THERE IS NO LIMIT TO PERFECTION

In the rapidly developing hi-tech era, it is impossible to imagine that people would be able to exist without information and communication technologies (ICT), and the Internet is an integral part of it. The worldwide web has taken deep root in our everyday lives, and experts predict that by 2012, the number of Internet users will exceed 30 per cent of the world population and reach 1.9 billion people. By 2014, mankind will totally depend on the Internet. At the same time, statistical information says that the volume of the market of Internet services is growing in Azerbaijan, and the audience and the range of services are expanding. The number of Internet users in our country is one million people, i.e. 10-12 per cent of the population, which proves that the Internet is becoming an everyday occurrence in our country. Meanwhile, the issue of inexpensive and high quality Internet service has long become topical and once turned into a "war" between providers.

The long-awaited decision

Not only rank-and-file users, Internet providers and various associations support inexpensive Internet service in Azerbaijan. For example, in March 2008 the Internet forum of Azerbaijan sent a letter to the Azerbaijani Ministry of Communications and Information Technology, saying that it is necessary to cut Internet prices in the country. To this end, it is necessary to lift the monthly fee for each subscriber from private providers, to exempt them from expenses on using hardware and ATS channels and to continue searching for ways of reducing prices for connecting providers to the worldwide web, the forum believes. Apart from that, the forum suggested selling ADSL modems at privileged prices in order to improve the quality of the Internet and popularize it. The proposals also stressed the need to secure state support for programmes and projects that serve to form public information centres.

At the same time, we have to point out that MCIT representatives themselves have repeatedly said that it is necessary to bring certain tariffs on telecommunications, including the Internet, in line with their cost price. Moreover, a coordinating council to develop the Internet in Azerbaijan was set up in the first half of 2008. It includes representatives of government agencies, the private sector and public organizations. Since the coordinating council was set up, most Internet providers reduced Internet prices by 30-35 per cent.

At the end of 2008, Azerbaijani Deputy Minister of Communications and Information Technology Iltimas Mammadov said that there are 30 providers operating in Azerbaijan, and "they are all very liberal" and negotiations on "price change" are continuing with them. At the same time, taking account of the results of 2008 and work to be carried out in 2009, the ministry prepared a number of proposals and submitted them to the Tariff Council of Azerbaijan which examined them at its session.

Specifically, a decision was made to reduce tariffs for digital channels required for Internet services. Tariffs for using internal urban digital channels (ports) at a speed of 2 Mb/s for other organizations (including budget organizations) were reduced from 1,200 to 600 manats (by 50 per cent at once), while monthly tariffs for these channels were reduced from 320 to 300 manats (6.3 per cent). The cut in tariffs also affected the connection and use of digital channels (except for Baku) - from 240 to 200 manats for every full and incomplete 50 km, and from 180 to 150 manats (16.7 per cent) for 2 Mb/s.

"The new tariffs will take effect from 15 January 2009. Thus, it will be possible to reduce the cost price of the services of Internet providers, which will result in tariffs for Internet services falling for the end user by 15-20 per cent," the MCIT explained.

Meanwhile, a poll conducted by R+ showed that Azerbaijan still has considerable potential to cut Internet prices.

Competition will decide everything

"There is no doubt that the recent decision of Azerbaijan's Tariff Council will help reduce Internet prices, but insignificantly," says the chairman of Azerbaijan's Internet community and the Azerin provider, Qalib Qurbanov.

"According to the decision of the Tariff Council, one-off tariffs for launching internal urban digital channels at a speed of 2 Mb/s were reduced by 50 per cent, while monthly tariffs for these channels by 6.3 per cent. However, the 6 per cent cut in the subscription fee will make no sense because the price will remain high," Qurbanov said.

At the same time, the head of the Internet community thinks that Internet prices will be reduced during the year, and not by 6.3 per cent, but by 30 per cent.

"No fall is expected in consumer demand for Internet services in Azerbaijan. This is an irreversible process. The Internet has taken deep root in the everyday lives of many Azerbaijani families, which is why the demand for Internet services in Azerbaijan is expected to grow, and we link this tendency to the growth in the number of users. Respectively, the cost price will fall as well. The theory of mass services works here - the more users, the lower the cost price. Plus, there is tough competition between providers. If we are absolutely honest, the work of private Internet companies is not profitable with the current prices for Internet channels and communication services," the expert thinks.

Qurbanov stressed that prices for Internet services in Azerbaijan are 20 and even 30 times higher than in Europe and the USA. They also considerably exceed prices in Turkey and Russia.

