active participation of each country is a prerequisite in order to benefit from any advantages of a project such as the above mentioned new Silk Road Broadband Highway project.

II. OBJECTIVE AND METHODOLOGY

In order to provide an overall situational analysis on the above-mentioned needs, data and information, materials and documents were gathered from various sources including the government agencies which regulate the ICT sector as well as agencies which collect statistics on telecommunication development. In terms of the development of broadband access in the selected countries, data was made available by the following agencies:

• JSC Kyrgyztelecom

• National Statistical Committee of the Kyrgyz Republic

• National Communication Agency of the Kyrgyz Republic

• Information and Communications Agency of the Republic of Kazakhstan

• Joint-stock Company Kazakhtelecom

• Statistics Agency of the Republic of Kazakhstan

• State Statistics Committee of the Republic of Tajikistan

• JSC Tochiktelecom

• Communication and Information Agency of Uzbekistan (UzACI)24

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• State Statistics Committee (Uzbekistan)25

• Ministry of Higher and Secondary Special Education (Uzbekistan)26

The key information requested from communication providers included statistics on users for the last three years, spectrum and price of services as well as details of further plans for development of broadband technologies. The data for the statistical tables in this report were collected from the most publicly available government and business statistical materials. Analysis of the collected data was done by comparing the findings with the indicators of previous years. Identified changes and trends in telecom/ICT development are illustrated by respective figures and tables. The numbers in the tables are given as of 1 January of the year followed by what is mentioned in the table unless otherwise indicated.

An Internet content analysis of the main communication providers was also carried out to provide a description of the situation, as well as an analysis of information and news websites (sites of official ICT sector regulators, of Internet providers, etc.).

III. REPORTS ON THE FOUR BROADBAND MARKETS

A. Kazakhstan

1. Overview of the telecommunications sector

At the present time in Kazakhstan, the following basic segments of the telecommunication services market have been developed: cellular communication, local telephone communication, long-distance and international communication, and data transmission (including Internet). As of 1 January 2006, the revenues of communication companies were as follows: wireless communication (48.7 per cent), long-distance/international telephone communication (27.3 per cent), and local telephone communication (12.9 per cent).

Over the last five years, dynamic development of the telecommunications sector has been observed, and its growth rates exceed the GDP growth rates of the country and average from 25 up to 30 percent annually.27 It is worth noting that sustainable positive development of the sector will promote development of the society and strengthening of the security of the country as well as making the sector a major source of sustainable economic growth.

For the next three years it is expected that the average annual growth rates of the sector will be 31 per cent, influenced by several important factors such as readjustment of local communication tariffs, positioning of tariffs for long-distance (in-zone) telephone communication depending on growth in traffic of this kind of communication, increase in the share of cellular communication services, other highly remunerative services, and development of new telecommunication services including domestic satellite communication.

According to the Statistics Agency of the Republic of Kazakhstan, communication companies over the period January - December 2007 provided 14.5 per cent more services in terms of total services provided by all communication companies, calculated based on prices which were comparable between providers as well as with the same period of the previous year. The income structure of telecommunication services at the national level is broken down as follows:

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• mobile communication – 51.4 per cent • fixed communication – 24.9 per cent • data transmission and Internet – 8.7 per cent • IP-telephony – 1.7 per cent • prepaid TV services – 3,9 per cent • other kinds of communication – 9.4 per cent

High growth rates in comparison with the previous years were posted by companies providing mobile communication, data transmission services and other Internet services, as well as transmission of data through satellite (TV). The highest growth rate for these services was observed in 2005, which was 85 per cent higher than the same period of the previous year. High growth rates, typical of communication services, characterize this market segment as the most rapidly developing segment of the telecommunication market. At present, 379 licenses have been granted for the data communication segment (including Internet access).

In terms of the access in rural areas, within the framework for installation of telephones in rural settlements (RS) with more than 50 residents,28 JSC Kazakhtelecom provided 395 villages with communication capabilities in 2007. Thus, installation of telephones in all rural settlements with a population of more than 50 people has been completed. At the time this report was written, only villages with a population below 50 people were without telephones. JSC Kazakhtelecom, the leading communication operator in Kazakhstan, provides services to more than 2.95 million subscribers of fixed line communications. Tele-density in Kazakhstan on average is 19.17 phones per 100 person (in 2005 it was 17.3).29 The level of mobile communication penetration in 2007 was 60 per cent.30

Table 1 below shows an overview of the telecommunication sector performance in Kazakhstan in comparison with the same income group and world averages.

Table 1: Telecommunication sector performance: Kazakhstan

Indicator Kazakhstan (2000)

Kazakhstan (2005)

Lower middle income

countries average (2000)

Lower middle income

countries average (2005)

World average (2000)

World average (2005)

Telephone Mainlines (per 1000 people) 123 167 108 205 161 180

International voice traffic (minutes per person)

19 26 10 14 39 30

Mobile telephone subscribers (per 1000 people)

13 327 60 306 122 342

Internet users (per 1000 people) 7 27 17 95 65 137

Broadband subscribers (per 1000 people) n/a 0.1 0.1 23.1 3.6 41.6

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International Internet bandwidth (bits per person)

1 3 2 116 102 816

Price basket for residential fixed line (US$ a month)

n/a n/a 8.4 8.5 10.2 11.7

Price basket for mobile telephone service (US$ a month)

n/a 11.5 n/a 10.2 n/a 10.5

Price basket for Internet service (US$ a month)

n/a 15.8 n/a 16.8 n/a 22.0

Source: World Bank31

The current local telecommunication deployment exceeds 2.6 million lines which constitutes 65 per cent of maximum available capacity. It is projected that by the end of 2008 the total number of basic telephone sets will increase to about 3.4 – 3.5 million.

Table 2: Status of telecommunication services market of Kazakhstan

Source: RCC Statistical Factbook and JSC Kazakhtelecom

In terms of technical development of the sector, the primary goals include the creation of digital infrastructure in support of computerization, development of modern telecommunication infrastructure and its integration into infrastructure of other countries as a major factor of national economic growth, growth of business and intellectual activities, and strengthening of the respect, recognition and prestige of the country with in the international community.

Plans are in place to expand the following services with high end technology during the period 2005-2010:

• Satellite-based telephony

• Mobile telephony • Internet access

200332 200733

Fixed communication subscribers (number of persons) 2,430,000 3,091,766

Mobile telephone subscribers (number of persons) 912,800 12,000,000

Fixed telephone density (per 100 people) 16.2 20

Mobile communication density (per 100 people) 6.1 78

Revenue from telecommunication services (billion tenge) 116.8815 314

(million US dollars) 781.4 2.1

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2. Policy and regulatory environment

As a result of the stage-by-stage liberalization in the telecommunication service market which began at the end of 2004, the preconditions for development of a truly competitive environment have been created. During the liberalization process, actions were taken to adjust tariffs and eliminate cross subsidization (price differentiation by market segments to compensate losses due to below-cost prices offered at certain targeted segments) to create economic incentives for development of competition in every segment of the telecommunication service market, including in rural areas.

In order to develop the telecommunications sector, the Telecommunications Sector Development Program of the Republic of Kazakhstan for 2006-2008 was adopted.34 Further development of the sector as one of the basic conditions for increasing the competitiveness of the economy, will allow the country to build a foundation to become one of the 50 most competitive countries in the world by 2012. For achievement of the specified goal of the program, the following priority objectives shall be achieved:

• Improvement of governmental regulations of the telecommunication sector in the area of research into further development of the sector; connection of communication operators; 35 development of fixed and mobile communication; development of Internet;36 provision of universal telecommunication services for the population.

• Innovative technological development and maintenance of the technical base of the sector including distribution of telecommunication numbering resources; improvement of radio-frequency spectrum distribution; development of national satellite communication; improvement of the system of standardization and certification; improving the system of training and retraining of human resources in the sector; carrying out intelligence activities on telecommunication networks including activities which lead to prevention of crime in the sector and for drawing up of legislation and regulations for review and investigation of organizations and installations which provide registration as well as identification of private data of subscribers.37

The implementation of the Program in Kazakhstan is expected to result in the following:

• Improvement of the system of governmental regulations; transition to a completely competitive telecommunications market without negative impact on availability of communication services for the population; national information security improvement;

• Enhanced competitive environment in telecommunications market providing opportunities for development of local access networks and increased markets for new communication services;

• Uninterrupted functioning of the telecommunication sector is achieved;

• Access of the population to basic telecommunication services is expanded;

• Spectrum of given telecommunication services is expanded;

• Positioning of Kazakhstan as a leader in the telecommunications sector in the Central Asia region. Kazakhstan becomes an international transit hub for significant information flow between South-East Asia – Europe, and Central Asia – Russian Federation;

14

• Normative legal base is created in the field of telecommunications for improved efficiency of governmental regulation in the area of telecommunications;

• Enabling environment for investment in telecommunication infrastructure, both short-term and long-term, is created;

• The overall performance of the sector has been improved and structural disproportions in consumption of communication services is reduced;

• System of training and retraining of human resources in the area of telecommunications is set up during the dynamic development of the sector.

The implementation of the Program will aim at achieving the following benchmarks by the end of 2008:

• Fixed telephone line density is 23 per 100 people in the country.

• Mobile communication density is 50 per 100 people in the country.

• Internet user density is 10 per 100 people in the country.

• Level of local telecommunication network digitalization is 80 per cent.

• Revenue of communication operators is 4-5 per cent of GDP.

• Revenue of telecommunication services per one person is US$ 150-200.

• Investment into telecommunication sector per person is US$ 70-100.

The Program implementation will enable the achievement by 2012 of the following key indicators, typical for the 50 most competitive countries of the world:

• 40 telephone lines per 100 people (it was 17 in 2005)

• 90 users of mobile communication per 100 people (it was 36 in 2005)

• 40 Internet users per 100 people (it was 1.34 in 2004)38

The development of mass broadband Internet access and development of local Internet content are also proposed, while work on improvement of principles and mechanisms of tariff regulation for the purpose of their reduction, including Internet access services and mobile communication services, will be continued.

3. Mobile market

There are four communication operators providing mobile communication services in the country while barriers for entering the market are very high. The types of services provided are almost identical for all mobile communication operators and they compete among themselves regarding the tariffs for provided services. In comparison with 2004, the number of mobile communication subscribers has increased by 250 per cent. The number of cellular communication subscribers in 2007 was about 12 million; thus the density was 78 subscribers per 100 people.

15

4. Internet market

In 2007 the number of Internet subscribers, according to the reports of the communication operators, was about 700,000, including about 270,000 people that enjoyed broadband Internet access; 430,000 people used dial-up access. According to the data of an independent marketing agency, ICT Marketing, in 2007 there were 1.6 million Internet users which was equivalent to about 11 per cent of the population.39

One of the most significant reasons for high Internet tariffs is linked to high costs that providers have to pay in order to get access to the world Internet resources.40 Users from Russian Federation find 80 per cent of their information using internal Russian Internet resources which are very cheap, while providers in Kazakhstan use international or foreign (e.g., Russian) Internet capacity and sell it to local subscribers for a fee with a sizable margin. Therefore, over 90 per cent of the users in Kazakhstan use external, out-of-Kazakhstan, resources linking the problem of high cost of Internet in Kazakhstan to the need for development of domestic content.

The issue of increasing the locally relevant content with a view of enhancing its attractiveness to ordinary users is one of the key issues, which requires special attention on the part of the Government.

In the opinion of experts in Kazakhstan, there are various reasons constraining the development and use of the Internet in the country which include limited local content, and the low level of overall computerization in the country.

For the purpose of development of the Internet segment, private companies are also making efforts. JSC Kazakhtelecom, for example, plans to carry out a comprehensive set of actions such as development of electronic payments, formation of a hosting market, development and maintenance of local Internet resources, and setting up of Internet Data Centers. The increase in speed from 128 Kbps. up to 256 Kbps for broadband access to Internet external resources (Megaline Hit service) is planned. Speed of Internet access to domestic Kazakhstan resources will be at the level of 512 Kbps. At the same time the company is planning to maintain the same level of user fee.41

5. Broadband development

The process of modernization has reached all levels and components of the national telecommunication system in Kazakhstan. Over the past few years essential changes have taken place, laying down the foundation for a full-scale update and expansion of the telecommunications network.

In general, the majority of users still choose out-of-date dial-up access, instead of modern ADSL. However, the trend is catching up. In the first six months of 2007 the number of ADSL-subscribers of JSC Kazakhtelecom, for instance, grew by more than twice. The growth was 326 per cent, in comparison with the same period of the previous year. The process of transition to Asymmetric Digital Subscriber Line (ADSL) is mainly impeded by purely technical reasons. Many people cannot be connected to the service because of poor status of telephone systems since old cable systems cannot provide transfer of a high-quality signal in accordance with adopted standards. A low level of computerization in the country in general also has an impact.

16

JSC Kazakhtelecom has about 70 per cent of the broadband Internet access market, and most likely, in the coming years it will continue to do so.

According to the official website of JSC Kazakhtelecom, tariffs for broadband Internet access are as follows:

• One-time fee for connection to a dedicated line is Tenge 53,922.00; for an ADSL connection is Tenge 14,381.10.

• Monthly subscription fee depends on traffic varies from Tenge 1,368 to Tenge 564,036.66 (incoming/outgoing traffic of 0.1 – 64 GB). Fee for the next 10 MB of incoming/outgoing traffic ranges from Tenge 95.62 to Tenge 248.52.

