Author: Ucha Seturi

The article was writen in the framework of the project "Strategic Plan Georgia 2020 - Strengthening Public Involvement" and was published on the blog "Georgia 2020".

Georgia’s broadband development and activities aimed at achieving the goals of “Georgia 2020” - objectives set without considering the interests of all of the players on the market.

At the end of 2014, the Government of Georgia announced the program to cover the country with high-speed internet and started activities for its implementation. As a result of the process, general plans and ambitious tasks were outlined. The project is implemented by the Ministry of Economy and Sustainable Development and LEPL Georgia’s Innovation and Technology Agency. The main executor of the project is NNLP “OpenNet”, which was established by the government.

With the initiative of the Georgian Government, the project “Broadband Internet to Every Citizen” was formulated and published in 2015. According to the announcement, the coverage of the country with broadband internet, having open access to all interested parties, was planned to be implemented by 2020. According to the strategy, the population would be provided with 30mb/sec internet, and 50% of the population with 100mb/sec internet. The project is financed by the grant from the private foundation “Qartu” with the budget of more than 200 mln GEL, according to unconfirmed estimates.

We think that in order to comprehend the internetization strategy, it’s important to analyse UN Millennium Goals:

• Eradicating extreme poverty and hunger - GDP growth, increasing income and the number of workplaces, providing elementary education globally;
• Universal access to computers, setting parameters for minimum pool connections, implementing the system of electronic education, ensuring gender equality and women’s rights;
• Increasing access to internet, regulating teleworking and distance working, e-healthcare issues;
• Controlling drivers through broadband connection and applications, online control of problematic areas according to specific challenges faced by specific countries, ensuring ecological sustainability;
• Increasing commercial services and broadband bridges in the direction of increasing the volume of electronic commerce, etc., establishing cooperation for development in the world;
• Broadband development for the accessibility of state and commercial online services, media access and for enhancing the engagement in various social projects, etc.

Implementing this project is vital for the country. The full coverage of the country with internet is dependent on increasing the number of end users connected to internet and providing them with an affordable connection and access to online commercial services. At this stage, the main challenge is the proper access to government e-services, since exactly these services are convenient for citizens living away from regional centers and cities.

In terms of implementing the project, the questions are multifold and consist of numerous layers. Building the web and bringing high-speed fiber-optical internet (FTTP or FTTC) does not resolve the problem of internet coverage of the country. Georgian citizens, living in rural areas and cities, where there is an access to broadband internet, still can not use these services due to price, absence of computers or other terminals, low income and other factors.

The market SWOT analysis is not an easy task; however, at this point it is possible to formulate them in a following way:

Strengths:

• Little coverage area;
• Developed broadband infrastructure in the cities;
• High level of mobile technology and network development;
• Optical backbone network;
• Legislation adapted to the demands of the EU regulations;
• Broadband internet, the stable rise in the number of end users and the migration towards the optical technology;
• The scale of the projects planned for developing e-governance;
• Stable rise in the demand for e-commerce market and multimedia services;
• Positive tendencies of the indicators of ITU and other international organizations;
• Partially regulated markets;
• Transit role of the country.

Weaknesses:

• The lack of investments in the region and underdevelopment of broadband infrastructure in the rural areas; 
• Complex geographical location;
• The existence of monopolists and related risks on the market;
• The absence of strategy and action plan for the government’s e-services;
• Low income and the lack of demand for broadband internet in regions;
• The lack of public awareness and needs of the broadband internet services;
• Illegal content and copyrights issues, low levels of consumer cyber-security and perception of its necessity;
• Problems with concentration of terminal device, smartphones and computers;
• Uncoordinated development of infrastructure, duplication of infrastructure and access price;
• Low levels of trust and usage of e-services

Unfortunately, listing similar problems is rather easy, especially if one considers GDP per capita. Yet, two issues can be singled out. Firstly, there is absence of strategy for covering Georgia with internet. Secondly, there is a chance that, with the implementation of the plan, tangible problems will arise while developing active operators on the market.

It is undeniable, that without doing SWOT analysis and identifying or determining problems and adequate solutions, it is impossible to talk about the implementation of the project. In addition to approving the strategy, defining the action plan and the timeline of the strategy is crucial. Unfortunately, these documents are not yet published, which complicates the process of advocating and assessing the risks of the process.

The problems caused by the absence of the broadband development strategy are as follows:

The absence of uniform planning and coordination

• The lack of trust of stakeholders toward the process;
• High risks of corruption and uncompetitive market;
• The impossibility of monitoring the process, pre-assessing failures and deficiencies, unpredictability of results;
• Duplication of resources and inefficient spending, expensive infrastructural and software projects of individual entities;
• Distancing socially unprotected, low income citizens and businesses in rural areas;
• Uncertain and unpredictable investment climate.

Second and more important problem is the effect of government’s activities on the players of internet market and the telecomm and media market in general. The government intervention and state aid is strictly controlled by the EU and UN, since the process involves significant risks of corruption and unhealthy fluctuations on the market. Following challenges were named by large, medium and small internet providers during the meetings organized by LEPL Georgia’s Innovation and Technology Agency:

• Will the newly established operator “OpenNet” be a competitor on the end user, i.e “last mile side? Does the organisation plan to provide services, even for public agencies, and would this intervention distort competition?
• How will the tariffs be decreased for access to transit network in relation to corresponding resources and elements, since high price derives from transit - [from] the volumes required to deliver internet to the regions.
• Is the newly established NNLP supposed to become a commercial legal entity, such as Ltd. or can it be sold by Government?
• How will the problems of end users be resolved via implementing the government plan?
• What would be the operational costs and tariffs of access to new networks?

Questions are numerous and there are no obvious answers, since the government’s strategy, action plan, timeline and expected outcomes are not yet published. The fact is that, after announcing the project, the second largest operator - Caucasus Online started to sell its shares and actives, while Scandinavian Teliasonera announced about selling shares in the second largest mobile operator – Geocell.

In addition to the above-mentioned, we believe that the conditions on the e-services’ market principally derives from the lack of competitive environment and not from state subsidies, despite the fact that the regulations promoting competitiveness have existed since 2005.

We think that, despite the absence of strategy and alternative action plan for the project’s implementation, necessary steps should be taken only after the plan is approved and expected outcomes are analysed. Introducing graft of project and the implementation process should start only after taking into account the interests of stakeholders and experts, since an absolute consensus guarantees high quality implementation of the initiative without deficiencies.

Additionally, we believe that the recommendations should be formulated in the following manner:

• Involvement of all interested sides;
• Creating a joint commission tasked with developing a long-term broadband development strategy and its implementation plan;
• Aims reflecting the interests of not only public institutions or organizations, but the private sector as well, should be included in the long-term broadband development strategy of Georgia;
• The plan must be based on the analysis of the current situation;
• Entities responsible for every activity of the strategy, as well as quarterly implementation and progress reports, must be designated;
• The development of the plan must be based on advisory documents for public discussions;
• The commercial sector, personal data protection inspector, the civil society as well as all stakeholders and other interested parties must engage in the process;
• The process must be open and transparent, while at the same time, the action plan and projects must also be open to criticism, recommendations and proposals.