December 4, 2014
A Call from the Future
A major restructuring is upon the domestic mobile market in the near future as two new operators are to get into the game. They are expected to not just shake, but also to compete with the status quo of the so-called ‘the big two’.

Each player ups their game The evolution of mobile technologies is increasingly modifying society, inevitably forcing people to change their habits. In the recent past, having cell phones was just about as unimaginable as traveling to other planets before they quickly made their way into the brief cases of ‘very important people’, and then ‘infiltrated’ into the realm of masses. Progress has been so swift that many people simply cannot keep up with it. And all this has us hoping that the burgeoning technologies will at least be pleasing to us, or better yet, make our life and work easier.

Today, nobody is surprised at the availability of cellular communication.

Therefore, operators have to resort to tricks, offering some additional services and packages, inventing unconventional designs and PR moves. This situation is particularly relevant in the case of Uzbekistan.

Being the best friend of any consumer, the competition should break the current situation in the market. Ultimately, everyone would benefit from that - subscribers would get additional services, probable cut in prices and improved quality, and the operators will have to get out of‘hibernation’, unless they do not want to lose their position in the market.

The situation is complicated by the fact that, according to experts, the market has almost reached its peak in the number of subscribers, so the market players will have to offer their customers something more than just communication. The number of mobile subscribers has exceeded 19.6 million people throughout the country. For a country populated by more than 30 million people, the rate is not just big, but giant. According to the State Statistics Committee, the working population of the country, and therefore the most active users, make up about 18.8 million people. So now, it is going to be like ‘an operator for a subscriber, and not a subscriber for an operator’.

A little over 23 years ago, there was only one operator for the whole country. An Uzbek-American joint cellular service venture Uzdunrobita was established in August 1991. As a paradox, mobile phones those days were poorly suitable for mobile operation: they looked like a portable radio transmitter and weighted a few kilograms. At that point of time, many were skeptical about this kind of communication. However, the company was demonstrating the world the good progress and the capacity of the Uzbek economy.

Five new mobile operators came to Uzbekistan six years later. The list is dominated by the Russian company VimpelCom, which acquired 100% of Unitel Co.Ltd and Bakri Uzbekistan Telecom, which later on were merged into one company, the Swedish-Finnish Telia-Sonera, which then redeemed the American company MCT Corp., the owner of 99.97% of the joint venture Coscom. The competitive environment was not long to affect on reducing the cost of services and the increasing number of users.

From that very moment, the number of mobile subscribers has been growing rapidly. In early 1997 there were only 9,543 subscribers, and a year later the number more than doubled. Uzbekistan overcame the milestone of 100 thousand subscribers in late 2000, and by the end of 2002 the bigger part of the country’s territory was covered by networks of three mobile operators. Finally, in 2005, the country reached an important psychological milestone - one million subscribers.

International experts mention the level of development of mobile communication in Uzbekistan. For several years run the Uzbek cellular service has been deemed as the world’s affordable one. Uzbekistan ranks among the leading countries with the highest ‘mobile development index’. In the area of access

The competition in the market will be primarily toughened by the advent of two new players - a national mobile operator and Universal Mobile Systems. It would be a mistake to think that the newcomers are long to catch up with the ‘big two’ - Beeline and Ucell. Both operators, despite the seeming novelty, already have some platform for an active assault.

The first one is created on the basis of the Uzmobile branch of the country’s leading telecom operator Uzbektelecom. The establishment of the national operator has been caused by a range of reasons, and is well within the mainstream of global trends of mobile technologies development. In today’s world, where the geopolitical issues are increasingly prevalent over the economy even to the detriment of domestic companies, the countries seek to protect confidential information from alien influence.

Let’s take Russia for example: it is currently approving a package of the regulations that aim at entrusting companies with storing personal data of the population on the servers within the country. Besides, there is a boost of cyber crime, which implies the use of information from telephone conversations and other sources. Therefore, there is a need to build the country’s own mobile network, which eludes influence from outside. According to experts, after the network covers Tashkent and regional centers, it will primarily cover public and economic bodies to strengthen their information security.

The company has already vowed its ambitious plans to cover the whole of the republic. By the end of next year it schedules to install 1,994 base stations and a billing system of eight million numbers in the regional centers, and in 2017 – 3,986 base stations in other settlements across the country. The first phase of the project worth $35 million is currently underway. The purchase of equipment is funded by the State Development Bank of China, as agreed this August. The operator plans to carry out construction, installation and commissioning works through soum loans of commercial banks, and investments of Uzbektelecom. The total cost of the project of the national mobile operator is estimated by experts at about $500 million.

The establishment of such an extensive network fairly requires modern technological and technical solutions, as well as a large amount of funding. In this regard, the national operator was secured by state benefits. By the end of 2017 it is exempt from customs duties for imported technological equipment. Besides, the ‘parent’ company of Uzbektelecom was granted a five-year exemption from the state fee for a license for design, construction, operation and provision of services to mobile cellular networks, as well as fee for the use of radio-frequency spectrum. A joint project of the Russian company Mobile TeleSystems and the State Committee of Communication, Information and Telecommunication Technologies of Uzbekistan is another new face in the domestic market.

The Uzbek side has 49.99% share in the new operator of Universal Mobile Systems, and MTS - 50.01%. Already at its start the company will have a serious basis to compete for the leading position in the market, since it has inherited the property, equipment and the infrastructure, which was previously owned by the foreign enterprise of Uzdunrobita.

Domestic cellular market is at the turn of change. It is not just about new players that are capable to speed up the next round of competition. As practice shows, the market is not able to ensure a stable revenue growth for operators only through the provision of telecommunications services.

They are increasingly jostled by Internet companies that allow their users to avoid using SMS and roaming through their services. Non-voice services and particularly mobile Internet are the matter of the future for cellular companies. Analysts predict a global restructuring of the global cellular market in the near future with Internet as its key cause. Time will tell how promptly the domestic operators can adapt to the new realities, however, it is obvious that Uzbekistan will not remain on the sidelines of global mobile revolution.

(Source: “Uzbekistan Today” newspaper)


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