• The monthly subscription fee for a tariff plan that does not depend on a set limit varies depends on the speed of the connection (32 – 2,048 Kbps) from Tenge 20,545.54 to Tenge 841,829.81.

In 2008 the Agency for Information and Communication (AIC) plans to compel the providers of broadband Internet access services to ensure speeds equal to or above 256 Kbps.. Various initiatives have been implemented to increase the speed.

Within the framework of development of NGN, projects on convergence of the fixed and mobile networks with use of a joint infrastructure are planned in 2008.42 Wide application of wireless technologies, such as WLL CDMA, Wi-Fi, WiMax, is also planned for providing services for broadband Internet access. The construction of a wireless access network on the basis of the given technologies is two-staged. During the first stage (2007-2008) the work on construction of wireless networks in the regional capitals of Kazakhstan is to be carried out while the second will involve improvements in regional cities, regional capitals and villages. Use of wireless access is cost-effective in places with no ground infrastructure as it is easier to launch a telecommunications network in a short period of time. Thus, in the future, the implementation of the project will permit the followings:

• Roaming services between data transmission networks of various operators for Wi-Fi Hot Spots

• Hot Spots for data transmission services and Internet access in places with predicted high traffic, i.e., airports, business centers, large hotels in Astana, Almaty, Аtyrau, etc.

• A uniform system of network monitoring and resource management

• Security systems for clients and networks

• Rapid launch of wireless access networks in rural areas with poorly developed telecommunications infrastructure

In 2007, 87,654 new subscribers were connected to the network in the regional capitals through CDMA technology. The use of wireless communication technologies is proposed for further development of rural communications and development of the national data transmission network will continue. The network is expected to cover all regional capitals of the country.

At the municipal level, most parts of the city networks are connected by Metro Ethernets which are intended basically for Internet traffic transfer at the second level of the open system interconnection (OSI) model, with a throughput of 1 Gbp. In order to provide full-fledged

17

services on the urban networks, Metro Ethernet network cores need to be upgraded to a throughput of at least 10 Gbps. with support for IP/MPLS to pave the way for providing services at the third level of the OSI model. In the immediate timeframe, Metro Ethernets will replace the Synchronous Digital Hierarchy (SDH) networks and bare the entire load of data transmission and Internet, voice and video traffic. Wide application of wireless technologies including WLL (Wireless Local Loop) such as CDMA, Wi-Fi, WiMax for broadband Internet access services are also planned. Development of the data communication network on the basis of Metro Ethernet technologies (JSC Kazakhtelecom) will lead to lower tariffs for broadband access services at least by 30 per cent.

At the national level, fiber optical communication lines of the National super-mainline covers almost all of the country in the following areas:

(a) Zapadnaya FOCL (Fiber Optical Communication Line), of which the construction was completed in 2001, passes through the regional capitals Shymkent-Kyzylorda-Aktobe-Atyrau. In total, 24 settlements are provided with digital communication;

(b) Vostochnaya FOCL, of which the construction was completed in 2003, covers Taldykorgan-Ust-Каmenogorsk-Pavlodar-Аstana-Коksheatau-Petropavlovsk. The FOCL line provides 29 settlements with digital communication;

(c) Severnaya FOCL runs through the following cities: Petropavlovs- Коstonay-Аktobe. More than 16 settlements have been digitalized, of which the construction was completed in 2005;

(d) Kaspiyskaya FOCL (Makat-Tengiz-Aktau.) of which the construction was also completed in 2005, connects facilities of Zapadnaya FOCL by digital channels with the regional capital Aktau.

Creation of the fiber optical mainline ring enables operators to provide the followings: • Quality long-distance digital communication • Optimized international traffic among the three ICC’s (International Center of

Communication)43 • Elimination of peak hour losses • Improvement of traffic quality due to use of digital paths and shorter routes • Expansion of a spectrum of services including data communication services and access

to the Internet • Accommodation of transit traffic from China and the countries in Central Asia, Russian

Federation and Europe

• Replacement of analog communication lines after construction of the mainline SDH ring

The National Information Super Main Line is functioning at 94 per cent of its capacity. This means that increasing the throughput of the network is critical to meet current and future traffic levels. With this purpose in mind, JSC Kazakhtelecom is implementing a project to construct high capacity transfer lines based on free strands of fiber optical cable, with application of dense wavelength digital multiplexing (DWDM) technology (dense spectral multiplexing). The passband of optical fiber channels are expanded greatly (dozens of times) by this technology.

18

Capacity of the installed DWDM system at the present time is 8 optical channels with a speed of 10 Gbps. each. Thus, there is an opportunity for increasing it up to 32 optical channels by adding some equipment. There are plans to increase the channel transfer speeds up to 40 Gbps by 2010.

At the end of 2007 a DWDM system was put into operation on the sections between Almaty – Shymkent – Аktobe and Astana – Petropavlovsk – Коstanai – Аktobe. Plans are in place for a DWDM system for the sections between Almaty – Ust Kamenogorsk – Astana to be implemented during the first quarter of 2008. Continuation in 2008 of the project for construction of the modern high-speed main network Internet Protocol/ Multi-Protocol Label Switching (IP/MPLS) will increase the throughput between the sections of Astana, Almaty and Аktobe up to 20 Gbps and up to 2 Gbps for other cities in Kazakhstan. In the period of 2009-2010, the throughput will be increased to 40 Gbps.44

Figure 7: National data transfer network in Kazakhstan

Source: JSC Kazakhtelecom45

Comment: Phase 1: year 2007 - increase of network capacity to 10 Gbps based on DWDM; Phase 2: year 2009 - modernization of network section between Almaty – Astana – Aktobe to 40 Gbps. Red line – 10 Gbps, blue dotted line – 1 Gbps.

6. International Internet bandwidth

The main characteristic of Kazakhstan is its geopolitical location on the cross roads of historically developed caravan routes between Europe and Asia. The development of telecommunications networks, including the main network, is focused on increasing the throughput to service the growing long-distance, international and transit traffic as well as to meet demands of the growing volume of data transmission. In 2007 JSC Kazakhtelecom

19

developed an Action Plan for commencing the work on accommodating the transit traffic increase in the Asia – Europe direction.

At the beginning of 2007 the telecommunications network of JSC Kazakhtelecom had interfaces or points of connection with networks in the neighbouring countries of China, Russian Federation, Uzbekistan and Kyrgyzstan. Expansion of existing and construction of new interfaces with the neighbouring countries in the long run will develop the capacity of JSC Kazakhtelecom. Implementation of such projects has already started. In 2007 the existing interface with China Telecom was upgraded from STM-4 to STM-16. Construction of linear-cable facilities (LCF) FOCL from Uralsk up to the border with Russian Federation to link up with the networks of alternative operators such as RF JSC STSS Sovintel and JSC Synterra has been completed. The fiber optical cable to interface in Khorgos with China Unicom, which is an alternative operator from China, has been laid. DWDM equipment is being bought with the intention of improving the interfaces with JSC Rostelecom and АК Uzbektelecom.

Figure 8: Opportunities for further use of the JSC network in Kazakhstan for developing the Asia – Europe transit route

Source: АО Kazahtelecom46 Comment: Green line: CP STM – 16 at present;

Blue line: installation of DWDM in 2007; Violet line: installation of DWDM in 2008.

Aimed at development of interface facilities of JSC Kazakhtelecom networks with neighboring networks, a series of agreements have been signed between the following partners in order to accommodate the Asia-Europe transit route growth:47

• Agreement with JSC Uzbektelecom on construction of the second border interface in the area of the settlement of Beineu

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• Agreement with JSC MTT and China Telecom on creation of a tripartite alliance for granting transit capacity

• Agreement with JSC STSS Sovintel and China Unicom on creation of a tripartite alliance for granting transit capacity

• Agreement with China Network Communications on construction of a joint interface • Agreement with Company TransTeleCom (Russian Federation) on construction of a

joint interface

B. Kyrgyzstan

1. Overview of the telecommunications sector

The communication service sector is one of the most dynamically developing service sectors in the country. In 2006 telecommunication sector revenues reached Som 5.4 billion and almost tripled in comparison with 2001. During the first 10 months of 2007 the communication sector revenues reached Som 7.32 billion, which is 1.8 fold higher versus the same period in 2006. Local telecommunication, basically, is provided by JSC Kyrgyztelecom which controls 88 per cent of the local communication market.

The communication sector has essentially strengthened its influence on national economic development and has surpassed the energy sector in terms of revenue generation, investment into network and service capacity, and quality of service delivery. Communication operators are constantly introducing new technologies and expanding the range of existing communication services, resulting in more technically advanced, effective, and more convenient communication services in the country.

Figure 9: Break down of communication service market segments based on total revenue in Kyrgyzstan, 2006

36,3%

48%

5,9%9,8%

Fixed communication Mobil communication

Data transfer, telematic Other

Source: National Communication Agency(NCA) of Kyrgyzstan48

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In 2006 the telecommunication operators attracted more than US$ 80.8 million worth of investments which is 3.5 times higher than investments in the sector during 2005. Communication is the second strongest sector, after trade, which is experiencing a positive percentage growth as a contributor to GDP (in 2002 the proportion of the ICT sector within the GDP structure grew by 2 per cent and 3.1 per cent in 2006). Total expenditure in the sector grew from about Som 557.4 million in 2001 to Som 939.8 million in 2006 (29.2 per cent increase in real figures). The number of companies that use IT increased between the period 2001 and 2006 by 21.8 per cent.

According to the National Communication Agency of Kyrgyzstan, as of January 2008, there were 293 operators with a total of 436 licenses to deliver telecommunication and postal services. 49 Communication operators provide basic telephone services, using mobile communication as well as wire communication lines and networks. In large cities of the country, including Bishkek, there are Internet cafes and dial-up Internet access available for Internet users. However, based on the research done for this report on the available ICT services, it is apparent that there is a significant digital gap among cities, especially when comparing Bishkek with cities in other parts of the country. According to the 2005 data, over 500 villages are without telephones.

Figure 10: Kyrgyzstan telecommunication network

Source: EBRD50

According to the statistics presented at an ICT Conference in Bishkek,51 in 2006 the level of local network digitalization was 46 per cent (in 2005 it was 43.6 per cent); the total utilized

22

capacity of the analog telephone exchanges of JSC Kyrgyztelecom was 530,904 telephone numbers, including 225,444 digital numbers. The Tele-density is 8.4 telephone sets per 100 residents while the digitalization level of the backbone network is 94 per cent.52

Table 3: Basic characteristics of the JSC Kyrgyztelecom network

2003 2004 2005 2006

Length of telephone channels (thousands of channels/km) 3,081.19 2,944.20 3,402.70 3,554.90

- including cable main lines 142.81 195.55 210.70 421.10- satellite main lines 737.25 737.25 620.25 512.10- radio relay main lines 1,319.02 1,332.07 1,992.58 2,603.70

Length of digital long-distance and in-zone telephone channels (thousands of channels/km)

2,421.26 2,296.00 2,532.20 2,855.50

- including optical cables 229.68 272.59 216.26 229.00- as a percentage 9% 12% 9% 8%

Source: ICT Conference, Bishkek 2007

As an indication of the overall ICT development in the country, the table below compares the telecommunication sector performance in Kyrgyzstan with global averages as well as with the relevant income group.

Table 4: Telecommunication sector performance: Kyrgyzstan

Indicator Kyrgyzstan (2000)

Kyrgyzstan (2005)

Low Income

Countries Average (2000)

Low Income


World Average (2000)



International voice traffic (minutes per person) 12 17 4 5 39 30

Mobile telephone subscribers (per 1000 people) 2 105 4 77 122 342


23



n/a 15 1 15 102 816


5.3 5.9 8.4 8.7 10.2 11.7


n/a 6.4 n/a 9.6 n/a 10.5


n/a 12.0 n/a 30.1 n/a 22.0


Over the last few years the following growth trends in the telecommunication market have been observed:

• Significant growth in the mobile communication market, both in terms of quantity and in terms of revenue

• Growth in telecommunication and multimedia services provided on various equipment (mobile telephones, computers and TVs)

• Transition from network services (telephony, Internet access and paid TV) to active development of a wide range of multimedia-services (audio, data and picture services) based on the dynamic growth of mobile communication as well as broadband technologies, such as ADSL, Ethernet, 2.5G, 3G, WiMax, EV-DO, DVB-Т/H

• Reorientation of some players towards the new service markets • Narrowing down of specialization or re-profiling of businesses

The trend of formation of universal network operators or universal telecommunication-media operators, re-orientation of other players towards the specialized production and distribution of content is obvious as well as occurrence of networks that do not depend on a type, i.e., universal service-providers. Virtual operator type business models are gradually being developed.

For different levels of land-line networks and wireless networks, new technologies and formats of data communication are being developed including ADSL for telephone lines, Ethernet (ETTH) and HFC for cable connections, DVB-Т/H (Digital video broadcasting) as a new format for on-air Television, and Wi-Fi and WiMax as wireless networks for data communication. In terms of technologies, construction of new networks for the end clients (ETTH, ADSL, and 3G) are on going as well as the construction of universal multiservice NGN networks with high throughput and functionality that integrate capacities of telecommunication, cable and wireless networks.

