and Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova

386 Pages·2007·1.78 MB·English

Final Report: Monitoring of Russia and Ukraine (priority
1) and Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan and Moldova (priority 2):
Telecommunications and the Information Society
Commission contract no: 30-ce-0009814/00-41

London- Brussels- Madrid
39/3 Rue Montoyer B-1000 Brussels
T: (32) 02 503 2265 F: (32) 02 503 4295

Project Coordinator: Joe McNamee

In Co-operation With

Russia: Yuri Hohlov / Sergey Shaposhnik (IIS) Ukraine: Andriy Pazyuk
Armenia: David Sandukhchyan Azerbaijan: Yashar Hajiyev
Belarus: Mikhail Doroshevich Georgia: Volodymyr Hardabkhadze /Levan
Kvernadze
Kazakhstan: Andrew Beklemishev Moldova: Ion Cosuleanu

December 2006
Revision 1

The contents of this document are the sole responsibility of the authors and do not necessarily
represent the opinions of the European Commission
Structure

• Introduction
• Priority 1
o Russia
o Ukraine
• Priority 2
o Armenia
o Azerbaijan
o Belarus
o Georgia
o Kazakhstan
o Moldova
Introduction, Methodology and
Context
Introduction

Table of Contents

1 SUMMARY................................................................................................................4
2 METHODOLOGY......................................................................................................5
2.1 Exchange Rates...............................................................................................7
3 GENERAL ENVIRONMENT......................................................................................8
3.1 Influence of non-public stakeholders on regulation and policy........................8
3.2 National Development Plans............................................................................8
3.3 Data Protection................................................................................................8
3.4 Cybercrime and Spam.....................................................................................9
4 REGULATORY ENVIRONMENT FOR ELECTRONIC COMMUNICATIONS.........10
4.1 Interconnection..............................................................................................10
4.2 Numbering.....................................................................................................10
4.3 Rights of Way and Facilities Sharing/Collocation..........................................10
4.4 Tariff Policy....................................................................................................11
4.5 Cost Accounting.............................................................................................11
4.6 Universal Service...........................................................................................11
4.7 Local Loop Unbundling..................................................................................12
4.8 Leased Lines..................................................................................................12
4.9 Mobile Services..............................................................................................13
4.10 Satellite Services...........................................................................................13
4.11 Resources of National Regulatory Authorities (NRAs)..................................13
4.12 Licensing and Authorisation...........................................................................14
4.13 Spectrum........................................................................................................14
5 REGULATORY ENVIRONMENT FOR ONLINE SERVICES..................................15
5.1 Digital Signatures...........................................................................................15
5.2 Payment Systems..........................................................................................15
5.3 Taxation Issues..............................................................................................15
5.4 Conditional Access........................................................................................16
6 USE OF ELECTRONIC COMMUNICATION SERVICES........................................17
6.1 Fixed line penetration.....................................................................................18
6.2 Mobile Sector.................................................................................................18
6.3 Fixed and mobile penetration.........................................................................20
6.4 ICT Usage......................................................................................................20
2
Introduction
6.5 Country-code top level Internet domains.......................................................21
7 STRUCTURE OF THE COMMUNICATIONS INDUSTRY.......................................23
7.1 Fixed Operators.............................................................................................23
7.2 Mobile Operators...........................................................................................25
8 ABBREVIATIONS....................................................................................................30

3
Introduction
1 SUMMARY

The study covers a geographically and politically diverse set of countries that share a
common history as former members of the Soviet Union. The roll-out of information
society services is made difficult by low income levels, which puts both equipment and
services beyond the reach of many citizens. These difficulties are further exacerbated by
weak fixed line infrastructure and low levels of access (particularly in rural areas) to fixed
line networks.

Faced with these structural and economic factors, the 8 countries being studied (Russia,
Ukraine, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova) have
endeavoured to undertake, and are continuing their efforts towards, varying degrees of
privatisation and liberalisation. The ICT sector has been the focus of a significant degree
of bilateral and multilateral cooperation (involving the EU, World Bank, UNDP, ITU, and
NATO, for example), as it is seen as offering great potential for economic growth,
underpinning democracy and creating wealth.