"The reason is that 80-95 per cent of users in Europe, North America, Turkey and Russia are using local resources, while 94-96 per cent of our users are using international channels. This is proved by many years of market analysis. It is no secret that the transportation of Internet flows to Azerbaijan from Europe will always be more expensive than local resources. So the reason for high Internet prices is that first, Azerbaijan is far from the world's Internet centres, and second, our country does not have enough Internet content. Of course, a small country cannot have large domestic Internet resources. For this reason, the main task is to considerably reduce prices for international Internet flows and communication channels inside the country. In this case, prices will fall, but again, the difference in prices between Europe and Azerbaijan will remain for a long time," Qurbanov said in conclusion.

In turn, the president of the Internet forum of Azerbaijan and director of the Multimedia centre for information technologies and systems, Osman Gunduz, pointed out in an interview with R+ that "the recent decision of the Tariff Council may be regarded as a serious step towards the development of Internet services in Azerbaijan".

"Of course, if the Tariff Council reduced monthly tariffs by more than 6.3 per cent, the cut in prices by Internet providers would be much more tangible. However, even this allows providers to reconsider their pricing policy," Gunduz said.

Our interviewee stressed that in its appeal to Azerbaijan's Minister of Communications and Infor-mation Technology Ali Abbasov, the Internet forum of Azerbaijan asked him to solve the problem when secondary providers create artificial obstacles to the development of the Internet in Azerbaijan by keeping up high Internet prices.

"What is more, I have the impression that many providers themselves have an interest in maintaining the existing Internet prices. For example, recently the primary provider in Azerbaijan reduced its tariffs by almost 20-30 times, whereas private ones did not take such a step," the head of the centre said.

Moreover, according to the expert, Azerbaijani providers constantly violate standards of proportional distribution of traffic. Specifically, they artificially expand a certain circle of users, selling certain Internet traffic to a greater number of clients, which affects the quality.

A point of rest

"At the same time, according to our monitoring, Azerbaijani Internet providers, especially state-run providers such as BakInternet and AzTelecom have great potential to cut Internet prices. Currently, Turkey has the most expensive Internet in Europe. In Azerbaijan, the cost of such services is 20 times higher than in Turkey. For example, if in Turkey one Mb/s of unlimited Internet access is 15 manats and in Russia - 20-30 dollars, in Azerbaijan the price is 250-300 manats. For this reason, no considerable fall in Internet prices is expected in Azerbaijan in the near future, because even a 100 per cent cut will not change the situation," Gunduz said.

Meanwhile, the expert thinks that in mid-January the starting price for 1 Mb/s of unlimited Internet access will be no more than 100 manats. This is a great "plus" and a point of rest on which we will be able to work in the future, Gunduz said.

The Internet industry has a lot of pluses in Azerbaijan. For example, according to the head of the MCIT's AzTelecom production association, Mahammad Mahammadov, Azer-baijan is the only country in the CIS where all regions have access to the Internet.

"In Baku, there are many users of broadband Internet, while regions are using mainly dial-up," he said, adding that over the last four years, Internet prices have dropped by seven times in the country.

According to Azerbaijan's Deputy Minister of Youth and Sports Intiqam Babayev, a UNESCO survey has shown that the number of Internet users in Azerbaijan is twice as higher than the number of users in Georgia and Armenia together.

Moreover, all conditions are right in Azerbaijan not only for Internet access, but also for fast Internet access to take on a mass scale, reaching 20-30 per cent in 2012, which will meet global tendencies by that time. Incidentally, the technical possibilities of Azerbaijani providers already make it possible to provide clients with ADSL services at a speed of 8 Mb/s.

Such integral attributes of the worldwide web as mobile Internet, IPTV, electronic commerce, electronic banking and so on are developing in Azerbaijan.

If we talk about the issue on a global scale, Azerbaijan is currently doing everything possible to overcome the information asymmetry with Europe. The country is planning to launch its own communications satellite AzerSat. It initiated a project to set up a transnational Eurasian super-information line the declaration on which was signed on 11 November 2008 in Baku at a meeting of representatives of communications ministries from 17 CIS, European and Asian countries, as well representatives of three international organizations. The American company Booz Allen Hamilton presented a draft project here, which will make it possible to ensure cheap access to the Internet in countries of the region, greater development of high technologies and create a regional electronic market. According to Minister of Communications and Information Technology Ali Abbasov, this year every effort will be made to put up this project for debate by the UN General Assembly in September 2009.