Ict Development

ICT DEVELOPMENT

2010 report CONTENTS

Chapter 1. Overview of ICT sector

1.1 Development of ICT sector and its role in national economy 6 1.2 Development of ICT in international assessments 10

Chapter 2. Government’s ICT Policy

2.1 Investment environment in ICT sector and liberalization 14 2.2 Development of telecommunications sector 18 2.3 Mobile communications market and introduction of new technologies 22 2.4 Internet services market 27 2.4.1 Broadband services 29 2.5 Coverage of digital TV in country 31 2.6 Application of postal banking and financial services 32

Chapter 3. Development of information society

3.1 Role of virtual social networks in society and enhancing ICT knowledge 36 3.2 Principle ICT priorities of the Government: E-Government 39 3.3 Application and expansion of E-Government 43

Chapter 4. International integration

4.1 Regionally important ICT projects 64 4.2 International partnership for the development of ICT 68

2 DIAGRAMS

Diagram 1 Dynamics and growth rate of the total revenues in ICT sector 6 Diagram 2 Share of ICT sector in GDP and non-oil GDP 7 Diagram 3 Distribution of the revenues in ICT sector in 2010, mln. AZN 7 Diagram 4 Distribution of the revenues in IT sector, mln. AZN 8 Diagram 5 Ranking of Azerbaijan by major aspects of readiness component 10 Diagram 6 Shares of public and private sectors in the revenues in ICT sphere 14 Diagram 7 Dynamics of investments made in ICT sector 15 Diagram 8 Azerbaijan’s rankings in international assessments on foreign investment and techno- 16 logical transfer Diagram 9 Revenues in telecommunications sector 18 Diagram 10 Capacity of fixed telephone network and level of electronic exchanges 18 Diagram 11 Fixed telephone lines per 100 inhabitants 19 Diagram 12 Fixed telephone lines per 100 households 19 Diagram 13 Volume of international traffic exchange 20 Diagram 14 Volume of international traffic per capita 20 Diagram 15 Mobile subscriptions per 100 inhabitants 22 Diagram 16 Market shares of GSM operators subscription, 2010 22 Diagram 17 Price variability in mobile market 23 Diagram 18 Distribution of respondents by the use of mobile operators 24 Diagram 19 Satisfaction level of operators by the quality of services 24 Diagram 20 Users’ satisfaction level of the mobile communications 25 Diagram 21 Services make users unsatisfied 25 Diagram 22 Internet sector revenues 27 Diagram 23 Personal computers per 100 inhabitants 27 Diagram 24 Penetertion level of internet services in society 28 Diagram 25 Division of internet users by internet usage, 2010 28 Diagram 26 Number of broadband subscribers 29 Diagram 27 Decreasing trend of 1mbit/sec. internet costs, in AZN 29 Diagram 28 Volume of internet channels per 100 inhabitants, in Kbit/sec. 30 Diagram 29 TV Programs broadcast in the country and their coverage (in%) 31 Diagram 30 Level of using different social networks in Azerbaijan, 2010 36 Diagram 31 World Economic Forum’s rankings on the use of virtual social networks 36 Diagram 32 Division on acquiring electronic knowledge and skills in 2010 37

3 chapter 1 overview of ICT sector 1.1 Development of ICT sector and its role in national economy

Considerable impact of the information and communications technologies (ICT) in social and economic life of the country in recent years has placed it in the forefront by the government and served to be on the agenda constantly, having further increased the importance of ICT. Accordingly, some significant actions have been taken and a sustainable policy implemented in order to establish an information society in the country during these years. 2010 has been a remarkable year in terms of the work accomplished in this sphere. This has resulted in major achievements in households, business, government agencies, education, public health, and culture.

Azerbaijan’s fast growing economy specifi- cally includes the years 2004-2010 and the ICT sector shares a significant contribution

diagram 1 in development indexes of this period. Con- sequently, the sector revenues have seen a Source: State Statistical Committee (SSC) & Ministry of Communications and Information Technologies (MCIT) 3.5 times increase in these years alone.

In general, revenues generated in the ICT sector of Azerbaijan have always been on an increasing dynamic growth and, considered as the main engine of economy. This sector has seen a fast growth in recent years and the average annual growth rate of the revenues constituted 30-35%. Currently, this sector almost takes the lead among all the spheres of national economy due to its growth rate. Source: SSC 2010 was mostly remembered by the anti- crisis policies and deceleration of recessions Annual average exchange rate 1USD = 0.8026 AZN

6 in overall world economy. The country also successfully concluded the actions to keep out the effects of global economic crisis on our real sector last year. Accordingly, this led to a 32.1% increase of the real growth rate revenues of ICT sector in 2010.

In 2010, the country economy witnessed a 5% GDP increase, while the non-oil sector GDP made up a 7.9%. One of the notable aspects is that the ICT sector has enjoyed a 29.7% added value growth, and it is several times higher than that of the other sectors included in the GDP structure.

Retaining the real growth rates in this sector has been possible particularly owing to successful economic policy by Mr. Ilham Aliyev, President of the Republic of Azer-

baijan have been set, and other conceptual diagram 2 documents have been adopted to ensure the sustainable development of the ICT sector.

It is also worth mentioning that ICT sector was not only remarkable in terms of the fast Source: SSC growth of the added value it created in GDP, but also in the increase of its share to 4.3% in the non-oil GDP.

Likewise, the positive assessment of development seen in the telecommunications sector by Mr. Ilham Aliyev, President of the Republic of Azerbaijan in the meetings of the Cabinet of Ministers on social and economic development results in reporting year and his views echoed on this sector having a diagram 3 bright future unveil that the ICT sector will keep being a priority area in coming years.

Source: SSC & MCIT 7 The increase in ICT sector has mostly taken place owing to the services sub-sector. Thus, telecommunications sector has seen a 32.8% increase, including 30.2% growth in mobile sector, and 29.1% increase in postal sector.

Moreover, there has been around 1.5 times increase in the IT sector in 2010 compared to the previous year. This also reveals that despite the minor deformation of global crisis on the economy, the production sphere of IT sector has constituted 42.9 million AZN, having increased 2.3 times.

The services sphere of IT sector has also seen a growth. Thus, the size of IT services has increased about 1.2 times and reached 42.7 million AZN.

Substantial increase of the revenues in ICT

diagram 4 sector in coming years will be possible as a result of the completion of the activities envisaged in the “National Strategy on Infor- mation and Communication Technologies for Development of the Republic of Azer- baijan in 2003-2012”, which defines the le- Source: SSC gal framework of future development in ICT sector.

At the same time, long-term forecasting of the average growth rate in this sector depends on the population growth rate, regular expansion of the size of services as a result of the influence of technological parameters on their daily lives, and other important fac- tors. Furthermore, the main targets of the “Long term Strategy on Management of Oil and Gas Revenues” confirmed by a Decree of the President of the Republic of Azerbai- jan, dated 27 September 2004 and covering 8 the period up to 2025, envisage re-directing profits from the oil sector towards the non- oil sectors, thereby also directly resulting in stimulating future growth of the ICT sector.

9 1.2 Development of ICT in international assessments

As a result of the state ICT policy implemented in the country and the significant actions taken to further develop the sphere, all the accomplishments are also objectively reflected in the assessments of international organizations.

“The Global Information Technologies Report 2010-2011” published by the World Economic Forum (WEF) ranks Azerbaijan 70th among the 138 countries of the world according to the Networked Readiness In- dex. Azebaijan is the second highest country among CIS states following Kazakhstan un- Sub-components of the network readiness der this ranking. index for Azerbaijan Under international best practices, when the countries are compared against each other, it is considered more rational to group these countries according to the growth rate of their economies. It is worth mentioning that while Azerbaijan was ranked 6th according Source: WEF to the Network Readiness Index among the low middle income countries in the previous report of Davos Forum, it is included in Ranking of Azerbaijan by major aspects of the list of high middle income countries readiness component and placed 15th in the group according to this index in the recent report.

