“Mr. Pietukhov is a little busy, so you’ll have to wait,” The Day was told at the reception room of Ivan Pietukhov, president of the Adamant company group. Fragments of a lively chat could be heard from behind the door, and a large delegation came out about 20 minutes later. “Those were inspectors,” Pietukhov said before the interview. “There are reforms and deregulation underway in this country, but bureaucrats flout the laws as before. They came without a warning, although they should have done so at a ten-day notice. Unfortunately, I had to send them off.” This in fact prompted the first question.
PEOPLE WANT TO LIVE DIFFERENTLY
Reforms are the talk of the town. Some accept and others reject them. And what do information market players think the ideal IT reform should be like?
“Unfortunately, Ukrainians are not exactly enthusiastic about the word ‘reform.’ They take a cautious attitude to it, and sometimes this word even scares them. In my view, reforms should be carried out when they are vitally indispensable. Do you remember being taught once about the way a revolutionary situation evolves: the rulers are unable and the ruled are unwilling. The same thing with reforms: they will be effective when their time has come and the people want to live and work differently. But, before launching them, one should study the market: what is being done wrongly, what hinders progress, what are the people unhappy with, etc.? This approach is also necessary in the IT sector. Otherwise, they will look as a mind-boggling experiment. Take, for example, taxation: at first, we were allowed not to pay the value-added tax on a number of IT services, which was a right thing to do. But the IT community doubted whether this exemption would last long. And they proved to be right. No sooner had a year passed than the VAT was restored for some reason. And now the problem seems to be in suspended animation. Clearly, this could not produce a positive result – it only imposed a heavier burden on business. The state, too, failed to benefit from its former and latter steps. It only lost out on administering and image. For reforms in our field require a well-balanced approach. All we need is being able to understand what exactly should be changed and reformed and what is better not to touch to avoid additional problems. This applies to the new Tax Code – all it has given us is an additional load. It is my personal opinion, but I think the entire market will share it.”
What are the differences between IT people and the government in their approach to IT reforms?
“I personally agree with the president of Ukraine who has set a goal to us all: Ukraine should be among the top 20 developed countries. All I want to know is by what means the government is going to do so. If we, for example, are setting out on a long journey, we must think over the transportation means – will it be an ox-drawn cart, an old railway engine, a racing car, or perhaps an airplane? And, maybe, even this will not be enough. Why not choose IT, which has changed the world beyond recognition in the last few years, as, figuratively speaking, the locomotive of our economy?
“And now I will tell you about different approaches of IT people and the government. We are offered exemptions. But we are not disabled. This only humiliates us. What we want to be discussed is preferences or, to be more exact, stimulus reactions. If the economy needs a locomotive that can draw it from the quagmire, why not clear the way by borrowing the experience of the countries, where a fast-developing IT sector has played the role of a reform prime mover? What this sector needs are high-skilled specialists rather than heavy investments. Besides, our education system is still capable of training them. Yet, for some reason, our universities prefer to train lawyers, economists, and managers instead of technological experts.”
OVERLOADED LOCOMOTIVE
The National Telecommunications Regulation Commission intends to submit, by the end of this year, a bill on establishing the fund of all-purpose telecommunication services. You apparently know about its main provisions. Do you think this is necessary? What will this financial mechanism be aimed at in reality and does it run counter to the very essence of IT reform and to what this sector expects from the reform?
“I am personally very grateful to this commission for having invited us, representatives of non-governmental organizations, to workshops conducted by the European Bank for Reconstruction and Development. High-profile international experts have told the participants about the situation in this sector. It turned out there are only two EU countries that are still using a fund like this. (And, as far as I know, our government is steadily following the line of approaching the EU.) So I don’t think we need this fund, and the data on the basis of which this decision was once made are just obsolete. The previous bosses of the regulatory commission were eager to set up this fund. But why should new people follow the same way? The sector’s civic organizations are advising bureaucrats to be as cautious as possible in order not to stumble on a smooth road, as we say. Will they manage to introduce a transparent money spending mechanism? Will this exert further pressure on business in addition to one by the Tax Code? And does this fund fit in with the reform program? This only leads to negative preferences that are standing in the way of our already slow-moving locomotive.
