Last Friday Kyiv hosted the 2nd Ukrainian Internet Governance Forum (IGF-UA), with Den/The Day being a special information partner to this event. This assembly of the entire Ukrainian Internet community is part of a good tradition to hold a series of international forums in various countries in order to discuss the most important problems of information society development and help the authorities and business take a common stand in crucial matters. This year’s forum focused on such topics as improvement of the law on information and communication technologies (ICT) and the Internet, government and market partnership aimed at developing an information society, instruments to combat cyber crime and Internet piracy, introduction of e-government, and protection of the freedom of speech in the Internet.
On the eve of the forum, The Day discussed the current situation and development trends in the ICT segment with Ivan PIETUKHOV, vice-president, chairman of the science and innovational technologies commission, Ukrainian League of Industrialists and Entrepreneurs; president, Adamant company group.
How has the Internet market changed in the past year? What are the main visible trends?
“Unfortunately, all that happens in this country is against, not owing to, something. The imperfect law, administrative pressure, and idleness of executive bodies of power have hardened our businesspeople, and they manage to develop and achieve successes in these conditions. The latest market statistics says that 51 percent of the Ukrainians have already gained access to the Internet in 2012. In other words, a half of the Ukrainians use the Net daily. The average age of these users is 15 plus. The socially active part of Ukrainian society has begun to show itself. The Internet offers them a competitive advantage on the labor market and additional opportunities for self-realization. In particular, the young can now quickly find a new job, launch a website, etc. Today, the national IT market accounts for over 4.6 percent of Ukraine’s GDP. Besides, at least 19.9 million people use the Internet. This paves the way to economic progress.
“Ukraine has crossed the line after which no one can say that it is impossible to build an information society here. In other words, there is some progress. All we have to do is reach the coveted plus 20 percent, and the Internet market’s growth rate will begin to slow down. For there traditionally remain social groups that show no interest in this field or have limited physical possibilities to use it. Ukraine can boost the share of Internet users to 70 percent within two or three years. This means Ukraine will be able to catch up with European countries in a few years’ time, as far as access to the Internet and innovational technologies is concerned.”
“THE INTERNET MARKET IS BEING REDIVIDED”
What legislative steps must the state take to reach a 20-percent share of Internet users within two or three years?
“One must not stifle grassroots initiatives. Any administrative pressure only hinders the process and results in the monopolization and decay of the market. The current administrative obstacles have not yet fully bound up the Internet. Yet there are some alarming tendencies. For example, the largest local Internet provider in Armiansk, which catered to 4,000 subscribers, was recently cut off. People stood up for the provider, but the problem still remains unresolved and the owner of this business is receiving threats of physical violence.
“In other words, the Internet market of Ukraine is being redivided on the local level. The local authorities have gained good leverage – they can now decide whether or not to let a certain operator into a concrete house and dictate their conditions to market players. But they forget that these players have already built an infrastructure and won the trust of users. There has long been a direct and free access of all buildings to all Internet providers all over the world, and the user himself decides on who he will deal with. In Ukraine, local government bodies believe, for some reason, that they are owners of all the entrances, corridors and walls of buildings and can thus demand that providers pay them for entering the building and make monthly payments for every subscriber.”
How can this problem be solved?
“We have turned to the President of Ukraine for help. In March 2012 the head of state instructed all the governmental bodies to furnish providers with free access to the grids in order to introduce cutting-edge telecommunication technologies in this country. But the president’s instructions have not yet been carried out.
“Besides, the Internet community has also suggested that the draft ‘Strategy of Information Society Development until 2020,’ now being studied by the Cabinet, comprises a provision that would allow all operators to get free access to buildings and give the customer the right to choose a supplier. The draft strategy also notes that local government bodies are exerting administrative pressure on providers. But somebody disliked this wording, and this phrase had vanished as the Cabinet began to consider the document. It was replaced by a milder statement, but the problem still remains – there is pressure.”
“ARE PROVIDERS TO PAY FOR THE DEVELOPMENT OF CINEMA?
What other barriers stand in the way of market development?
“What stands in the way are legislative initiatives aimed at worsening, rather than improving, competitive conditions on the market. Take, for example, a draft law to establish the Universal Services Fund. This idea has been toyed with for 12 years. At first the fund was intended to help build nationwide telephone networks. But the current level of mobile communication penetrability is 121 percent. This means there are 1.2 cell phones for every infant and elderly person who practically does not use them. So an attempt is being made to force providers to allocate 3.5 percent of their profits to this fund ostensibly for extending the Internet to the remote regions. But the number of users has already exceeded 50 percent, so this problem no longer exists.
“What also arouses concern is the attempt to take control of the Internet by means of a law that bans public contracts and obliges everybody, including users of Internet services (access, hosting, etc.) and SIM cards, to supply their personal data to the operator. The claims that this will reduce crime are unsubstantiated. Foreign countries found out long ago that an initiative like this would not produce the desired effect. So the Schengen zone does not resort to this practice. It exists in Russia and Belarus only. Certifying SIM card and Internet users will not reduce the crime rate, but the life of every individual will be placed under strict control.