In comparison with the previous years, the process of development of telecommunication infrastructure is at the beginning stage of steady expansion. In 2007, as well as in 2006 a

24

significant growth in interest has been expressed by existing operators, by new operators and by telecommunication agencies in rendering the following services: data transmission and telematic services; 54 local telephone communication; international, long-distance telephone communication; designing, construction and installation of networks, lines, construction, systems and electric communication devices. The number of applications for these kinds of activities is constantly growing.

2. Policy and regulatory environment

Realizing the importance of ICT, the Government of Kyrgyzstan, in 2002, developed and adopted the National Strategy on Information and Communication Technologies for development of Kyrgyzstan 55 and an Implementation Plan. The Kyrgyzstan law dated 28 December 2006, “On amendments and modification of the Law of the Kyrgyz Republic on guarantees and freedom of access to information and some other normative legal acts” was enacted to facilitate access to information.

One of the regulation methods of any given market is licensing. The state supervision over the licensed activity of communication operators in Kyrgyzstan, according to the Law of the Kyrgyz Republic on electric and postal communication, is carried out by the National Communication Agency of Kyrgyzstan. Furthermore, the Communication Agency, as the sector regulator, sets up the clear order of conflict settlement and conflict resolution among operators, among telecommunication services, among users, etc.

The current system of telecommunication market legal regulation includes normative legal acts of both general and specific nature. These acts all together regulate the processes of formation and development of the telecommunication service market, activity of participants in the market, and establish powers of the government concerning regulation of telecommunication services market. The special acts related to regulation of the given market include the normative legal acts, which cover the following issues: licensing, certification, connection of networks, tariff regulation, and distribution of limited resources.

3. Mobile market

The segment of mobile communication recorded the most significant growth among various ICT sectors; one and a half (1.5) fold annual growth in revenue was observed as a result. In total, 85 per cent of Kyrgyzstan is geographically covered by mobile communication. At the beginning of 2006 there were more than 560,000 mobile subscribers who amount to more than 10 per cent of the entire population of Kyrgyzstan.56 At the end of 2006 there were about 900,000 mobile subscribers. For the first nine months of 2007 the number reached 1.68 million people equalling 33.6 per cent of the entire population.

According to the National Communication Agency of Kyrgyzstan, in 2007 the number of mobile communication subscribers reached 2.2 million representing 42.5 per cent of the entire population. This means that the number of mobile communication subscribers almost doubles every year. It is evident that the quantity and quality of provided services have also increased.

Nine operators have obtained licenses to sell mobile communication services while only four operators (BiMoCom Ltd., SkyMobile Ltd., Katel Ltd., Аktel Ltd) are currently operational; the others are still in the development stage. The key players in the mobile communication

25

market are: Bitel GSM (owned by BiMoCom) with 78 per cent market share, Megacom (owned by SkyMobile) with 10 per cent market share, Katel (owned by Katel) with 8 per cent market share, and Fonex (owned by Aktel) controlling the remaining 4 per cent of the market.

Figure 11: Number of subscribers of local and mobile communication in Kyrgyzstan

Source: National Communication Agency of Kyrgyzstan57

In 2007 the new operator Nexi (Sotel Ltd.) entered the mobile communication market in Kyrgyzstan, making it the first mobile network to provide new 3G services. The 3G services are provided in the following oblasts: Chui, Issyk-Kul, Osh, and Jalalabat.

One of the noticeable characteristics of mobile communication in Kyrgyzstan is a significant concentration of subscribers in Chui and Issyk-Kul oblasts in the cities of Osh, Talas, Jalalabat, Batken, Naryn, Karakol and partially in the other oblasts.

4. Internet market

Over the last 5 years, the revenue of the Internet services sector demonstrated high growth rates, having increased in 2006 almost by 6 folds, compared to 2001. In 2006 the size of the Internet service market reached Som 320 million. In Kyrgyzstan, the number of Internet service provider’s tends to increase every year along with the number of subscribers and Internet users in general. In 2007 the number of service providers reached 56 while the number of subscribers reached 22,003 including approximately 8,693 corporate users (educational institutions, companies, agencies, and organizations). The total number of people using the Internet in 2006 was estimated to be 600,000 people58. According to a forecast, the total number of Internet users by 2010 will equate to one third of the population of the country59.

416430 477231541652

958000

2208457

460200440383

243375

0

500000

1000000

1500000

2000000

2500000

2004 2005 2006 2007

Local telephone communication Mobile communication

26

Socio-economic challenges have posed various constraints for Internet development in the country. Over 60 per cent of the people reside in mountainous areas, where installation of telephones and introduction of Internet requires significant capital investments. At present, only 10-15 per cent of the rural population has Internet access.

Geographically, the activities of data communication operators and of telematic service providers are concentrated in Bishkek. The total number of allocated Internet access lines (telecommunication channels/frequencies rented by operators to provide services) in Kyrgyzstan reached 733 in 2005 while the total capacity of the international Internet access channels is 33.4 Mbps.

The Internet access services offered by the four main market share holders (JSC Kyrgyztelecom, Elcat, Asiainfo, and Saima Telecom) include ADSL (xDSL) and dial-up Internet connections, as well as IP Telephony (ISDN Internet access and Internet cards are also available, as well as domain name registration, hosting and satellite communications). ADSL connections cost between US$ 15 and US$ 1,615 for speeds ranging between 64 Kbps to 8 Mbps depending on traffic (download-upload rates) and may involve extra fees of up to US$ 1 per GB for excess traffic depending on the package and provider. Dial-up connections cost between US$ 5 to US$ 64 depending on the type of package (with or without prepaid limits) and is about US$ 0.1 to US$ 0.8 per hour depending on the time of day. IP Telephony costs between US$ 0.11 and US$ 64 per minute depending on time of day and service provider. Internet cards are available at rates ranging from US$ 3.8 to US$ 6.4 depending on the face value of the cards (5 hours; 10 hours).

As a whole, Internet access development is a priority area for many providers. JSC Kyrgyztelecom, in order to satisfy growing demand, is increasing network capacities and expanding the capacity of external channels for Internet access. A strategic area of expansion of broadband access to the Internet is based on ADSL technologies. To improve and develop access to communication services, the use of new wireless technologies such as WiMax has also been proposed by experts.

5. National backbone and broadband services

Telecommunication infrastructure is unequally developed and does not cover the entire country. Installation of telephones and introduction of Internet, particularly in mountainous areas, will require significant capital investments. Access to basic communication services is restricted by the location of the lines and by the available Internet access facilities especially in rural areas.

In Kyrgyzstan the existing network of telecommunications is based on a SDH ring (see Figure 10), mainly utilizing wireless relays or microwave networks to connect all regional capitals. There are some fiber-optical cables in limited parts of the country. The existing network is adequate for providing the basic services (including voice and dial-up Internet access) in urban areas, but with some inconveniences.

The first digital wireless relay network project in Kyrgyzstan based on a synchronous digital hierarchy 60 (SDH) is under construction. The digital wireless relay SDH structure, consisting of 16 ringed wireless relay stations, is used as a basis for the network. The speed of the digital communication network on the ring is 155 Mbps, which provides 1,830 telephone channels. The equipment for the wireless relay Plesiochronous Digital Hierarchy (PDH) structure

27

was installed on the other seven stations, which were not included in the ring, with input and output capacity of 2 Mbps. The digital wireless relay stations cover the most important areas of the country. Therefore, in the event of infrastructure development in any region, it is possible to deploy reliable communication lines of any kind easily and quickly.

The project component on establishment of digital telephone stations included installation of digital telephone exchanges61, linked into a uniform network all over the country, and covered the capital, the regional capitals and large cities.

Inter-station connections in Bishkek are done through fiber optical cables based on SDH technology; connections between the cities of Bishkek, Osh, Jalalabat, Karakol, Cholpon-Ata, Talas and Naryn are based on wireless relay systems, with the use of SDH technology as well.

According to the project, the fiber optical lines in Bishkek were laid in a ring, connecting 10 digital stations that were set up during the first telecommunications project62 and 2 previously existing stations with 24 fiber cables. The configuration of the network is based on SDH STM-4 with 622 Mbps throughput, which provides each of the stations with input-output capacity standard flows of 2 Mbps. A certain amount of the capacity of the entire network is reserved for future development of the existing digital telephone exchanges and other telecommunication needs. This project has created a robust modern telecommunication network in Kyrgyzstan and has become a crucial factor in improving the telecommunications system through introduction and development of new telecommunication services in the region.

At the present time in Kyrgyzstan, the wireless alternative known as xDSL-connection, which is a broadband wireless access method (a popular way of high-speed connection to the Internet), is successfully developing. Each subscriber connected to this type of access system, alongside with Internet access, can take advantage of the wider spectrum of offered services including high-speed consolidation of Ethernet-networks, high-quality digital data communication, voice and videoconferencing as well as regular telecommunication.

6. International telecommunications access Since the Internet has been gaining popularity and as the national IT infrastructure is being

constructed to expand access to various ICT services, it can be concluded that the demand for access to international bandwidth is also growing steadily. At present, the TAE (Fiber Optical Cable System Trans Asia Europe, see Figure 6 for more details) runs through the country as follows:

Table 5: TAE network in Kyrgyzstan

Country Sub-segment From To Current Status

C 1 Border Kazakhstan (to Sarybulak)

Bishkek in service Kyrgyzstan

C 2 Border Kazakhstan (to Merke)

Bishkek in service


28

According to JSC Kyrgyztelecom, in view of the growth in demand for Internet access it is possible to assume, that by 2012 Internet traffic will use a higher speed level (about 622 Mbps) and 70 per cent of Internet channels will be rented from Russian Federation. The total throughput on external channels of Internet access in 2005 was 200,533.4 Mbps.

At present, it is not possible to assess the potential interest of the neighbouring countries in using transit channels over the territory of Kyrgyzstan because the operators, as a rule, do not reveal such information. Information on actual traffic dynamics, whereby it would be possible to define the volume of potential interest, is also not publicly available. Basic interests in establishing international transit channels over the territory of Kyrgyzstan have been repeatedly expressed by Uzbekistan, Tajikistan and China during discussions at different levels of representation.

In the framework of SCO (The Shanghai Cooperation Organization) the construction of a high-speed information main line (HSM SCO) has been proposed shows the map with the HSM SCO routing over the territory of Kyrgyzstan and is further explained in Table 6.

Table 6: HSM SCO routing over the territory of Kyrgyzstan

Interface points of the border fiber optic line

Internal sections to be determined for the WIM Name of the

neighbouring country Name of the

internal points of interface

Name of the interface points in the neighbouring

country

Already constructed

sections Sections that require

new construction

Cost of the FOLC

construction

China Sary Tash Kashkar -

Оsh – Sary Tash – Irkeshtam – Kyrgyz – China border (262 Km)

Roughly 5,000,000 dollars

Uzbekistan Оsh Andijan - Оsh – Kyrgyz – Uzbek border (4-5 Km)

Roughly 100,000 dollars

29

All over the specified FOLC section (regions depicted in Table 6) the installation of a 24-strand fiber optical cable is planned.64

C. Tajikistan

1. Overall telecommunications sector development

In Tajikistan, after sovereignty was obtained in September 1991, the civil conflict of the mid 90’s caused huge damage to the national economy. The country’s development was thrown back several decades. The telecommunication infrastructure inherited from the former Soviet Union was almost completely destroyed and the remaining equipment has exhausted its capacity.

Other significant impacts on the telecommunications network included energy crisis and natural calamities, which occurred in Tajikistan in recent years (mud floods, avalanches and flooding). Due to the civil conflict and economic hardships, a significant number of highly skilled personnel migrated out of the country; in particular 4,426 experts involved in the telecommunication sector left the country.

The above-stated reasons, along with the lack of budget and financing alternatives, have constrained efforts to attract local and foreign investments into the telecommunication market in Tajikistan and have caused significant delays in telecommunication infrastructure development and introduction of ICT in general.65

According to the report 2007 Asia – Internet, Broadband and Convergence Statistics, the level of penetration of mobile phones in Tajikistan was 9 per cent in 2006. Fixed and mobile communication reached about 15 per cent of the population at the beginning of 2007 according to the same report. The telecommunication system in Tajikistan is the least advanced among the surveyed four countries. In 2007 the telecommunication network of the country covered less than 5 per cent of the population, according to the 2007 Asia - Telecoms, Mobile and Broadband in Central Asia.66

As an indication of ICT development in the country, the table below compares the telecommunication sector performance in Tajikistan with the global average as well as with the relevant income group.

Table 7: Telecommunication sector performance: Tajikistan

Indicator Tajikistan (2000)

Tajikistan (2005)

Low Income


Low Income





International voice traffic (minutes per person) 4 10 4 5 39 30

30



Broadband subscribers (per 1000 people) 0.0 0.0 0.0 0.9 3.6 41.6


0 0 1 15 102 816


1.3 0.8 8.4 8.7 10.2 11.7


n/a 23.3 n/a 9.6 n/a 10.5


n/a 12.3 n/a 30.1 n/a 22.0


2. ICT policy and program

The State Programme for the development and introduction of ICT in Tajikistan was developed with the view of implementing the State Strategy for ICT for Development of the Republic of Tajikistan for 2006 - 2008, passed by a decree of the President of Tajikistan in November 2003 (№ 1174). The State Programme includes the following stages:

• Implementation of priority programs and areas of the program which enhance cooperation of national and local government agencies with citizens and business entities;

• Development and introduction of basic information systems; • Setting up of information infrastructure for national and local government agencies; for

the budgetary (organizations funded by government budget) and for the not-for-profit organizations;

• Establishment of systems of electronic trade and public access points open to the general public;

• Deployment of ICT for the promotion of goods and services made in Tajikistan in the global markets;

• Training and retraining of human resources in the ICT sector; • Improvement of legal and regulatory frameworks in the area of ICT; • Integration of technical solutions into a uniform complex; • Modernization and improvement of the existing information systems.