“One should also look at the dynamics of broadband access to the Internet. This has already picked up a good speed in Ukraine – by the end of the year, more than a third of the Ukrainians will have the possibility of a broadband access to the Internet. And this does not require special investments. But what is the fund of all-purpose services being set up for? For attracting investments, but in this case funds are being withdrawn from some promising projects and channeled into outdated ‘technological novelties.’ What can be more promising than broadband access? World experts urged governments last year to create as favorable as possible conditions for its development. Conversely, we are going to spend money on quite an archaic system of wire telephony. To make it still clearer, I will tell you about an almost ridiculous event that occurred two years ago. A faraway village woman asked in letter to the now defunct Ministry of Transport to put in a telephone. So the bureaucrats decided to show a good attitude to people and present the woman with a cell phone without too much foot-dragging. They came to her place and saw that she already had two cell phones. When asked why she also wants a wire phone, she said that her neighbors had one and she had been on the waiting list for 15 years – so she must have one, too. Meanwhile, you can equally successfully call emergency services today by either mobile or stationary telephone. Is it then worthwhile to establish a fund that will surely affect the cost of IT services? This is why I oppose drawing up this law. I think this question should be struck off the agenda altogether, for it is at least 15 years late.”
Has a new procedure of access to electric communication cable ductwork been developed and how will it affect the user rates?
“As part of a task force that deals with this matter, I cannot but note some positive changes in this direction. We already know the proposed rates, but the regulatory commission has not yet approved them – preliminary hearings are underway. Another stage of this work is today. It is intended to work to set not only the rates but also the very procedure of access. For you cannot solve all the problems only by altering the rates. Our task force would like to see both documents – the rates and the procedure – by the end of the year. All the more so that, judging by the available proposals, there will be no radical changes in the rates. And even if they perhaps go down by 1.5-2 percent, this will not change the situation. In any case, the positive side is that there still are good conditions for access. But what really matters is not the rate itself but the provisions that lay down the rules of access. We think it is possible to finalize and adopt these documents before the end of this year.”
Is there in Ukraine the problem of legalizing the operators and providers who are illegally using access to the ductwork?
“It would be totally wrong to mention operators in this context because the operator is one who has received a proper license and, hence, he works legitimately. By contrast, anybody can be a provider. But even here the law does not say clearly that the provider works under the operator, while others are just economic entities of telecommunications. I don’t think it is a big problem. By all accounts, the question just is that somebody has illegally done something in the telephone ductwork. Two years ago, when we made a deal with our colleagues on normal work, we managed to ‘win over’ the popular ductwork diameter of up to 12 mm. That was a natural, logical, and well-grounded position. And the new price was far more competitive than the one offered previously (for a diameter of up to 20 mm). This trade-off decision was made at a roundtable at the Ukrainian Entrepreneurs and Industrialists League. An Ukrtelecom representative said to all the participants: if you have laid a cable wrongly, please legitimize this and submit the necessary documents. It is a different question whether this advice has been followed. And now, as far as I have heard, Ukrtelecom is being inspected and, as a result, some cables are being cut off. What does this mean? This may nave been negligence of the personnel – I wouldn’t like to insist that there was foul play. Maybe, somebody laid a cable but did not use it for a long time or even forgot about it altogether. Yet it is obvious that Ukrtelecom should put its ductwork in order. Now that it is a private company, it faces entirely different demands. The new owners will have to show a rational approach to their business. But it is not in my line to advise them. We have a regulator that sets out the procedure and rates of access to monopoly service which include access itself. Incidentally, other operators also have ductworks. Yes, they are not so long, but they are sometimes located in very attractive places. All we need is receive proposals from operators and information on whether there are free ducts and on what conditions we could get there. This is a major problem in our sector.”
The government is drawing up new online shop regulations. They seem to be aimed at protecting buyers from being swindled. What is the Internet community’s attitude to this document?
“The Internet association is actively working in this direction. There are several draft laws, one of them being drawn up by us. But we are raising serious objections on the alternative document. Some MPs are trying to use it for making what may be called ‘cooperative loopholes’ in electronic commerce. But my expert opinion is as follows: if we do not have a law that sets out trade rules in a usual shop, what’s the use of a law on Internet trade? And if one sells something on telephone, does this also need a law? And if another variety or trade comes up tomorrow? I suggest that we adhere to the principle of rationality. This principle says that one must first streamline some elements of electronic commerce, not the system as a whole. So the Internet community is trying to make the draft law more positive and ward off the mistakes that have occurred before.”
