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 KAZAKHSTAN International Business Magazine №3, 2007
 Internet in Kazakhstan. Glitter and Poverty of the .kz Zone
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Internet in Kazakhstan. Glitter and Poverty of the .kz Zone
 
By Aleksandr Vasiliyev
 
The number of ADSL subscribers to Kazakhtelecom grew by more than fourfold in the first half of 2007. Of course, this growth of 326% from a year earlier is impressive. But to be honest, the absolute figures are much more modest, and this sort of ambiguity is endemic in the Kazakh zone of the World Wide Web.
 
The number of subscribers to broadband Internet access, offered by the Kazakhtelecom company, stands at only 59,885, whereas the number of the national operator’s dial-up users was 241,453 in the first half of 2007 against 176,680 a year earlier. As a result, the number of ADSL subscribers grew by 45,821 and that of dial-up subscribers by 64,773.
 
It should be noted that these figures relate only to Kazakhtelecom. Although this company occupies a dominant position in the market, Internet services are also provided in Kazakhstan by dozens of other providers, including ASTEL, Golden Telecom, Nursat and others.
 
Kazakhtelecom has explained this growth in the number of Internet users by the modernisation of its telecommunications networks, the adoption of new technology and a flexible tariff system. For example, it reduced tariffs for its flagship Megaline Hit broadband service for individuals by 23% in February 2007 (on top of previous tariff cuts of 76.5% in 2006). In addition, it cut Megaline Hit tariffs for self-employed entrepreneurs by bringing them down to the tariff level for individual users. As a result, this service became 50% cheaper for self-employed entrepreneurs. In addition, between March and August 2007, connection to Megaline services was offered with 50-100% discounts. As for dial-up connection to the Internet, rates have fallen by 5% since 1 January 2007 (they fell by 50% on average in 2006).
 
Taking into account the fact that the Internet connection market in Kazakhstan is quite competitive, Kazakhtelecom’s actions could not but influence other providers, who also had to revise their rates. However, the significant drop in rates has not yet provoked a surge in demand and the bulk of users are still choosing old-fashioned dial-up, instead of the modern ADSL connection. This is strange because the average monthly costs of these services are almost comparable, but the level of ADSL efficiency is incomparably higher (it is both a “free telephone” and offers much faster and more reliable connectivity). The question arises: why?
 
Above all, the process of switching to ADSL is being hindered by purely technical reasons: many people cannot connect to the service because telephone lines are in disrepair: old cables cannot ensure signal transmission at the necessary level. The author faced this problem 18 months ago, when he was refused a connection on grounds of “absence of technical capabilities”. At the same time, Kazakhtelecom is also failing to push ADSL services actively. Many do not simply know about the advantages of a broadband connection. And, finally, the low level of computer ownership in the country is also to blame for this: the Internet is useless without a computer.
 
A separate issue is how to bring the Internet into the nation’s educational system. Great hopes are being pinned on this now. Once schoolchildren and students have been introduced to the opportunities offered by the Internet, they are bound to take it further, not just using it in the classroom but starting to access the web from home too. In effect, any place which has a telephone line can be regarded as connected to the Internet: a telephone line and a computer are sufficient to access the World Wide Web. One does not even need a contract: the cost of using Kazakhtelecom’s dial-up services for Internet access is included in the telephone bill. Moreover, Kazakhtelecom has provided schools with a 50% discount for accessing the Internet and has set reduced rates for monthly payments. In addition, it has launched free dial-up services to access the Internet for state-funded schools from February 2007 (but only in the .kz domain zone so far).
 
That is why we can say that all our schools and universities have, at least formally, access to the Internet. Another issue, however, is the practical side of providing educational establishments with computers and access to the Internet. Do pupils have real access to computers or is the computer classroom always closed, so that “the schoolchildren will not break anything”? Unfortunately, this side of the process of computerising the education system has not been studied properly.
 
Neither has the number of Internet users been counted, nor the number of sites registered in the .kz Zone. Of course, from time to time some figures are made public, but without any explanation of how they were collected. Their validity is therefore very doubtful. Still, we can try to estimate the number of users by using indirect indicators. Let us take the statistics of yandex.ru, the most popular search engine in the .ru Zone, as a point of reference. According to these data, the average daily number of this portal’s users accessing it from Kazakhstan is 40,000 and the average weekly number is 170,000. There is no mistake here, because these statistics count only unique users and it is incorrect to simply multiply the daily number by seven days. However, using these figures we can obtain information about the share of unique users in the total traffic, which equals 280,000 users a week (40,000 multiplied by seven days). Dividing 170,000 by 280,000 we derive a coefficient of 0.6 or 60%. In order to roughly estimate the average monthly number of users we can use this ratio: if we multiply 40,000 users by 30 days and by 0.6, we get 720,000.
 