Furthermore, our country has advanced from 106 to 67 under the Individual Readi- ness component, which is one of the sub- diagram 5 parameters of the network readiness index. It has become possible thanks to the rational policy carried out by the government.

“The Global Competitiveness Report 2010- 2011”, another publication of the WEF ranks Azerbaijan 57th among the 139 par- Source: WEF ticipating countries according to the Global Competitiveness Index. Azerbaijan leads the CIS countries in this report, as well. Under

10 the Technological Readiness Index, which is one of the sub-components in this index, our country has risen to the 70th spot, having advanced 5 steps from its previous position. According to the application of innovation among the countries, Azerbaijan was ranked 61st. It is worth emphasizing that our country was ranked 75th and 42nd, respectively according to these indexes in the assessment of this report covering 2009-2010.

Favorably, Azerbaijan shares the second place among CIS countries following the Russian Federation with its 61st ranking according to the innovation aspect in this report. Accordingly, Russia, Ukraine, Kazakh- stan, Armenia, and Georgia are ranked 57th, 63rd, 101st, 116th, and 125th in this ranking.

In the “ICT Development Index” as part of the report: “Measuring the Information Society - 2011” by the International Tele- communication Union, Azerbaijan took 74st place among 152 countries in 2010 and improved its rating by nine more position over that of 2009. Furthermore, Azerbaijan entered the list of the top 10 countries whose indicators rose in the index.

In the same report, a criterion named the “ICT Price Basket” was created for comparing relative price levels for ICT services among the selected 165 countries. When calculating the price basket, the share of costs spent per capita on ICT services in the National Income in a country was measured. Azerbai- jan was ranked among the first 10 countries where the communication costs decreased rapidly. It became the 53rd country among 165 states in 2010 having advanced 46 steps from the 99th ranking where it was among 161 countries in 2009 according to the ICT Price Basket.

11 chapter 2 government’s ICT policy 2.1 Investment environment in ICT sector and liberalization

The actions taken in the country in recent years in order to continue the economic reforms, to improve the liberal business environment, to develop the non-oil sector have both sped up the social prosperity process, and further strengthened the social and economic stability.

As a result of the flexible management and purposeful policy carried out as of 2005 and thanks to creation of effective regulation mechanisms in ICT sector, establishment of competitive environment, and the market liberalization, the infrastructure rapidly developed.

Furthermore, owing to the creation of effective regulating mechanisms, the creation of a competitive environment and liberalization of the market in the ICT field since 2005, the ICT infrastructure developed rapidly, which fact is also reflected in assessments made by international organizations.

The share of the private sector, measured by revenue, increased from 67.3% in 2003 to 80.0% in 2010 in the overall ICT sector.

diagram 6 In general, the “open door” policy carried out by the government in order to achieve development of the country’s economy through clusters and to enhance the attractiveness of investments has stipulated Source: SSC Azerbaijan’s reaching new accomplishments

14 in international setting that integrates faster than ever. This also visibly appears in the sound competition available in the ICT sector and the investment engagement of the companies operating in the business environment. Accordingly, the favorable conditions created in the sector as a result of the targeted state policy increase the interest and trust of the foreign investors to this sphere every year.

The volatility seen in the global markets has partially affected the attraction sensitivity of the foreign investments. Investments in amount of 204.0 million AZN have been made to the sector in general during the reporting year. The investments made to the sector in the past 6 years constitutes 1,06 billion AZN or 1,3 billion USD. Foreign capital makes up around 20-21% of the overall investments made to the sector in these years.

Note that, share of investments in the ICT sector constitute approximately 2-3% of total investments made in the country’s economy. The level of investment in the mobile part of the sector outstrips all other investments in the remainder of the sector. diagram 7

Even though the attractive investment environment created for foreign and local investors has increased the size of investments to this sector, the declaration of ICT sector as the second priority area following the energy sphere by the country president has also led to the rise of the state share in investments Source: SSC

15 made to this sector. Thus, the share of public sector investments has increased from around 23.5% to 48% in the past 4 years.

In 2010, the state has invested 79.1 million AZN to this sector, 37.0 million AZN of which has been allocated directly from the state budget.

The interpretation of the studied regression model on measuring the dependence of ICT sector from investments proves that a 1.2% increase of an investment leads to 1% rise of the new added value. And this shows that sustainable development of the ICT sector also depends on the size of substantial investments. Assigning the investments caus- ing capital accumulation to equipment and introduction of new technologies can ensure the long-term economic growth of the country.

diagram 8 According to the assessments of international organizations in 2010-2011, around 68% of the direct foreign investments are assigned to the transfer of new technologies. Azerbaijan ranks 65th among the participat- Source: WEF ing 139 countries according to the “Foreign direct investment and technological transfer” rankings and leads the countries in the region.

As a result of the policy carried out to support the development of entrepreneurship in ICT sector, a number of new fixed line and mobile network operators, Internet Ser- vice Providers, ICT product developers and

16 broadcasting companies have entered the market, a completely sound competitive environment created for development.

Currently, there are 15 fixed network operators in the country’s telecommunications market, and only two of them completely belong to the state. In 2010, 3 new licenses have been issued for telecommunications services and 1 license issued to fast postal services. At the same time, the validity peri- ods of licenses of 3 telecommunications and 4 fast postal services have been extended.

17 2.2 Development of telecommunications sector

The role of introducing information technologies to a large extent in the society is irreplaceable to create a solid foundation for sustainable development for our country’s future and to ensure the balanced development of economy. The dynamic development of telecommunications sector, which is the main constituent in this sphere, serves to the social welfare of each member of the society.

The overall size of telecommunications services performed for the people in 2010 constituted 1097.8 million AZN, having increased 32.8% in relation to the previous year with comparative prices. And this makes up 89.2% of the ICT sector. The tele- diagram 9 communications sector mainly consists of 21% fixed network and 71.4% mobile network. The revenues in fixed network made up 231.2 million AZN in 2010, having risen approximately 6.9 million AZN, while the mobile sector’s revenues reached to 785.4 Source: SSC & MCIT million AZN seeing an increase of 75.0 million AZN. In 2004, the specific weight of mobile sector constituted 64% in the telecommunications sector.

The total capacity of fixed network has reached to 1,667,300 numbers having increased 52% since 2004. Reconstruction works of ATSs were successfully continued diagram 10 also in the reported year to ensure consistent high quality communication services both for the private population and enterprises.

While the special weight of digital ATSs as part of the general capacity of the fixed

Source: SSC & MCIT network of the country constituted 55.5% in 18 2004, currently this figure is 100%. And this means that people are using high-quality communication services. The total digitali- zation of telecommunication network of the country was completed in 2010.

The telecommunications systems created on the basis of radio technology play an important part in the social life of all developed countries, including ours. The wireless communication is widely used in connecting phone systems in the rural areas and remote regions of the country. Taking into account that a certain part of the country’s area is mountainous, one can see the importance of introducing the CDMA technology in in-

stalling those parts with phone system. diagram 11

Currently there are 6 operators in the fixed network market using the CDMA standard. The coverage of CDMA technology includes the area of the country where up 70% of the population live and the number of subscribers has reached to 52 749, increasing by 12 041 in comparison with 2009. Source: SSC Moreover, the work on reconstruction of the fixed telephone network based on the NGN technology in some regions through the state investments made in the sector is underway. The capacity of this network has reached to 452,931 numbers in the reporting year and this constitutes 27% of the overall network. diagram 12 Another main development indicator of the telecommunications infrastructure is the percentage of phone users in the fixed network. There are 16.2 fixed lines per 100 inhabitants in the country, which means a 32.7% increase compared to 2004. The number of main telephone sets used in the country has Source: SSC reached to 1,411,200 having increased 40.1

19 thousand in relation to the previous year. During these years, the number of fixed telephone lines per 100 households jumped from 52 to 67.3 in 2010.This number constitutes 136.3 for Baku and 47.3 for other parts of the country.

