BISHKEK (TCA) — Kazakhstan’s Internet operators raised the price of Internet transit to Kyrgyzstan almost threefold without any explanation in August. In order not to increase the rates for customers, Kyrgyz Internet providers have begun reducing the Internet connection speed. The news has caused a wave of indignation in Kyrgyz society that fears tariff increases for the population.
The Kyrgyz Government is looking for alternative suppliers of Internet services, Prime Minister Sooronbai Jeenbekov said at a Parliamentary meeting this week. He ordered the State Committee for Information Technology and Communications to solve the problem as soon as possible.
The Government is now negotiating with Kazakhstan partners, and considering the possibility of cooperation with alternative Internet providers.
Kazakhstan provides Kyrgyzstan with Internet link up to the border with Russia, and then Russia provides further traffic. Several Kazakhstan transit operators are operating at the Kyrgyz-Kazakh border. Since 2010, they have competed between themselves for the demand of Kyrgyzstan’s operators and offered quality services at reasonable prices.
Operators’ appeal
According to the Association of Telecommunications Operators (ATO), there are 22 Internet service providers together with mobile operators in Kyrgyzstan, and 18 of them are the ATO members. Since none of the local providers has managed to agree with Kazakhstan’s suppliers to reduce the price, the ATO sent an appeal to the State Antimonopoly Regulation Agency, Economy Ministry and the State Committee of Information Technologies and Communications of Kyrgyzstan. The antimonopoly authority sent a request to the Kazakh side to explain the reasons for the price increase.
Kyrgyzstan’s Internet users fear that it will seriously hurt their wallets. For example, if the minimum price of the Internet for subscribers is now 600 soms, it would rise up to 1,200 soms or even 2,400 soms per month.
At the end of 2015, there were 4.7 million Internet subscribers in Kyrgyzstan. Around 79% of the population has access to the Internet in the country.
Collusion?
Internet service providers in Kyrgyzstan believe that Kazakhstan’s transit operators entered into a price collusion against Kyrgyz partners.
In early August, most Kyrgyzstan‘s Internet providers got a notification from their Kazakhstan partner on an almost threefold increase of tariffs for Internet services. Since almost all Internet traffic goes to Kyrgyzstan through Kazakhstan, there is no alternative for Kyrgyzstan.
Each provider has its own contract. The contracts will expire at different times, some in February and others in May, and each provider used to discuss prices with the Kazakh suppliers a month or two before the expiration of the contract. Each year, there was a tendency toward lower prices, because the purchase from the Kazakh providers has been increasing.
This year, Kazakh providers simultaneously, within two weeks, notified their Kyrgyz partners on the price increase. When Kyrgyz providers tried to find an alternative, and turn to other Kazakh providers, they encountered even higher prices. So, the Kyrgyz providers assumed the existence of price collusion. The Kazakh providers did not explain their decision but at the same time did not recognize the fact of collusion.
It is private Kazakh companies that provide Internet services for Kyrgyzstan, these are market relations and the state cannot interfere in this sphere, the Information and Communications Ministry of Kazakhstan commented on the situation, promising to find out whether there was price collusion between the suppliers.
Severe conditions
Kyrgyzstan’s communication operators have to survive under severe conditions. Middle-sized companies cannot bear additional costs, and they have to consider various measures, from raising tariffs to selling themselves to large operators.
According to experts, large operators can withstand for a certain period, up to six months, and wait for small and medium-sized operators leave the market. Then they will continue to monopolize the market. As a result, the market will become slightly competitive and monopolists would control the prices. Sooner or later Internet tariffs will increase in Kyrgyzstan, experts believe.
Options
Kyrgyzstan can purchase Internet services from China, but as there is Russian-language Internet consumption in Kyrgyzstan, it will go through a great distance from the Far East, across the whole of Russia. This will affect the quality of services, especially of those that require high interactivity (WhatsApp and Skype).
In Kyrgyzstan, only two companies — state owned Kyrgyztelecom and Elcat — have established relations with Chinese providers. Kyrgyztelecom sent a letter to the State Committee for Information Technology and Communications with an initiative to make Kyrgyztelecom a sole supplier of telecommunication transit services. Kyrgyztelecom also wants to be a sole supplier of telecommunications services for public authorities and local governments, public enterprises, and all budget organizations in Kyrgyzstan.
Representatives of the telecommunications operators and anti-monopoly agencies of the two countries met on September 21 in Astana, and Kazakh operators promised to consider the prices for Internet services in Kyrgyzstan within ten days.
If the Kyrgyz side is not satisfied with the new terms, it will take further actions including addressing the Antimonopoly Agency of Kazakhstan, Russian Federal Antimonopoly Service and the Eurasian Economic Commission (EEC), as the EEC has the right to adjust the Internet tariffs within the Eurasian Economic Union.