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The programme aims to expand the construction of fiber optic and wireless relay communication lines on the basis of SDH and DWDM technologies, covering the administrative structure68 of the territory of the country. The construction of a high-speed network for data transmission in all cities and regional capitals in the country will certainly be an important step forward in improving all aspects of people’s lives.

In the area of modernization of government agencies, including local governments, the following measures will be implemented through the programme:

• Acceleration of information exchange in society as a whole, including among citizens and government agencies;

• Equipping the majority of workplaces in government agencies with computers and means of information sharing;

• Increasing the efficiency of the national and local governments through the introduction of ICT;

• Creation of fundamentally new opportunities for monitoring of the processes in the economy and in society and adoption of appropriate decisions on regulation of these processes;

• Entering information about the country’s state property into electronic databases and data registers;

• Reduction in the time required for document processing between state authorities and local government agencies by up to 4 hours;

• ICT capacity building among the personnel of governmental institutions and local government agencies;

• Introduction of ICT certifications into the system of training and retraining of human resources;

• Introduction of electronic transactions in retail and wholesale trade; • Availability of electronic mass media amounting to at least 50 per cent of all mass-

media outlets in the country; • Providing Internet access through home computers to at least 13 per cent of the

population in the country; • Encourage frequent visits and use of the official websites of the government agencies.

The implementation of the Programme will affect all areas of public life in Tajikistan. It is expected to lead to an increase in the number of business entities and increased competition in the ICT sector. Incentives for observance of legal requirements regulating activities in the ICT sector will be substantially increased. By undertaking activities in the above areas, the State Programme envisages the following outcomes:

• Optimization of information flows among government agencies, business entities and the population at large

• Essential increase in the throughput, reliability and security in transfer of data and information on broadband telecommunication networks

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• Mass introduction of ICT to all sectors of public work on standardized information and telecommunications infrastructure; i.e. use of an electronic trade system

• Providing affordable Internet access to all groups of people

As a whole, the implementation of the Programme will enhance the competitiveness of the economy of the country by reducing transaction costs and improving the quality of products and services. It will also enhance the efficiency and effectiveness of the delivery of various government services and the democratic nature of the government at all levels. Eventually, it will lead to improved quality of life of the population at large.

The creation of conditions for accelerating the introduction of ICT in all areas of public life and business is considered as an important way forward, since only higher growth rates in this area will help reduce the gap with the developed countries, as well as avoid information and economic isolation from the world economy and community, and provide dynamism of interregional integration processes.69

3. Mobile communication market

Active development of the telecommunication market and new technologies, such as access to the Internet, IP-telephony and GSM standard mobile communication, appeared in Tajikistan in 1998. However, compared to other countries in the region, the mobile market in Tajikistan is still considerably small. The chart below (Figure 12) shows that the number of mobile communication subscribers in Tajikistan is 5.8 people per 100 persons, which is approximately half the number of subscribers in Kyrgyzstan and 6 times lower than in Kazakhstan.

Figure 12: Number of mobile communication subscribers per 100 people in CIS countries

Source: Expert Consulting Agency 70

0,7 3,4 6,12,0 1,6

6,513,0

5,8 4,410,0

32,9

84,0

0,9

24,8

49,9

0

10

20 30

40

50

60 70

80

90

Tajikistan Uzbekistan Kyrgyzstan Kazakhstan Russian Federation

2003 2004 2005

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The largest non-governmental Internet provider, JSC Babylon-Т, during the first quarter of 2008, plans to launch a WiMах network. Not including Dushanbe, the network will cover the largest cities in Tajikistan, namely Kurgan Tyube, Kulyab and Khojend. According to the management of JSC Babylon-T, WiMах technology is an optimal technology for provision of high-quality voice and data transfer over mountainous terrains in Tajikistan; it also provides reliable security during communication. With time, this kind of communication will completely replace dial-up connections and will compete with ADSL.

JSC Babylon-Mobile provides the entire spectrum of modern services to the subscriber based on the GSM 900/1800, and 3G-UMTS (the 3G network was launched in 2005) standards. Successful launch of 3G has permitted the expansion of the already wide spectrum of services provided by the company. In addition to video-calls and 3.6 Mbps. Internet access speeds the following services are available for the subscribers: SMS, MMS Voice-mail, Call register,71 WAP, GPRS, Prepaid cards, Customer service call center, SM US$-Money, 72 ICQ-SMS, Roaming and International roaming, Mobile TV,73 content services (including entertainment services such as pictures, games, music, chat), games and many other things.

4. Internet and broadband markets

E-mail and Internet access services are provided by 19 Internet providers. The number of potential users74 is about 600,000. Approximately 2,000 web sites have been setup under the domain “tj”. Access to the Internet is provided based on the following technologies: Wireless – Ethernet, ADSL, SHDSL, xDSL, and WiMAX. The number of allocated lines for Internet access (number of dial-up modem pools) has grown by 26 per cent between 2005-2006.

Babylon-T user fees for Internet access on the allocated channel in view of traffic (without VAT) depends on the speed of data transfer ranging from US$ 25 to US$ 200 a month; prepaid external traffic transfer rates range from 250 to 3,096 MB; prepaid internal traffic transfer rates range from 700 to 2500 MB. The fee for traffic excess ranges from US$ 0.02 to US$ 0.05 per MB. For the connection to the allocated channel, US$ 100 is charged.

The monthly fee for Internet access on the broadband asymmetric channel (without VAT) without taking into account the traffic, depending on the speed of data transmission (64/33.6 - 256/128 Kbps.) ranges from US$ 170 to US$ 576; the fee is contract based for speeds above 256/128 Kbps. The connection fee is US$ 100. User's fee for Internet access on the symmetric channel (without VAT), depending on the speed of data transmission, ranges from US$ 210 to US$ 399; the fee is contract based for the speeds above 256 Kbps.

Access is also sold by the hour at speeds between 64 - 128 Kbps. The minimum monthly fee for this type of access ranges from US$ 50 to US$ 100 with a setup cost of US$ 100. The fee for Internet access (without VAT), depending on the time of a day, varies from US$ 0.20 to US$ 0.40 per hour.

According to the website survey (08.06.2006 – 24.02.2008) done by Intercom Ltd. (Tajikistan)75 the visitors of the website consider the following as the most modern Internet access: WiMax – 30.2 per cent, HDSL – 20.6 per cent, ADSL – 12.7 per cent, dial-up – 3.2 per cent.

The fee for ADSL with unlimited access (guaranteed symmetric access) varies, depending on the speed (19.2 - 1,024 Kbps), from US$ 30 to US$ 1,800 per month.

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In general, in relation to the Internet service market, it should be noted that, despite the advanced level of the telecommunications market in the country in terms of introduced technologies, fees for Internet service (compared to average wages) are much higher than in other CIS countries. Tajikistan has one of the lowest Internet access per capita in the world. Representatives of telecommunication companies cite high fees associated with satellite communication channels as a cause. Probably, this is one of the prohibitive factors, which hinders Internet accessibility to the majority of families in the country, and this issue should be seriously addressed by the government.

By the beginning of 2008, the number of Internet users across Tajikistan reached 441,469 subscribers.76

5. National backbones

The country has been upgrading and developing the telecommunications infrastructure at the national level so as to increase geographical coverage and capacity.

The Digital communication line Dushanbe – Hudjand (digital wireless relay link) and the Tajikistan section of the fiber optic communication line of the TAE Shanhai – Frankfurt section was set in operation. Also, there was expansion of the network of trunk communication by using communication satellites based on modern digital communication equipment DAMA (the Demand Assigned Multiple Access). This network includes 40 DAMA stations and covers all hard to reach areas of Tajikistan.77

Figure 13: Perspective scheme of primary telecommunication network of JSC Tochiktelecom (satellite lines of communication, DAMA network)

Source: Ministry of Transport and Communications, Tajikistan78

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In 2003 in Dushanbe the telephone exchanges were updated to migrate to digital technologies. The SDH STM-16 system equipment that was installed in all automatic telephone exchanges in Dushanbe now enables 320 streams at 2 Mbps on the fiber optical ring. The total length of the cable within the city is 43.8 km. At present, there are 316 telephone exchanges including 80 digital and 236 analog systems in the country. The total capacity of the telephone exchanges is 280,282 numbers. The installed capacity of local communication based on ATS (analog telephone switchboard) in 2006 was 371,417 telephone numbers (in 2004 it was 327,876 telephone numbers).

In 2004 the Government of Tajikistan developed the project “Transport Networks of Telecommunications in Republic of Tajikistan” with a budget of US$ 20 to 25 million. The project aims to construct a fiber optical communication line, using dense wavelength division multiplexing (DWDM) and SDH technologies. Data transmission in the proposed network is based on STM-1, STM-4, and STM-16 with transfer speeds of 155 to 2,048 Мbps. The project will allow further development of the network in view of potential opportunities of inclusion of additional digital channels in the network as well as cable television which would enable to have digital telephone exchanges in the cities and settlements of the country with access to internal and international traffic. The implementation of the project will expand Tajikistan’s access to the Middle East, Afghanistan, Pakistan, China and other countries in South-East Asia. Such a modern telecommunication infrastructure in the country will attract more investments into the economy.

The first two phases of the project (creation of a transport network inside Dushanbe, and also creation of the network connecting regions of the country with the capital) have already been completed and have been implemented by JSC Tochitelecom. The third and last phase focuses on the initial stage of connecting Tajikistan with the neighboring countries of Afghanistan, Kyrgyzstan, China, and Uzbekistan. In order to implement the third phase, the National Communication Operator is going to involve local investors including telecommunication companies.

D. Uzbekistan

1. Overall telecommunications sector development

Since becoming independent in 1991, Uzbekistan has demonstrated its commitment to using ICT for development and has made strong efforts to improve and build up the legal and regulatory framework for promoting various aspects of ICT. During the past years, a modern telecommunication network has been developed which included the upgrading of the switching equipment, and migration and expansion into digital networks. It is clear that the telecommunications sector is being reorganized while the processes of liberalization and capitalization are underway.

As a result of various projects and programs focused on modernization and development of telecommunication networks in all regional centres of the country, digital intercity stations have been installed, and fiber optical cables and digital wireless relay links have been mounted on intercity and interregional communication lines. There are more than 2,000 switching systems with a combined capacity of more than 2 million telephone numbers on the local telecommunications network. Presently, about 82.3 per cent of the country wide fixed telephone

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lines are digital. There is 100 per cent digital telecommunications network coverage in towns and district centres, while the coverage in rural settlements stands at about 90 per cent, of which 52 per cent is digital.

Figure 14: Backbone digital telecommunication network of Uzbekistan

Source: Presentation of Mr. Khakim Mukhitdinov, General Director, JSC “Uzbektelecom” at the 5th Summit on Information and Communication Technologies – ICT Summit 2007 held on 27-28 September 2007 in Tashkent, Uzbekistan.

The dynamism of ICT development is evident in the fact that major foreign players from the ICT field are coming into Uzbekistan, especially in the telecommunications industry, which has resulted in substantive achievements (e.g., the number of mobile subscribers has almost doubled each year, NGN services are gradually showing up in the market).

Another notable trend is that an increasing number of local ICT companies are joining the IT Association of Uzbekistan to promote their “single voice” and interests in the government’s regulation of the ICT field and to present their products and solutions not only within the country but also abroad.

In 2007 organizations representing the ICT sector delivered ICT products and services valued at Som 906.49 billion (US$ 702 million based on the exchange rate as of 1 January, 2008 ) with a growth rate of 145.4 per cent when compared with 2006. The annual export figures for the sector in 2007 grew by 108.7 per cent and reached US$ 31.09 million (US$ 28.59 million in 2006).79 The share of foreign direct investments amounted to US$ 206.3 million which is 94.4 per cent of all investments into the ICT sector.

As an indication of ICT development of the country, the table below compares the telecommunication sector performance in Uzbekistan with the global average as well as with the relevant income group.

It is clear from the comparisons that Uzbekistan has done very well in providing telephone access compared with other countries in the same income group, but it is still less than half of the world average. Uzbekistan has done equally well to provide affordable fixed, mobile and Internet

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services to the public, compared with the figures of the income group and world average. In terms of mobile subscribers, the growth is much slower than other countries in the same income group; and the number of mobile subscribers in Uzbekistan is less than one tenth of the world average. To a lesser extent, the same trend applies to the Internet subscribers. Compared with the world average of 137, the figure in Uzbekistan in 2005 was 34. The gap between Uzbekistan and other countries is larger in the area of broadband subscribers and international Internet bandwidth.