Telephone lines have been systematically installed to reach all regions of the republic. All populated areas including the outlying residential settlements of the republic have already been provided with a telephone communication network. No residential areas in the country remain without telephones.

An increase in the revenues of the fixed telephone network in the reporting year has been caused, on the one hand, by the expansion of the users, and on the other hand, by the rise of the country’s international traffic diagram 13 exchange. Accordingly, the size of Azer- baijan’s international traffic exchange has increased around 3.2 times compared to 2004 and constituted 848.0 million minutes. The size of international incoming traffic to Azerbaijan from other countries constituted Source: MCIT 688.0 million minutes, which is 99.5 million minutes more than the previous year. The size of international outgoing traffic made up 160 million minutes in the reporting year, having increased 1.6 million minutes.

Compared to 2004, the volume of international incoming traffic per person has in- diagram 14 creased by 2.9 times, thereby reaching 75.5 minutes per capita. The volume of outgoing traffic per capita has also increased by 2.8 times, has reached 17.6 minutes.

This factor implies that the possibility of making cheaper international calls through Source: MCIT ever updating internet programs that support

20 viewing and voice, such as Skype, MSN, Gmail, etc. hasn’t made the rise of traffic of communication with other countries through traditional phone system as high as in previous years.

The AzDatacom network, which has been established to beef up the transit role of the country’s information exchange, enjoys the capability to transmit high-speed information and covers the whole area of the country, has created favorable conditions for quite rigorous telecommunications services.

In order to further enhance the sustainability of the international communication system in the country, to expand the transmission possibilities of the optical network, a fiber optic cable highway has been constructed in the direction of Siyazan-Shabran-Guba- Samur. A 240-km fiber optic cable highway has been constructed in the telephone network of the country and most regions have already been connected to this cable highway.

21 2.3 Mobile communications market and introduction of new technologies

The mobile sector carries the greatest weight regarding increases in revenues generated by the ICT sectors. Internationally the mobile communication sector is developing rapidly and is attractive and of interest to potential investors. This quantitative and qualitative development applies to our country as well.

The volume of revenues generated by mobile communications market in 2010 reached 785.4 million AZN, having increased 30.2% by comparable prices over the corresponding period of the previous year.

The progress made in mobile sector is clear- diagram 15 ly noticeable in the change of the number of subscribers. Thus, while there were 2.2 million subscribers in country in 2005, this number constitutes 9.1 million people having increased 4.1 times. This means that an Source: SSC & MCIT increase of the number of subscribers of per 100 inhabitants to 100 users. It demonstrates a rigorous competition on increasing the number of subscribers by the operators. This healthy competition ultimately provides for sustainable increase of the income in mobile sector. diagram 16 Although some experts maintain that such a dynamic increase continues until the subscriber pool of the market is 100% covered, Source: MCIT the international best practices suggest that the increase is under way even after the 100% coverage takes place.

22 Currently “Azercell” company leads the mobile market with its 46.1% of share of the overall subscribers.

Along with the GSM technology, CDMA technologies are also available in the mobile market.

In 2004 the average annual revenue per subscriber was 143 AZN, presently this figure has dropped to 85.8 AZN reflecting a decrease of 40%.

Flexible tariff policy carried out by the operators under the highly competitive conditions present in the mobile market has also diagram 17 led to the decrease of the calling costs per minute in addition to the rapid expansion of the subscriber pool.

The studies show that while in 2004, a subscriber spent 22 AZN on average for 100 minutes, currently this amount varies be- Source: MCIT tween 9-11 AZN.

And this will allow the mobile phone operators supporting GSM standard to further decrease their tariffs in future.

Under the report, a social survey has been conducted among more than 300 respondents in order to determine the satisfaction level of the users from the services in mobile market and the effect of them on the users’ social behavior. The respondents included 48.2% men and 51.8% women. The survey was mostly conducted among the young

23 people. Accordingly, 45.6% of the respondents belonged to 16-25 age group. 19.2% of them were among the 25-30 age group, 25.1% of them in the 30-50 age group, and 10.1% of them were the citizens above 50 years of age.

The most liked mobile operator according to the quality of services was Azercell with 43.5%. As a result of the survey, the second liked operator was Bakcell with 33.4% and Azerfon had a 6.2% share.

30.5% of the respondents use mobile communication only at workplaces. 28.9%, 17.2% and 1% use mobile devices at home, on the street, and in transportation, respectively.

If we take a look at the frequency of using diagram 18 mobile communication by the respondents, Source: Social survey 52.9% of them have used it for communication with the people close to them. 6.2% of them have used it for SMS and MMS services, and 4.9% have used it to get access to Internet.

As known, the operators who perform the best services to each individual and corporate client, valuing its users for providing highest

diagram 19 customer service in mobile market, gaining real customer satisfaction, always compete against each other. The study also allows Source: Social survey the respondents to express their satisfaction level that is what they have observed in terms of their social behavior in using these mobile communication services. According

24 to the results, 40.2% of the respondents feel themselves satisfied because they have not frequently faced technical problems in the network. 23% of them are pleased with the suitable prices and availability of choices by different tariff packages. 19.9% of them have expressed their satisfaction with the bonus campaigns and balance gifts. Even though it sounds interesting, the remaining 16.3% of the respondents haven’t expressed any service that has left them fully satisfied.

In general, the reasons that make the users unsatisfied are different. For instance, in con- trast to satisfaction, those who are unhappy diagram 20 about both expensive prices and complexity of tariff packages constitute 42.5%. Those who complain of technical problems make up 19.2%. 29% of the respondents who have received undesirable announcements and advertisements through SMS to their phones have expressed their dissatisfaction. Source: Social survey diagram 21

Source: Social survey

2.4 Internet services market

Like other spheres, the internet services market in our country also enjoys a dynamic development growth. While the size of internet services market constituted 3.7 million AZN in 2004, these revenues reached to 42.3 million AZN having increased 11.4 times.

As seen in the diagram reflecting the revenues of the internet sector in recent years, the major part of internet revenues in, i.e. approximately 70-80%, result from internet expenditure by enterprises and organizations. Furthermore, this trend also indicates the growth of internet usage among the general population. Accordingly, the revenues in Internet sector generated diagram 22 through the people increase 2 million AZN annually since 2007. This has also occurred due to the increase of the users pool and size of services as a result of the substantial decrease in the fast-speed internet services prices in the market. The increase of the people’s share in revenues generated in the Internet sector is also connected with the increase of level of computerization in the country. Thus, if the number of computers per 100 inhabitants constituted 1.6 in 2004, Source: SSC whereas currently that number has reached to 15, which means a 9.3 times increase.

In order to enhance the computerization level of the people, through the initiative of diagram 23 MCIT and participation of the leading global companies, the “National computer” project has been successfully underway in the reporting year, as well. This project serves to create conditions for the low-income social strata of the population to obtain modern computers with licensed software under special concessions (interest-free credits, prices below market prices) and to speed Source: MCIT up the process of public awareness for the country’s integration to global information

27 age. A number of regional countries are also interested in learning this experience. 10,000 educational workers and students have received computers under this project.

Along with the rapid computerization of the people in Azerbaijan, the number of internet users is also increasing substantially. Currently, there are more than 4.5 million internet users in the country, which means that the number of users per 100 people is 50. This is the result of the considerable lowering of the internet services in the market, increased opportunities to join the Internet (WiMax, 3G, CDMA, Wi-Fi), and most importantly, the effective policy carried out by the MCIT.

The Internet users access the worldwide network in following places: 38.8% at home, 14.6% in Internet cafes, 20.2% in workplac-

diagram 24 es, 8.4% at educational institutions, 0.6% in libraries, and 17.4% in other places.

