Mobile data is key to growth in Central Asia, but regulators must not interfere

Mobile broadband and 3G services continue to spread across several Central Asian countries, while the region itself has proved a notable testing ground for LTE deployments.

However, licensing irregularities in Turkmenistan have led to operators leaving the country, and the resulting insufficient coverage has caused widespread unrest.

In the past few months, operators in countries such as Uzbekistan and Tajikistan have been have been introducing various promotions, to encourage greater data customer growth and service usage.  In December 2010 Kyrgyzstan became the latest Central Asian republic to introduce third-generation (3G) mobile services, although LTE networks had already been launched in Uzbekistan and Kazakhstan in 2010 by Kazakh mobile market leader K-Cell - owned by the Nordic carrier TeliaSonera - and Uzdunrobita operating as MTS Uzbekistan.

Mobile broadband services based on UMTS/HSPA and LTE technology will likely make a strong contribution to the growth of internet services in Central Asia because of the limited scope of fixed broadband growth. This is due to a lack of existing infrastructure, income-constrained demand and challenging geography.

Growth is likely to be stronger in Tajikistan, Uzbekistan and Kazakhstan as a result of the impact of mobile broadband services. The spread of mobile broadband services will have the potential to stifle the success of competing wireless technologies such as WiMAX and satellite in the long term.

Meanwhile, in November 2010 3G services were launched in Turkmenistan, when MTS Turkmenistan launched a 3G network in the capital Ashgabat. However, the following month it was announced that MTS’ operating licence had been suspended by the Turkmen government. MTS remains offline and is proceeding with its lawsuit against two state-owned operators - Turkmentelecom and mobile subsidiary Altyn Asyr - regarding the termination of interconnection agreements. The revocation of MTS’ licence will likely be to the detriment of the Turkmen market in terms of a loss of competition and international expertise.

The Russian foreign ministry announced on March 7 2011 that it will protect the interests of local telecoms operator Mobile TeleSystems (MTS) in its dispute with Turkmenistan. MTS has itself responded by writing to international firms with the aim of discouraging them from investing in Turkmenistan. Meanwhile, the Ministry of Foreign Affairs in Turkmenistan has expressed its interest in initiating negotiations with the Russian operator on the buyout of its assets in the country.

The situation became a political issue beyond telecoms after the military were called in to control crowds in early April 2011, after hundreds of customers stormed Altyn Asyr stores when it suspended the distribution of SIM cards due to network congestion problems. The operator began offering vouchers that could be used to acquire a SIM card from May 2011. Only public officials or foreign nationals are currently being issued SIM cards. One positive ramification from the SIM issuance suspension is the political pressure it applies to the Turkmen leadership. Earlier in April, the President of Turkmenistan, Gurbanguly Berdymukhamedov, was forced to respond to the political implications of the SIM shortage by criticising the operator's poor service. He argued poor work organisation is the cause of the low efficiency. He demanded measures be taken immediately to guarantee the high quality of mobile services across the country and obliged the government to establish private companies and joint ventures with foreign businesses. Huawei Technologies and Nokia Siemens Networks have since won contracts for an urgent upgrade of the Altyn Asyr network, according to local reports.

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