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Kaznet as a growth driver
 
Alexander Vassilyev

Today the Internet becomes a new driver at the telecommunication market in Kazakhstan, which actively moves the mobile communications from their positions. So, it was natural that in addition to the growth of quantitative and qualitative indicators of Kaznet, now we are observing the growing number of various disputes and conflicts, concerning the Internet one way or another: from rights for a certain site to the problems of copyright in general.

Incomes rise

We begin our review traditionally with the activities of all the telecommunication industry.According to the Statistics Agency, in the first half of 2011 the communication enterprises provided services in the amount of 259.63 billion tenge, which in comparable prices by 16.5 % higher than in January–June 2010.Revenues from long-distance telephone services amounted to 22 billion tenge (17.0 %), local telephone services – 19.48 billion tenge (0.8 %), and the Internet – 39.9 billion tenge (61.5 %), cellular – 139.57 bln tenge (13.2 %).

As one can see, revenue from mobile communications (53.9 %) and the Internet (15.3 %) continue to take the largest share in total, followed by long-distance (8.5 %) and local calls (7.5 %).

The fact that the Internet began to play a significant role in the overall structure is not news, as well as the fact that its share steadily increases. But another thing is interesting – the growth rate in the current year has accelerated considerably: in 2009 the Internet sector gained 26.5 %, in 2010 – 28.1 %, and for the first six months of 2011 growth was already 61.5 %.This of course reflected its share, which is also noticeably rose – up to 15.3 %.For comparison, in 2009 9.6% of revenue fell at the Internet, in 2010 – 11.3 %.This shows the potential of the market driver – the Internet shows the highest rates and growing almost four times faster than the entire telecom!

 In the structure of the Internet revenues the growth trend remains generally due to providing services to the population and activity in rural areas – here the rate is even higher.For example, if the volume of internet services rendered to population last year rose by 44 %, the first half of 2011 growth was already 96.2 % (compared to the same period of 2010). As for revenues from Internet services rendered in rural areasin January–June, they rose by 58.2 % (as against 74 % in 2010). In this sector, although the pace dropped, it was still very high.As we can see, the Internet is actively going to the grass-work.

At the same time the regions have the greatest potential for growth, as there is a strong imbalance in the structure of income by regions.Moreover, this imbalance is growing.Thus, the lion's share of all Internet revenues, which is 53.7 %, still falls at Almaty, although at year-end 2010 the share of the southern capital decreased to 45.8 % against 51.6 % in 2009.Then there are Astana (8 %), Karaganda (5.7 %), East-Kazakhstan (3.8 %) and Atyrau (3.7 %) regions.

If we talk about the regional distribution of daily site traffic of Kaznet sites (according to online counter CountZero), Almaty for last six months is about 32 % of all Kazakhstani users as against 48 % a year earlier. Astana has added a little – now it has 8.9 %. Karaganda showed a growth up to 8.3 %. Thus, a clear trend of internetization of regions of Kazakhstan is being traced. But the less obvious fact is that while the bulk of the core audience is in Almaty – they use the Internet more often.

Portrait of Kaznet citizen…

As for the number of Internet users in Kazakhstan, the estimates concerning this figures are traditionally very different, but more often the figure of 5–6 million is sounded. According to the Statistics Agency, there were 1.094 million subscribers of fixed internet in the first half of 2011 in our country(in this case one subscriber means one connection point), and cellular subscribers with access to the internet – 5.7 million The number of fixed telephone lines at the end of June 2011 amounted to 4.1 million.

But in February "Kazakhtelecom", the main provider of Kazakhstan, informed about the results of 2010, according to the company, the number of users of broadband Internet access (as of January 1, 2011) was 1,756,838 and the number of ports – 765,817.

In turn, according to the annual survey of online audience made by ICT Marketing (specializing in research in the field of telecommunications and IT), at the end of last year, the number of Internet users in Kazakhstan was 4.3 million.To calculate it the ICT Marketing used the data of questionnaire survey of urban and rural population. In general, according to the company, from December 2009 to December 2010 the size of the Internet audience has increased by more than 30 %.Among urban residents aged 16 years and older 41 % use the Internet, and among rural – 19 %.At the same time 94 % of Kazakh users use the Internet several times a month or more. Mostly the Internet is used by young people.

If speaking about the cities of Kazakhstan with a population of 70,000 or more person, the picture is as follows.Among the urbanites aged 16–24 years the share of Internet users was 66 % and aged 25–44 years – 52 %.In the age category from 45 to 54 35 % use the Internet, 55 years and older – only 10 % of the population. Most kazakhstani go on-line from PC or laptop, while the proportion of those who enjoy mobile phone is relatively small. During the survey ICT Marketing found that only 12 % of adults (16 years and older) of the urbanities use the Internet service from a mobile phone with GPRS / WAP.The majority of “mobile Internet users" also use the Internet from a regular computer at home, at work or elsewhere (7 among 10 users).By the way, the Internet is still mainly used at home.If in November 2009 the proportion of home users was 61 % of all adult citizens, at the end of 2010 this figure had already reached 63 %.

The company PROFIT Online also presented its estimation of the number of Internet users.Thus, it suppose that at the end of 2010 there were about 6–6,5 million (monthly audience), and the core of Kazakhstan's Internet audience (those who go online several times a week) – in 2,5–2,8 million users. PROFIT Online experts note that the nature of further dynamics will change: growth of monthly audience will slow down, but the core – to grow more actively, coming in numbers to the monthly audience.That is a quantum growth of the audience: users will go online more often and spend more time there.