The distribution of internet users by their goals clearly tells us that Internet is mostly used to obtain information in Azerbajan, Source: MCIT like in countries around the world. Given that 31.6% of the users employ Internet as the main tool of comunication, we can infer that its role as the most reasonable and live means of communication has increased.

The main areas of activity during the reporting year have also included facilitating access of the people to internet services, setting up technical infrastructure, providing schools with high-speed Internet, increasing the connection speed, etc. diagram 25

Source: SSC

28 2.4.1 Broadband services

As the number of Internet users grows and the volume of exchanged information increases every year, there is an increased demand for high-quality services to obtain information. In this regard, the technical infrastructure of networks is further developed and taken to the next level. Today, per 100 inhabitants in the world, 8 of them are users of the broadband internet services. This figure is 24.6 in developed countries.

Also in Azerbaijan broadband communication services are regularly expanded, thereby leading to a rapid and constant growth in the number of subscribers over the

years. The reporting year has seen 500,000 diagram 26 broadband internet users, which is 5 times more than the previous year.

Broadband connection means not only high-speed internet, but also uninterrupted connection to the internet. It also provides two-way communication, that is, the information is both received and transmitted in high speed. Source: MCIT

As the general internet segment expands throughout the country and the cases of broadband internet services increase, there is a growth in the number of users, as well. Currently, the number of broadband internet users in Azerbaijan per 100 people constitutes 15. diagram 27 An effective tariff policy to expand the broadband services is underway in the past 3 years. As a result of the prices changes carried out recently the costs of connecting to broadband internet services has decreased 6-7 times in 2009. It was further lowered around 50% in 2010. Source: MCIT

29 These changes also dismissed the views expressed that the prices of broadband connection in Azerbaijan are more expensive than the countries in the region.

The analyses prove the favorable business and competitive environment established for operations of internet providers also allow for about 30% increase of the internet users every month in regions of the country.

As a consequence of the increased demand for internet services of the people in recent years, the international channel capacity of the country has also substantially increased. If the general capacity of the internet channels constituted 240 Mb/sec. in 2004, currently this number is 40 Gb/sec. This means a 42 times increase in the internet connection speed. Currently, the capacity of internet channel per 100 inhabitants constitutes 460.4 Kbit/sec.

diagram 28 The activities carried out to further develop the wireless broadband networks allow us to state that the broadband network services will develop even faster in the internet services market. Source: MCIT Presently, the “Strategy on development of broadband internet services”, which contains the long-term development goals of the broadband internet in Azerbaijan is progressed.

30 2.5 Coverage of digital TV in country

Like in other countries, the Republic of Azerbaijan also carries out respective set of activities in order to transmissions from analogue to the digital TV broadcasting. In this regard, the “Program for Application and Development of DVB-T Digital Telecasting System in the Territory of the Republic of Azerbaijan” was adopted. The program envisages completion of the full transition to digital TV broadcasting within the country until 2013. The digital TV broadcasting will enable enhancing the quality of TV broadcasting in the country, an increase of the TV programs, effective use of the frequency resources, and introduction of new technologies. diagram 29

For the first time in the region, Azerbaijan successfully tested the digital TV broadcasting in 2004. Currently, more than 60% of the country’s population has access to digital TV broadcasts. International Telecommunications Union has set the completion goal for transitioning to digital broadcasting as 2015, but Azerbaijan will reach to this goal earlier, in 2013. Source: MCIT

The coverage of people by the TV channels during the reporting year as a result of the activities carried out to further expand the coverage of TV and radio programs is as follows: 99.9% by AzTV, 89% by Public TV (established in 2005), 88.8% by Lider TV, 82.2% by ATV, 80% by ANS TV, 78% by Khazar TV.

In addition to Baku and its outlying districts, Sumgait and Absheron Peninsula, Ganja and its surrounding regions, the digital TV broadcasting has been launched. Already more than 50% of the people have opportunities to access digital TV broadcast in the areas they live.

31 2.6 Application of postal banking and financial services

Performing postal services in the Republic of Azerbaijan is regulated by the Law of the Republic of Azerbaijan on Postal Services. Under the Law, the postal services market has been fully liberalized. Currently, 33 private postal companies perform express mail (courier) services. National postal operator “Azerpost” LLC performs both traditional and non-traditional postal services, and carrying out activities to increase the variety of services. Accordingly, the World Bank- financed “Financial Services Development” Project, which supported the integration of postal network to electronic payment infrastructure and providing banking and financial services, was completed in 2010, and the post offices have started performing banking and financial services for customers.

The Framework on “Financial Services Development” Project, the networking and automatization of the post branches of “Azerpost” LLC have been completed by the end of 2010, their access to the Automatized Corporate Information System (ACIS) provided.

Under the “Financial Services Development” Project, “Azerpost” LLC obtained a license from the Central Bank of the Republic of Azerbaijan on March 16, 2010 in order to perform new banking and financial services.

32 Thus, the customer services of 65 post branches carry out payment transfers through the Centralized Information System on Mass Payment (CISMP).

As of October 4th, 2010, post branches have started carrying out transactions through the Real Time Mode Inter-banking Payment System (AZIPS). In addition, the work on treasury, risk management, management of main funds, deposits, cards, internet banking modules has been completed. Currently, the work on these components is underway and by the end of 2011, all the post offices will be provided establishing a system of postal savings and postal payments.

33 chapter 3 development of information society 3.1 Role of virtual social networks in society and enhancing ICT knowledge

The impact of technological revolution brought by the ICT in the 21st century opens unlimited opportunities for mutual interac- tion of the civil society and state.

Information society allows the people to widely tap into their potential and realize their own efforts. One of the changes rapidly brought by the technological innovation is virtual social networks. Social networks include a number of elements, such as communication, sharing, and discussion, which are created by modern technologies. They have become particularly popular among the most internet users around the world. In some cases, they have even surpassed the media and press.

The level of Azerbaijani people’s usage so-

diagram 30 cial network on receiving the information content and sharing is different. Thus, the level of using Facebook among the social networks by the country’s population has increased from 80.3% in 2009 to 85.6% in Source: StatCounter 2010. However, the level of using social networks, such as Twitter and StumbleUpon have respectively decreased by 14.6% and 38.1%. It is worth mentioning that Facebook is fast-growing and popular social network throughout the world due to its many advantages. Accordingly, 64% of the world population, who used social network, has used Facebook in 2010.

diagram 31 According to the assessments of the World Economic Forum, Azerbaijan ranks 44th among 138 countries according to the ranking of using social networks.

Source: WEF

36 Under the initial evaluation of 2010 results, the coverage of Facebook social network among the Azerbaijani people constitutes around 3%, which means that per 100 internet users of the country, 16.5 of them use this network.

More than 50% of the users of this network in Azerbaijan are the ones who belong to 18- 24 age group and more than 60% of them are male users.

The level of using ICT is one of the main indicators for each country’s intellectual and scientific potential, transparency in public management and development of democracy.

In order for the population to benefit from the opportunities created by ICT to a maximal degree and to more effecively and creatively resolve the social and economic problems diagram 32 emerging in their daily lives, first of all, it’s necessary to possess ICT knowledge. Taking into account that the application of ICT is increasingly widening in all spheres, one can state that there is certain progress in public awareness in this sector, as well.

In general, if we take a look at the distribution of the people in our country by acquisition of electronic knowledge, one can see a quite Source: SSC diverse picture. Thus, the biggest share on acquiring ICT knowledge is the ICT knowledge and skills obtained by the individuals in their work process. That is, the percentage of people acquring ICT knowledge and skills individually and on a compulsory basis is 39.5%. The respondents’ replies in the surveys held on acquiring ICT knowledge shows that this indicator constitutes 20.7% in educational institutions. All these also tell us that the use of ICT resources and applying ICT in many spheres of the society has been rapidly spread out. While Azerbaijan ranked

37 38th among the 133 countries according to the Government’s ICT prioritization level in the assessments of World Economic Forum in 2009-2010, it rose to the 36th spot among 138 countries according to this indicator in the latest report. In a near perspective, works will be continued to ensure the maximum usage of opportunities created for the society in order to utilize the existing cultural, educational, scientific-technical potential of Azerbaijan and to form its worthy place in the global information society.

