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 ac- complished in this sphere. This has resulted in major achievements in households, busi- ness, government agencies, education, pub- lic 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 in- cluded in the GDP structure. Retaining the real growth rates in this sec- tor 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 de- velopment 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 eco- nomic 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 cri- sis 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 en- visaged 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 de- pends 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 imple- mented 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 previ- ous 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.