The Internet in the Kyrgyz Republic: Potential economic impact Siddhartha Raja The World Bank Group December 10, 2014

Overview What is the status of the Internet in KR? How could the Internet support KR’s economic growth? –Jobs –Trade –Innovation –Services What could KR do to unlock this growth? –Policies, institutions, and regulations –Programs –Supply and demand

Current market situation and comparators Penetration of broadband services Number of international carriers International Internet bandwidth (bps/capita) Source: TeleGeography 2014

Role of the Internet in KR Inspiration: National Sustainable Development Strategy For The Kyrgyz Republic for –Strategic objectives from Internet access development The spread of internet-access – by 2017 all inhabited points in the country will have full-scale access to Internet, is one of the priority tasks in terms of human capacity development, ensuring economic growth and fostering development of culture, education, health care and individual growth. –Rural connectivity Telecommunications infrastructure will also see development; there will be an enabling environment for further development of communications and expanded coverage of the country’s regions. –Use of Internet access In the years the Internet will play a greater role in the activities of government bodies, there will be a modern system of "e-government” for the efficient and cost-effective administration, improvement in democracy and increase in the accountability of the government to its people.

Role of the Internet Jobs ICT is now an integral tool in most jobs/sectors; connects people to work ICT enables job creators and job creation: SME development, online work Over 15M people worldwide are working through online platforms Lack of ICT & digital skills will hurt long- term growth—knowledge economy Kids in KG today will be working by 2030—if they are not digital natives, they will face major barriers Trade Access to affordable, reliable, quality Internet is essential to grow almost any business that has any links outside its immediate location MGI: Growth in knowledge-intensive goods trade 1.3x as fast as in labor-intensive goods; 90% of commercial sellers on eBay export to other countries, vs. less than 25% of traditional small businesses Innovation ICT is an enabler for cross-border collaboration, innovative activities through power of computing, data analytics Opens avenues for new ICT-enabled businesses, productive growth Enables transfer of knowledge, technology Services Improve accountability, access, transparency, and efficiency of service delivery Public and private sector can benefit Need for institutional reforms (can’t only rely on technology)

So how? Ensure wider access to the Internet –Focus on smaller towns, rural, and hard-to-reach areas –Build international and domestic connectivity –Find ways to cut costs of broadband rollout: Wireline and wireless –Let a competitive private sector lead the way Ensure greater use of the Internet –Find ways to make services more affordable, especially for the poorest –Identify possible demand driving services to increase attraction—increase local content availability –Support use of Internet by major users e.g. universities, government, hospitals, banks, tourism Challenges to overcome –Terrain and geography for backbone connectivity, but not a “deal breaker” –Limited economic development of regions, can rely on public sector strategically –Skills need to be developed for all types of users

So how? Focus areas… Improve international and domestic Internet backbone connectivity –Position KR as a connector in the region—needs true competition to flourish –Improve reliability of international and domestic connectivity—facilitate private sector Develop appropriate competition-promoting regulations –Ensure affordable but high quality services –Counter effects of control of monopoly/limited resources Improve management of radio spectrum, especially the digital dividend –Use finite spectrum for best uses; allow technology neutrality –Extend low-cost wireless Internet access in rural areas Define a new role for the public sector in a competitive market –Institutions: Need to build capacity and collaboration –Infrastructure: Kyrgyz Telecom can be a supporting infrastructure, open access provider; share infrastructure of all public entities to cut costs –Services: e-Government and other e-services can be demand drivers, especially to improve connectivity in rural/remote areas; promote local content development –Ensure complementary policies are in place (e-payments, skills, innovation)