38 3.2 Principle ICT priorities of the Government: E-Government

Today the government’s priorities of ICT policy are adoption of significant laws and regulations in applying ICT, and implementation of innovative reforms in spheres, such as science, education, public health, taxes, finance, customs, and registration.

In Azerbaijan, as in all countries, the priorities of the ICT sector are reflected in appro- priate political documents adopted by the state. The “National Strategy on information and communication technologies for development of the Republic of Azerbaijan” (2003-2012), signed by the national leader Heydar Aliyev on February 17, 2003 is a long-term conceptual document defining the strategic goals in introduction of modern information technologies in Azerbaijan and enabling conditions for consistent and systematic development of this sector.

The strategic goals of the National Strategy include meeting the information needs of citizens, further enhancing the country’s intellectual capacity, and strengthening the economic potential of the country by the application of information and communication technologies.

Stressing on the above-mentioned, the “State Program on development of communications and information technologies in the Republic of Azerbaijan in 2010-2012” (Electronic Azerbaijan) was approved by the Presidential Order # 1056 dated August 11, 2010 in order to carry out the activities envisaged for upcoming years in the National Strategy and as the logical continuation of the Electronic Azerbaijan (2005-2008).

The main goal foreseen in the State Program is to create information resources stipulating

39 the effective activity of unified automatized information exchange in public management and management systems, as well as management bodies by areas and regions.

Among the 20 basic e-services defined by European Union states for citizens and business sector, 8 of them are already performed in Azerbaijan (electronic submission of tax and customs declarations, submitting application for university entrance exams, etc.). The number of these services is increased gradually.

Azerbaijan ranked 83rd among 192 states on development index of e-government in the UN’s E-government Survey 2010 report and moved 6 spots upward compared to its rank in 2008. Also, Azerbaijan ranks 68th among 157 participating states according to e-participation index in the same report published by UN.

While grouping the people by their goals of using Internet, if the specific weight of the users communicating with government agencies constituted 1.2% in 2005, this percentage increased to 8.4% in 2010. As a result of the targeted action taken, the C2G (Citizen to Government) level of the country in reporting year has increased approximately 7 times.

The Action Program on Development of Electronic Government has been elaborated in order to ensure the quick and high-quality Source: United Nations access of the citizens and organizations to public services while widely introducing ICT, to enhance the effectiveness of functions of public bodies, to ensure transparency, to create conditions for civic participation in public decision-making and to maintain the communication with governmental bodies though electronic means, which are simpler and more accessible. The document, which initial implementation period covers 2010- 2011, was approved by the government. 40 The activities foreseen in these documents complement each other. While the Action Program envisages development of basic components of Electronic Government, the State Program envisages elaboration of electronic solutions that can be applied based on these components, and implementation of electronic services.

The implementation of this program will ensure the full transition to electronic services in the society. As a result of the program, the processes of job search, passport and driver’s license, birth and death certificates, marriage registration will be simplified, acceptance of online applications for car registration, reference for living address, university entrance, permission for construction, allocation of pensions and allowance will be supported, issuing invoices, registration and license types, social fees, tax and customs declarations for institutions and organizations will be completely simplified, One of the important aspects of improving the public management system is the and full transition to electronic platform will be “electronic government” (e-government) provided. concept. Electronic government means using information and communications In order to regulate the process of developing technologies in order to improve the Electronic Government and the relations that effectiveness and responsiveness of the will arise, a draft law on E-government is state agencies’ functions, to facilitate being elaborated. Currently, development of and ease the connection with the people, business units, as well as among the electronic government gateway under the themselves. E-government State Information System Project is reviewed in order to ensure the information exchange among the existing information systems of state agencies.

This project serves to effectively use the existing information in state agencies, to organize mutual use of them among various bodies, and to apply electronic services. The work is already under way to install equipment in several state agencies. E-government portal, which will allow applying to electronic services based on the “one stop-shop” principle, is developed under the Project. Launching the E-government portal is planned in 2011.

41 National Certificate Services Center has been established in order to apply the e-signature, which is one of the important components of E-government, and introduction of e-signature will start soon.

42 3.3 Application and expansion of E-Government

The actions taken in Azerbaijan to develop information society, as well as to create e- government are successfully continued. Thus, these successful activities include establishment of unified automatized information exchange and management systems in public management processes, development of the state registry of people, performing e-services for taxpayers, registration of entrepreneurship units, introduction of “one stop-shop” system for formalizing and monitoring customs, expansion of the automatized systems of migration services, electronic health card services, establishment of education management information The activities on improving the legislative system, accepting applications for university framework have continued in the reporting entrance exams via internet, the creation of year and the following documents adopted: a tracking system via web-cameras installed at polling stations. 1. Regulations on state registration of the personal data in information systems and The policy carried out by the Government revocation of the state registration in 2010 toward ICT sector has stipulated the 2. Requirements on protection of personal data expansion of score of using ICT in Azerbai- 3. Regulations on state registry of the jan and having the electronic government information systems of personal data further influence the state bodies. These pos- 4. Regulations on deletion of the data in information system when the state itive trends can be seen in the work of some registration of the individual data in ministries and committees. information system is revoked 5. Information systems of personal data not required to be included in state Civil Service Commission registration

A series of activities in the area of introducing and developing information technologies on different areas of operations of the Civil Service Commission (CSC) under the

43 President of the Republic of Azerbaijan have been implemented. The information search system of “CSC Candidates”, which includes wide database on the candidates that have taken part in competitions and interviews in order to hold vacant civil service posts in public bodies has been improved.

The on-line application system has been created in order to enhance the efficiency in the process of receiving applications for civil service. The Commission has created and launched a new system to record the correspondence through electronic mail addresses. This system allows preparing various reports on registration of the correspondence via the Commission’s electronic mail addresses.

In order to more responsively inform the candidates at different stages of the competitions and interviews, a GSM-supported system has been established.

State Customs Committee

The State Customs Committee (SCC) of the Republic of Azerbaijan has implemented new projects on introduction of ICT in customs. Thus, the official website of SCC has been updated and the new portal includes regulations for formalization, nomenclature of goods, respective tariff degrees, and opportunities for virtual reception with the website visitors. A unified corporate network that covers all customs bodies has been established.

44 In addition, as the first stage of Unified -Au tomatized Management System (UAMS), a software of the electronic control system on monitoring and delivery of the goods and means of transportation shipped through the state border delivery points has been developed and its industrial use is underway in the border car transit points.

In order to provide electronic monitoring on the data included in formalizing the customs and goods declarations through computer software, the draft “System of formalizing customs and automatizing control” (SFCAS) has been developed and respective software created.

As a result of the work done, 95% of the stakeholders in foreign economic operations have been covered by electronic declaration process.

Respective software has been established for formalized registration of goods and monitoring through the customs receipts (CR) and a database on CRs has been created.

The Committee has also ensured access to the inter-office automatized information and search system on Entry, exit and registration through the optic fiber communication channel, and it has launched the information exchange.

45 Ministry of Taxes

Ministry of Taxes (MoT) have carried out a number of activities in introduction of ICT in its system, such as automatization of the functional operations of local tax authorities that work directly with the taxpayers, integration with other government agencies, and creation of Automatized Tax Information System (ATIS) that allows to carry out different types of economic analysis and forecasting.

The system allows all structural units within the MoT to store and process the data in unified information age. One of the advantages of the system is its capability to have a mutual and effective exchange of information with the information systems in other bodies.