Table 8: Telecommunication sector performance: Uzbekistan

Indicator Uzbekistan(2000)

Uzbekistan (2005)

Low Income


Low Income





International voice traffic (minutes per person) 6 n/a 4 5 39 30





0 1 1 15 102 816


2.6 1.0 8.4 8.7 10.2 11.7


n/a 1.8 n/a 9.6 n/a 10.5


n/a 5.7 n/a 30.1 n/a 22.0


The telecommunications market in Uzbekistan is represented by fixed line communication, mobile communication and Internet users. Figure 15 provides the respective trends from 2002 to 2007.

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Figure 15: Fixed line, mobile and Internet usage rate and trends (as a percentage of the total population), Uzbekistan

Source: Aggregated information on the basis of data obtained from JSC UzbekTelecom, State Commission on Radio Frequencies of the Republic of Uzbekistan, UzACI

2. ICT policy and regulation

In 2002 according to a Decree by the President of Uzbekistan, the Coordination Council for the Development of Computerization and ICT (ICT Council) was established to spearhead the formulation of ICT enabling policy and pursue inter-agency coordination. This council is the highest level local public service body involved in the coordination of computerization and ICT development in the country. The same Presidential Decree transformed the Agency of Post and Telecommunication into the Communication and Information Agency of Uzbekistan (UzACI) and tasked it to also work as an executive body of the ICT Council, giving the agency the authority to establish regulations and licensing regimes in the telecommunications industry.

UzACI also supervises the activities of Uzbektelecom, which is the largest national telecom operator covering the country’s territorial borders with its network and services. The Resolution of the Cabinet of Ministers of Uzbekistan #45381 states that “… the operators and providers undertaking their activities on the basis of relevant licenses, can access the international telecommunications networks solely through the Uzbektelecom technological base”. Thus, the resolution stipulates that Uzbektelecom JSC is the only organization in Uzbekistan that can legally provide international access to the Internet making it the only legitimate option for ISPs.

In 2006, the Association of IT Companies and Organizations of Uzbekistan (IT Association) was established to consolidate the efforts of different stakeholders towards further development of the ICT sector, and currently around 50 companies are members of the association.

As with other countries, ICT development in Uzbekistan is ensured through the implementation of national programs. In this regard, the Decree of the President of the Republic of Uzbekistan #UP-308082 was an important first step towards identifying ICT development

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objectives and planning for countrywide introduction and implementation of activities aimed at achieving these goals. The main purpose of the decree is to set the framework for the improvement of telecommunications infrastructure, to develop national Internet and data networks, create a software industry, improve the quality of information resources, ICT education, training, and for the development of a competitive environment in the ICT sector as a whole. The decree is implemented under the Programme on Computerization and ICT Development for 2002-2010.

During recent years, a modern data network has emerged within the territory of Uzbekistan, switching equipment has been modernized, and digital networks are being constructed and expanded. In this regard, the Resolution of the President of the Republic of Uzbekistan #PP-58983 was issued to further coordinate the development and construction of new digital systems, and assure coordinated, harmonized relations among various telecom operators and providers and their management systems, as well as to ensure reliability of telecommunication networks and services in life threatening and emergency situations.

Today in Uzbekistan, more and more modern and progressive types of services are rapidly developing, and are most apparent in the telecommunication and mobile markets. To further develop these services and enhance their coverage throughout the country, especially in the regions of Uzbekistan, the Resolution of the President of the Republic of Uzbekistan #PP-64084 was issued, endorsing the proposal of UzACI for the establishment of an information-service infrastructure in rural areas, and called for the use of existing equipment of telecom operators and small-size entrepreneurs. At the same time, this resolution resulted in a substantive reduction of government fees for issuing licenses to small-sized entrepreneurs who provide telecommunication services in rural areas.85

3. Fixed line communication

As of 1 January 2008 in Uzbekistan there were more than 2,000 switching systems with a combined capacity of more than 2 million telephone numbers on the local telecommunications network, 82.3 per cent of which are digital.

Figure 16: Installed and used capacity (number of subscribers)

of telephone stations, Uzbekistan

Figure 17: Telephone stations’ digitalization trends, Uzbekistan

Source: JSC UzbekTelecom

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In 2007 the number of fixed telephone subscribers reached 1,865,500 corresponding to 6.9 per cent86 coverage of the total population of the country. The utilization of the installed capacity of telephone stations reached 90 per cent while the coverage rate of digital telecommunications networks in towns and district centers is 100 per cent. The coverage rate of rural settlements with telecommunications networks is about 90 per cent, and 52 per cent of them are digital. Table 9 shows the current fixed-line telephone prices from Uzbektelecom.

Table 9: Uzbektelecom fixed-line telephone tariffs

Residential Business

Connection (installation) fee Monthly fee Local call

(per minute)Connection

(installation) fee Monthly fee Local call (per minute)

14,790 800 2.6 32,635 1,643 2.6

Source: Uzbektelecom. All tariffs are in Som, US$ 1 = Som 1,291.23 (1 January 2008)

4. Mobile communication

It is evident that growth in mobile subscribers is increasing throughout the country. In November 2005 the first million mobile subscribers was recorded, while, at the beginning of 2007, the number reached 2.7 million. During 2007 the number of mobile users increased by 3.1 million and reached 5.8 million by the end of the year. Thus, the subscriber growth rate reached 216 per cent in 2007 compared with the same figure in 2005 and a similar growth rate is expected in 2008.

Figure 18: Mobile usage rate and user trends, Uzbekistan

Source: State Commission on Radio Frequencies of the Republic of Uzbekistan87

In January 2008 the number of mobile subscribers in Uzbekistan exceeded 6 million. It is expected that by the end of 2008 the number of mobile subscribers will reach 12 million people with a level of penetration of over 40 per cent.

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During the last 5 years and up to now, the mobile communication market in Uzbekistan has been the key driver of growth of the overall telecom market and there is still a big growth potential in this sector. This estimate is based on annual trends of the mobile market in Uzbekistan and the increasing penetration rate. However, compared with, for example, Russian and Ukrainian markets that have reached a maturity stage (with a penetration level of over 100 per cent), the mobile market in Uzbekistan is still in its growth stage (with a penetration level of just over 20 per cent). Experts from Avesta Research 88 predict continued growth in the subscriber base in Uzbekistan in the next 5 years.

5. Internet

As of January 2008, the estimated number of Internet users in Uzbekistan reached 2,015,000. The growth trend in Uzbekistan was illustrated by the presentations made during the Tashkent workshop in 2007 as depicted in Figure 19 below.

Figure 19: Uzbekistan Internet growth

Source: NTT West and InfoComm89

Figure 20: Internet usage rate and user trends: Uzbekistan

Source: UzACI

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The simplification of licensing procedures for operating Internet public access points brought about an increase in their numbers. As of January 2008, the total number of public access points in the country reached 774 with a total number of computers in such centers with access to the Internet equal to 5,378.

Figure 21: Internet public access points by year, Uzbekistan

Source: UzACI

The household survey undertaken in February 2008 revealed notable characteristics in the Internet usage patterns of households and individuals. The survey demonstrated that the majority, or 54.2 per cent, of Internet users go online in Internet cafés (54.2 per cent), followed by at their workplaces (24.4 per cent), and at home (20.6 per cent). As for the type of access, a dial-up connection still dominates with 84.9 per cent of households accessing the Internet through this connection method. xDSL Internet usage among households stands at 7.5 per cent. Only 3.3 per cent of the total respondents access the Internet every day. Over 60 per cent of users go online to spend leisure time, while, over 50 per cent search for information, communicate and undertake research, education and learning activities. The survey also showed a difference between males and females as to why they use the Internet. In addition, the younger the user, the more they tend to focus on spending leisure time and communicating over the web.

6. Broadband communication

Although the broadband growth trend is accelerating at a fast pace in Uzbekistan, the number of users remains very small. By January 2008, there were about 20,000 broadband subscribers90 (8,850 by January 2007) and the annual growth exceeded 130 per cent. xDSL technology appears to be the preferred method of broadband connectivity for 85 per cent of the total subscribers, while, 5 per cent of the broadband subscribers use wireless LAN (Radio Ethernet) to go online. The majority of broadband subscribers (97.6 per cent) are located in Tashkent although the ISPs are starting to offer their services in the regions (i.e., Samarkand, Andijan, Navoiy, Fergana, Bukhara, Khorezm) of Uzbekistan as well.

By January 2008, according to estimates based on data provided by leading ISPs (see Figure 25), there were about 17,000 individual broadband subscribers in Uzbekistan with most of them (99 per cent) living in Tashkent city.

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Figure 22: Residential broadband subscription trends (estimates), Uzbekistan

Source: Aggregated information on the basis of data obtained from ISPs

The residential xDSL market is not yet saturated pointing to a huge potential for growth, and the number of people using the available assortment of ISPs is increasing. The residential xDSL market is dominated by Sharq Telecom and Sarkor Telecom. Other popular xDSL service providers include Buzton and TPS. The majority of individual subscribers pay for only 128 Kbps or 256 Kbps speed connections, which are in fact not guaranteed speeds but are in reality dependant on best available speeds. Less than 10 per cent of subscribers are connected at the speed of 1 Mbps.

Figure 23: Residential broadband access speeds, Uzbekistan

Source: Local ISPs91

Only a few ISPs are offering their services using xDSL technology in the regions of Uzbekistan, due to low purchasing power of the population, resulting in a small number of xDSL subscribers in the regions.

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According to the data provided by the State Statistics Committee, leading ISPs, and estimates of experts there were about 3,800 corporate broadband subscribers in Uzbekistan (Figure 24).

Figure 24: Corporate broadband subscription trends (estimates), Uzbekistan

Source: Aggregated information on the basis of data obtained from State Statistics Committee and ISPs

The corporate broadband market is dominated by UzNet, Sarkor Telecom and Sharq Telecom that offer their services using leased lines, ISDN, Wireless Ethernet and xDSL technologies with xDSL being a dominant technology in the market. The majority of corporate users are connected at 128 Kbps speed (48.41 per cent) and almost 90 per cent of corporate users subscribe to the packages that provide only speeds of less than 512 Kbps (Figure 25).

Figure 25: Corporate broadband access speed, Uzbekistan

Source: Local ISPs92

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Though the majority of corporate users are located in Tashkent city, their number in such regions of Uzbekistan as Samarkand, Andijan, Navoiy, Fergana, Bukhara, and Khorezm is also noticeable amounting to over 30 per cent of the total (Figure 26).

Figure 26: Corporate broadband Internet usage rate by regions of Uzbekistan

Source: Data from ISPs

3G development in Uzbekistan is still in its infancy although all three of the GSM operators in Uzbekistan (MTS, Beeline and COSCOM) have already received licenses from UzACI for the creation of 3G networks. Moreover, during the ICT EXPO2007 exhibition held in Tashkent in September 2007 the first 3G call was demonstrated by MTS.

However, according to expert opinions, it is unlikely that the existing equipment of mobile operators as well as the insufficient level of penetration and high prices of mobile Internet over GPRS,93 will allow launching of real 3G services in the near future. At the same time, given the increasing demand for mobile Internet over GPRS among the population, the 3G technology is anticipated as a solution for reducing Internet access prices, ensuring high speed connections to the Internet, and providing VoIP, m-Commerce and other services. A company called COSCOM plans to create a pilot 3G network in the second half of 2008 in Tashkent. The company will update its mobile network in Uzbekistan in the next two years and planned foreign direct investments will exceed US$ 150 million of which US$ 25-30 million will be used for the deployment of a 3G network. MTS also announced its intention to start the first phase of 3G and WiMAX networks in 2008, through which MTS subscribers will be able to take advantage of new innovative services.

Of course government support in such areas as customs policy on import of telecom equipment by providers who develop data network infrastructures and provide various services including broadband connections, solving issues with external international channels, and creation of favorable conditions for expansion will play a key role in further broadband development tendencies.

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7. International bandwidth

The telecommunications system of Uzbekistan has direct international channels spreading in 28 directions with access to 180 countries in the world through fiber-optic and satellite systems. Four connections are used for data transfer (through London (34 Mbps), Kazakhtelecom (STM1), Rostelecom (STM1) and satellite (InSAT)) and the remaining connections are used for telephony services including 3-4 satellite connections (through Rostelecom, Golden Telecom, Turkey, UAE, Republic of Korea, Japan, Tajikistan, Kyrgyzstan, Turkmenistan, Germany, USA, UK, France, Israel, India, Italy, Singapore, and Pakistan).

To ensure user access to international information networks, including the Internet, direct connections through satellite and terrestrial digital channels are in place. The bandwidth of international channels providing connectivity to the Internet as of January 2008 was 362 Mbps. Figure 27 shows the yearly international bandwidth growth rate from 2003 to 2007.

Figure 27: International Internet bandwidth trends by year, Uzbekistan

Source: UzACI94

The usage rate (utilization by ISPs) of the total international bandwidth of 362 Mbps as of January 2008 stood at about 85 per cent.95 This usage rate partially depends on the fee that ISPs pay to Uzbektelecom for every Mbps of incoming traffic.96 However, it is necessary to note that ISPs plan to further build on their accomplishments and request for additional Internet bandwidth from Uzbektelecom which, in fact, always has some unused capacity. For example, at the beginning of February 2007, Sarkor Telecom, one of the leading ISPs in Uzbekistan, reported on the expansion of its international channel to 40 Mbps.97 By mid-2008 Sarkor Telecom plans to expand its international channel to 100 Mbps based on the opportunities provided by Uzbektelecom. This has become possible because of the capacity of Uzbektelecom to provide an additional 60 Mbps of international channel access to the company. In February 2008, in response to a rapid increase in the number of subscribers, Sharq Telekom expanded its international channel to 70 Mbps.98

The international bandwidth allocated for individual ISPs is utilized to its full capacity at almost all times. The graph shown in Figure 28 obtained from Sharq Telecom ISP demonstrates

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that during the “peak” hours (from 9 a.m. to 9 p.m.) the bandwidth loading for incoming traffic is close or equal to 100 per cent. The bandwidth loading for outgoing traffic (all Internet connections are symmetrical – e.g., STM1 155/155) is about 4 times less. The situation is about the same with other ISPs in Uzbekistan.