We can check these data by comparing yandex.ru’s statistics with the precise number of Internet users of some other country, for example Ukraine. Firstly, this is a good option because I have personally come across detailed information about Internet users in that country. Secondly, the Kazakh IT market is often compared precisely with the Ukrainian market because similar processes are taking place in both countries. So, according to yandex.ru, its average daily number of users from Ukraine stands at 320,000 and the weekly figure at 1.02 million. As a result, the share of unique users in the total traffic is 45%. This means that the monthly number of users, our calculations show, will be about 4.3 million. At the same time, according to the sputnikmedia.net website, the number of Ukrainian Internet users totalled 5.13 million people in August 2007 (http://index.bigmir.net). This comparison shows that the accuracy of our calculations is about 15%, which is quite acceptable. We should not forget that yandex.ru is a very popular search engine in the former Soviet Union, but not every user visits it even at least once a month. It turns out that the number of Kazakh Internet users can be estimated at 750,000-800,000 people, which is no more than 5% of the country’s total population. Comparing this figure with an estimation of Internet usage that was made public last year – 4% – the annual increase was about 25% (1 percentage point).
I tend to agree with this. On the other hand, we should in fact expect an exponential growth in the number of Internet users, because a similar trend occurred in the field of mobile telecommunications, where penetration grew from 18-20% in late 2004 to the current 60%.
 
A more complicated situation is to be found when we look at the number of websites registered in the .kz Zone. The CountZero catalogue (zero.kz) recorded 4,442 websites in early September (4,101 in early January), while the Whole WWW-Kazakhstan catalogue had only 3,585 registered websites (3,344 in early January). Of course, not all owners register their websites with catalogues and not every registered website is a ‘live’ and regularly updated web resource. That is why there is no exact figure of websites registered in the .kz Zone.
 
We have not yet discussed another frequently quoted reason for the weak development of the .kz Zone – a lack of quality and interesting content. Yes, indeed, this is a problem: in terms of its content, the .kz Zone is not competitive. However, this is not the cause but rather an effect. When there will be demand, there will be supply. Meanwhile, it is not profitable to develop quality projects: it is impossible to cover the costs of a good website by revenues from advertising when the number of hits is small.
 
However, interest in the .kz Zone is growing steadily, and this is demonstrated by a great number of indirect indicators. One of the main interests is commercial – new online shops are springing up regularly, even in the provinces. The number of businessmen who treat the Internet as an effective instrument of advertising is also growing. The Almaty-based Profit Online website has registered over 50 companies that place their banners in the .kz Zone. All popular Kazakh websites are now in high demand by advertisers.
 
Another indicator is the number of domains registered in the .kz Zone: the number of applications to registers websites was 6,010 in the first half of 2007 against 5,350 applications a year earlier (Table 1). Moreover, the quality of applications has also improved: many domains are being registered for real projects, not just as fancy names with the aim of selling them later.
 
Another pleasing piece of news is that an increasing number of media outlets are setting up their own electronic identities, because world statistics show that the highest demand is for information resources. A shining example is the sharp growth in the number of hits on the kurs.kz website, which offers information on currency rates at exchange bureaux in Almaty and other Kazakh towns. During a “currency fever” in late August, it recorded several thousand hits a day (against several hundred on routine days).
 
In addition, various political parties in Kazakhstan have appeared on the Internet this year, pointing to the new medium’s growing influence on public life. Practically no party that took part in the race for parliamentary seats in August avoided the Internet. Many parties set up their own websites offering a wide range of practical and theoretical information, including their main policy positions, basic documents, political programmes and election platforms.
 
The e-government web portal also set up a special Parliamentary Election-2007 website, which became the main platform for covering the election processes on the Internet. The website posted daily news, articles and analytical comments concerning the election, as well as the results of opinion polls and the ratings of political parties. The main feature was Internet conferences at which party leaders answered questions from the website’s visitors.
 
The head of state also led by personal example – President Nursultan Nazarbayev held an e-conference in early June and took part in an online nationwide school lesson on 3 September.
 
The arrival of new players should also have a positive impact on the development of the Internet in Kazakhstan. For example, the Canadian Netbundle company has announced that it will start to offer wi-fi Internet services in Kazakhstan. The choice of wireless access to the Internet is not accidental, because the entire cable infrastructure belongs to Kazakhtelecom and only wireless technology can offer a real alternative. Netbundle is ready to supply all the necessary equipment and invest about $500m in this project. The company intends to start with a tariff plan equivalent to $20 a month. Netbundle’s President Arthur Turple believes this will be affordable for every Kazakh citizen. It is possible that this project will be an incentive for local companies too.
 
In conclusion, I want to provide some official statistics relating to the telecommunications sector. Telecom enterprises of Kazakhstan provided services to the tune of 190.4 billion tenge in the first half of 2007 (up by 32.7% from a year earlier), including services to the population worth 77.2 billion tenge (up by 31.8%). Mobile telecommunications accounted for 50.8% of the total revenue (48% in the first half of 2006), international fixed-line telephone calls 16% (17.8%), local telephony 6.9% (6.9%), the Internet 5.8% (5.1%), radio communications and broadcasting 3.3% (3%) and postal and courier services 3.1% (3.3%).
 
As we see, the share of Internet services is growing, although insignificantly. In order to achieve more impressive indicators there is a need to computerise our society further, increase its access to the Internet and, above all, improve the content of Kazakh websites, which will encourage people to use the opportunities offered by the .kz Zone.


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