One of the important ICT projects implemented by the MoT is the “one stop-shop” state registration of the commercial entities. The registration data is simultaneously electronically transmitted to different relevant

The duration of state registration of entities in a centralized manner. commercial entities has decreased 20 times and become 3 days following the introduction Through the introduction of e-declaration of “one stop-shop” system. Also, the number of registration procedures for commercial and system, taxpayers can submit their decla- legal entities in the Republic of Azerbaijan has rations to tax authorities electronically and decreased from 13 to 5. At the same time, the number of paper-based documents submitted transparently from any place without losing has declined multiple times. any time and being in contact with the tax If more than 500 public servants took part in the multi-stage registration process carried authorities’ staff. out by different public agencies before the “one-shop” system got introduced, now it is implemented by only 85 staff members. Electronic application system allows taxpayers to submit a number of applications to the tax authorities through the Internet Tax

46 Office website. Currently the application forms on receiving a certificate duplicate for opening a bank account and Registration of taxpayers for the value added taxes are submitted electronically and there is work underway to enable submission of more application forms electronically.

On January 1, 2010, MoT introduced the implementation of Electronic tax invoices system, in order to provide more convenient and high quality services to taxpayers.

“Application of electronic control devices supporting GRPS modem in cash control ap- pliances” is one of the important ICT projects carried out by the MoT. Installation of the systems has led to improvement of the tax control efficiency and enhancing transparency of the taxpayers’ activities.

MoT has also introduced a toll-free 195 phone number service in order to address the requests of taxpayers in line.

Ministry of Health

As a part of the reforms implemented in health sector, the Ministry of Health (MoH) established Health Information System in 2010 in order to widely apply information technologies in this sphere, to carry out monitoring of the people’s health, to create a unified health information area, and to organize connection with other information systems and databases. Currently the medical insti-

47 tutions under the subordination of the MoH have been fully provided with the document exchange through electronic mail. Currently, MoH hosts 7 registries in this area.

“Citizens’ electronic health card system” (CEHCS) is an electronic information system implemented by the MoH. The introduction of CEHCS ensures improvement of the monitoring system on the citizens’ health status through development of respective electronic registries and efficient creation of the information pool on the people’s health conditions.

The Medical Examination Card information system has been created in order carry out registration of the health conditions of the citizens that are required to go through medical examination when they enter workplaces in certain fields and periodic medical examination afterwards (obligate groups). The citizens included in the obligate groups (around 300,000 people throughout the country) have been issued cards supplied with a microprocessor chip that stores information on passing medical examinations. It is impossible to falsify data in these cards.

MoH has also created the Electronic Moni- toring System of Contagious Diseases in order to improve the collection, transmission, analysis and processing work of the data on infectious diseases, and to strengthen the ep- idemiological control over diseases.

48 Ministry of Internal Affairs

Ministry of Internal Affairs (MoIA) has widely used information technologies in recent years in its activities to fight against crime, and to ensure public order and public safety. The “Entrance-Exit and Registra- tion” Inter-office Automatized Information Search System (IAISS) created by the MoIA contains information on the passport and ID cards of the Azerbaijani citizens, the respective documents issued to foreigners who live either on a permanent or temporary basis in Azerbaijan, and the stateless persons, and other information on crossing the border, etc. The system includes automatization of provided information developed through the activities of state bodies in charge of regulating the migration processes and other respective state bodies by introducing new technologies, respective documentation and control activities.

MoIA has also introduced “102” Call Center System which the main aim is to take emer- gency action after receiving the information from the citizens on crimes and incidents, transmitting them to respective units and efficient resolution of their calls.

“Safe City” Automatized Management Sys- tem was also created by MoIA which is aimed at protecting human and citizen rights and liberties, public safety, and the legal in- terests of the state, individuals and legal entities against unlawful practices. The system

49 has been equipped with the facilities pro- duced by leading companies of the world. 448 digital and multi-functional cameras have been installed in 150 points and their total has reached to 1,110 during the reporting period.

Ministry of Education

The “Program on providing general education schools with information and communications technologies in the Republic of Azerbaijan (2005-2007)” approved by the Presidential Order #355 dated August 21, 2004 was the most important step toward in- State Program envisages implementation of troduction of ICT in education. the following objectives

In recent years, Ministry of Education of the Republic of Azerbaijan (MoE) has carried out series of activities on establishment of Education Management Information Sys- tem (EMIS). The main goal of this system is to allow the education system managers to monitor the relevant areas where they are responsible for, and to develop a compre- hensive information base for preparation of strategy and action plans based on accurate and current information. The system consists of several levels: Ministry of Educa- tion, education departments, and schools. On recommendation of the World Bank to improve the organization of activities, a sep- arate entity – The Department for Education Management Information System and a sec- tion of the Education Department of Baku city have been established.

50 New modules of EMIS software – “EMIS- school” and “EMIS-education department” have been established, the rules for using the software have been instructed to the representatives assigned by education departments and schools. Currently, EMIS database includes data on 1 million 400 thousand pupils and up to 210 thousand school staff (teachers and other employees).

Education System Informatization Office was established under the “State Program on Informatization of Education System in The main goal of the State Program is the Republic of Azerbaijan” (2008-2012) to create conditions for establishment of approved by the Presidential Order #2856 unified national educational environment dated June 10, 2008. through wide application of modern information and communications tech- Moreover, the normative and legal frame- nologies, ensuring opportunities to receive high quality education by all strata work was improved, necessary regulations of the population, and integration of and standards on education management and the Azerbaijani education system to the informatization of educational process have global education area. been developed and implemented in 2010.

State Students Admission Commission

State Student Admission Commission (SSAC) continues to expand the diversity of information services performed for the people every year. Among these services, one should particularly note the electronic application submission through the Internet launched since 2007.

The applications of school-leavers willing to study in secondary specialty educational institutions on the basis of general secondary education are received electronically. Also,

51 regardless of the level of higher education they want to be admitted to, all the exam takers receive test access papers through the Internet.

In connection with the introduction of new financing system in higher education - insti tutions, the Commission has developed a sub-system of “Student-graduate database” to be used by the Ministry of Finance of the Republic of Azerbaijan. The sub-system allows implementing the financial aspects by tracking the movement of each student that enjoys the right to study under financing from the state.

The Commission also introduced the Tes- tBuilder 1.0 system envisaged for development and revision of pool of multiple choice questions by different subjects, and elaboration of question books for tests based on the defined guidelines. The system was introduced for the first time in 2010 during the undergraduate entrance exams in higher education. Currently, SSAC is working on further enriching the system with new functions.

The reporting period also saw the creation of the “Electronic Services Portal of the State Commission on Student Admissions” and its posting on the Commission’s website.

The users can also access to the version of the SSAC website customized for mobile phones supporting WAP technology (wap. tqdk.gov.az).

52 A joint project between SSAC and Azer- cell mobile operator, the “ImtahanCell” allows the school-leavers to learn their scores through their mobile phones after university entrance exams. On the other hand, SSAC also has a toll free “141” phone number information service.

One of the big projects developed by the SSAC specialists is the “Student-graduate” state electronic information system. The regulations on this system were approved by the Decree of the President of the Republic of Azerbaijan on February 23, 2010. The system allows for receiving detailed information on the all university students, also ob- taining different statistical information.

Ministry of Justice

The role of created information systems is irreplaceable in enhancing the quality of legal services provided for the people and further improving the activities of justice bodies. Ministry of Justice (MoJ) has created an automatized registration and information system “Acts of civil status”, which unites all the registration bodies of the country based on new technologies in order to collect, up- date and reliably protect the data on people’s civil status in a centralized manner, to submit them to state agencies and individuals under the rules and cases as defined, and to improve the statistics on demographics and other related issues.