“It is not clear why they want to develop cinema at the expense of Internet providers. This business is very profitable all over the world. These initiatives will only raise the price of Internet services. Ukraine can now boast the lowest Internet access prices in Europe. This means that providers are running short of a profit but, on the other hand, this allows broadening the circle of users and increasing economic productivity. Breaking free of a physical or virtual infrastructure, the Internet has become a catalyst of economic development. International surveys show that every 10 percent of the Internet penetration growth results in an average 1.3-percent growth of the gross domestic product (GDP). The Internet development can help Ukraine raise its GDP by another 2.6 percent within two or three years. So the successful work of this market players will benefit, above all, the state and the consumer who will be able to get a high-quality and cheap service in highly competitive conditions. This is what I call a market economy, and let us not drive it into a corner.”
Were your proposals taken into account in the draft “Strategy of Information Society Development until 2020?”
“The main thing is that it has preserved the spirit of changes – free access of individuals to information. Yet the Ministry for Justice has already attempted [to impose a restriction]: they put a comma and added ‘except for statutory limitations.’ This strategy is permeated with the spirit of innovations, development, and construction of an information and innovation society. We expect the president to sign this version.
“But this document is not a panacea which will solve, as if it were a magic wand, all the problems in this sector. It will offer a road map for informational development and lay the groundwork for all the other legislative acts and standard-setting instruments. It will define the market rules of the game, without which the sector has existed for 21 years, and will help build an information society faster. Besides, the Strategy of Information Society Development until 2020 will speed up civilizing the Internet and information-communication services market.”
In other words, you expect the ICT market to expand after the adoption of this document?
“There are 2,675 Ukrainian telecommunication entities registered on the National Communications and Informatics Regulation Commission’s website. Out of these operators, only 1,738 have a license to work in the telecommunications sector. The market is going to consolidate, and those who render low-quality services will have to go off the market. It is possible that the number of these facilities will shrink to 2,000 in the course of time. A time has already come for the information and telecommunication market to civilize.”
“IT IS CONSUMERS THAT SHOULD COMBAT THE ‘GRAY’ MARKET”
And how can “gray” players be ousted from the market?
“There is no all-purpose recipe. It is not only providers and the national regulator that should combat the ‘gray’ market – it is, above all, the job of the consumers who vote for services with the hryvnia.”
What do you think is the level of ICT market development?
“Ukraine is trying to break out of the circle of the developing countries. What also confirms this is its Networked Readiness Index ranking. By this index, Ukraine was 75th on the list of 142 countries in 2011-2012, having risen 15 places in just one year. To keep up this trend, the state should not put up obstacles by adopting hard-to-grasp or absurd laws – instead, it should help remove administrative fetters and approve technological standards and rules of the game for market players.”
Where do you think is the borderline between a fair legislative regulation of the Internet market and the rights of consumers?
“The Internet community, including myself, have already drawn up and submitted to parliament the law ‘On Interception of Telecommunications.’ It clearly sets out the instances when a certain governmental body can intercept information.
“The document is based on the best world practice which rejects any unnecessary restrictions for the Internet space. However, this draft law still sits collecting dust on parliamentary shelves. Why? Maybe, somebody stands to gain from this state of affairs or our MPs are still unaware that this should be done in a civilized way.
“All I know is that there is one person who will surely not stand to gain from this situation – it is the head of state, for he needs things to be in order and all processes to be clear and transparent. This shapes public attitude to him. And those who pursue the opposite goal are middle-tier bureaucrats because they are unwilling to lose their excessive rights and additional earnings. To break this system, the topmost administrative bodies should exert reasonable pressure on these wreckers and enlist the support of individuals and civic organizations. A civilized ICT market and the proliferation of Internet technologies will be to the benefit of the whole society. Suffice it to mention the establishment of e-government. The computerization of all processes is a way to eliminate corruption which is the main barrier to an economic miracle in Ukraine. One of the first steps being taken in e-governance is electronic submission of tax and customs declarations. But it is impossible to quickly and systemically establish e-government unless the highest authorities show a real will to do so. What is also needed is adequate funding and help in reducing administrative pressure on market players.”
Can you say that this country’s topmost leadership is showing this political will and has changed its attitude to the problems of this sector?
“We are being heard. We are knocking on the door. It is difficult, but we are marching forward. Those who are standing in the way are middle-tier bureaucrats who benefit from the existing state of affairs. But even though our current achievements are small steps, they will eventually grow into big ones. The number of telecommunication entities has increased by 1,500 and 277 compared to the years 2010 and 2011, respectively, and it is not yet the end of this year. In spite of some [negative] trends, this is optimistic information. Yet it is too early to say that the ICT crisis is over, although there is some steady, albeit slow, progress. This looks like the displacement of a huge rock which runs into major obstacles that stop it for some time. But, sooner or later, these barriers will sag under the pressure and the flow will move on. The ICT and Internet market will, sooner or later, overcome the obstacles, but this will occur much sooner if MPs stop passing absurd laws and the government relieves market players of administrative pressure on the local level.”
