This report provides a comprehensive overview of the trends and developments in telecommunications, broadcasting and pay TV markets in Armenia, Azerbaijan, Bhutan, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Nepal, Tajikistan, Turkmenistan and Uzbekistan. Subjects covered include:
Armenia’s telecommunications sector has started to grow. There are over 700,000 fixed-line subscribers, together with 520,000 mobile subscribers, for a population of almost 4 million people. The level of investment in infrastructure and new services has begun to increase. There are, however, major structural issues to be addressed in the sector. Amid growing dissatisfaction over the performance of the telecoms network, in November 2004 the government reached a compromise agreement with ArmenTel, the country’s national telecom provider, to end its exclusive rights to provide GSM, satellite, and mobile radio communications services in exchange for various other concessions, including the stipulation that only one alternative mobile operator would be allowed to operate in Armenia until 2009. ArmenTel was also allowed to retain sole rights to Internet telephony and the use of fibre optic cables. Previously, ArmenTel had been granted exclusive rights to the provision of all telecommunications services in Armenia until 2013 (apart from data services). A second mobile operator launched its network in mid-2005 after the government awarded a licence to K-Telecom.
Azerbaijan is making steady progress in developing its telecommunications sector, but still faces numerous problems. Poor quality infrastructure has been a major ongoing problem. Only around half the telephone lines in the country are digital. The monopoly held by Azerbaijan’s Ministry of Communications, among other things, results in the high cost of satellite connections. As well as being a commercial operator through its role in AzTelecom, the ministry is both policy-maker and regulator for the telecoms sector in Azerbaijan. The country’s significant dependence on international funding has also made it difficult for any long-range planning in the development of the sector.
Bhutan, a country that preferred to remain isolated from the world from a long time, has very recently started to improve its telecommunications capability. To do so it has had to overcome the country’s mountainous landscape. Whilst the country had a basic connection to the outside world as early as 1974, with the introduction of trunk calls between Bhutan and India, it was not until 1999 that television, satellite dishes and Internet services started to appear. The tiny country proceeded to invest heavily - to the tune of around US$27 million - in telecommunications infrastructure between 1996 and 2002 to provide the country with a modern fixed line network. In late 2003, a mobile service was launched by Bhutan Telecom and by early 2006 was claiming almost 40,000 subscribers, to give a mobile penetration of less than 2%. Accurate statistical information on Bhutan is difficult to obtain; there is even a huge variation between sources on what the country’s population is.
Georgia, - Although steadily improving, the telecommunications infrastructure in Georgia remains outmoded and inadequate as a result of gradual under-investment over decades. However, there has been an upward trend in the country’s telecom market over the past few years, with rising revenues and increased investment in infrastructure. Mobile communication systems have become increasingly important because the fixed-line facilities provided in many places (particularly in rural and remote areas) are outdated and a mobile phone represents the only effective means of communication. In an interesting move, in April 2006, the country’s telecom regulator, the Georgian National Communications Commission, awarded a 3G mobile licence to textiles company Argotex. Further spectrum was due to be auctioned.
Kazakhstan, has a booming telecoms market that will ensure the rapid introduction of new infrastructure and the upgrade of old equipment (Just over 70% of the national network was digital in early 2006). New legislation adopted in 2004 started the liberalisation of the telecom sector and ending Kazakhtelecom’s monopoly. By April 2005, four companies had been licensed to provide international and long-distance services in competition with Kazakhtelecom and by the end of the year, over 1,000 licences had been issued for the provision of a range of telecom services. Rapid development in the mobile market has seen mobile subscribers surge from 260,000 in 2000 to over 5 million (a penetration of over 33%) in early 2006. Although Internet penetration remains low for the moment, there is increasing interest in going online.
Kyrgyzstan, While much has been done to modernise Kyrgyzstan’s telecom network, geographical conditions, a high incidence of poverty and a still developing legal and regulatory framework are key obstacles to expanding telecom operations. The good news is that the market has been opened to both foreign and domestic investors and an independent regulator has been established to oversee the sector. Full liberalisation of the market was set to be achieved by end-2006. As a consequence of this, the sector has been attracting strong foreign investment interest as well as considerable economic and technical assistance of various types. Since the start of market reforms in 1991, the national operator Kyrgyztelecom has been expanding and upgrading its outdated and poorly distributed network. In January 2006, the government approved a decision to put 77.8% of Kyrgyztelecom up for sale. The country’s second GSM network was also launched in April 2006.
