Kazakhstan 2017 | TELECOMS & IT | REVIEW

ICT will be central to Kazakhstan's attempt to diversify and develop its economy, and new large-scale projects like TASIM and university tech partnerships should pay dividends in the future.

Technology is key to Kazakhstan's efforts to diversify and strengthen its extraction-based economy. A decade of development has resulted in dramatic increases in access to technology, and today the country enjoys mobile subscription rates on par with the developed world. Kazakhstan's priorities going forward will be integrating tech into the nation's economic fabric in order to generate innovation, economic growth, and improved outcomes for the country as a whole. A series of initiatives are up and running, working in partnership with regional and global organizations to bring new systems of knowledge into the nation and develop solutions for some of its most pressing issues.


Since it attained independence from the Soviet Union in 1991, Kazakhstan has made strides in telecoms development. The nation aptly leveraged its mineral resources into funding for telecoms infrastructure and saw steady development that blossomed into rapid growth in the first years of the 21st century. Mobile growth was particularly strong, quickly outstripping fixed broadband lines in part due to the nation's geography; with one of the lowest population densities in the world, wireless networks are a better fit for the Kazakhstani market than costly landlines. According to World Bank figures, Kazakhstan had a cellular subscription rate of 187 per 100 people in 2015, one of the highest in the world. For comparison, the global average is 99 subscriptions per 100 people and the average for high-income countries is 124 per 100. In contrast, Kazakhstan has only 25 fixed telephone lines per 100 people.

The Kazakhstani telecoms industry was previously state-owned, but legislation passed in 2004 ended the state's monopoly, allowing for private investment and additional development. As of 2016, the market has three main mobile operators. State-owned Kazakhtelecom holds approximately 40% of the market through its Kcell mobile network, which has about 12 million subscribers. Russian telecommunications operator VimpelCom purchased Kazakhstani cellular operator KaR-Tel when the market opened in 2004 and has since grown the brand to a 37% market share as of 2016 under the Beeline brand. The remaining two entrants, Swedish firm Tele2 Group and Altel, a subsidiary of Kazakhtelecom, announced a merger in 2016 that combines the assets of both companies, creating a single firm with a market share of 23% and 6 million subscribers. The overall growth rate of the mobile market has slowed considerably in recent years due to the saturation of cellphone penetration. Alexander Komarov, CEO of Beeline, explained to TBY that after a decade of rapid growth mobile service providers are adjusting to a new reality: “Actual penetration is around 150% and our core business is declining," adding, “Digital [is] growing rapidly in terms of consumption but not in terms of revenue. Last year we had more than 130% data traffic growth but our data stream grew less than 10%." With the number of new users reaching a saturation point, improving network quality will be a key issue for providers. 3G services arrived in 2010, and all mobile operators had 4G networks as of mid-2016. While not available in all cities, let alone the entirety of the ninth-largest country in the world, 4G LTE networks are expected to expand rapidly within the year, with the Minister of Information, Dauren Abayev, announcing a plan to have all regional centers covered with high-speed 4G networks by the end of 2017.


Internet access has also grown over the same time period, though not as fast as mobile subscription rates. Despite the aforementioned problems with infrastructure development, Kazakhstan has seen the number of internet users grow 10-fold over the past decade, with more than 10 million users in 2016. Likewise, internet penetration has risen from 3.3% in 2006 to 45% in 2011 to an estimated 72.9% % in early 2016. Government sources estimate that 82.2% of all households had an internet connection in January 2016, with 2.1 million fixed-line broadband connections. As with mobile networks, Kazakhtelecom was formerly the state-owned monopoly, but the same 2004 law allowed new entrants to the market. Today, there are four other main providers and dozens of smaller ones that purchase bandwidth from the main ISPs, but Kazakhtelecom remains the dominant player, with 85% market share and additional ownership stakes in several other downstream ISPs that give it an even more significant market position than its share might indicate.

