The potential of the BBA market development in Ukraine – 23 million hryvnas

15-06-2017

The fixed broadband access (BBA) is the main and most reliable way to access the Internet. Developed countries implements the optical network development strategy nationwide. Increasing the Internet connectivity in the country by 10% reflects in more than 1% of GDP. In Ukraine, according to official figures, the level of fixed BBA connectivity is only 11.8 subscribers per 100 people, while in neighboring Slovakia, it is 23.3, in Hungary – 27.4, and in Belarus – 31.4.

In 2016, the Ukrainian BBA market volume was 6.1 billion hryvnas – it is the second largest market in the telecommunication segment – and has a significant potential for growth. Today, the market is served by more than 2700 companies, and 5 million subscribers have broadband access to the Internet.

The state, business public and expert community representatives discussed the market problems at the Roundtable “Internet to everyone: pain points of broadband access regulation” as part of the Public Dialogue #PRODialogue that took place in iHUB on June 15.

The Better Regulation Delivery Office (BRDO) analyzed the legislative environment of the sector and presented it in the Green Paper “Regulation of the market of the fixed broadband Internet access”. According to this study, the Ukrainian legislation does not contain any definition of BBA, and therefore, does not define the requirements for the minimum speed for broadband access.

Thus, in Ukraine, only 2 of the 10 largest BBA operators guarantee the minimum speed of 10 Mbit/s. 4 operators include the minimum access speed of nominal 64 kbit/s in the contracts with users, and another 4 operators do not mention this aspect at all. By the way, the EU set a goal to provide 100% of the population with the opportunity to connect at least at 30 Mbit/s and 50% of the population – at100 Mbit/s by 2020.

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“A limited and unequal access of operators and providers to the infrastructure such as energy, cable sewage, construction and transport facilities is a significant problem for the development of the market and telecommunications networks,” the First Deputy Minister of Economic Development and Trade of Ukraine Maksim Nefyodov explains. “Basic issues of access to such facilities, which are often controlled by monopolists imposing unjustified conditions and too high prices, are still not regulated by laws. Sometimes, charges for using transmission towers are far different in various regions.”

The Head of the State Regulatory Service of Ukraine Kseniya Lyapina said that to address the market problems and maximize its potential, it was necessary to create an effective model of relations that will reflect the real situation while being friendly to business.

On March 2, 2017, the President of Ukraine signed the Law of Ukraine “On access to infrastructure of construction, transportation and energy facilities to develop telecommunication networks”. 10 subordinate acts should be adopted prior the Law comes into effect – by June 4, but no acts have been adopted so far. Thus, the conditions of access to infrastructure facilities for telecommunications market participants are still unregulated and noncompetitive. Inhibition of the telecommunications network development limits the development of SMEs in the country and in regions.

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The Head of the BRDO’s IT and Telecom sector Oleksandr Kubrakov said: “In Ukraine, the level of BBA availability is very different in large cities and rural areas. 28% of a total number of subscribers live in Kyiv, and less than 40% of users live in other regions of the country, except Kyiv, Dnipropetrovsk, Donetsk, Odesa, Lviv and Kharkiv regions. This digital divide is a barrier to the technology development of regions. Solving the problem of access to infrastructure will allow to promote the development of SMEs, especially in the regions.”

The event was attended by Maksim Nefyodov, the Head of the State Regulatory Service of Ukraine, Kseniya Lyapina, the Head of the State Regulatory Service of Ukraine, representatives of the National Commission for state regulation of communications and informatization, the Internet Association of Ukraine, business representatives and service providers, experts and the public.

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We are grateful to the iHUB founder Dmytro Podolev for the partnership and support of the technology startup industry in Ukraine.

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