IT sector in Azerbaijan (2011)

ICT sector in Azerbaijan as of 2011 was one of the fastest developing sectors of the national economy. Communications and IT Minister Ali Abbasov said that at present, the ICT sector in Azerbaijan expands, modernizes and contributes to the comprehensive progress of the country in terms of the widespread use of new technologies in the world and amid the dynamic socio-economic development in Azerbaijan.

Minister said that the basis for the development of this sector is the achievement of the priorities determined by the National Strategy of ICT development, adopted in 2003, and the goals set by public programs. The projects of local and regional importance are being implemented to achieve these goals to develop the ICT sector. The creation of Regional Innovation Zone, the European-Middle Eastern high-speed information network, Trans-Eurasian super informational main line, launching the Azerbaijani first telecommunications satellite into orbit, the transition to digital broadcasting, the creation of "e-government" are among these projects.

"As a result of implementing these projects and the measures taken within state programs, the use of ICT in society, state governance and all sectors of the economy will be ensured in the short term prospect," he said. "The ICT infrastructure and IT local production will be developed. The export potential of the sector will increase. I may emphasize that 2011 can be considered successful for the ICT sector."

According to the Azerbaijani State Statistics Committee, the volume of information and communication services rendered to the organizations and people in Azerbaijan in 2011 amounted to 1.2 billion manat, or 11.8 percent more than in 2010. About 72.7 percent of the total volume fell to the services rendered to the population.

According to the Azerbaijani Communications and IT Ministry, the total volume of investment in the ICT sector in 2011 amounted to 415 million manat, or 2 times more than in 2010. About 246.4 million manat of the total amount of investments made in the sector fall to the share of mobile operators, the ministry's bodies - 144.5 million manat.

The amount of income on the ICT sector and postal services increased by 13 percent and amounted to 1.314.9 billion manat as of 2011 compared to 2010. The revenues in the ICT sector and postal services in Azerbaijan's GDP in 2011 was 1.8 percent. The revenues of this sector in the GDP non-oil sector hit 3.7 percent.

The growth rates in the ICT sector of the republic in 2011 amounted to 12.8 percent, the telecommunications sector - 9.8 percent, IT-sector - by 1.4 times, the postal sector - 5 percent compared to 2010.

About 75.3 percent of the income obtained on the ICT sector and postal services, fell to the share of non-state enterprises. About 66.8 percent of the total income received by the sector fell to the mobile communication market. The growth rates amounted to 3.6 percent compared to the same period of 2010.

New automatic telephone exchanges with a total capacity of 49,896 numbers were put into operation in the country. At present, numbering capacity across the country is 1.717.196 units.

According to the ministry's statistics, at present, the total number of phones falling to every 100 people across the country is on average 18.6 units. This index on the capital is 35.7 units, other regions of the country - 10.9 units, in rural areas - 7.1 units. About 68.8 units of phones fall to every 100 families. This figure is 140.2 units in Baku, other regions of the country - 47.6 units.

IT-production volume increased by 50 percent to 120 million manat for the reporting year. This product includes the elements of radio electronics, optical carriers, computers, software modules, etc. During the period, the telephone network was fully digitized and transformed into an international numbering system. The capacity of the public telephone network was increased by 50,000 numbers. At present, the current level of fixed telephony penetration in the country is 18.6 percent.

2011 was very intense in the field of information and communication technologies in Azerbaijan.

Mobile communication

All mobile operators got the licenses to render 3G services. The proposal was made to pass to 4G standard. These are the main events of the year. Azercell and Bakcell operators received licenses for 3G services in 2011. The companies were able to increase the number of 3G-subscribers to 500,000-700,000 users during a month since it was launched (late November).

The full elimination of the contour system and the transition to monetary billing of GSM mobile communication standard - Azercell and Bakcell was stressed.

The subscriber base of Azerbaijani mobile operators increased as of 2011, or more than 1 million people. The figure hit more than 10.1 million subscribers.