Kazakhstan's internet speeds have improved with infrastructure upgrades of recent years but remain solidly middle of the pack globally. Kazakhtelecom introduced a 120 Mbps connection option in 2015, but no other ISP offers speeds above 100 Mbps. A 2015 industry report estimated that the average connection speed was 5.9 Mbps in 2015, a clear indication that true high-speed networks are not accessible to many Kazakhstani citizens, with rural areas especially constrained by infrastructure shortages. Service prices have been dropping since the opening of the market, but broadband internet access is still out of the reach of many. One of the tech community's key objectives in 2017 and the near future will be spreading fixed broadband access to the more remote towns that have previously been shut out from high-speed internet, giving them the tools needed to make economic and social advancements.


The Trans-Eurasian Information Super Highway (TASIM) represents one of Kazakhstan's most important projects for future ICT development. First proposed in 2008, TASIM is a fiber-optic connection linking Frankfurt to Hong Kong. The proposed route would run approximately 11,000km, passing through Turkey, Georgia, Azerbaijan, Kazakhstan, and China, and provide unprecedented levels of broadband access for landlocked Eastern Europe and Central Asia regions. With an estimated cost of USD100 million, the project will be constructed in two stages: first, national operators will build transport infrastructure within their countries, then installation of the fiber-optic line will allow countries to offer broadband connectivity. TASIM is important on multiple levels. First, it should lower broadband costs and increase speeds, giving Kazakhstan's citizens the tools they need to perform the higher-level tasks a sophisticated economy calls for. TASIM also represents a new level of regional cooperation on infrastructure, a precedent that will only prove fruitful in the future as Europe and Asia look to solve some pressing economic and social issues.


Several initiatives are underway to incorporate ICT services and projects into the larger goal of diversifying and developing the Kazakhstani economy. Well aware of the need to incorporate new technologies into the nation's education system, Kazakhstan's Minister of Education and Science recently announced a plan to provide broadband internet to all schools and universities, making it the main platform of the nation's education infrastructure. Schools have had free dial-up access since 2017, but educational and industry leaders recognize that high-speed broadband connections will be necessary as the sector looks to the future. Kazakhstan has also been forming new partnerships with major ICT firms, with one high-profile example being the Science Park Astana Business Campus at Nazarbayev University. Intended as an “intellectual innovation cluster," the center has agreements with General Electric, Microsoft, Intel, HP, Samsung, and Huawei and is envisioned as the centerpiece of a new knowledge economy. Samsung Kazakhstan CEO Ben Yoon explained that supporting initiatives like this is a natural fit for the company. “We want to continue to be a part of the economy of Kazakhstan, and through our innovative products we will contribute to the economy and increase our business," Yoon told TBY. “We are responsible in how we support our students and the future of Kazakhstan. We support and develop a smart class in school and have scholarships with certain top-ranking universities here."

Elsewhere, startups are working to build new products and cultivate a culture of innovation within the country. Kazakhstan has been aggressive about hosting international showcases and conferences that attract global ICT leaders and help spread ideas. Foreign education initiatives that help engineers and IT students study abroad for free as long as they return to Kazakhstan for four years afterwards have helped bring new skills back home, but the lack of an open internet culture remains a barrier to delaying the kind of organic startup ecosystem that is so crucial for innovation. Kazakhstan's internet restrictions are a barrier to innovation; legislation passed in 2014 allows the state to restrict internet access at its discretion. In addition, the government has long required that any website with a “.kz" domain be hosted on Kazakhstani servers, a move that has made several foreign corporations hesitant to add .kz to their webpages due to security concerns. Still, industry participants are optimistic. As Xerox Eurasia CEO Sergey Chernovolenko told TBY, “We see improvement coming…

Technologies go hand-in-hand with the country's two major goals: to grow GDP and the number of workplaces. Innovations can help in finding new economic opportunities for revenue streams." ICT, arguably more than any other industry, has the power to dramatically transform Kazakhstan's economy and quality of life. With government and industry officials committed to doing so, progress appears poised to become a force.

Mirbolat Ayupov
General Director, Kazmedia
KazMedia was created to bring together all government companies into one government media outlet so that they can work together and not have to outsource to other companies. Centralization was a key factor. The creation of KazMedia was truly an achievement in itself.