LABYRINHTS OF INVIZIBLE BUSINESS
EKA LOMIDZE
One needs such a small capital for becoming Internet-provider in Georgia that installing the so-called “ruter” (satellite antenna) and appropriate equipment, obtaining a license and starting business costs almost nothing.
Speaking about the scale of the Caucasus, market of providers is comparatively better-developed in Georgia than in other republics. Two providers work in Armenia though there is, in fact, no market there. This number is greater in Azerbaijan, but there are clan agreements on prices there. There is a different situation in Russia. Comparing incoming and outcoming traffic in Russia, one may get the impression that outgoing traffic is higher than ongoing one. Internet segment in Russia is comparatively more developed than ours. Providers’ market of Russia consists of three large companies: PTKmm.pu, Gold-en Telecom and MTV-Intel. They have their own resources, i.e. their networks are developed via the connection of modern technologies The three companies occupy 90% of Russian Internet-users’ traffic. Thus, segment of Russian Internet does not require “transfer” from outside. Therefore, providers have the possibility to influence prices. Where before they changed traffic free of charge, now the situation has changed. Free local traffic became paid. From the technological point of view, this can be very easily achieved in Russia. There is a more favourable situation in Georgia in this sense. Providers here work for comparatively lower income.
Internet provider market of Georgia is quite competitive. The largest providers are Online, Sanet and Caucasus Network as well as other small providers that receive a particular amount of channels from large providers and later sell them to population.
Lado Kvilitaia – general manager of Greennet. Our company is a system integrator that creates systems out of facilities produced by different companies. Later we install the facilities and help providers in their further development from technological point of view. Greennet is a partner of CISCO in Georgia. Company has to pass through a long period of certification in order to become partner of the world leader CISCO. In this stage our company meets requirements of silver leader, but nowadays it is difficult to work with such qualification in Georgia.
Many providers use our systems. Providers in the Georgian market made achievements due to correct technological decision. Large and small providers differ by scale. The more users a provider serves, the larger it is or vice-versa. Small partners, certainly, use different facilities and technologies. Their local resources are not well developed, either. Things were different in the past when providers did not co-operate actively with each other. A signal had to pass a very long way. Now several providers are interconnected and receive local tariff from each other. But there is another problem here: some X company might dislike another Y company, i.e. they can refuse to co-operate with each other. Therefore, a certain neutral, non-commercial organisation should undertake establishment of M9 (Moscow) type structures with a view to promoting the creation of local resources. Nowadays, non-commercial organisations have no resources for this. We undertook creation of such structure. We fixed equipment in Post-Telegraph buiding that would connect providers with each other. We offer them free-of-charge service, i.e. they will not have to pay taxes for the exchange of traffic. I think this trend will promote the development of Internet in Georgia. At the same time, we will have the opportunity to learn which company is a leader in Georgia. We have technologies that would enable us to select a leader among providers. This information will be helpful for companies that come into the Georgian Internet market.
Otar Shamanadze – general director of Infocom ltd. Our company works in several directions: we deal with telegraph processing as well as supply information and serve bank operations in Internet. We are behind world companies in Internet network because development of this service is much dependent upon average salary. One needs computers for Internet, yet they cost much. The market develops, mainly, at the expense of private sector, as this sector is a main consumer. Improvement of life-standard will, certainly, make for the development of Internet market.
Development of Internet market is directly connected with communication network. As far as we know, we inherited poor cable economy from the former USSR, which, certainly, had an impact on our present-day situation. No one would replace the old telephone network as it costs too much. Nowadays, all providers are connected with customers by means of fibre-optic cable. A provider offers me 26 kilobytes modem of which I will use only 33 byte due to bad telephone line. Synchronisation is very important during the work in Internet. Its disturbance becomes a reason of interrupted Internet connection. In this case, a customer has to dial a number for Internet connection, which is sometimes very tiring. So a person loses any wish to continue work in the network. All this has an impact on market work. Today our company is not considered a market leader because the company was once a public structure and millions of profits went to budget. 53 000 laris are necessary for purchasing a new CISCO. But if you do not receive profits, you will not, certainly, purchase new technologies at the expense of collaborators’ salaries. An internal product gradually comes into being. There are new sites. As for Internet price, the tariff is not cheap in our company due to a number of factors. The first factor is that Internet price is determined by minutes of Internet use. Company New Networks (Akhali Kselebi) charges 2 tetris per minute so that we cannot take 1,5 or 0,5 tetris from users. There are, certainly, other methods that cost much. I mean line that makes it possible to use Internet and telephone simultaneously. The amount of tariff also depends on the expensiveness of backbone cable laid to the sea. No one has yet agreed to invest money in this project. Negotiations are now held about laying of fibre-optic cable along the Georgian railway. Yet, this backbone cable will come till Poti competing only in this area. If the backbone cable will be laid till Turkey, the competition will be greater then, i.e. we will be able to receive Internet from Russia and Turkey. In this case the price will be cheaper and the quality will be higher, but it is still a matter of future. Negotiation are now held about introduction of new technologies such as using Internet via electric network. I think this technology will be introduced in our country in the nearest future, which will promote the development of Georgian Internet market.
Mamia Sanadiradze – general director of Caucasus Network. Internet market of our country is quite competitive. There are several large providers as well as small providers that do not have the chance of expansion because they made no capital investments. The number of customers increases due to service quality and price. Large providers have resources for reaching the appropriate quality and price. Customers once connected by providers to Internet do not necessarily stay with the same provider. Provider should maintain quality so that not to lose a customer. Time and experience has imparted to us small secrets, which enable us to increase number of customers. This is, certainly, caused by the correct financial policy and investments of a company. With there being dynamic and quick changes in this industry, one has to offer increasing production to a customer in order to stay in the range of strong companies. We have to make investments in this direction.
Internet service is a very specific production. There are new and small companies that promise you more and fulfil less.
Internet service is expensive here, as there are no local resources. There is not enough information that would interest people. Therefore, a customer uses foreign sites. High Internet prices are stipulated by the geographical location. We are far from Europe, America and East Asia so we receive information mainly through satellites. We should add that prices are also influenced by Russian monopoly. Internet comes to Poti from Novorossisk and many taxes are added to this. If we had direct connection with Europe, prices would be lower here as Internet is cheap in Europe. However, such backbone cable will hardly be laid at all. This should be done by the state, but unfortunately, it has no time for this. As for competition in domestic market, there is a normal situation here. We can, certainly, act together for protecting Internet, but this does not take pace yet. Today, there are three types of segments in the market: dialup, separate lines and international calls. We are strong in separate lines and we intend to launch work in the rest two directions in order to meet market demands.
As far as we see, development of Georgian Internet market depends on some principal factors such as: improvement of life standard, development of technologies inside as well as outside the country, establishment of the culture of domestic product and consumption. Today, prices are quite high though clan system does not work in this direction. The future will show what will be the dynamics of Internet market in Georgia.