Figure 28: International bandwidth loading (Sharq Telecom ISP), Uzbekistan

Source: Sharq Telecom99

8. Challenges and future directions

ICT development in Uzbekistan has progressed at a steady pace during the past years. Several years ago, there were only a few households with computers connected to the Internet, but currently many online services are available to end users. However, there still is the outstanding issue of bringing the Internet to every household, especially in the rural areas, as mandated by the national ICT programmes.

It is obvious that reliable broadband infrastructure will continue to play an important role in social and economic development of the country. According to experts from leading ISPs, the demand for the following Internet services that are currently available in Uzbekistan will increase in the future and drive the development of broadband services in the next 5 years:

• IP-telephony and IP-TV

• Entertainment-related content (e.g., music, movies, etc) • Elements of e-Government (e.g., interaction with public authorities and various

regulators such as filing of tax returns, registration of patents, permits, visas, reference services, etc.)

The demand for the following new Internet services (or services that are not widely available in the market in Uzbekistan) may emerge in the next 5 years with the development of broadband communication:

• e-Commerce and Internet banking • e-Learning • e-Health including telemedicine

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• e-Government initiatives, including management of public and private transportation in the cities of Uzbekistan and traffic management systems

• Protection of public and private property with the use of video webcasting, etc.

Based on the current trends and estimated growth in the use of ICT applications in various socio-economic sectors, experts from leading ISPs estimated the growth rates of the number of Internet users, and the number of users with broadband connections to the Internet in Uzbekistan. Projections for these growth rates for the next 5 years are shown in Table 10.

Table 10: Estimated number of Internet users in Uzbekistan from 2009 - 2013

Date Estimated number of Internet users

Estimated number of users with broadband

connection100 01.01.2009 2.6 million 180,000 01.01.2010 3.0 million 250,000 01.01.2011 3.5 million 450,000 01.01.2012 4.2 million 1 million 01.01.2013 5.0 million 2 million

Source: Estimate based on the figures provided by ISPs

This growth pattern is then translated into an estimated growth of traffic and required capacity of international channels (providing Internet connectivity) that will fully meet the market needs in the next 5 years (Table 11).

Table 11: Estimated International bandwidth needs in Uzbekistan from 2009 -2013

Date Estimated need for International bandwidth

01.01.2009 0.6 - 0.75 Gbps 01.01.2010 1.0 - 1.5 Gbps 01.01.2011 2.0 - 2.5 Gbps 01.01.2012 3.0 - 4.0 Gbps 01.01.2013 5.0 - 6.0 Gbps

Source: Estimate based on the figures provided by ISPs

E. Issues, market, potential, and policy environment

1. Barriers to broadband usage

Based on the national reports, barriers to broadband usage could be summarized and categorized as given below. The examples mentioned are extracted from national reports and they are applicable to all the countries to a varying degree.

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(a) Taxation system

In Uzbekistan, until recently the entrepreneurs were paying a 10 per cent single income tax. However, currently the tax inspection representatives require 33 per cent income tax to be paid by entrepreneurs. This places additional financial burden on any aspiring ICT entrepreneurs. Furthermore, the removals of the majority of ICT spare parts and equipment from the Annex of the State Customs Committee's Resolution #2-5/21 (30 March 2007)101 resulted in an increase in telecom equipment prices, which in turn increased the financial expenditures of telecom companies working on development of telecommunication networks of the country. The country already experiences relatively high costs for end-user equipment (around US$ 200-400) to enable wireless connections and a small number of mounted base stations.

This customs policy regarding telecom equipment could be addressed by possible creation of customs preferences to stimulate business interests of operators and providers in expansion of their networks and in building telecommunication infrastructure with better quality and speed with lower installation fees for users.

(b) Telecom licensing and regulation

As mentioned earlier, the state supervision over the licensed activities of communication operators in Kyrgyzstan, according to the Law of the Kyrgyz Republic on Electric and Postal Communication, is carried out by the National Communication Agency of the Kyrgyz Republic. Furthermore, the Communication Agency, as the sector regulator, sets up clear order of conflict settlement and conflict resolution among operators, among telecommunication services, among users, etc. However, at present, the existing system of telecommunication sector's regulation does not seem to meet the requirement of telecommunication market development. These factors include the following:

(i) Absence of effective mechanisms regulating provision of connection services (ii) Restriction of market capacity by the national communication operator and creation of

unequal market conditions for it (iii) Lack of consistent implementation of tariff regulation mechanisms (iv) Lack of mechanism for implementation of the right of the citizens on access to

communication services in all settlements of the Kyrgyzstan.

With a view of improvement of regulation, the legislation in Kyrgyzstan should provide the following:

(i) Regulation of relations in the field of communication (ii) Information security (iii) Stimulation of development of services of communication and commerce (iv) Harmonization of the national legislation with international regulations with due

respect to specificity of the national legislation102

In the case of Tajikistan, the report found that ICT regulation did not cover a variety of existing activities and governmental services provided to the citizens and organizations in the area of ICT; development of information resources and management in this area were limited.

Among the unresolved issues the following are worth noting:

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(i) Lack of standard regulation providing rights of citizens to have access to information, including procedure of access to information and implementation mechanisms

(ii) Lack of procedure for planning, examination, approval, financing and control of information facilities

(iii) Absence of principles for providing information (completeness, timeliness, reliability) in regulation

(iv) Limited step-by-step development of the procedure of information dissemination by governmental agencies to citizens and all companies as well as use of electronic messages and information networks for such activity

(c) Access to international telecommunications networks

One of the key issues that affect the substantive growth of broadband development and its usage in Uzbekistan is the access to international telecommunications networks. According to the Resolution of the Cabinet of Ministers of Uzbekistan #453 (30 September 2004) "On additional measures for privatization of Uzbektelecom joint-stock company", telecom operators and ICT service providers with relevant licenses can access the international telecommunications networks solely through Uzbektelecom telecommunication networks.

Today's overall international bandwidth of 362 Mbps more or less satisfies current needs, although the potential is much higher and it can reach 500 Mbps. Based on calculations of Uzbektelecom, the current usage of international channels is about 85 per cent and, according to a Uzbektelecom's estimate, at the beginning of the 2nd quarter of 2008 at least another 155 Mbps of bandwidth would be needed and another 155 Mbps before the end of 2008. It is estimated that in 2009 the organization of additional international telecommunication channels with 622 Mbps of bandwidth will be required. The recent statistics from Uzbektelecom on international Internet (IP) bandwidth and its usage rate is as follows:

Table 12: Estimated usage rate of bandwidth in Uzbekistan from 2006 to 2008

Date Available bandwidth (Mbps)

Used bandwidth (Mbps)

Usage rate (%)

1 Jan 2006 112 66 59

1 Jan 2007 199 156 78

1 Jan 2008 362 275 76

1 Feb 2008 362 300 83

Source: Calculated based on Uzbektelecom figures

Based on this dynamics of the Internet usage growth, the bandwidth of the international channels in 2008 should be over 600-700 Mbps to fully satisfy the market needs. The current total monthly volume of downloaded traffic is at about 65,000 GB and uploaded traffic is at about 20 GB (based on the average usage rate statistics of Uzbektelecom).

Undoubtedly, the need for broadband connections will grow in the near future, taking into consideration the increasing usage of ICTs and current and planned projects in the field of telecommunications and ICT infrastructure development. If the usage of the Internet resources

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and services keep to today's trends and local Internet resources continue to develop slowly, of course the number of Internet users will grow substantively faster than the growth of the international bandwidth necessary for satisfaction of user demand.

Although Uzbektelecom is a state-owned telecommunication company, it is also a business entity which currently undertakes commercial activities. This creates a conflict of interest, without a flexible tariff policy, due to monopoly of access to international telecommunications networks. One of the possible solutions could be the establishment of a separate company, a state-owned but non-commercial entity (perhaps under UzACI), objectives of which should include proper distribution of international bandwidth between operators and providers, constantly monitoring the sufficiency of the bandwidth and taking appropriate measures when possible bottlenecks are observed.

At the same time, it is also obvious that the national Internet development directly depends on co-operation at the regional and international levels with other countries, especially, in the case of Uzbekistan, where more than 90 per cent of the Internet traffic falls under international Internet traffic, which transits through the territories of several countries. The capacity of the existing TAE highway is not enough to satisfy current and future needs.

This is equally true for Uzbekistan, as well as for other countries in the region including Kazakhstan, Kyrgyzstan, and Tajikistan, as telecommunication services markets in these countries have only recently begun to be developed. Given relatively low international bandwidth capacities of these countries, except in Kazakhstan, the cost of the Internet traffic becomes quite high and affects the wide development of broadband services in the respective domestic markets. All of this suggests that the expansion of a regional broadband network is a fundamental element needed to satisfy the broadband communication demands in the mentioned countries.

(d) Specific geographical features of countries and limited ICT facilities

The coverage area and technical equipment used for data communication networks by the majority of telecom operators in the four countries sometimes do not enable quality services, especially in remote areas. It is often due to various difficulties concerning conditions of telecommunication networks in these areas, including backbone networks and "last mile" issues. One of the plans of Uzbektelecom, for instance, is oriented towards development of a data network which in the near future will allow organizations to have access to high-quality data communication channels at regional levels.

Although, the broadband development can be assessed as satisfactory taking into consideration that the Internet popularity in Uzbekistan started not too many years ago, still much work needs to be done in this direction. Thus, the vast majority of broadband subscribers (almost 98 per cent) are located in the capital city. The broadband penetration in Uzbekistan is still behind other developing countries in terms of the quality of broadband connection and the price that customers have to pay. Thus, the broadband network environment outside the capital would need urgent attention to ensure balanced distribution of users.

The development of the telecommunication services market depends on demand from consumers which in many respects is determined by the status of the national economy and available budgets for expansion of networks and services. At present, Kazakhstan does not

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possess sufficient capacity for expansion of the clientele base because of unequal distribution of the population across the country.

According to the State Program of the Kyrgyz Republic on the development of information and communication services in rural areas of the country by 2010, one of the constrains in rural communication development is loss-making maintenance operations under the current tariffs and high specific costs of construction of communication facilities, which can be linked to limited transportation infrastructure in rural areas, because in that case transportation costs seriously affect the maintenance expenses and final cost of equipment and materials required for construction of any communication facilities.

In the case of Kyrgyzstan, the basic obstacle for Internet development was found to be a limited number of computers in the country. By expert estimations, the total number of computers in Kyrgyzstan in 2005 was about 80,000.103

(e) Cost to the government

According to the Country Development Strategy for 2007-2010 of Kyrgyzstan, the communication sector as a whole will require a government budget of US$ 120 million. The total amount of expenses for development of rural communication infrastructure was determined to be Som 240,193,700 (State Program of the Kyrgyz Republic "Development of information-and-communication services in rural areas of the Kyrgyz Republic by 2010"). Further development of rural communication infrastructure demands significant capital investments, possibly based on the pooling of financial assets from the budget of the country, from funds of business enterprises, of associations of communication operators, and of local governments.

According to the National ICT Development Strategy of the Kyrgyz Republic, financial support for the national, social, scientific and technical, and educational projects in the ICT area was proposed to be implemented by the ICT Development Fund, specially created by the Government of Kyrgyzstan. The ICT Development Fund accumulates funds from the national budget, off-budget funds, loans, investments and commercial funds according to the legislation of the country. Accordingly, the ICT programs and projects are being financed by the ICT Development Fund. In 2007, the analysis of implementation of the Action Plan related to implementation of the given strategy was carried out. The analysis has shown that many proposed actions have not been implemented due to the lack of funds.

(f) Cost to end users

Initial cost or installation (set-up) fee (which is mainly related to last mile equipment cost) for broadband connections at some point discourages potential customers from using these technologies, and majority of the potential users do not know why they should expend additional expenses while not being sure if they will be satisfied with their broadband connection after these investments are done. Thus, it is expected that reduction of installation fees or even its removal will give positive results in substantial growth of broadband subscribers and will thus promote the "first step" of potential customers.

In order to broaden access to broadband networks and services among the people at large, the services should become affordable. The tables below provide the "optimal" or "desired"

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monthly fees for customers in Uzbekistan, with unlimited and limited traffic included into monthly fees. The fees are separated by households and corporate users.

