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Telecom market is looking for investments…

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Telekom as one of the stably developing markets attracts attention of investors of the various countries. However for successfully development of IT and telekom-branch it requires transparent regulator policy, mutually beneficial cooperation of the various structures, application of modern technologies and business policies. These and others questions, as well as investment specifics were examined at the Ukrainian telecommunication forum which had taken place in Kiev from the 25th to 26th of May (Adam Smith Institute was an organizer).

Within one of the forum`s group “Broadband access and telecommunications: how reform of the telecommunications can give an impulse to growth and innovation” the discussion of the current trends and prospects of the Ukrainian market was taken place. Representatives of the companies such as Volya (Sergey Boyko), Triolan (Vadim Sidorenko), Internet Association of Ukraine (Tatyana Popova), Andrey Kolodyuk (Divan-TV, Venture capital investing fund AVentures Capital), Freenet took part in the discussion.

So as to mind of Andrey Kolodyuk Ukraine has great potential in the investment inspite of current economic circumstances, But anybody finding a financing do not know where and how it can be obtained, and how make an investor to be interested.
According to speaker`s data the 60 new startup projects had been financed in 2014, and this year the 22 projects already has.

Though it is not a rule that such projects directly are connected with telekom-market. But an investor would like to expect the guarantee of committed facilities as well. First of all  the protection of investments is important for potential investor, and how will private (intellectual) property be exactly protected? In that there is one of the problems: our state unfortunately has not yet the protection mechanism of intellectual property. Take for example cardsharing. Events of application of real sanctions against installers of pirated content access are not known to Speaker. Though the problem would not be in the reluctance to pay but in the mentality of people: consumers are used not to pay for which could be found free of charge in network. It refers to any content: films, audio tracks, videos, photos…

Besides market players operate under unequal conditions. One part of them pays for content officially, and others do not. Illegal providers do not pay both for content and for advertisement. And till it is continued the situation will be unlikely changed, — Mr. Kolodyuk confidently said. At the same time, if domestic programmers and software developers were hired, the unemployment level in Ukraine could be decreased. These specialists could be got involved in creation of STB interface, security systems and content distribution etc.

In line with the latest estimation of the speaker, in Ukraine there is lack of approximately 100 thousands of workplaces for IT-specialists, programmers and developer software, testers and other «techs».

According to the speaker Ukrainian programmers have high level of their skill, and their professionalism is confirmed by collaboration with foreign companies, which the domestic specialists perform various projects for. Though in accordance with this speaker`s information, the half of web-developers did not ever graduate from “universities”, having only passed through short-term courses in computer programming or being self-educated person at all.

Author’s note May be it like this, but author has to make small note. In Ukraine the quantity of good specialists with university`s diploma who are able  to realize competently and error-free even entry-level projects according to deadlines and able to create code by nought point is not more than a few percents. Most of them have already been employed and the rest either has already left the country or is going to do the same. And they would unlikely consider vacancies of our state companies with their «one copeck’s worth» wage rates (which information can be obtained in the Public employment service about), where basically there is a personnel shortage. And promised high salaries in domestic companies do not quite often match with those sums of money, which employees is actually paid for (except large companies). However information about “migration” of IT-specialists from neighboring countries in Ukraine was voiced during the forum. but this phenomenon is not yet widespread and it will unlikely have great influence on domestic statistics. And those who mastered free Joomla, WordPress, Drupal et al. platforms for a couple of months and began to create sites without any understanding of site design and usability, making, optimizing and testing of software code and who are not promptly able to correct the errors detected by client under testing could be called after professionals. And the product to be created according to order instead of being one as free cut-and-dried solution in Internet. Sometimes such “specialists” offer dumping price when trying to make their first project. As a result of above the market is flooded with low-end web-projects having a lot of defects and undermining client’s authority.
It surprises more that young graduate of domestic institute of higher education without any practice or newly fledged “specialist” having passed through courses in computer programming immediately demands pay of 10-15 thousands having neither any experience nor even portfolio. Companies that already have or open their representative offices in Ukraine periodically offer vacancies which seldom amount to two-digit numbers. And the specialists are often recruited under specific project or short-term agreement.

The above can be summarized that there is interest in investment in Ukraine. But «giver of grant» will demand of executors, which seek pouring of money, not only to provide protection of intellectual property, but also to determine the terms of payback and return of investment; to specify in detail utility of the project not only for consumer inside country, but also abroad; to observe terms of project delivery, to specify quantity of engaged developers, to calculate in detail the estimate for promotion of the project etc. And it requires knowledge of foreign language whose lack for our developers is one of the constraint to access to the international market.

