Internet in Kazakhstan: Balancing Low Tariffs and Development Challenges

During a meeting with the President of Kazakhstan on July 11th, the Minister of Digital Development, Innovations, and Aerospace Industry, Bagdat Musin, highlighted that there are two main issues related to the quality of the internet in the country.

20/07/2023 - 19:32
Source: Open Source
Source: Open Source

The first issue is associated with radio phobia among the population, indicating people's concerns about the impact of radio waves on health. The second issue is the excessively low tariffs in the communication sector. These two issues are interconnected and can have a negative impact on the development of the communication sector in the country.

According to the Internet Accessibility Index, the cost of mobile internet in Kazakhstan is indeed among the lowest in the world. The country ranks 5th out of 164 countries in terms of internet accessibility. In 2022, the average cost of mobile internet for Kazakhstani citizens was only $10.8 USD per month. For comparison, Ukraine and Russia hold the top positions for internet affordability, with costs of $6.4 and $7.4 USD respectively.

Regarding internet speed, according to the Fair Internet Report, Kazakhstan ranks 120th out of 161 countries in terms of internet speed in 2023, with an average speed of 13.6 Mbps. This represents a 6% decrease in speed compared to the previous year. For comparison, Russia ranks 60th with an average speed of 55.63 Mbps, while Ukraine ranks 65th with 51.18 Mbps.

Why is this the case?

The mobile communication market in Kazakhstan is dominated by only two companies – the group of companies AO "Kazakhtelecom" and TOO "Kar-Tel."

In contrast, Ukraine has approximately 1500 internet providers. Many of them operate as monopolies within small towns or settlements, while in cities, up to 15 providers may compete for customer attention. Competition helps to keep prices in check and improve quality.

As Ukrainian experts explain in interviews with DW, the internet in Ukraine is largely unregulated. The Ukrainian digital infrastructure is well connected to international networks, and due to minimal regulation, providers can freely lay their own cables or lease capacity. Additionally, Ukraine is connected to major transport hubs through cables passing through Poland, Hungary, and Romania.

In the case of Kazakhstan, over 95% of internet traffic flows through Russia. Experts hope that the situation with the internet provider market in Kazakhstan may change with the completion of the Trans-Caspian Fiber-Optic Communication Line (FOCL) between Kazakhstan and Azerbaijan. The FOCL is being constructed as part of the "Digital Silk Road" project, with completion planned for 2024.

Some experts anticipate an increase in prices for internet access services. According to a study by Nokia Bell Labs, internet consumption is expected to grow from 9,000 to 25,000 petabytes per day by 2030, with the highest growth projected in the Asian region.

The explosive growth in internet consumption will require infrastructure investments. One of the key consequences of the supply chain crisis is the rapid increase in the cost of new equipment. 54% of surveyed communication operators reported to The Fast Mode magazine that they have faced cost increases for all network equipment from manufacturers, ranging from 11% to 30%.

Fortunately, the secondary market – the market for refurbished and repurposed equipment – can also supply new equipment. Typically, this costs 50-90% less than the price of new antennas sold directly by the provider. Equipment that was ordered in excess or never used due to a failed project sometimes ends up in this market. However, by using refurbished equipment instead of purchasing new, operators can significantly reduce their expenses. Restored equipment, which has undergone thorough testing and restoration processes, presents an economical alternative without compromising quality or performance.



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