Final Report: Monitoring of Russia and Ukraine (priority 1) and Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova (priority 2): Telecommunications and the Information Society Commission contract no: 30-ce-0009814/00-41 London- Brussels- Madrid 39/3 Rue Montoyer B-1000 Brussels T: (32) 02 503 2265 F: (32) 02 503 4295 Project Coordinator: Joe McNamee In Co-operation With Russia: Yuri Hohlov / Sergey Shaposhnik (IIS) Ukraine: Andriy Pazyuk Armenia: David Sandukhchyan Azerbaijan: Yashar Hajiyev Belarus: Mikhail Doroshevich Georgia: Volodymyr Hardabkhadze /Levan Kvernadze Kazakhstan: Andrew Beklemishev Moldova: Ion Cosuleanu December 2006 Revision 1 The contents of this document are the sole responsibility of the authors and do not necessarily represent the opinions of the European Commission Structure • Introduction • Priority 1 o Russia o Ukraine • Priority 2 o Armenia o Azerbaijan o Belarus o Georgia o Kazakhstan o Moldova Introduction, Methodology and Context Introduction Table of Contents 1 SUMMARY ................................................................................................................4 2 METHODOLOGY ......................................................................................................5 2.1 Exchange Rates...............................................................................................7 3 GENERAL ENVIRONMENT ......................................................................................8 3.1 Influence of non-public stakeholders on regulation and policy ........................8 3.2 National Development Plans............................................................................8 3.3 Data Protection ................................................................................................8 3.4 Cybercrime and Spam .....................................................................................9 4 REGULATORY ENVIRONMENT FOR ELECTRONIC COMMUNICATIONS .........10 4.1 Interconnection ..............................................................................................10 4.2 Numbering .....................................................................................................10 4.3 Rights of Way and Facilities Sharing/Collocation ..........................................10 4.4 Tariff Policy ....................................................................................................11 4.5 Cost Accounting.............................................................................................11 4.6 Universal Service ...........................................................................................11 4.7 Local Loop Unbundling ..................................................................................12 4.8 Leased Lines..................................................................................................12 4.9 Mobile Services..............................................................................................13 4.10 Satellite Services ...........................................................................................13 4.11 Resources of National Regulatory Authorities (NRAs) ..................................13 4.12 Licensing and Authorisation...........................................................................14 4.13 Spectrum........................................................................................................14 5 REGULATORY ENVIRONMENT FOR ONLINE SERVICES ..................................15 5.1 Digital Signatures...........................................................................................15 5.2 Payment Systems ..........................................................................................15 5.3 Taxation Issues..............................................................................................15 5.4 Conditional Access ........................................................................................16 6 USE OF ELECTRONIC COMMUNICATION SERVICES ........................................17 6.1 Fixed line penetration.....................................................................................18 6.2 Mobile Sector .................................................................................................18 6.3 Fixed and mobile penetration.........................................................................20 6.4 ICT Usage......................................................................................................20 2 Introduction 6.5 Country-code top level Internet domains .......................................................21 7 STRUCTURE OF THE COMMUNICATIONS INDUSTRY.......................................23 7.1 Fixed Operators .............................................................................................23 7.2 Mobile Operators ...........................................................................................25 8 ABBREVIATIONS....................................................................................................30 3 Introduction 1 SUMMARY The study covers a geographically and politically diverse set of countries that share a common history as former members of the Soviet Union. The roll-out of information society services is made difficult by low income levels, which puts both equipment and services beyond the reach of many citizens. These difficulties are further exacerbated by weak fixed line infrastructure and low levels of access (particularly in rural areas) to fixed line networks. Faced with these structural and economic factors, the 8 countries being studied (Russia, Ukraine, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova) have endeavoured to undertake, and are continuing their efforts towards, varying degrees of privatisation and liberalisation. The ICT sector has been the focus of a significant degree of bilateral and multilateral cooperation (involving the EU, World Bank, UNDP, ITU, and NATO, for example), as it is seen as offering great potential for economic growth, underpinning democracy and creating wealth. The study looks at the electronic communications and information society sector in the eight countries from three key angles: 1. The electronic communications sector (looking in particular at the regulatory framework supporting competition in the sector, as well as market development), and the legislative framework surrounding electronic service provision. 2. The services available, both commercial and governmental, which give an indication both of the development of the market and the extent to which citizens have compelling reasons to become “connected” to the information society. 3. The level of use of available services. The eight countries have engaged in varying policies with regard to electronic communications and the information society, producing markets that, while similar, have fundamental differences. These differences include the level of competition in the telecommunications market, the degree of privatisation, and the extent to which online retail and service provision are supported by a comprehensive legislative framework. The study aims to give an overview of the development of telecommunications and the information society in the eight countries being studied. The range of examples showing good and best practice is quite striking, indicating strong potential for these countries to cooperate effectively. There are good examples of best practice in each of the countries being studied: the practical and comprehensive planning of universal access to communications infrastructure in Russia; the new Ukrainian approach to data protection; the Armenian e-dram electronic money system; the simplification and low cost of the licensing regime in Azerbaijan; the efforts of Belarus to ensure universal access to fixed and mobile technologies; the independence and transparency of the Georgian National Regulatory Authority; the long-term approach of Kazakhstan’s Government to planning the development of the information society; and the comprehensive Moldovan adherence to international norms in the online environment. With sufficient communication between the countries to share such best practice and with assistance from international organisations such as the European Union, significant progress can be made towards realising these countries’ information societies. 4 Introduction 2 METHODOLOGY The present study covers a geographically and politically diverse set of countries that share a common history as former members of the Soviet Union. Partly due to this historical backdrop, the eight countries examined all have significant communications infrastructure problems, particularly with regard to access to fixed networks, which are especially noticeable in rural areas. The roll-out of information society services is made still more difficult by low income levels which militate against the rapid deployment of services. From this starting point, the eight countries being studied – Russia and Ukraine, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan and Moldova – have endeavoured to undertake varying degrees of privatisation and liberalisation and have been supported in these initiatives by various international organisations such as the World Bank, the International Telecommunication Union and the European Union. The ICT sector has been the focus of significant international cooperation, as it is seen as offering great potential for economic growth and wealth creation. The report looks at the development of the