The Internet in the Kyrgyz Republic:

Potential economic impact

Siddhartha Raja

The World Bank Group

December 10, 2014

sraja2@worldbank.org

Overview

• What is the status of the Internet in KR?

• How could the Internet support KR’s economic growth?

– Jobs

– Trade

– Innovation

– Services

• What could KR do to unlock this growth?

– Policies, institutions, and regulations

– Programs

– Supply and demand

Current market situation and comparators

48

14 11 8 7 4 3 2 2 1 1

Ch

ina

Eston

ia

Aze

rbaijan

Pakistan

Mo

ldo

va

Kazakh

stan

Uzb

ekistan

Kyrgyzstan

Tajikistan

Afgh

anistan

Turkm

enistan

0%

20%

40%

60%

80%

100%

120%

Est

on

ia

Mal

aysi

a

Th

aila

nd

Mo

ldo

va

Ser

bia

Arm

enia

Aze

rbai

jan

Geo

rgia

Mo

ng

olia

Kaz

akh

stan

Vie

tnam

Kyr

gyz

stan

Bh

uta

n

Fixed BB

Mobile BB

26

6,2

45

32

,24

9

7,7

08

6,7

61

6,4

80

3,2

75

97

2

95

5

45

8

41

5

10

6

76

Eston

ia

Mo

ldo

va

Kazakh

stan

Aze

rbaijan

Mo

ngo

lia

Ch

ina

Kyrgyzstan

Pakistan

Uzb

ekistan

Tajikistan

Afgh

anistan

Turkm

enistan

Penetration of broadband services

Number of international carriers

International Internet bandwidth (bps/capita)

Source: TeleGeography 2014

Role of the Internet in KR

• Inspiration: National Sustainable Development Strategy For The Kyrgyz

Republic for 2013-2017

– Strategic objectives from Internet access development

• The spread of internet-access – by 2017 all inhabited points in the country will have

full-scale access to Internet, is one of the priority tasks in terms of human capacity

development, ensuring economic growth and fostering development of

culture, education, health care and individual growth.

– Rural connectivity

• Telecommunications infrastructure will also see development; there will be an

enabling environment for further development of communications and expanded

coverage of the country’s regions.

– Use of Internet access

• In the years 2013-2017 the Internet will play a greater role in the activities of

government bodies, there will be a modern system of "e-government” for the

efficient and cost-effective administration, improvement in democracy and increase

in the accountability of the government to its people.

Role of the Internet

Jobs• ICT is now an integral tool in most

jobs/sectors; connects people to work

• ICT enables job creators and job

creation: SME development, online work

• Over 15M people worldwide are

working through online platforms

• Lack of ICT & digital skills will hurt long-

term growth—knowledge economy

• Kids in KG today will be working by

2030—if they are not digital natives,

they will face major barriers

Trade• Access to affordable, reliable, quality

Internet is essential to grow almost any

business that has any links outside its

immediate location

• MGI: Growth in knowledge-intensive goods

trade 1.3x as fast as in labor-intensive

goods; 90% of commercial sellers on eBay

export to other countries, vs. less than

25% of traditional small businesses

Innovation• ICT is an enabler for cross-border

collaboration, innovative activities through

power of computing, data analytics

• Opens avenues for new ICT-enabled

businesses, productive growth

• Enables transfer of knowledge, technology

Services• Improve accountability, access,

transparency, and efficiency of service

delivery

• Public and private sector can benefit

• Need for institutional reforms (can’t only

rely on technology)

So how?

• Ensure wider access to the Internet

– Focus on smaller towns, rural, and hard-to-reach areas

– Build international and domestic connectivity

– Find ways to cut costs of broadband rollout: Wireline and wireless

– Let a competitive private sector lead the way

• Ensure greater use of the Internet

– Find ways to make services more affordable, especially for the poorest

– Identify possible demand driving services to increase attraction—increase local content availability

– Support use of Internet by major users e.g. universities, government, hospitals, banks, tourism

• Challenges to overcome

– Terrain and geography for backbone connectivity, but not a “deal breaker”

– Limited economic development of regions, can rely on public sector strategically

– Skills need to be developed for all types of users

So how? Focus areas…

• Improve international and domestic Internet backbone connectivity

– Position KR as a connector in the region—needs true competition to flourish

– Improve reliability of international and domestic connectivity—facilitate private sector

• Develop appropriate competition-promoting regulations

– Ensure affordable but high quality services

– Counter effects of control of monopoly/limited resources

• Improve management of radio spectrum, especially the digital dividend

– Use finite spectrum for best uses; allow technology neutrality

– Extend low-cost wireless Internet access in rural areas

• Define a new role for the public sector in a competitive market

– Institutions: Need to build capacity and collaboration

– Infrastructure: Kyrgyz Telecom can be a supporting infrastructure, open access provider; share infrastructure of all public entities to cut costs

– Services: e-Government and other e-services can be demand drivers, especially to improve connectivity in rural/remote areas; promote local content development

– Ensure complementary policies are in place (e-payments, skills, innovation)