Table 13: “Optimal” monthly fee for customers for unlimited traffic

Monthly fee (US$)

Access speed to/from client

(Kbps) Households Corporate users 128/128 25 250 256/128 45 450 256/256 50 500 512/256 75 750

1024/256 120 1200 1024/512 130 1250

Table 14: “Optimal” monthly fee for households for limited traffic


(Kbps)

Monthly fee (US$)

Traffic included into monthly fee

(GB)

Over limit traffic cost(US$ per 1 MB)

128/128 20 1.5 0.030 256/128 25 2.0 0.025 256/256 30 2.5 0.025 512/256 45 3.5 0.018

1024/256 55 4.0 0.014 1024/512 65 4.5 0.014

Table 15: “Optimal” monthly fee for corporate users for limited traffic


(Kbps)

Monthly fee (US$)

Traffic included into monthly fee

(GB)

Over limit traffic cost(US$ per 1 MB)

128/128 120 1.0 0.14 256/128 180 2.0 0.13 256/256 200 2.5 0.12 512/256 350 5.0 0.10

1024/256 650 10.0 0.09 1024/512 700 11.0 0.08

Although these pricings are considered as desirable from a user perspective, ISPs will still provide connection services with different traffic options and fees, that will be different among ISPs as well (mainly due to the fact that those ISPs who have bandwidth over 30-40 Mbps eventually can provide services with lower tariffs, compared with those who have bandwidth capacity of with less than 10 Mbps).

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(g) Lack of awareness on the part of users

Limited knowledge on benefits and potential of broadband technologies has created some "boundaries" and limited willingness of the society to search, implement and use these technologies to receive more effective solutions that can give substantive results for economical and social development of the country.

The national report on Kazakhstan found that there was a special concern with information and computerization in the education sector, expectations for which are very high today. Information for education has not yet been addressed as a priority; more students should have access to computers and computer classes should be widely available.

Below is the result of a survey on reasons of not having access to the Internet at home, undertaken in Uzbekistan.

Table 16: Reasons of not having access to the Internet at home

Reason of Internet absence Percentage of

respondents with computer at home

Lack of interest in Internet 33.6% Lack of telephone line 23.6% Lack of usage skills / fear of virus attack through Internet 15.5% High price of Internet access (incl. through mobile phone) 15.4% Sufficient Internet access is available in other places 12.7% Relatives are against having Internet at home 10.0% Telephone communication though computer / Shared line 8.2% Old computer / computer is not functioning / modem is missing 7.2% Difficult to answer 3.6%

Source: Household survey results (February 2008) undertaken by UNDP ICTP Project

Note: As percentage of respondents who have a computer at home; multiple answers permitted.

2. Feasibility of a regional broadband network

Although some of the identified barriers are national or local in nature, a robust and high-bandwidth network at the regional level could help reduce the cost of international access to the Internet and meet future demands for bandwidth. For instance, with the development of trade and economic relations in the region, there has been a significant increase in information and telecommunication links. The volume of ICT services and information accessed among Central Asian countries has been steadily growing. As the above chapters confirmed, the existing regional network is not able to satisfy such growing demands for bandwidth.

Geographical coverage of such a broadband network should be based on the key directions of the main international traffic. Uzbekistan is interested in the development of broadband networks in almost all directions but one of the priorities is the connection to Russian telecommunication networks.

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Given the geographical location of Uzbekistan, the status of telecommunications networks of the countries that Uzbekistan borders with and/or connects through and bandwidth capacity of boundary channels, it is not always possible to acquire international channels, especially the high bandwidth channels, using the shortest geographical links. In some cases, for the moment, there is no such possibility at all.

For example, to connect to Russian telecommunication networks it is necessary to connect through the national telecommunication network of Kazakhstan. Uzbekistan currently possesses only one international connectivity junction with Kazakhstan. Thus, the network of Kazakhstan should be able to provide the necessary capacities for direct connection to Russian Federation. Currently, the process of modernization of the Uzbek-Kazakh connectivity junction 104 of telecommunications networks from STM-4 level to STM-64 level is being undertaken. In addition, the possibility of establishing a second connectivity junction with Kazakhstan at the STM-64 level is under study now.

Europe, with its concentration of the largest Internet traffic exchange points, also remains very important to Central Asia. The shortest way to connect from Central Asia to Europe, taking into account the current status of the available networks in the subregion, is through Turkmenistan (with which there is a STM-4 level connectivity junction) and further through Iran and Turkey to Europe. During the TAE project design stage the construction of a parallel route, which runs through the north of Uzbekistan, via Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, the Black Sea and further to Europe, was considered. However, the network in Turkmenistan, at that moment, could not be organized to enable high-speed channels in this direction and there was no underwater backbone which passed through the Caspian Sea.

To reach East Asia and in order to meet the growing demands towards this direction, the construction of a high-speed backbone connecting Uzbekistan and China via Kyrgyzstan is being considered. This idea is shared within the framework of a Shanghai Cooperation Organization agreement.

All these initiatives demonstrate a need for the construction of broadband networks at the regional level, with the possibility of using existing networks (fiber-optic lines) in order to reduce the construction costs.

The development of such networks should be based on the following fundamental principles: faster speed, security and reliability, as well as the existence of at least two or more telecommunication network junctions (international) among neighboring countries through which the cables pass. By adhering to these principles the maximum effect from the project can be achieved, while a disruption and damage caused by natural disaster at one point of the cable can be minimized with a possibility of alternative traffic routes.

The interregional "Silk Road" broadband network proposed by InfoCom Research and Nippon Telegraph and Telephone West Corporation will fully utilize the entire range of telecommunication services in the region, thus making a positively strengthening cooperation among countries in the region in the field of telecommunications, as well as meet the demand for ICT applications and services for socio-economic development at the national level.

However, it is quite clear that the Internet content from the Russian Federation will remain as the main source of information for the Internet traffic of Central Asian countries due to the

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traditional geopolitical and growing economic influence. Thus, the key countries involved in the development of a regional broadband network should include China, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, the Russian Federation, Afghanistan, Azerbaijan, Georgia, Armenia, Iran, Iraq, Turkey, Syria, and the countries of the Middle East.

Since the Central Asian region is witnessing rapidly growing popularity of the Internet, the proposed regional broadband network will help countries in the region to fully satisfy their demands for Internet access, telephone communications, multimedia services and direct high-speed channels (IPLC). The perceived benefits of such a regional network include increasing the range of available international telecommunication services, increasing the revenues, reducing the tariffs for international telecommunications services, and promoting cooperation in the ICT sector, which in turn will facilitate regional cooperation in other areas (politics, trade, economy, and culture). Thus, the implementation of regionally important projects such as the "Silk Road" broadband network project will significantly contribute to improving the information infrastructure and security of the existing regional network.

Therefore, the proposed network diagram should be reviewed based on the traditional cultural and economic relations in Central Asia, and the geographical features as well as patterns of broadband access in each country. Taking into account an increasing number of points connecting the backbone with the Russian Federation, it may be necessary to consider the viability of connecting from Aktau (Kazakhstan) via the bottom of the Caspian Sea to Astrakhan (Russian Federation).

The participation of the Russian Federation in the project would also help balance national interests of each of the participating countries on the basis of a regional approach and facilitate discussions on issues such as fair and equitable cost sharing for traffic routed to/from Russian Federation and transited via Russian Federation. Such a regional approach will also facilitate discussions on accessing the existing and newly created reliable terrestrial backbone networks in the Russian Federation, bypassing the complex mountainous terrains in the Caucasus (as stated in the project proposal as a dashed line from Azerbaijan). Instead of going through Azerbaijan, the project could consider the participation of Iran, Iraq, Turkey, Syria, Georgia, Armenia and some other countries of the Middle East. The constraints may occur because of the need to harmonize the tariff policy and governance of such infrastructure related to the use of transits within the territory of neighboring countries on the basis of the universal tariffs. This principle will not provide any disproportionate advantage to any of the participating countries, but can be applied to cover expenses for the maintenance of part of the network, based, for example, on the lengths of the backbones which run through the territory.

One of the most serious constraints of the regional approach vs national approach could be a varied degree of acceptance among concerned countries. It could manifest as a deficit and or lack of funding for such a project in some countries where either the benefit of the project will be underestimated and the project does not receive any support from the government, or the government will not be able to provide the necessary funds due to a lack of donors and other sources of long-term financing for the project, even if some Governments express willingness to proceed with the initiative.

The development of regional broadband networks depends on the development of national networks of individual countries of the region, and thus an integrated and harmonized approach is required to achieve the intended benefits. At the same time, it is important to define the

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cooperation framework among countries before the project is implemented. Each country participating in the project should, for example, ensure the implementation of commitments it has made concerning the construction of its segment within the specified time frame. A failure, or delay, of any country, whose territory will be used for building the designed network, to comply with its commitments, could, as a whole, negatively impact on the development of a regional broadband network.

3. Estimated development and maintenance costs

According to those interviewed for the national reports, it is impossible to undertake an assessment of development and maintenance costs without the detailed elaboration of the project. The same applies to the financing policy/plan, which, in fact, can get a unique attraction by both the largest international financial and investment institutions and private investors and businesses interested in taking advantage of new market opportunities.

The cost of constructing the "Silk Road" broadband network in Central Asia, proposed by InfoCom Research, Nippon Telegraph and Telephone West Corporation, includes the cost of the optical cables and their laying, as well as the cost of the channel-forming equipment. In determining the cost of the project, it is also necessary to take into account the additional costs associated with construction and installation works, civil works, power supply, transportation, storage and other expenses, which on average account for about 20 per cent of the capital costs. The total expenses for the capital construction consist of all the above positions and operating costs, which are determined by the cost of consumables, power supply and maintenance. The profits from the project and the project payback period defined as the ratio of capital costs (cost of the project) to the profit are defined as the difference between income and operating costs and calculated when preparing the feasibility study (technical and economic assessment) of the project.

Three major potential sources of funding can be approached: the international financial institutions, investment funds, and commercial banks. The funding from the following international financial organizations that have been earlier used in previous projects in Central Asia: the European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ADB), Japanese Bank for International Cooperation (JBIC), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), the Export-Import Banks of the US and China, among others.

Taking into consideration the importance of the telecommunications sector for the sub-region and relatively quick return on a project such as this proposal, along with attraction of funding from sources mentioned above, the resource of business entities (e.g., major telecommunication operator, banks, etc.) can be invited to participate in the discussion and project implementation.

4. Conclusions

The findings presented here are based on trends in recent telecommunication development projects, steadily developing ICT markets in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan and the proactive role played by respective governments towards building the necessary legal and regulatory frameworks for promoting various aspects of ICT.

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Broadband telecommunication networks have been planned and developed in the four countries during the last few years and the number of broadband subscribers is increasing steadily in some countries and slowly in others. In general, the mobile market was found to be the key driver of growth of the overall telecoms market. Demand for Internet access has also shown high growth, with broadband access becoming increasingly popular. With increased demand for bandwidth of international channels, providing connectivity to the Internet seems to be growing accordingly.

Broadband connections and related multimedia services (IP Telephony, IPTV, Triple Play, Video telephony, etc.) are already being offered by major ISPs in some countries. Wired xDSL connections appear to be the most popular type of connection. It is expected that xDSL technology will remain dominant in the market in the near future. There are also some ISPs that provide their services using wireless broadband technologies (RadioEthernet, WiMAX) that are more attractive in the areas with absence or low-quality of land-line channels. While WiMAX technology in the short term will not have a big impact on the overall broadband market, their introduction in regional markets is possible. Wi-Fi coverage is also being expanded with the increase in number of Wi-Fi hot spots. It is expected that the introduction of 3G services will stimulate the Internet development in Central Asia.

Broadband connections through fiber optics, wireless technology and satellites must be encouraged to provide fast and reliable connectivity not only in the industrialized but also developing countries. It should no longer be a luxury reserved only for urban dwellers, as it is the critical foundation for a thriving information society where an increasing level of decision-making takes place based on digitally transmitted data, information, and knowledge.

This study assessed the current situation and major broadband development trends and identified future broadband communication needs in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan proving that it is important and necessary to expand the existing regional broadband network in order to satisfy the growing demand for such services at the national and local levels.

The implementation of regional projects, such as the "Silk Road" broadband network proposed by InfoCom Research, Nippon Telegraph, and Telephone West Corporation will significantly contribute to improving the information infrastructure in the Central Asian region. It is expected to lead to satisfying the demand for information and knowledge among the people and strengthen the security of the existing regional network which in turn will increase the range of international telecommunication services offered to the people. While this will generate more revenue for telecom operators and related service providers, it is also expected to reduce tariffs on international telecommunication services, and will help promote cooperation in the ICT field and facilitate further cooperation in other areas related to politics, trade, economy, and culture.

The implementation of the proposed interregional "Silk Road" broadband network project will enable full utilization of the entire range of telecommunication services in the region, leading to positive impacts on socio-economic development of the countries. However, this development will directly depend on the development of national networks of individual countries of the region and creating of enabling policy and regulatory environments; thus an integrated approach to rectifying the challenges and issues is required to attain the intended results. At the same time, it is important to define a regional cooperation framework among countries after the project is completed, and each of the countries participating in the project

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should guarantee the implementation of commitments it would make concerning the implementation of construction volumes on its segment within the specified time frame.

It is also noted that the Internet content from the Russian Federation will remain as the main information source among Central Asian countries due to the traditional geopolitical and growing economic influence. Therefore, the participation of the Russian Federation would be critical to such a regional broadband network initiative.

5. Recommendations

Regional Cooperation: Enhanced regional cooperation among countries to nurture the development of a regional broadband network will create favorable conditions and expedite the implementation of the project. The identification of priority objectives and directions for cooperation will create a solid foundation for mutually beneficial relations. Since a regional network should be based on interconnections between concerned countries and the management and maintenance of such a network affects all the countries benefiting from the network, there is a strong need to examine the aspect of regional cooperation in the future.