MoJ has also set up an automatized information system titled “Electronic database 53 of notarial documents”, which ensures the coordinated operation of notarial in order to improve the level of legal services performed for individuals and legal entities in notary sphere. It has also set up a respective infrastructure in all notarial offices and organized electronic information exchange among them. Currently, the work is underway to develop an unprecedented “Electronic notary’s office” information system in Azerbaijan based on the further improvement and development of those technologies.

The Ministry has developed a unified internet-based electronic data base of normative and legal acts (www.e-qanun.az) for enhancing the people’s legal knowledge, and creating conditions for them to directly familiar- ize themselves with the texts of normative and legal acts in order ensure transparency in legislative sphere.

Ministry of Justice has for the first time started to use modern technologies in the country to trace crimes. Along with the materials of the criminal case whose investigation is under way for a specific case, it also sends the electronic version to court. The introduction of these technologies provides favorable conditions for the trial process parties to ef- ficiently find the documents related to case and to review them at any time.

The Ministry has introduced an automatized information search system “Recording of judge corps” in order to modernize the activities of Court-Legal Council. The system which ensures the registration of all the

54 judge corps members, has taken into account all specific features that relate to this field. Created based on the similar principles with the automatized information search system of “Recording of staff”, this system includes the mechanisms for users to enter the database and have the right to make operations.

State Social Protection Fund

State Social Protection Fund (SSPF) continued its activities to automatize its functions in 2010. The automatization of recording the collection of compulsory social insurance fees has been achieved as a result of introducing the individual recording. The transition to this system envisages setting up an individual recording of the social insurance fees paid for the insured person, and making the pension payments of citizens based on the data included in that recordings. It means that any working person is interested in full and timely payments of social insurance fees by the insured persons for his/her future pension payments, and therefore, the adminis- trative control will have been replaced by the social control, which is more effective.

Automatization of assigning the pensions and allowances is the main element of the newly established insurance and pension system. This system foresees full simplifi- cation of the mechanisms for defining and increasing the pension amounts, which will allow each person to calculate and specify his/her amount of the pension and rise to their pensions. As a result of this system, the cases of calculating pension and allowance

55 amounts higher or lower will be fully elimi- nated, the rules for defining and increasing pension amounts will be simplified suffi- ciently. Finally, the insured persons will be periodically informed of their pension capital accrued in their individual accounts and this will create conditions for social control in this field.

In order to automatize the payments of pensions and allowances, the Fund has selected the mechanism of delivering these payments to people via plastic cards, which they can use in ATMs. During the reporting period, the Fund has made sure that 100% of the pensioners living in urban areas and 98% of the pensioners living in rural areas receive their payments via plastic cards. According to these indicators, Azerbaijan is considered one of the countries in the world which has the most transparent practice.

Moreover, the Fund has ensured full func- tioning of the “190” Centralized Phone Sys- tem that operates in the Fund’s headquarters.

With regards to introduction of the automatized management system, State Social Protection Fund has created an electronic exchange and archive of documents in social insurance and pensions, set up a modern automatized registration system that is based on individual recording principles and sup- ports “one stop-shop” mechanisms.

The Fund has also introduced a special web portal on unified registry of the pensioners, insurers and insured people in order to take the issues related to building contacts with people to a new level. 56 Ministry of Culture and Tourism

Taking into account that the introduction of information technologies in culture and tourism sectors is of great importance, much work has been accomplished in these spheres.

“147” phone information system has been set up among many other activities to introduce new systems. It is possible to receive information on all the spheres that are covered by the Ministry of Culture and Tourism through this phone number. Due to the system, tourists have the options to contact any hotel, tourism company, trade units, resort centers, etc.

The Ministry has set up a system of “Reg- istry of Azerbaijan’s non-material cultural heritage monuments” in order to protect and pass to future generations the non-material cultural heritage monuments on ethnog- raphy, folklore and craftsmanship, which constitute the core of national morality and culture. The registry is used since 2010 and the system includes the list of up to 10,000 non-material cultural heritage monuments.

The Ministry has also set up a respective system for carrying out the registration of historical monuments, statues and other structures within the territory of the Repub- lic of Azerbaijan.

57 “System of geographic information and nav- igation for tourists” is placed at the following domains: www.gomap.az, www.guide- map.az, and www.guide-map.az. The project is one of the largest initiatives to introduce information technologies in the tourism services sector of Azerbaijan. The system includes important information on tourism. In addition, geographic coordinates, picto- grams, and photos of the placed items as assigned by the satellite.

The Ministry also uses promotional instru- ments. It has created a number of internet resources (Ministry’s official website - www. mct.gov.az, Baku, the Capital of Islamic Culture 2009 - www.baku-icc-2009.az, In- formation Observatory of GUAM countries on Cultural Policy - www.observatory- guam.org, Baku Intercultural Dialogue Fo- rum - www.bakuforum-icd.az, Azerbaijan’s Traditional Music Atlas- www.atlas.musigi- dunya.az, Azerbaijani Carpets - www.carpet. intangible.az, Sattar Bahlulzade - www.sattar.az), etc.

State Migration Service

State Migration Service has carried out a number of activities in 2010, framework the “Unified migration information system of the State Migration Service of the Repub- lic of Azerbaijan” towards formulating the “Electronic Government”.

The Service has developed and launched software on registration of the foreigners and stateless persons, as well as citizens of

58 the Republic of Azerbaijan by their loca- tions, transmission of the data on foreigners and stateless persons registered in hotels, camps, tourist bases and other similar units to the unified migration information system of the State Migration Service in order to automatize the process.

Central Bank

Central Bank of the Republic of Azerbai- jan has carried out series of activities and realized importance projects since 2000 in order to shift the information exchange to electronic carriers platform based on international standards in line with arranging for inter-bank accounting and reporting. First of all, it was decided to transform the circulation of documents in payments from paper carriers to electronic carriers in order to meet the increased needs of the sustainable development dynamics of the economy. To this end, the Central Bank established Real Time Mode Inter-bank Payment System (AZIPS) for large and urgent payments in 2001, which is one of the main components in the National Payment System. Thanks to the launch of this system, the payment transfers, which used to take weeks and months among the country’s economic entities, now take a few seconds based on electronic carriers. In 2002, the Central Bank set up and launched Accounting Clearing System for Small Payments (ACSSP), which allows for making small and recurring ex- penses (utilities, payments to state budget, etc.) through electronic carriers and receipt

59 of payments for state agencies that actively participate in transfers. Using the technical and financial support of the international financial institutions and the political support from the government, Central Bank of the Republic of Azerbaijan has set up a National Electronic Payment System.

Central Bank of the Republic of Azerbai- jan has set up and launched a Centralized Information System for Mass Payments (CISLP) in 2008 in order to ensure the integration of mass service institutions to electronic payment systems.

Moreover, the Central Bank has created a “Certification System for Electronic Sig- natures” in order to transform the exchange of documents between Central Bank of the Republic of Azerbaijan and the commercial banks operating in Azerbaijan. Launching this system has created suitable facility for more intensive implementation of the “Elec- tronic government” concept.

The Central Bank has also set up the systems of “Electronic Statistical Data Base and Analytical Reporting”, “Automatized Bank Statistical Report” and “Prudential Reporting”, which ensure the receipt of periodic statistical and prudential reports from commercial banks in electronic carriers.

State Committee on Property Issues

The Committee has established an Informa- tion System of State Real Estate Cadastre

60 for developing electronic cadastre maps of the state real estate. It is currently under implementation in respective units of the Committee. The implementation of this system has ensured full automatization of the operation processes in creating the state real estate cadastre.

At the same time, in the framework the World Bank-funded “Registration of Real Estate” Project, works done in line with implementation of new information systems.

The Committee has set up an Automatized Document Circulation Information System in order to improve the records management within the headquarters of the State Commit- tee and branches under its subordination. The system was introduced on January 1, 2011. In order to create a corporate network between the Committee’s headquarters and the branches, connection through the fiber optic channels has been set up between the Committee’s adminis- trative building, State Register Service of Real Estate, and the building where Auction Center on Organizing Public Sale is located.