The study looks at the electronic communications and information society sector in the
eight countries from three key angles:

1. The electronic communications sector (looking in particular at the regulatory
framework supporting competition in the sector, as well as market development),
and the legislative framework surrounding electronic service provision.
2. The services available, both commercial and governmental, which give an
indication both of the development of the market and the extent to which citizens
have compelling reasons to become “connected” to the information society.
3. The level of use of available services.

The eight countries have engaged in varying policies with regard to electronic
communications and the information society, producing markets that, while similar, have
fundamental differences. These differences include the level of competition in the
telecommunications market, the degree of privatisation, and the extent to which online
retail and service provision are supported by a comprehensive legislative framework.
The study aims to give an overview of the development of telecommunications and the
information society in the eight countries being studied.

The range of examples showing good and best practice is quite striking, indicating
strong potential for these countries to cooperate effectively. There are good examples of
best practice in each of the countries being studied: the practical and comprehensive
planning of universal access to communications infrastructure in Russia; the new
Ukrainian approach to data protection; the Armenian e-dram electronic money system;
the simplification and low cost of the licensing regime in Azerbaijan; the efforts of
Belarus to ensure universal access to fixed and mobile technologies; the independence
and transparency of the Georgian National Regulatory Authority; the long-term approach
of Kazakhstan’s Government to planning the development of the information society;
and the comprehensive Moldovan adherence to international norms in the online
environment. With sufficient communication between the countries to share such best
practice and with assistance from international organisations such as the European
Union, significant progress can be made towards realising these countries’ information
societies.
4
Introduction
2 METHODOLOGY

The present study covers a geographically and politically diverse set of countries that
share a common history as former members of the Soviet Union. Partly due to this
historical backdrop, the eight countries examined all have significant communications
infrastructure problems, particularly with regard to access to fixed networks, which are
especially noticeable in rural areas. The roll-out of information society services is made
still more difficult by low income levels which militate against the rapid deployment of
services. From this starting point, the eight countries being studied – Russia and
Ukraine, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova – have
endeavoured to undertake varying degrees of privatisation and liberalisation and have
been supported in these initiatives by various international organisations such as the
World Bank, the International Telecommunication Union and the European Union. The
ICT sector has been the focus of significant international cooperation, as it is seen as
offering great potential for economic growth and wealth creation.

The report looks at the development of the ICT sector in order to analyse the progress
made in maximising the potential benefits of the information society. Two key aspects
are considered in order to achieve this overview:

• The use of electronic services and the monitoring of this usage in order to gain a
view of levels of participation in the information society by Government, business
and citizens, and of the level of dynamism in the ICT and telecommunications
market.
• The creation and implementation of a suitable legal framework to strengthen
competition, transparency and interoperability.

(1) The use of electronic services and the monitoring of this usage in order to
gain a view of levels of participation in the information society by
Government, business and citizens, and of the level of dynamism in the ICT
and telecommunications market.

The study looks at the available statistics in each of the countries, drawing comparisons
with EU data, as applicable. However, there is a recognised1 problem with regard to the
methodologies used in the development of ICT statistical indicators, particularly in less
developed countries. It is widely noted that methodological inconsistency and the
absence of statistics “seriously hamper[s] policy efforts and blindfolds decision makers”2.
Therefore, while every effort has been made to collate accurate, comparable and timely
data, this context should be noted. An additional problem with regard to reliable data is
the varying extents to which the “black economy” influences the level of usage of
information society services but does not appear on official statistics.

The statistical overview at the beginning of the report provides a greater amount of data
for the more easily verifiable mobile market than provided on the fixed network market,
with the mobile market generally representing the most competitive and cost oriented

1 Joint UNECE/UNCTAD/UIS/ITU/OECD/Eurostat Statistical Workshop on Monitoring the Information Society: Data
Measurement and Methods, Report, 16 January 2004
2 Ibid P.9
5
Introduction
aspect of the communications market. With a weaker statistical basis, older available
statistics, and a significant degree of ongoing change due to tariff rebalancing, fixed
communications data are less reliable and provide fewer insights into the potential of the
markets being studied.

(2) The creation and implementation of a suitable legal framework to
strengthen competition, transparency and interoperability.