It is the application of modern technologies that the companies directed to. This fact, as Vadim Sidorenko considers, and particularly appearance of 3G network in Ukraine (although active 4G introduction is carried out worldwide, and Ukraine is the last European country introducing this standard) will help to train clients to make use of smartphones, as well as applications for communication. And the free access to Internet in public places (parks, schools, hospitals, hostels) by Triolan company helps to reach that. In respect of analog TV cutoff the speaker marked the necessity of «digit» popularization, that will enable to increase the services demand. Besides to mind of the speaker, the providers should change the regulations of provision of the services, and separate paid TV from free one. That is the paid content should be rational given only to the subscribers which are ready to pay for it. Paying attention to the high income of every Triolan subscriber, the speaker marked, that the company will proceed with expansion to market providing new services for its subscribers. At the moment the company offers unlimited Internet for 120 grn/month, and about hundred shareware TV channels.

Within the forum an implementation problems of electronic government, e-medicine, e-education, modern communication standards et al. in other countries (Moldova, Sweden, Georgia, Lithuania) were considered as well. Main constraints of Ukrainian market (corruption, unstable economic and political situation, inflation, unreasonable taxes, overregulation of many industries et al.) has been analysed there as well. At the same time, every 1000 new users of BBA is 80 new workplaces, and expansion of broadband access throughout the country is 1.5-2% GDP growing. Such information were given by representatives of Ministry for economic development and trade of Ukraine.

Author’s note Discussion is carried out for public, and what is in practice? Let us examine the easiest occurrence – implementation of electronic circulation of documents or so called e-government, which discussion has been still carried out from mid 90-th about! It appears that there is … no money to computerization of ministries! Let you try now to submit form No4 to any capital office of State Registration service being subordinated to the Ukrainian Ministry of Justice. Several tens persons per day for the whole district, maximum up to 40 visitors, are received! People join a queue at night, but it is not a fact that they would succeed to submitting of documents. System of electronic queue constantly interrupts due to failures and operates as a pure formality. If you are unlucky then everything shall be repeated once more. And the matter is, that the documents, which were prepared by bookkeepings of companies or private enterprises as online documentation, are exclusively submitted and received in print (!). Then the hardcopies are entered in PC by hand (no scanners!) all over again (technology is worthy of the Guiness book). The question is why? In Europe «wet seal» on documents has been already forgotten for a long time. Conclusion of foreign economic agreement creates the same situation, when foreign companions are asked to provide documents with seals, they are perplexed why? And who needs information in form No4 at all, if no responsibility is provided for data failed to submit or specified? It is the reasonable thing for investments to be directed …
Or let us have a look at the changeover to electronic system of payment in Ukraine. Non-cash payment with Visa and MasterCard is an excellent idea but practically unrealizable due to current limitation for card accounts. Сertainly, if readers knows, how any foreign hotel, good or service to be paid with hryvnia card at more than 3000 grn. per day (about $140) abroad, they could get «a lot of likes». And so on…

The information announced at the forum by the Ukrainian Ministry of economic development and trade, which is tried to follow the example, is impressive. So, for 2020 the whole Europe will be covered with broadband access with speed more than 30 Mbit/sec, and 50% of EC population will have BBA with speed up to 100 Mbit/sec. The half of EC population will be shopping on-line in 2015, and the part of population never having used Internet before will decrease from 30% till 15%.

In the same time, as it was announced within the forum,  more than 1600 providers operates in Ukraine, and a lot of them works semilegal or illegal at all. Besides in major cities there is sufficient keen competition between providers. So, single apartment building could be served by up to six various providers in Kyiv. And prices for final consumers are grown because of idle capacities of access to Internet. But under keen competition a price usually falls.

The information, announced by National Commission on communication and informatization regulation, is  interesting as well. So, in 2014 the Ukrainian telekom-market earned 40.1 bn. hrn, including 26.3 bn. hrn is of mobile communication (leaders are Kyivstar, MTS, Ukrtelecom, Astelit, Datagroup), 5.2 bn. hrn is of data transfer, 6.8 bn. is of fixed communication and 1.8 bn. hrn is of TV and radio.

As for the “Digital Ukraine” project (society digitalization rather than a transfer to digital TV), substantial improvement of the situation and simplification of operation for a lot of small and medium-sized business representatives should not be so far expected except declaration of intentions.