Azerbaijan outstrips the world average by 35 percent in terms of mobile penetration. The world average mobile penetration rate hits 78 percent.

According to the ministry's statistics, about 110 mobile phones fall to every 100 people in Azerbaijan.

The number of mobile subscribers in Azerbaijan (people):

- 2003 - 1 057 100,
- 2004 - 1 456 500,
- 2005 - 2 242 000,
- 2006 - 3 323 500,
- 2007 - 4 519 000,
- 2008 - 6 548 000,
- 2009 - 7 757 120,
- 2010 - 9 100 000,
- 2011 - 10 120 000.

Mobile communication penetration rate (percentage):

- 2003 - 12,8,
- 2004 - 17,4,
- 2005 - 26,8,
- 2006 - 39,0,
- 2007 - 52,4,
- 2008 - 75,0,
- 2009 - 86,2,
- 2010 - 100,
- 2011 - 110.

Information and communications equipment

As of 2011, computer, electronic, optical and electrical equipment was produced to the amount of 192.4 million manat in Azerbaijan. An increase of 22.8 percent was registered in the production of computer and other electronic equipment. As of 2011, production of television sets in the country increased by 2.2 times. As of January 1, 2012, the finished products worth 9.7 million manat are in warehouses. The figure hit 3.7 percent of the total reserves of industrial enterprises' production.

E-government

Azerbaijan commissioned the electronic-digital signature issuing center in 2011. The presidential decree on "Some measures in the field of electronic services rendered by state bodies" on May 23, 2011 opened the wide opportunities to use the electronic services in the country. The National Certification Center was established within the decree fulfillment. The electronic signature was introduced. "E-government portal" was created to organize and use the electronic services of the state agencies on the basis of the "single window" principle. The operations are conducted to place the services of the state agencies.

At present, Azerbaijani ministries and departments are being used the electronic services. About 60 e-services of 15 state agencies have joined "Electronic government" portal within EHDİS project. The Azerbaijani ministries and departments are expected to fully render the electronic services to the public by the end of the first half of 2013. The portal is expected to be launched in March next year. It is expected that the total number of electronic services to be rendered by the agencies in the republic, will hit 300. The portal will reduce the number of documents requested from the citizens through different bodies' cooperation with each other electronically.

Azerbaijan carried out the purposeful work in the field of providing the state bodies with the modern technologies in accordance with the program of activities to create "Electronic government" in 2010-2011. The large-scale projects of "Electronic government" were implemented.

The level of e-preparation of state bodies was quite high. Thus, information systems, registries and other information resources created in the sphere of education, health, justice, internal affairs, customs, taxes, social security and others, simplified the relations of state agencies with citizens and organizations. They created the conditions for providing them with advanced services. As an example, we can mention the created state register of the Azerbaijani population, which is part of "Electronic government". The electronic applications, electronic invoices, electronic bids to participate in the test examinations for admission to the universities and the civil service, the statistical data in electronic form, etc. are received there.

The operations on the "Electronic Government" infrastructure development and the legislative base will be intensified to accelerate the transition to the "Electronic Government".

Digital television

At present, about 85 percent of Azerbaijani population has the access to a digital broadcasting signal. This allows watching a social package. It includes the main TV channels of the country. The number of the channels broadcast in a digital format hits up to 12 units at the regional level. The number of channels broadcast in a digital format in Baku and Sumgait, hits 24 units. The number of channels broadcast in a digital format in Baku and Absheron peninsula will be increased to 40 units at the end of the first quarter of 2012. Digital TV is based on MPEG-4 standard. The population must buy decoders to pass to digital television standard.

The Communications and IT Ministry takes certain steps to use digital TV in the republic as well as in other countries. According to the Azerbaijani Cabinet of Ministers' decree on September 13, 2006, a decision was made to use the European DVB-T standard to broadcast digital television in the Republic. According to the Cabinet of Ministers' decree on February 10, 2011, the "Program for the use and development of digital television DVB-T on the territory of Azerbaijan" was approved.

The main advantages of digital broadcasting is a high quality reception of television programs, effective use of limited frequency resources having strategic importance, the possibility of receiving numerous television programs through the terrestrial means.

At present, about 65 percent of the population is provided with digital TV due to digital television transmitters operating in Baku, Ganja, Agsu, Lerik, Agstafa, Imishli, Mingachevir and Shirvan. The measures are made for the rest regions and the Nakhchivan Autonomous Republic to be provided with digital TV by the end of 2012. Thus, 85 percent of the population will be provided with broadcasting of open digital package.

The digital television and receivers for analogue TV sets must be used in analogue broadcasting in 2012. For this purpose, the Communications and IT Ministry takes the appropriate actions with manufacturers and entrepreneurs involved in the production and sale of these receivers.

Thus, the KUR plant in Mingachevir, "Peak" plant belonging to the Ministry of Defense Industry, and the "Terra Siqnal" company began production and sale of digital receivers in the country. An information video clip was created to enlighten the public. It is broadcast by local TV channels. The work in this direction is underway.

Space industry

Two loan agreements were signed within the launch of the Azerbaijani first satellite - Azerspace in 2011. The first agreement includes financing of the construction, the second - financing of the launch into orbit. The total cost of the first satellite program in Azerbaijan is estimated at approximately $ 250 million.

The manufacturer of the Azerspace satellite, to be launched on the French Arianspace orbit in late 2012, is the U.S company Orbital Sciences Corporation. At present, the operations have been launched to construct the ground satellite control station in Baku. The construction of the second station, to be located on the territory of the Nakhichevan Autonomous Republic, has been started since January 2012.

The foundation for implementation of the second satellite program was laid in 2012. The second satellite, to be launched in 2015, will be low-orbit. It will be used for remote sensing of the Earth, mapping studies, geological studies, etc.

Development of Internet services

About 50 Internet users fell to every 100 people as a result of the development of the national segment of the Internet, the repeated lowering of prices, promotion of modern means of connecting to the Internet, including broadband, wireless and mobile means to create favorable conditions for service providers and Internet clubs in 2010. At present, the number of users reached 60 percent of the whole population. Approximately a half of Internet users have a broadband access. This is more than the global average by 2.5 times.

At present, a network of fiber-optic main lines was created all over the country. As an example, one can specify "AzDataCom", "Deltatelekom", "Azrtelekom" and others. Total capacity of international internet channels hit up to 45 Gb / s. Azerbaijan exports Internet services in Iran and Georgia. The Communications and IT Ministry has developed a program of activities to develop broadband Internet services in Azerbaijan and the original version of the plan for the implementation of this program. It is planned to submit these documents to the government soon.

The intensive talks aimed at creating a consortium with the participation of stakeholders are being held within the Trans-Eurasian super informational highway. Two big meetings related to the establishment of the structure and a business model of the consortium were held within these negotiations. One was held in July in Gabala, and another in November in Istanbul. In general, the negotiations can be characterized as constructive and dynamic.

At present, the major telecommunications companies of Azerbaijan, Kazakhstan, China, Russia and Turkey discuss two proposed routes at the negotiations: the main southern route - China, Kazakhstan, Azerbaijan, Georgia, Turkey, Eastern Europe and Germany; alternate northern route - China, Kazakhstan, Russia, Ukraine, Poland and Germany.

It should be noted that the geographical diversity, meeting the requirements of the international backbone connectivity, ensures high reliability.

The project participants plan to hold another meeting in Budapest in March 2012.

The volume of Internet traffic in Azerbaijan increased by 35 million minutes in 2011 compared to the same period of 2010, amounting to 723 million minutes. The volume of outgoing traffic increased by 22 million minutes. The figure hit 182 million minutes. The volume of outgoing traffic increased by 13.9 percent compared to 2010, incoming traffic - by 5.7 percent. The number of international telephone channels increased by 1,206 units and reached 9,116 units. The capacity of the AZNET segment increased by 1.4 times and reached 55 Gbit / s.

As of January 1, 2012, the level of the Internet penetration reached 65 percent or 30 percent more compared to 2010. According to the Communications and IT Ministry, about 30 users of broadband Internet fell to every 100 people in 2011 or 2 times more than the previous figure.

According to the Azerbaijani Communications and IT Ministry, the volume of the Internet market in Azerbaijan in 2011 exceeded 60 million manat. The volume of income received through the Azerbaijani Internet sector in 2011 increased by 1.2 times compared to 2010.

Azerbaijan's Internet market has substantial growth potential. This segment of the telecommunications market has been recently demonstrating a steady growth in the number of Internet users.

The tariffs on the internet (in the network of state Internet service providers AztelekomNet and BakinterNet) in the country have decreased by 30-50 percent for the last year. Such a sharp decrease in connection cost is stipulated by lower prices for external channels (both satellite and terrestrial), cheapening of equipment and increasing competition between providers.

ICT - protection from crisis

The world experience and the global financial crisis show that the minimal impact of the crisis was observed in the countries experiencing the greatest use of ICT. The diversified and innovative economy was created.

IT-sphere is developing in Azerbaijan today. The level of professionalism of local companies is increasing. They are actively involved in the dissemination of electronic banking and electronic commerce. Azerbaijani IT-companies achieved joining the regional markets. They successfully participate in numerous projects in the region. They export their products to the regional market.

Despite the significant share of IT sphere in the world countries, in the structure of the ICT sector and the annual increase in revenues in this field in Azerbaijan, the specific weight of IT sphere in the structure of the ICT sector in the country is 7.7 percent.

At present, the work is underway to conduct the complex measures in this direction. This is required by current conditions and world trends.

Special Economic Zones - a guarantee of future development

There are a plenty of different special economic zones in the world. According to the specialists, about 40 percent of world trade turnover passes through these zones. These zones are created in developed and underdeveloped countries. Therefore, a guarantee of future development is closely connected with the creation of technology parks and innovation zones.

The "Silicon Valley" is one of the most famous zones in the world. It produces about 20-25 percent of computers in the world.

The intensive work was launched in such CIS countries, connected with Azerbaijan economically, politically and geographically, as Russia, Belarus and Kazakhstan, to create and develop special economic zones, envisaging the ICT development. Azerbaijan must conduct more intensive work in this direction to achieve leadership in this area.

There are necessary legal framework, the competitive sphere and investment climate in the country.

The creation of the Regional Innovation Zone (RIZ) was launched. The main advantage is that the development of the Azerbaijani model is based on the study of positive and negative experience of such zones in the world.

The regime of privileges will be applied here. Besides local companies, the investments of foreign companies will be encouraged. This will lead to a significant increase in the production of IT-products.

Today the foreign companies' interest in Azerbaijan is great. This is a guarantee for a successful future. At present, such companies as Microsoft, Cisco Systems, Hewlett Packard, IBM, Apple Computer, Intel, Oracle, Google, Nokia-Siemens Networks, Ericsson operate in Azerbaijan. They are actively involved in various projects.

ICT Development Fund

The Communications and IT Ministry started working over a new project to strengthen the business development in the ICT field. The main goal of this project is to ensure flexibility in new and innovative projects, to improve the investment sphere, to ensure the interests of investors, to establish the state ICT development fund to create the conditions for participation in joint projects. This fund will serve to attract professionals with extensive knowledge in the ICT field, to conduct research on the effectiveness and importance of the projects with foreign experts, to develop intelligent business.

The State ICT Development Fund will ensure venture financing to develop the innovation sphere in the ICT field. An opportunity will be created to use foreign capital in the risky, but at the same time promising and innovative projects for small and new enterprises through the venture financing.

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