TBY talks to Ali M. Abbasov, Minister of Communications & Information Technologies, on FDI in the IT sector, the country’s first communications satellite, and the goal of developing an ICT hub.
TBY What has driven the 13% growth rate the ICT sector experienced in 2011?
ALI M. ABBASOV The ICT sector has been acknowledged as one of the priorities of the national economy. The sector’s current share of GDP is about 3.5%, which is twice the ratio of 2005. Sector revenues increased by 13% in 2011 compared to 2010, and this is twice as high as we initially expected. Such an outcome has been possible thanks to the government’s long-term visionary strategy, various state programs and projects, the promotion of competition in the sector, and a favorable investment environment. Also, I have to emphasize the proficient performance of local entrepreneurs as they practice an innovative and competent approach to business development in local and regional markets.
What role have foreign investors played in developing the sector?
Both foreign and local investors have turned the ICT sector into a sound competitive environment. Over the last decade, $3 billion has been invested in the sector and 25% of this amount has come from foreign investors over the last seven years. This investment has played an important role in the modernization of telecoms infrastructure, particularly mobile communications, and the development of advanced technology. Today, foreign companies enjoy a favorable legal framework to set up their businesses in Azerbaijan. Many incentives have been set by the government to simplify business registration procedures. The World Bank’s Doing Business 2011 report positioned Azerbaijan quite well in starting up a business, registering property, protecting investors, the enforcement of contracts, and access to credit. More progress is being made on the registration period for foreign companies and the development of e-service applications.
Azerbaijan will launch its first communications satellite in 2012. What does this achievement represent for the development of the country?
The Azerspace satellite is aimed at upgrading the quality of TV broadcasting and telecommunications not only in Azerbaijan but throughout Eurasia, and will lead Azerbaijan into becoming a major relay site for signal transmissions between Europe and Asia. The satellite’s footprint will cover Eastern Europe, Central Asia, and Africa. We are going to use only one-fourth of its capacity, while the rest will be available for lease. Azercosmos, the government-owned national satellite operator, plans to launch a second satellite in 2015, which will further expand Azerbaijan’s satellite communications capacity. Azercosmos also plans to launch a remote sensing satellite into low Earth orbit, which will enhance and accelerate Azerbaijan’s capacity in the areas of environmental protection, agriculture, topography, and national security.
What targets has your Ministry set to increase internet and broadband penetration?
Broadband in Azerbaijan is constantly expanding, and we are seeing an ongoing increase in the number of subscribers. The full digitalization of the fixed-line network has been successfully completed, providing high-quality accessibility. Also, in recent years, broadband has become more affordable since the Ministry has worked closely with the relevant agencies to adjust the pricing. We initiated the AzDataKom network to expand broadband service access of at least 10 Gbps to all of Azerbaijan’s regions. In addition, the wholesale distributers Delta Telecom and Azertelecom have significantly contributed to increasing internet bandwidth. We have developed an action plan that complies with the International Telecommunication Union’s vision and aims to gradually expand broadband infrastructure over the 2012-2015 period.
How will Azerbaijan benefit from the two main regional projects it participates in: the Trans-Eurasian Information Super Highway (TASIM) and the Europe-Persia Express Gateway (EPEG) Agreement?
Both projects are key in turning Azerbaijan into a transit corridor, which is a vital part of the government’s vision of utilizing the country’s lucrative geography as much as we can. TASIM is an initiative of the government that was raised during a ministerial summit held within the framework of the BakuTel exhibition in November 2008. The project is a major regional initiative aimed at the creation of a transnational fiber-optic backbone targeting primarily the countries of Eurasia, from Western Europe to China. It envisages the building of an information superhighway that more than 20 countries of Eastern Europe and Central Asia will benefit from. On December 21, 2009, the 64th session of the UN General Assembly adopted the Resolution on TASIM (A/Res/64/186). The Resolution acknowledges the role of Azerbaijan in the coordination of the initiative. In July 2011, in Gabala, as an outcome of this preparatory work, Azerbaijan hosted the first meeting on TASIM, with the participation of leading telecom operators from Azerbaijan, China, Kazakhstan, Russia, Turkey, and the EU. The last meeting was held in November 2011 in Istanbul, Turkey and I look forward to seeing many other players joining the project. EPEG is another successful ongoing project that will start in Frankfurt, Germany and reach Oman passing through Poland, Ukraine, Russia, Azerbaijan, and Iran via large-capacity, high-quality communication channels. Azerbaijan is a part of the project both as a main and alternative route holder. The design capacity of the new EPEG system will be up to 3.2 Tbps with a total length of approximately 10,000 kilometers, with around 9,500 kilometers being terrestrial fiber-optic cable. The system will be put into operation in May, 2012, with an initial capacity of 540 Gbps. The proposed route is about 3,000 kilometers shorter than the submarine connection between Europe and Asia. EPEG will allow a telecommunication transit route alternative to the Red Sea, Suez Canal, Egypt, and the Mediterranean Sea regions and can play an important role for traffic re-routing in case of earthquakes and disasters, which have been known to affect multiple systems at once.
How will mobile number portability affect the sector?
Through the recommendations of the Ministry in 2011, the mobile operators have switched to a new manat-based billing system, thereby ending the major complaints of subscribers giving them permission to properly manage their phone calls and control their ongoing balance. We have also recommended that the operators complete all the procedures regarding mobile number portability by 2013. We have studied the impact of the legislative framework of mobile number portability in various countries, and we have carried out analyses in that regard. Right now, a special legislative norm has been drafted by the Ministry and sent to the mobile operators for their consideration. I believe that the new framework will have a positive effect on the market, creating fair and healthy competition between operators, and attract new investments. It should also increase the number, reliability, and quality of mobile services. So far, we can state that currently the cell phone penetration rate is 110%.
What are the main ICT challenges Azerbaijan faces with the organization of international events such as Eurovision 2012?
The 2012 Eurovision Song Contest is a superb opportunity for our country in terms of promotion in many fields. However, it also carries responsibilities and challenges, and in this regard we have developed an action plan to provide high-quality telecommunications, internet, and television services. Work has already begun in terms of software, web, and content development, as well as online security. At the same time, we have to make sure that the availability of telecommunications services, mobile infrastructure, and 3G and Wi-Fi services can cope with bandwidth demand. Having said that, we firmly believe that the infrastructure in place will guarantee the success of the event from a technological point of view.
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