Policy Statement
by
H. E. Mr. Nurudin Mukhitdinov
Minister of Communications
Republic of Tajikistan

Tuesday,19 March 2002

Dear Mr. Chairman,
dear guests,
ladies and gentlemen,

I would like to express my thanks to the International Telecommunication Union, Administration and Government of the Republic of Turkey, hosting this event for the this opportunity to speak at such important form in the field of telecommunications.

In full recognition of the importance of the role of telecommunications services in the economic development and growth of the country, the Government of Tajikistan has declared telecommunications as one of the priority sectors for the development of the Tajik economy.

Poor quality of the telecommunications infrastructure in Tajikistan, which is a result of long decline of the economic growth after the Civil War in Tajikistan, was a serious obstacle to economic and social development.

Moreover we should emphasize that the economy growth rates decreased and, therefore, the telecommunications growth rate has also declined. This decline has been taking place from 1992 to 1999 and some increase of telecommunications growth rate was achieved only in 2000.

It is the goal of the government, on behalf of which I am speaking here, is to create the conditions necessary for the development of telecommunications sector, modernization and digitalization of the existing telecommunications infrastructure, bridging the digital divide existing between Tajikistan and developed countries and elimination of imbalance between the urban and rural areas.

It is not possible to achieve the above-mentioned goals without clear policy of the Government, the principle objectives of which are as follows:

• Increase the availability, range and reliability of the telecommunications services with primary emphasis on the demand satisfaction of urban (business, governmental and residential) subscribers as well as subscribers (business, administrative and residential) in rural areas;

• Providing a clear, predictable regulatory framework that follows the principles of objectivity, transparency, non-discrimination and proportionality.

• Liberalize the telecommunications sector which means to open markets for entry of operators and service providers and removing unnecessary barriers to entry

• Apply tariff principles and structures which allow for operators to generate an adequate return on capital.

Strategy of Telecommunications Sector Development

The strategy for the telecommunications sector development consists of four elements: institutional restructuring, liberalization, universal service concept and privatization.

Institutional restructuring

Following a decision of Government to restructure the telecommunications sector which was made in 1996 the Ministry of Communications has transferred all operational functions in the field of telecommunications to the newly established Open Joint Stock company "Tajiktelecom".

The separation of ownership, management and regulatory functions is being further developed by transforming Tajiktelecom into a commercial company that has to follow certain development objectives defined in the license and laws and is regulated by a telecommunications regulatory authority.

The Ministry of Communications remains the policy development body for the communications sector. An independent regulatory authority will be created based on the State Inspectorate of Communications at the Ministry of Communications. The Regulatory Authority will fulfill all regulatory functions, e.g. tariff regulation, licensing, frequency administration and enforce the communications legislation.

The following steps will be taken in order to achieve an institutional restructuring:

• During this year the telecommunications legislation will be improved taking into consideration the above-mentioned goals and the new law "On telecommunications" and other telecommunication legal acts will be adopted.

• Improvement of a Licensing Policy based on the principle of transparency that fosters market: development of regulations, decrees or other legislative and regulatory instruments required to implement a sound licensing policy.

• Establishment of the Independent Regulatory Authority is planned for 2003: vesting it with all necessary powers; transfer of responsibilities from the Ministry to the Regulatory Authority, elaboration of a mechanism to adopt, monitor and enforce regulatory decisions and elaboration of a mechanism to ensure self-financing and democratic control.

• For a transition period prior to the privatisation (2004) and liberalisation of international long distance switched telephony (2006) the State Inspectorate of Communications at the Ministry of Communications will be functioning as the regulatory authority.

Liberalisation

Liberalisation means opening markets for competition and allowing as many private and public investors as possible to participate in the telecommunications sector. The government intends to take steps to achieve effective liberalisation of the telecommunications sector. The objective of this liberalisation strategy is to ensure that there are no barriers to the entry of prospective operators who can contribute to the development of the sector.

There are already some privately held operators providing mobile cellular services, paging services, banking data transmission services, trunking services to residential and business subscribers within Tajikistan so this market is sufficiently liberalised since 1996. Several private Internet Service Providers (ISPs) are actively operating in Tajikistan. The government welcomes this development and will foster further market opening.

For the International Voice service, the key policy is to start full liberalization in 2006. Alternative international gateways will be permitted and international service providers will be required to offer non-discriminatory access to their gateways. International service providers will be required to support the financing of Universal Service.

For the Domestic Long Distance service, the government will establish the conditions favourable to the entry of new operators and service providers. This will include clear criteria for the relevant licences including interconnection obligations and rights. There will also be a framework for the regulation of interconnection tariffs and leased line tariffs. Service providers will be required to support Universal Service either by contributing to the fund or by providing service themselves.

For Local Service, all sources are mobilized and competition maximized by allowing alternative means of service provision, including Wireless in the Local Loop (WLL). In the longer term, competition will require mandating unbundled access to the local loop (local line network). This will include facilitating access for service providers who use WLL. Investment in rural networks will be supported in a non-discriminatory way by mobilizing in rural networks by mobilizing development assistance funding and the Universal Service fund consisting of the licensing fees and other levies paid by the operators functioning in the urban areas.

For the providers of network facilities, the government will create the most favourable conditions for network expansion. This will involve a clear and easy licensing policy. Interconnection regulation will also be designed to ensure that network investment is optimized.

For Data Communications service, the licensing conditions will be established that allow unlimited access to international gateways and data network expansion, including connection to the fixed telephone network. In line with technological development, the government does not in the long run intend to differentiate between data and voice communications.

In the field of Mobile Telecommunications services, the government is issuing the licenses for cellular services on a nation-wide service. Currently, four mobile operating companies are providing services in AMPS and GSM standards. The regulatory and legal framework will make provisions that no mobile operator has the power to manipulate competition in other markets.

Privatisation

JSC "Tajiktelecom" is the owner of all existing telecommunication infrastructure in the Republic. 5% of Tajiktelecom’s shares are owned by the employees and 95% are owned by the Government. In the future it is intended to reduce the percentage of shares owned by the Government and to attract a foreign strategic investor. The sale of a majority stake in Tajiktelecom is scheduled for 2003-2004. Preparation for privatization will be finalized in 2003, the sale of shares will further commence from 2004.

Universal Service

It is expected to develop financially autonomous economical sector, which will not need to rely of the State budget. It is necessary to achieve a commercial balance between obligations of operators/investors to invest and protection of customers’ interests in the provision of telecommunication services at affordable prices despite the monopoly market position of operator.

In order to finance the development of networks in economically non-viable areas or projects in the interest of national security a universal service fund will be established. The fund will be financed by operators, public funds and international aid.

Such clear position of the Government of the Republic of Tajikistan, which I presented to you, will not be fruitful without the contribution of the international financial institutes and private capital and in this case the divide in information and telecommunication technologies will become even wider.

I hope that the ITU Telecommunications Development Bureau and Mr. Touré personally will do their best to foster the attraction of the investments necessary for the development of telecommunications in the developing countries.

Thank you for your attention, ladies and gentlemen.