National level efforts: At the national level, the strengthening of cooperation between telecommunication operators and other players in the field of telecommunications, resulting in the exchange of professional and network development experience between national operators, will serve as a catalyst in the development of the entire industry and national economies.

Continued development and implementation of modern technological solutions that cost less and provide better quality, and a variety of services is essential. The constant modernization of data networks, expansion of coverage areas, and ensured presence of nodes where there is a demand for them will result in the growth in demand for these services.

It is also necessary for ISPs and other entities to apply new approaches in advocacy and public relation campaigns that will also assist in raising awareness of the population about the benefits of these technologies.

Concerned government entities could play an active role in enabling policy and regulatory environment in the development of broadband networks, markets and industry as a whole. Some of the key issues emanating from the national reports include customs policies, roles and responsibilities of state-owned telecommunication companies, telecommunications regulations, taxation, access to information, and content creation among others. The development of local content and increased access to such contents among the population will eventually lead to reduction of Internet connection costs and further expand the market for broadband services.

A key first step maybe the setting up of a coordination board for programs and projects (supplementing the current programs and concepts on ICT sector development and/or development of new ones), focused on broadband network development, by involving all concerned stakeholders during development and implementation. The structure of the board should include ICT services providers, both governmental and private sectors, and subscribers. Establishment of the board would promote cooperation on broadband access development among the stakeholders not only at the national but also at the regional level.

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ENDNOTES 1 OECD, OECD Communication Outlook 2007 (http://213.253.134.43/oecd/pdfs/browseit/9307021E.PDF, 2007). 2 “Global broadband prices revealed”, BBC News, July 2007, http://news.bbc.co.uk/2/hi/technology/6900697.stm. 3 Criterion Economics, The Effect of Ubiquitous Broadband Adoption on Investment, Jobs, and the U.S. Economy

(http://www.criterioneconomics.com/docs/Crandall_Jackson_500_ Billion_Opportunity_July_2001.pdf, September 2003).

4 OECD, Broadband and ICT Access and Use by Households and Individuals (http://www.oecd.org/dataoecd/44/11/39869349.pdf, December 2007).

5 Ibid. 6 OECD Broadband Portal

(http://www.oecd.org/document/54/0,3343,en_2649_34225_38690102_1_1_1_1,00.html). 7 Baller Herbst Law Group, Bigger Vision, Bolder Action, Brighter Future: Capturing the Promise of Broadband

for North Carolina and America (http://www.e-nc.org/pdf/Broadband_report_composite.pdf, June 2008). 8 OECD Broadband Portal

(http://www.oecd.org/document/54/0,3343,en_2649_34225_38690102_1_1_1_1,00.html). 9 Khan, Abu Saeed, “Philippines is 2nd fastest-growing broadband market-Ovum”, LIRNEasia, 28 September 2007,

http://lirneasia.net/2007/09/philippines-is-2nd-fastest-growing-broadband-market-ovum. 10 Lee, Min Keong, “Malaysia to get high-speed broadband”, ZD Net Asia, 3 October 2007,

http://www.zdnetasia.com/news/communications/0,39044192,62032928,00.htm?scid=nl_z_ntnd. 11 “India to have 20 million broadband connection by 2010”, cellular-news, 16 Nov 2007, http://www.cellular-

news.com/story/27496.php. 12 ITU, Trends in Telecommunication Reform 2007: The Road to Next-Generation Networks (NGN)

(http://www.itu.int/publ/D-REG-TTR.9-2007/en, 2007). 13 Kenji Saga, “Challenges and prospects in the development of ICT infrastructure among Asian developing

countries”, Kaigaidenkitushin, Jan 2005 (The article was written in Japanese). 14 The data were complied by the Statistical Division of ESCAP based on the ITU statistical data in the preparation

of the 2008 ESCAP Statistical Yearbook for Asia and the Pacific. 15 The workshop was organized within the project entitled “Assistance to member countries in the implementation

of ICT policies and programmes for development” funded by the Ministry of Internal Affairs and Communication of Japan.

16 http://www.unescap.org/icstd/events/RW_JUNE2007/Tashkent_statement.pdf 17 http://www.unescap.org/icstd/events/RW_JUNE2007/SATO2.pdf 18 http://www.unescap.org/icstd/events/RW_JUNE2007/ 19 http://www.unescap.org/icstd/events/RW_JUNE2007/SATO2.pdf 20 The Fiber Optical Cable System Trans Asia Europe (TAE) connects the countries of Asia and Europe by modern

telecommunications facilities. It follows the ancient Silk Route, starting from Shanghai, China on the east to Frankfurt, Germany on the west. This cable system traverses 20 countries: China, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Afghanistan, Pakistan, Iran, Turkey, Azerbaijan, Georgia, Armenia, Ukraine, Poland, Romania, Hungary, Austria, and Germany. TAE is the longest terrestrial cable link in the world with a total length of 27,000 km. More information and updates are available at: http://www.taeint.net/

21 http://www.taeint.net/en/network/astana/ 22 http://www.taeint.net/en/network/ 23 It is Rostelecom’s used term (whereas RCC uses the term “universal connection services”), which covers such

services as IFS (International Freephone Service), HCD (Номе Соuntry Direct), СС (Collect Call), Televoting and others.

24 http://www.aci.uz 25 http://www.stat.uz 26 http://www.edu.uz 27 Program of development of the telecommunications sector of the Republic Kazakhstan for 2006-2008, page 8 28 Within the framework of execution of the instruction of the President of Kazakhstan on installation of telephones

in rural settlements; http://www.telecom.kz. 29 http://www.telecom.kz 30 http://www.investkz.com/journals/52/501.html 31 World Bank, The Little Data Book on Information and Communication Technology (2007). 32 According to Statistical Factbook of Regional Commonwealth in the field of Communication RCC. 33 According to data from JSC Kazakhtelecom.

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34 http://www.aic.gov.kz or http://www.ru.government.kz/docs/p060519~1.htm. 35 There will be determined and published standard points of connection. The Program also intends to work out

additions for rules of connection of this telecommunication network to telecommunication network of general use.

36 Includes wideband access to the Internet, development of local content, development of Internet – commerce (E-commerce & E-cash/payments) and opening centers of collective access to the Internet for the rural population.

37 Source: Telecommunications Sector Development Program of the Republic of Kazakhstan for 2006-2008. 38 Agency of the Republic of Kazakhstan on information and communications, http://www.aic.gov.kz/. 39 According to the JSC Kazakhtelecom website, http://www.telecom.kz/. 40 Telecommunications Sector Development Program of the Republic of Kazakhstan for 2006-2008, p. 16. 41 Official website АО Kazakhtelecom, http://www.telecom.kz/. 42 This is planed by Kazakhtelecom. Some information about this project is in the Annual Report of Kazakhtelecom,

2007. In 2008, Kazakhtelecom planed to expand NGN by 150,000 phone numbers, http://www.telecom.kz/. 43 http://www.telecom.kz/. 44 According to JSC Kazakhtelecom at http://www.telecom.kz/. 45 Ibids. 46 According to АО Kazahtelecom at http://www.telecom.kz/ 47 According to JSC Kazaktelecom at http://www.telecom.kz/ 48 National Communication Agency (NCA) of Kyrgyzstan -2006 Annual Report (Bishkek, 2006). 49 National Communication Agency of the Kyrgyz Republic, Progress Report 2007 (http://www.nas.kg). 50 EBRD Project on Universal Access for Kyrgyzstan, Paper on the Strategy of Universal Access of Kyrgyzstan (17

October 2005). 51 The ICT Conference is an annual event where operators, regulators and users of ICT products and services in

Kyrgyzstan meet to discuss regulatory and market issues. This particular conference took place in Bishkek on 1 December 2007.

52 Hand-outs from the ICT Conference (Bishkek, December 2007) including the concept paper on telecommunications development in Kyrgyzstan.

53 World Bank, The Little Data Book on Information and Communication Technology (2007). 54 Local definition of TELEMATIC: services delivered on telecommunication networks excluding telephony, telegr

aph, Internet and data transmission/exchange. 55 Government of Kyrgyzstan, National Strategy Information and Communication Technologies for Development in

the Kyrgyz Republic (http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN012317.pdf). 56 Information security of the Kyrgyz Republic (2007). 57 National Communication Agency of Kyrgyzstan, 2007 Progress report. 58 ICT Conference, Bishkek, 2007. 59 Country Development Strategy for 2007 – 2010, passed by the Decree of the President of the Kyrgyz Republic on

May 16, 2007, # 249. 60 http://www.kt.kg 61 This component included only installation of digital telephone exchanges. It was established in Bishkek, other lar

ge cities and the regional capitals. 62 The First Telecommunication Project in the Kyrgyzstan came to an end in 1997. Under this project, a digital

high-quality telecommunication services network was constructed and the total capacity of the digital stations was increased to more than 51,000 telephone lines.

63 http://www.taeint.net/en/network/shanghai/ 64 According to JSC Kyrgyztelecom. 65 http://cacaari.org/ 66 Paul Budde, 2007 Asia - Telecoms, Mobile and Broadband in Central Asia (Communication Pty. Ltd.). 67 World Bank, The Little Data Book on Information and Communication Technology (2007). 68 Defined as administrative division of a territory into defined units of the countries administrative system. 69 Tajik search portal: http://www.tajik-gateway.org (State program of development and introduction of information

and communication technologies in the Republic Tajikistan for 2006 - 2008). 70 http://www.expert.kg/content/ict/3 71 This is a missed call alert service, i.e., an SMS is sent listing calls missed due to down-time or cut off. 72 This is a pay method and it also has a feature called “Help Friend” where by a subscriber can transfer credits to

another ‘friendly’ account to pay and/or prepay for services. 73 Subscribers can watch TV programs on enabled telephone sets. 74 Potential users are not regular subscribers and are classified as ‘ad hock’ users such as students, teachers, or

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others using established access points and/or Internet cards, who create additional traffic. By the latest estimates the number of potential users could reach 1,500,000, http://www.unescap.org/icstd/applications/projects/DAKN/consulmeetingCA/Presentation%20and%20document_Baku/Tajikistan/TADJIKISTAN_Ms.Shohsanam.pdf.

75 http://www.intercom.tj 76 Presentation by Tochiktelecom 77 Presenation by Ms. Shohsanam, Ministry of Transport and Communications, Tajikistan 78 Ibids. 79 “On additional measures to accelerate the development of service industry in the Republic of Uzbekistan for the

period till 2010”, in The Resolution of the President of the Republic of Uzbekistan #PP-640 (21 May 2007), has set annual targets (forecast) for services (in percentage) for each year till 2010 (inclusively).

80 World Bank, The Little Data Book on Information and Communication Technology (2007). 81 “On additional measures for privatization of Uzbektelecom joint-stock company” (September 29, 2004) 82 Issued on May 30, 2002 83 “On additional measures to stimulate the modernization of telecommunication networks management system of

the Republic of Uzbekistan”, 20 February 2007. 84 “On additional measures to accelerate the development of service industry in the Republic of Uzbekistan for the

period till 2010”, 21 May 2007. 85 http://www.aci.uz/ru/news/uzaci/article/295/ 86 The number of subscribers corresponds to the number of households, size of which on average is higher than in

other countries. 87 State Commission on Radio Frequencies of the Republic of Uzbekistan, http://gkrch.uzpak.uz/ 88 http://www.avestagroup.uz/ 89 Presentation made by NTT West and InfoComm during the Tashkent workshop in July 2007. 90 State Statistics Committee 91 Data from ISPs 92 Data from ISPs 93 General Packet Radio Service 94 UzACI 95 Uzbektelecom 96 Starting from 1 December 2007 the fee for every Mbps is determined according to the bandwidth they purchase.

Thus, the ISPs buying from 1 to 10 Mbps pay USD 3,600 per 1 Mbps, those ISPs buying from 10 to 40 Mbps pay USD 1,900 for every Mbps exceeding 10 Mbps, and those ISPs buying more than 40 Mbps pay USD 1,300 dollars per every Mbps exceeding 10 Mbps. This regressive scale appears to be advantageous to large ISPs and perilous for small ISPs.

97 http://www.sarkor.com 98 http://www.st.uz/onenews.php?Lang=ru&news=578 99 http://st.uz/, As of Feb 27, 2008, 2:30pm local time (Tashkent). 100 The number of users with broadband connection is calculated as a number of households subscribed to

broadband connection multiplied by an average household’s size (3-4 people). 101 “The list of technological equipment and spare parts that entered the territory of Uzbekistan and were exempted

from customs fees”. 102 Analysis of the current development status of telecommunication sector in the Kyrgyz Republic (materials of the

Fourth ICT Conference, November 2007). 103 Information security of the Kyrgyz Republic (2007). 104 There is a junction between Kazakhtelecom and Uzbektelecom (STM-4), the modernization works of this

junction to STM-64 will be completed by the end of Q2, 2008 and as a plan for anticipation of a possible major disruption of communication, Uzbektelecom is going to work further with Kazakhtelecom and establish 2nd connectivity junction by 2009 (also STM-64).

Broadband for Central Asia and the road ahead...Broadband for Central Asia and the road ahead ......

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