TBY talks to Frank Bonnemeier, CEO of Azertelecom, on the development of internet infrastructure and the future possibilities the ICT sector holds.
TB YWhat was the idea behind the creation of Azertelecom in 2008?
FRANK BONNEMEIER The intention was to have more telecommunications companies operating in the country in order to boost competition and quality, and lower cost. This is why the company was founded. Our shareholders include Azerfon, Aztelekom, and Baku State Telephone Network (BTRIB). We received a lot of start-up support from these firms in the form of assets and know-how that we could work with. That was the basis to set up the company.
What are the primary ICT services that you bring to customers?
Azertelecom has all the necessary licenses in the country to perform telecommunications operations, except for mobile operations. Based on those we have three main businesses. One is to handle international telephone minutes; we partly facilitate in-country traffic, and also outgoing traffic from mobile operators. Our second main business activity is international fiber connections. One such connection runs via Georgia and Turkey, and another via Russia; also connections to Iran have been established. We bring the internet to Azerbaijan and also sell it to neighboring countries. The third main line of our business is high-capacity backbone services based on latest stage fiber optical network technology. We offer everything in terms of the voice and data for businesses both nationally and internationally. We count big mobile operators and other corporate customers as our clients.
What were the major challenges that you faced in Azerbaijan to roll out your network?
There was no need to roll out a completely new network because there already was an extensive fiber network available. We pursue a policy of renting fiber and dark fiber networks. As for challenges, so far the quality of existing fibers is okay, but could be better. The larger challenge is to manage and maintain networks outside of Baku. There are large distances between the cities and villages, and the roads are not always the best. It is therefore impossible to have a technical field engineer immediately in all locations available in case fiber cuts happen or equipment fails. However, we are building our organization and processes to an international quality level and with customer satisfaction in mind.
What is the status of e-government development in Azerbaijan?
Overall, the mission of our company is to serve the country, its population, and companies, both in Baku and the countryside. We are proud to be witnessing the development of e-government in Azerbaijan as a major contribution to the development of the country through the creation of high-capacity network and internet services. E-government will make all data exchanges and databases transparent, connected to one another, and accessible for the entire population and all companies. That is the intention of the whole program in Azerbaijan.
Do you elieve mobile operators represent significant competition in the internet market?
I don’t see major competition from mobile operators in the field of internet services. The main focus of mobile internet is on mobility, which cannot be provided by fixed-line operators. On the other hand, cable-based infrastructure, like fiber-optic cables provided directly to businesses and residential apartments, offers almost unlimited bandwidth even in both directions, uploading and downloading. Future high-capacity services such as user-generated-content and cloud computing can only be served by fixed-line operators Therefore, while addressing different needs, mobile and fixed internet operators are complementary and are not competing in the field of internet services.
What potential does Azerbaijan have to attract foreign investment to the ICT market?
The biggest positive here is that the market is still developing fast, and so it is reasonable to expect double-digit growth over the coming years. Still, the PC penetration rate is still not at the level of Europe or Asia; the same goes for internet penetration and capacity used per user. But increased PC and broadband penetrations are the base for any kind of ICT services in the B2B and B2C segments. International investors might participate even during this development stage and will find later a partly underutilized market potential ready for new businesses.
What are the main hurdles to increasing the internet penetration rate?
On one side the mentioned low PC penetration rate is a hurdle. But also technical problems, the low capacity of existing offers, and insufficient quality of existing lines are blocking development. Azertelecom is positioning itself in exactly this area by rolling out state-of-the-art infrastructure, high quality services, and a strong focus on customers. Of course, there are several areas of the consumer market that we need to educate as well. One such group is the elderly. Generally, the younger generations are more educated in terms of technologies, yet the level of internet use amongst the older generation here is lower than in other countries.
What potential does e-commerce have to develop in Azerbaijan?
E-commerce is one of the upcoming internet services in Azerbaijan. However, it requires a decent PC, high internet penetration rate, reliable networks, and high-quality customer-friendly applications. Another big need is the implementation of easy-to-use electronic payment mechanisms. All of these elements are under development, and once available e-commerce will boom and customers will learn quickly the benefits of e-commerce from their own experience.
What renders Azerbaijan more attractive than its neighboring countries in relation to the ICT market?
First of all, Azerbaijan has a very central position at the crossroads between West and East, North and South, Europe and Asia. Our national network and international connections are based on latest-stage DWDM, SDH, and IP/MPLS technology, and the goal is to develop Azerbaijan as the ICT pearl of the region. Due to its strategic geographic position between huge markets such as Russia and Iran, Europe and Central Asia, up to India and China, Azerbaijan may become the international hub of the region. We are building the communications highway for this to become a reality.
What is your general outlook for the ICT sector in the coming years?
As for the country itself, we must work in Baku and all regions, providing information technology and communication means. With our network, we’ll bring this prosperity to the entire country. Another of our major plans is to connect the buildings here in Baku directly to fiber cables and bring real broadband to apartments, to the consumer, and to businesses and governmental bodies. We are very active on these projects. So far, there are some DSL and wireless access possibilities, but the quality is not that impressive, and the capacity is low. We are installing completely new infrastructure. In addition to that, a strong customer focus will be a major differentiator.
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