Broadband in Central Asia and the Caucasus: It’s a political world

Although there are some significant variations and investment in new networks, fixed broadband penetration in Central Asia and the Caucasus remains low. One factor holding back development has been political. Many of these countries are dictatorships or at best deeply flawed democracies. The question is whether such regimes want citizens to have access to broadband and the window onto the world it can provide.

Recent events in Iran demonstrate very clearly how important the Internet has become for communicating a political message to the outside world. It seems to me perfectly fair to say a non-democratic regime would not be too keen on its citizens having access to social networks. This is because of the power they give to citizens to form groupings and exchange opinions very quickly. At the same time, of course, governments find themselves in a dilemma because they want the economic benefits and resulting stability that highly computer literate populations can bring.

As a result of fears of growing independence amongst citizens many of the countries in Central Asia and the Caucasus have imposed censorship and filtering of the Internet. For example, in Azerbaijan two citizens were recently arrested for – sources have told me – their blog postings. In Georgia press reports indicate that Internet connectivity was lost at a time when there were demonstrations against the government of Mikheil Saakashvili. Kazakhstan has also recently adopted a law meaning that local as well as foreign websites can be blocked. One consequence of these actions is to make the Internet a less attractive proposition for potential customers hindering growth in subscription numbers.

Governments in these countries are keen to maintain as much political control as possible. To this end, privatization of fixed-line incumbents has been faltering, although Armenia and Georgia have sold off government stakes. Dictatorial regimes would be loath to cede power to any outside influence and in addition any opportunities for the financial milking of state assets would be limited. Government employees such as those of a fixed-line telephony incumbent are also likely to be more easily coerced into voting for the existing regime in any flawed elections. As such insiders in countries such as Azerbaijan and Uzbekistan have indicated to me that they consider any privatisation to be a long way away. Of course, privatisation is no panacea, but the experience of Georgia demonstrates how it can help. Before its privatisation in 2006 United Telecom of Georgia did not offer broadband but when this was launched in 2007 broadband penetration surged due to increased availability and competition. According to WBIS at the end of 2008 there were 118,500 broadband subscriptions in Georgia up from just 49,200 at the end of 2007.

The desire for control of the Internet sector of governments in the region also extends to the lack of independent regulation that prevents alternative operators from making their mark. For example, in Azerbaijan anyone seeking a broadband connection from an alternative operator must wait for that ISP to secure the paperwork from the incumbent, which will only then allow the connection to be activated by the alt net. This means that competition does not occur on a level playing field as there are delays for the alternative operators in being able to secure the permission. In many countries government control of the incumbents also means there is limited competition in the market for international connectivity ensuring that prices remain high for alternative operators. This is particularly important when most of the content is coming from outside the individual countries and from, for example, Russia. One example of this is Uzbekistan where state owned Uzbektelecom maintains a monopoly on international bandwidth.

It goes without saying that other factors help explain the low level of broadband development, not least low income levels. Countries such as Kyrgyzstan and Tajikistan are also geographically isolated and heavily dependent on Kazakhstan for connection to the international Internet. Nevertheless with a fair, open and constructive policy the governments in the region could help spur broadband growth much more.

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One comment

  1. Avatar peter tatischev 09/09/2009 @ 3:09 pm

    Having worked almost 2 years in Azerbaijan, I would say that most important points are mentioned in the end of the post here – limited competition for international connectivity and low income (and, consequently, low computer literacy) level.
    In Azerbaijan all the international traffic is controlled by semi-independent carrier, and as local content production is extremely limited subscribers are obviously mostly interested in international traffic.
    Low income levels are important, because most of the people who can afford and want to have Internet access live in large cities that do have some (rather limited, but still) choice for their broadband provider. Whereas rural population is not covered at all, and here the comparison to India or Africa is more relevant – we should expect wireless broadband to be the key driver. Some countries already have 3G netwoeks in operation, others are not far from launch (Azerbaijan in particular).

    I would not say that censorship etc. are an issue in most of the countriess (I’m not talking about Turkmenistan that is a whole different story), but rather an issue of “state capitalism” (that we have in Russia as well). And besides, those countries, even though the penetration rates are not all that high are not too attractive from investment point of view – because the infrastructure is not available, and significant initial investments into any broadband project are unavoidable.

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