The telecommunications sector in Kyrgyzstan has been generally characterised by an open market that welcomes both foreign and domestic investors. The telecom sector has been part of the final phase of a large scale privatisation program that has been steadily progressing in the country since 1992. Despite the market being “fully competitive” today there remains more to be done on the regulatory front to take full advantage of the reforms already in place. There also remains a culture of poor transparency in some aspects of corporate behaviour.
The Internet penetration rate was of just slightly over 32% by mid-2016. Over the past few years there has been particularly strong growth in mobile broadband subscriptions. This phenomenon is rapidly changing the shape of the internet market. The active mobile broadband subscriber penetration reached 33% in 2016. During 2012 to 2016 the internet penetration in Kyrgzstan has been increasing steadily, increasing from 23% in 2012 to 30% in 2015 and 32% in 2016. The percentage of households with the internet has risen from 8.7% in 2013 to 16.5% in 2016. Fixed broadband penetration continues to grow strongly but from a very small base. It reached 4.4% in 2016, up from 2.4% in 2013 and 0.9% in 2012.
The telecommunications sector in Kyrgyzstan has been generally characterised by an open market that welcomes both foreign and domestic investors. This has been effectively done in accordance with the requirements set down by the WTO. Despite the market being ‘fully competitive’ there remained more to be done on the regulatory front to take full advantage of the reforms already in place. There also remains a culture of poor transparency in some aspects of corporate behaviour; this needs to be addressed if the telecom market is to reach its full potential. In the meantime, private operators, which actively function in the mobile market and in the provision of internet services, have been actively investing in the necessary infrastructure.
Kyrgyzstan is a poor, mountainous country with an economy dominated by minerals extraction, agriculture, and reliance on remittances from citizens working abroad. Cotton, wool, and meat are the main agricultural products, although only cotton is exported in any quantity. Other exports include gold, mercury, uranium, natural gas, and – in some years – electricity. The country has sought to attract foreign investment to expand its export base, including construction of hydroelectric dams, but a difficult investment climate and an ongoing legal battle with Canadian investors in the nation’s largest gold mine deter potential investors. Remittances from Kyrgyz migrant workers in Russia and Kazakhstan are equivalent to about a quarter of Kyrgyzstan’s GDP.
Following independence, Kyrgyzstan rapidly carried out market reforms, such as improving the regulatory system and instituting land reform. The government has privatized much of its ownership shares in public enterprises. Despite these reforms, the country suffered a severe drop in production in the early 1990s and has again faced slow growth in recent years as the global financial crisis and declining oil prices have damaged economies across Central Asia.
Kyrgyz leaders hope the country’s August 2015 accession to the Eurasian Economic Union will bolster trade and investment, but slowing economies in Russia and China, low commodity prices, and currency fluctuations continue to hamper economic growth. The keys to future growth include progress in fighting corruption, improving administrative transparency, restructuring domestic industry, and attracting foreign aid and investment.
Kyrgyztelecom OJSC, founded in 1993, provides telephone and telegraph services throughout the territory of Kyrgyzstan. It offers fixed-line services, international calls, Internet data transfer, and tele-radio broadcasting. The company also offers data transfer services; telegraph communication and network services; and access to the Internet using switched, dedicated, and asymmetric digital subscriber lines.
NOTE: As yet, there is no carrier-neutral data centre in Kyrgyzstan. Nonetheless, there is at least a choice of data centers between the existing ISPs. For more information, see the Internet Society report at https://www.internetsociety.org/sites/default/files/Kyrgyzstan_Study.pdf