61 chapter 4 international integration 4.1 Regionally important ICT projects

“First telecommunication Sattelite” Project

International experience shows that the role of ICT is especially important in development of non-oil sector and this sector increases the countries’ competitiveness by ensuring sustainable development of their intellectual capacity. Satellite communication has a special importance in this aspect. In this connection, eliminating the dependence of the information exchange on foreign countries, preparation and launch of telecommunication satellite, being a component of information security, are the strategic Procurement of the aims of country. The work is successfully under way to preparation and launch of tele- First Telecommunication communication satellite into orbit. Sattelite of Currently, a part of the international and Azerbaijan and inter-city communication, and great bulk of its Launch into Orbit radio and television communication in Azer- baijan is organized through satellite communication. Taking into account that more than 50% of the relief of the country’s area is mountainous and it is possible to more effi- ciently organize the satellite communication systems, one can expect that the demand for this service will grow further in future.

Thanks to President Ilham Aliyev’s special care and attention to the development of information technologies in the country, the activities relating to organization of satellite communication services by use of telecommunication satellites in Azerbaijan have been accelerated. Thus the President of the Republic of Azerbaijan signed the Order “on Creation of Space Industry and Launch of the Telecommunication Satellites into Orbit in the Republic of Azerbaijan” (dated 4 No- vember 2008); “State Program for Creation and Development of the Space Industry in

64 the Republic of Azerbaijan” - also confirmed by Order dated 17 August 2009. The Order and State Program have laid the foundation for introducing satellite technologies in Azerbaijan. It has also created wide opportunities for our country to become one of the stakeholders in the global satellite market.

Within the framework of the activities undertaken in order to implement the afore- mentioned Order and the State Program, the respective contracts between Malaysia’s “Measat” company and “Orbital”, one of the leading satellite manufacturers of the U.S. were signed on May 25-27, 2010. Mean- while, the contract was signed with French “Arianespace” company on November 5, 2010 in order to launch the first telecommunications satellite. Currently, specific activities are under way to launch the satellite as envisaged, i.e. in 2012.

Necessary actions were taken in order to launch the country’s telecommunications satellite to its orbital position and Internati- nal Telecommunications Union (ITU) have assigned 2 orbital positions (23.20E and 95.90E) in planned band.

“Trans-Eurasian Information Super Highway” Project

Compared with the developed societies in the world, most Eurasian countries have lim- ited opportunities for people to enjoy high quality and efficient Internet services. Users have to pay excessive fees for joining and accessing the Internet and the poor provision of international hubs for this region is visible proof of the international “digital divide”. Azerbaijan, having recognized the neces- sity to take corrective action to remedy this “digital divide”, has launched an initiative by creating the “Trans-Eurasian Super Infor- mation Highway” initiative among the countries of the region.

65 The “Trans-Eurasian Super Information Highway” project will cover approximately 20 relatively poorly developed regions and create an information highway connecting the two giant neighboring regions having a highly developed ICT, namely Western Eu- rope and the Eastern Asia region located on the Pacific Ocean basin.

Currently, the joint work is under way with regional countries and international organization in order to carry out the project and obtain international support.

The Azerbaijan government has presented the project in question at the General Assem- bly of the UN. In the 66th plenary meeting of “Trans-Eurasian Information the 64th session of the Assembly, resolution Super Highway” Project number 64/186 dated 21.12.2009 was adopted unanimously in support of this project aiming at eliminating the “digital divide” in the Eurasian region as a whole and creating the opportunity to the participating countries of reaping the social-economic benefits of this project.

Currently, negotiations are under way on establishment of a consortium with the leading telecommunications operators of 5 countries – Russia, Azerbaijan, Turkey, Kazakhstan, and China in order to realize the project.

Project for Establishment of Regional Innovation Zones

In order to ensure the sustainable development of information and communications technologies sector in Azerbaijan, create alternative income sources, increasing attractiveness of local markets for foreign investments, also to ascertain sustainable development of non-oil sector in the country, the concept of “Regional innovation zone” was developed. Also, the other main goals

66 include promotion of the activities of local companies on ICT products, establishment of new companies, and increasing the volume of local production and export. Taking into account the important role of innovation zones and technoparks in reaching these goals and benefiting from the favorable legal opportunities created by the Law of the Republic of Azerbaijan on “Spe- cial economic zones”, specific actions have been taken in order to create Regional In- novation Zone (RIZ). In line with the exis- tig legislation of the country, the documents required for establishing a RIZ have been submitted to the government. Currently, the Ministry is holding joint discussions with relevant government bodies in order to implement the project. Project for Establishment of The project will raise the relative importance of the information and communica- Regional Innovation Zones tion technologies in the economy of the country, attract potential foreign investors in the ICT market of the country, create new work places in the republic for the production and exportation of electronic equipment and most importantly, increase the export potential of the country to position Azerbaijan as centre for ICT in the region.

67 4.2 International partnership for the development of ICT

The community together with the state should take part in the process of strengthening the normative base and corresponding policies, stimulating competition and the development of the state, shortening the access route to digital technologies, seeking to protect the integrity of the net against attacks and ensuring global online access of people.

Undoubtedly, the foreign policy pursued in the area of ICT and the activities in this field will be able to support progress towards international cooperation among countries towards social and economic progress in the world.

The effective partnership, including the mutual cooperation among states, is the key element for the development of ICT. The potential benefits of ICT stimulating competition, creating and expanding conditions for production, supporting economic growth and employment are only some of the important prospects. In the process of strengthening international partnerships, the basic duty of Azerbaijan is to stimulate the transition to ICT and thereby to realize the economic, social and cultural benefits offered by ICT.

Currently, Azerbaijan, going beyond the regional borders, pursues its ends and strengthens its role in a wider dimension of cooperation and does not limit its policy to only export of energy resources providing the present stage of ICT development of the country.

After gaining independence, Azerbaijan within the framework of international inte-

68 gration became an equal right member of international organizations on communications, such as the International Telecom- munication Union and for postal services, the Universal Postal Union. In 1991 it was elected as one of the representatives of the Regional Commonwealth in the field of Communications (RCC) created in the framework of CIS countries.

Moreover, Azerbaijan successfully collabo- rates with international satellite and space communications organizations, Postal and Communication Administration of the Eu- ropean Commission (CEPT), European Telecommunications Standardization In- stitute (ETSI), European Union, Scientific Commission of NATO and Eurasian Postal Union.

Azerbaijan also takes an active part in international cooperation on ICT and postal communication. Currently, the dynamic col- laboration with the countries that are leading in the world, such as U.S., Germany, Japan, South Korea, China, Singapore, Malaysia, and India is developing further.

It also has bilateral partnership with CIS countries in the ICT field and actively col- laborates within RCC.

The normative-legal basis for international cooperation in the ICT sphere has been developed. In the field of telecommunications and postal communications, Azerbaijan has already reached agreement and concluded a memorandum of cooperation with 30 countries of the world at an intergovernmental and inter-organizational level.

69 The reporting period has seen signing 4 documents, including 3 agreements and 1 protocol between the Ministry and respective agencies of foreign countries. MCIT has signed 77 international documents, 19 agreements, 18 memorandum, 15 different protocols, 10 other documents and 15 documents at the governmental level with these institutions in the past 7 years.

In line with the development strategy of the country’s international economic and commercial partnership, relations built with international organizations and foreign part- ners in the field of ICT and strengthening Azerbaijan’s international ties in this area are always on the agenda.

In general, ICT is an effective tool in ensuring peace, security and stability, and strengthening democracy. The issues that Azerbaijan gives preference to in the processes of international partnership include ensuring information security, introduction of conceptual, institutional mechanisms recommended by the international institution for these, and the activities undertaken by the country to conform the legislative framework, material and technical foundation to the international criteria.

70 MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGIES