ALI ABBASOV: ICT SECTOR INCOMES TO EXCEED PETRODOLLARS BY 2015 IN AZERBAIJAN

Azeri Press Agency, Azerbaijan
Dec 5 2006

Communications and Information Technologies Minister Ali Abbasov
interviewed by APA

– Achievements and main indicators made in information and
communication technologies life of Azerbaijan can be very
interesting. And expectations for 2007.

– Annual growth rate in the ICT sphere has exceeded general growth
rate by 2 or 3 times in Azerbaijan during recent years. Gross
Domestic Product growth hit 30% in 2005 and 2006, which changed the
ratio. The growth in communications sphere was 30% in 2006. Recently
the internet users increased by 10-15%, mobile users 30-32 per 100
people, websites reached 10 000 in number. We intend to turn to the
leader of the region in this sphere. 80% of postal networks will
be centralized in a computer center. As from next year posts will
offer banking services. At present AzTV covers 98% of Azerbaijan’s
territory and ITV (Public TV) covers 88%. Coverage of the other
broadcasters is between 50% and 60%. According to these indicators,
Azerbaijan is not behind in the world. Telecommunication field will
be the top priority following the oil sector.

– What about creation of innovation zones. What are the expectations?

– We have great targets. If we can implement these projects, the
incomes of this sector will overtake petrodollars in 2012-2015. These
ideas failed in some countries. Ireland, China, Malaysia, India and
South Korea succeeded in this sphere. We are consulting with Monitor
and AlimBus. We plan to forward our proposals to the Government and
Parliament by March 31, 2007. The proposals reflect privileges in
taxes and customs duties. President Ilham Aliyev declared ICT sector
the new priority of Azerbaijan while addressing Bakutel international
exhibition in October. These plans attracted many foreign companies
to Azerbaijan. CISCO, Intel and other famous companies want to take
part in the creation of technoparks. Ericsson, Siemens and Huavey
are among the interested.

– Will innovation zones be created in one region or a number of
regions for Phase 1?

– We speak about privileges which can also be misused by some
companies. We want to remove imbalance between Baku and regions. We
think the project should cover all over Azerbaijan and the companies
have privileges in the operating activities.

– Which components does the innovation zones project include and is
it possible to differentiate the privileges among regions?

– We are negotiating with both the Government and he companies in
order to satisfy the both parties at the same time. Creation of
technoparks will be followed by production and export of electronics.

At the next stage Azerbaijan will be a bridge between the West and
the East. The prices of western imports will fall by five times.

Azerbaijan will form a giant info market. Submarine optical cable
should also be laid in the Caspian, which will be a shortcut
between the West and the East. Creation of Azerbaijan Technologies
University for development of education and human capital is also
under discussion, of which founder is not the Government but ICT giants
like CISCO, Ericsson who want to qualify personals for themselves.

– Will Azerbaijan participate in funding the project?

– The Government can allot some activities for companies free or with
privileges. Also, the government investment is vital for creation of
e-government, adoption of new laws, improvement of legislation and
necessary infrastructure. Foreign companies are planned to finance
creation of new ventures, installation of new systems. Foreign
investors demand security for their investment, like international
oil contracts, the innovation zone project contracts should be
ratified at parliament. And in this case, protection of investment
and the commitments of the foreign companies can be ensured. As in
oil contracts, these contracts should reflect percentage of revenues.

If we can send the proposals to parliament in March, the first
investment will flow to Azerbaijan in fall.

– All TV broadcasters should convert to digital system by 2015. How
will this project be realized?

– There is almost no digital system in the South Caucasus and Central
Asia. According to the demands of International Telecommunication
Union, all countries to convert to digital system. We prepared a
program envisaging transition to digital system by 2015. The Cabinet
approved our program and it seems to me the program will be implemented
successfully.

– What difficulties do you experience in transmission of foreign
broadcasters in Azerbaijan?

– 5 foreign TV and 7 radio channel broadcast in Azerbaijan. Some
violate our laws. According to the legislation, a foreign broadcaster
can transmit if there is a intergovernmental agreement. There is no
problem with Russia broadcasters. We also have agreement with Turkey.

In reality, TRT doesn’t pay for broadcasting, but the problem will
be solved next year.

– Iranian, Russian and Central Asian broadcasters interfere in the
airspace of Azerbaijan. The Government blames private channels of
Azerbaijan for this interference. What measures are being taken?

– It is impossible to completely prevent electromagnetic waves. The
broadcasting can reach 300km, but 500km in sea. International
Telecommunication Union has rules. For instance, if Iran has a
channel in 25th channel near the border, Azerbaijan is not allowed to
broadcast in 25th channel. Countries should show tolerance. We are
concerned that foreign broadcastings coincide with ours. I met with
Iranian minister in Antaliya and we agreed to sign an agreement on
this field. The channels will be distributed after this agreement is
signed. Our private broadcasters are guilty sometimes because their
broadcasts are weak. All broadcasters, in particular privately-owned
channels should strengthen broadcasting.

– Armenians use our transmitters in the occupied lands and interfere
in Azerbaijan’s airspace. What pressures can the ITU exert on Armenia
about this problem?

– Our transmitting stations were left in Shusha, Jabrail, Gubadli
and Zengilan. I brought up this issue and put forward demands in the
ITU conference. There are some conflict zones in the South Caucasus
as well. But, the Union has no experience in this sphere, Azerbaijan
was the first to raise this question.

– Communications enterprises are planned to be privatized within the
public properties privatization program. How the process is going on?

– First, joint enterprises are privatized and, then, the state-owned
enterprises. The Government’s participating interest in Azercell
Telecom was planned to be privatized this year, but the process
was put off for next year. There are problems with assessment and
privatization of this high-income enterprise. AzEuroTel and Catel are
in privatization auction now. We will also take a step in privatization
of the state-owned enterprises in 2007. Mechanism for assessment of
telecommunication system has changed recently.

– With what kind of succession will the privatization be carried out?

– Teleradio Unit will not be privatized so far. The Government’s
participation in television and radio activities is necessary because
there are lots of problems in this field. Azerpocht will not be
privatized so far either because it is not considered profitable.

Aztelecom and Bakitelecom can be privatized. Internet providers-
Bakinternet, Aztelecominternet and Azerin can be privatized.

Telephone outlets will be privatized earlier than Teleradio and
postal ones.

– Customers complain about tariffs of cellular providers and many
wait for Azerfon-the third operator.

– Azerfon doesn’t have so great potential as Azercell and Bakcell
have in the market in order to reduce prices. Azerfon’s first step
will cover price-related activities. Azerfon’s coming on line will
have positive influence on market prices. Bakcell’s price policy has
influenced the market greatly. I think Azerfon will take concrete
steps in this direction.

– Are you satisfied with the tariffs offered by internet providers?

– They try to keep the current prices unchanged. I don’t understand
their policy, they can’t expand their customers stock without reducing
prices. Unfortunately, their appeals sent to us suggest that the
existing prices remain unchanged. The State can offer financial
resources. They should be capable of borrowing long-term loans which
will enable them to reduce prices. At present, the providers’ incomes
only consist of the tiny payment of the customers.