Mongolia is committed to developing a more efficient telecommunications network as an integral part of its push towards a market economy. Since the mid-1990s, the Mongolian Government has carried out a series of telecom reforms leading to effective liberalisation of all market segments, partial privatisation of the fixed-line incumbent operator, Mongolia Telecom, and establishment of an independent regulatory authority. Competition is now in place for both fixed and mobile telephony, including local, long-distance, and international, Internet, VoIP, and VSATs. While the fixed-line network has been expanding slowly, the mobile phone market has undergone a remarkable boom, with the number of subscribers growing at an average rate of over 100% year-on-year. By early 2006, there were 550,000 mobile subscribers in the country, representing a penetration of around 20%, up from less than 2% penetration at the end of 2000. Several failed attempts have been made to issue a third mobile licence.
Nepal’s is among the poorest and least developed countries in the world. Amid what has been an unsettled political climate, the country has been moving steadily towards a more liberalised telecom market. Positive regulatory changes in the telecom sector have been implemented, including the incumbent telco losing its monopoly status in the market. By April 2006, over 170 operators had been authorised to provide a wide range of telecom services, including two for basic telephony and two for mobile telephony. The expansion of telephone services has not been able to keep up with the growing demand, an estimated 50% of demand for telephones remaining unmet. The biggest challenge has been in providing rural services. This area has been neglected as the level of investment over recent years fell well short of what was required. More than 60% of telephone services are concentrated in the capital Kathmandu. The ITU reported that there was a static waiting list of over 300,000 customers seeking fixed line services. As these issues were being confronted, the licensing of a relatively large number of ISPs, combined with the liberalisation of the VSAT data market, has created excellent conditions for the Internet to flourish in Nepal.
Tajikistan, s telecommunications network is arguably the least developed of all the countries that emerged from the former Soviet Union. With a telecom network that was near total collapse, the government has started the daunting task of bringing it up to modern standards. The network is tiny, providing service to a subscriber base that represents a teledensity of less than 4% coming into 2006. And, significant proportion of the Tajikistan network has not yet been converted to digital. A gradual process of liberalisation is under way and over the last decade a number of private operators have been allowed to enter the telecom market, notably in the mobile and Internet sectors. Privatisation of state-owned fixed-line operator, Tajiktelecom is expected to be achieved by 2007. Despite a more than healthy growth in the mobile sector, total fixed-line and mobile teledensity was estimated at barely 10% in early 2006.
Turkmenistan is yet another of the nations that emerged from the former Soviet Union with a relatively underdeveloped telecommunications sector. In fact, it is claimed that telecommunications services in Turkmenistan are the least developed of all the CIS countries. Poor growth in telecoms services, the slow progress in the development of the private sector and continuing state control over most economic activities have not been helpful in supporting the growth of the country’s telecommunications market. Combined fixed-line and mobile teledensity was estimated at just over 10% by end-2005. Fixed line growth has been virtually stagnant for almost a decade. Unlike most of its neighbouring countries, Turkmenistan’s mobile market, served by one private and one state-owned operator, has been slow to grow. The year 2005 provided the first signs of a more energetic mobile market. At the same time, the Internet, which is controlled by the government and access is severely restricted, has not been able to develop to any extent. Turkmenistan’s Ministry of Communications continues to be both the regulator and policy maker for the telecom sector.
Uzbekistan, has been struggling to bring its telecom system up to the standard found in developed countries. Although steadily improving, some of the telecommunications infrastructure remains outmoded and inadequate. With only 2 million fixed line telephone services at the end of 2005 for a population of almost 27 million, the national network still has 35% of equipment yet to be replaced or converted to digital. Certainly, however, the situation has been steadily improving, due largely to the government’s decision to give priority to the telecom sector. In 1996, in what was a significant move, the government started inviting foreign telecom companies to invest in Uzbekistan in their own right. This was followed by the creation in 2000 of Uzbektelekom, a holding company charged with operating the national telecommunications network. There has been an upward trend in the country’s telecom market over recent years, with rising revenues and increased investment in infrastructure. The next step in the government’s strategic program is to privatise the incumbent operator Uzbektelecom and to open the market to competition consistent with the country’s aim to join the World Trade Organization (WTO). Combined fixed-line and mobile teledensity was estimated at roughly 12% in early 2006, with the mobile sector growing at 100% per annum coming into 2006.
Note: Up to date accurate statistics are difficult to obtain for the telecom sector in many of the economies covered in this report. Where official figures are not available, we have as far as possible, provided estimates.
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