Developed economies, particularly in the EU and US, have created extensive regulatory
frameworks in order to promote the development of the information society. The
experience of these economies gives a clear view of what policies are necessary and
falls broadly into two categories:

(a) Telecommunications competition: The creation of a competitive and
innovative market for fixed, mobile and Internet access services serves to
reduce costs whilst increasing choice for customers.
(b) E-commerce: Issues such as electronic signatures, content liability,
copyright and related rights, and distance selling need to be addressed to
allow consumers take advantage of the information society.

The study considers the development of the communications and e-commerce
regulatory framework (both in terms of competition and content issues) in the eight
countries, drawing comparisons with the EU regulatory framework, where appropriate.

(3) Availability of Services

For use of the information society to grow, there must be services on offer that make
citizens want to connect to new communications methods. One obvious example lies in
the mobile environment: the lack of “waiting time” in order to be connected to a mobile
service, compared with sometimes long delays in the installation of fixed lines, has
meant that citizens have a clear and compelling reason to adopt this technology.
Similarly, good e-government services can help encourage citizens to access new
communications technologies. The study seeks to highlight the services on offer to
citizens and the extent to which these are developing and are sufficient to meet
customer needs and expectations.

By providing an overview of the current state of development of the information society,
the extent to which the regulatory framework is in place to allow e-commerce and
access services to develop in a competitive and innovative way, and through a general
overview of the services currently on offer, an understanding can be developed of the
strengths, weaknesses and current development of all of the countries in the study.

Comparisons as to the level of “informatisation” of these eight countries can then be
drawn, forming the basis for benchmarks of ICT in the region.

In the study, a figure of 420 Euro is taken as an estimate, from our local experts, of the
cost of a standard new computer in their respective countries. This figure is purely
indicative in order to draw a comparison between wage levels and the rough cost of a
6
Introduction
computer. The only exception is Azerbaijan, where the local expert advised that local
production meant that cheaper computers were available.

2.1 Exchange Rates
All currency conversions used in this report use the following exchange rates:

Exchange Rates
Currency AMD AZN BYR GEL KZT MDL RUB UAH USD
1 Euro 550.505 1.11875 2604.81 2.17095 161.878 15.5315 34.4154 6.16265 1.21

7
Introduction
3 GENERAL ENVIRONMENT
3.1 Influence of non-public stakeholders on regulation and policy
Trade associations and civil society groups have played an important role in the EU,
both as consultation partners in the development of legislation and as partners for the
elaboration and management of self- and co-regulatory approaches to dealing with
issues of concern, such as harmful or illegal content on the Internet. The existence of
such groups and their inclusion in the decision-making process is therefore important for
the development of effective and proportionate legislation.

The eight countries considered in the study represent the full range of experience in
terms of the influence of non-public stakeholders, from those countries with little or no
industry and civil society input at one extreme, to those, such as Georgia, with
sophisticated and legally binding requirements for consultation on the other.

3.2 National Development Plans
The EU has run a series of development plans for the consistent development of the
online environment in Europe. The aim of these initiatives (namely the eEurope 2002
Action Plan, eEurope 2005 Action Plan, and the i2010 initiative) is to help encourage the
development of a competitive, knowledge-based economy which, in turn, supports
economic growth, more job creation and greater social cohesion. A key focus of the
Action Plans has been to “benchmark” key statistical indicators in order to better target
policy initiatives. The EU’s ICT development plans have included provisions relating to
e-inclusion and citizenship, e-government, interoperability, trust and dependability, and
the use of ICT by business. The earlier EU programmes focused on fostering the rollout
of and access to online communications and services; whereas later plans placed more
emphasis on “supply-side” issues (such as the stimulation of Internet content provision
to encourage online activity).

In the eight countries studied, there is a widespread - but not universal - problem with
the responsible ministries and departments sustaining the long-term effort necessary to
ensure the implementation of national development plans. On the other hand, a minority
of the countries, Kazakhstan in particular, has invested a high level of management
expertise to ensure long term commitment to the national plan.

3.3 Data Protection
The basic principles behind both the general (1995/46/EC) and electronic
communications specific (2002/58/EC) EU data protection directives require that data
8