... And his/her preferences

Today, most Kazakhs use the Internet to exchange e-mail, downloading music and video, as well as social networking.A recent survey of Institute of Political Solutions, conducted among residents of 16 cities of Kazakhstan, also confirmed the addiction to social networks.It was found that 64 % of Kazakhstani Internet users "resides" in the social networking sites, of which 62.4 % prefer "My World", followed by "Odnoklassniki.ru" – 25.9 %, while "VKontakte" is on a the third place – 22.7 %.Rapidly gaining popularity Facebook has 12 % and fourth place.

However, despite the popularity of Russian social networks, the level of Kaznet site traffic is growing steadily too.So, today the number of projects with traffic ranking of more than a thousand people a day is about 160 sites, while in 2008 the quantity of such web-resources were only about fifty. The website traffic of the most popular sites – Kiwi.kz, Kolesa.kz and Nur.kz – is about 130,000 web visitors per day.For example, the Russian Mail.ru is every day used by about 1,3-1,4 million Kazakhstani citizen (for comparison, in December 2009, the average daily audience of Mail.ru from Kazakhstan was equal to 720 thousand people).

Thus, sites of Kaznet have something to strive for and they have great potential for growth. The good fact is that Kaznet not only grows with domains (on July 31, 2011 in the area KZ 60 686 domain names were registered), but also with really existing sites.Thus, in the catalog of CountZero rating there were about 11,5 thousand sites at the end of July 2011, while just in the beginning of the year this figure was only 10 thousand.

Fight for the interests

The increase of the Internet audience and site traffic in Kaznet were followed by the growth of budgets allocated by domestic companies for the Internet advertising.The audience of traditional media flows into the network, followed by advertising budgets.According to various estimates, the volume of Internet advertising market in Kazakhstan in 2010 amounted from $5 million to $10 million, however, exact numbers are not even as important, the main thing is a clear growth trend.In the next few years, Internet advertising market will grow by at least 30 % per year.The exact figures will depend on the economic situation: if the economy shows good growth, the doubling of the market is possible.

Against this background, increasing the number of different arguments and discussions around Kaznet becomes quite logic: the amount of money in that share is growing, there is something to fight for.Thus, last year the Internet community was watching the carve-up of online community forum “Tsentr tyazhesti” ("The center of gravity").This year's heated debate flared up around the need to protect copyright on the Internet, as this issue directly affects the commercial interests of the tens and even hundreds of sites, whose work is based on the provision of pirated video content.

The impetus for the discussions became a method of “three snaps” (two warnings followed by forced elimination of a piratical resource) – an initiative of the Internet Association of Kazakhstan (IAK) to protect copyright in Kaznet.As was known, the method of "three snaps" was proposed by IAC at the round table held in late April.Its essence was outlined by the association president Shaukat Sabirov: "We need to punish offenders by the "three clicks": First – the notification to the author of illegal content, the second – a warning, and the third – criminal case. We believe that this is the most appropriate method for our market."Although this approach does allow sites to feel more secure, it has caused a rapid perturbation of a number of major Kazakh sites, including Namba.kz, Nur.kz and Kiwi.kz.In their view, an active anti-piracy is detrimental for Kaznet.They even wrote an open letter to the Prime Minister of Kazakhstan with a request to enter a two-year moratorium on the fight against piracy.

Interesting, that the initiative of the Association was the only trigger for the widening of the conflict of interest that erupted in early June. Later the opponents of the "three snaps" finally admitted that the problem for them is not in "snap", but in the fight against pirated content at all. And heir arguments were, at least, surprising: all the traffic and advertising budgets will go in RuNet, and Kaznet, if not die, then fall back to five years ago.However, if one look at things robustly, it is clear that the Internet is used not only to download movies.And if we're talking about Kaznet and advertising budgets, in our country there are about 150 sites that can be attributed to advertising sites, that is, to sites of interest to advertisers.This means that online advertising in Kazakhstan does not end out of the boundaries of the three portals.

The seriousness of the situation was confirmed by the exit of "Kazakhtelecom" to "pirate" scene. During one of the roundtables Askar Eserkegenov, Chief Commercial Officer of the company, actually spoke in favor of piracy.The arguments he gave the following argument: while banning pirated content when the traffic goes from Kazakhstan (and "swing" will be a Russian site) may occur deterioration in the quality of Internet access and increase of its price.

However, perhaps this discussion is the most eloquent indication that an internet business in Kazakhstan is forming as an independent phenomenon, as well as the fact that internet projects in Kaznet are becoming more interesting for investment.

 


Table of contents
Kaznet as a growth driver  Alexander Vassilyev 
· 2016 №1  №2  №3  №4  №5
· 2015 №1  №2  №3  №4  №5  №6
· 2014 №1  №2  №3  №4  №5  №6
· 2013 №1  №2  №3  №4  №5  №6
· 2012 №1  №2  №3  №4  №5  №6
· 2011 №1  №2  №3  №4  №5  №6
· 2010 №1  №2  №3  №4  №5/6
· 2009 №1  №2  №3  №4  №5  №6
· 2008 №1  №2  №3  №4  №5/6
· 2007 №1  №2  №3  №4
· 2006 №1  №2  №3  №4
· 2005 №1  №2  №3  №4
· 2004 №1  №2  №3  №4
· 2003 №1  №2  №3  №4
· 2002 №1  №2  №3  №4
· 2001 №1/2  №3/4  №5/6
· 2000 №1  №2  №3





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