BY FUAD ALLAHVERDIYEV
“AZERTELECOM” LLC CEO
Nowadays, we are witnessing the informatization process all over the world. Information and communication technologies (ICTs) are boosting economic growth and competitiveness. These technologies are an integral part of the economy, which greatly contribute to its development and ensure the efficient functioning of markets. ICT development and their effective use in various spheres of social life is becoming a decisive factor in countries’ socio-economic development, and that leads to the creation of a huge amount of new IT products and services.
ICT development generates economic growth for many years to come, so the most competitive economies are the ones with the highest level of ICT development. The IT market in many countries, as well as in Azerbaijan, is formed by the demand for networking hardware, computer devices, software solutions and electronic services. According to the last International Telecommunication Union’s (ITU) report, Azerbaijan ranks 65th among 176 countries in terms of ICT development. However, Azerbaijan secured the highest position in this ranking among the countries of the South Caucasus. Russia is placed as high as 45th, followed by Kazakhstan at the 52nd position, Moldova at 59th, Georgia at 74th, and Armenia at 75th.
According to the State Statistical Committee of Azerbaijan, revenues in the ICT sector hit about 1.724 billion manats in 2017, which is 6.6 percent more than in 2016. Almost half of this sum (856.2 million manats) is in the mobile communications market.
The mobile communications market is one of the most attractive segments of the telecommunications industry, and it has been showing rapid growth since the mid-1990s. As a result, the infrastructure expenditures of ICT operators are growing considerably due to the increasing number of mobile subscribers and users of mobile Internet, as well as the significant increase in volumes of data transfer and the development of the ‘Internet of Things’ (IoT) and M2M (Machine to Machine). In Azerbaijan, the M2M market is not yet very developed, but it already has some technological solutions. The main customers of M2M services are corporate clients, as well as automatic meter reading systems that collect data from devices such as electricity, water, and gas meters.
Mobile operators are forced to strike a balance between meeting growing customer needs and the cost of equipment for data transmission and storage in order to ensure business profitability. The mobile companies are competing not only for new subscribers, but also for the loyalty of existing ones. It is very important to find new growth points to recover capital and operating expenditures. Operators are still very conservative in budgeting, and they trying to minimize the costs in the IT sector.
Mobile operators will probably focus on several important areas in the coming years. First, they will work on the development of 3G and 4G networks and customer loyalty programs which will envisage the gradual substitution of prepaid charges with a postpaid billing system. The second important point is the development of the mobile devices (smartphones) market, which is directly linked to the development of the postpaid billing system. Thirdly, mobile operators will pay special attention to the development of the services of Fixed Wireless Access (FWA) systems, which will have billions of subscribers in five years.
As the number of internet users increases, so does the volume of the digital economy. Currently, internet penetration hits about 80 percent in Azerbaijan. So, there is still room for growth in Azerbaijan’s internet economy. Much of the credit for development of this sector goes to the state, which invests in the IT and telecommunications industry, thereby ensuring the stable growth of the country’s economy in the future.
For example, according to the Gartner Inc research company, the lion’s share of the expenditures of countries such as Singapore, Malaysia, Indonesia and Thailand in Southeast Asia falls on information technologies. There is no doubt that investments in this sector will pay dividends to the state, both in the short and long term. Worldwide trends inevitably have an effect on Azerbaijan. Therefore, it is extremely important to create favourable conditions for the transfer of technologies in order to keep up to date.
Azerbaijan has every opportunity to become a global innovation hub in the region. The country initiates and participates in many important regional infrastructure projects in energy, transport and telecommunications. Of course, a modern approach based on advanced technologies is used in all these projects.
Juniper Research analysts forecast that the development of artificial intelligence (AI) and blockchain technologies will be the main technological trends in 2018 globally. Integration of blockchain technology and Big Data will open up a wide range of new opportunities for business. It will allow access to detailed information about consumer preferences which will help to create analytical profiles of different suppliers, products and components of products.
Big Data technologies will achieve its potential to optimize key business processes due to such data. Moreover, it will reduce risks and create new opportunities for the monetization and production of products meeting actual consumer preferences.
By the end of this year blockchain technologies will go beyond banking applications and enter areas such as money transfers, insurance and digital identification. The same will happen with artificial intelligence.
Peripheral computing will be used to quickly deploy IoT solutions. Edge Computing (peripheral, or boundary computing) is considered a model for remote monitoring and data processing with IoT equipment.
Looking ahead, International Data Corporation (IDC) predicts that world expenses for cloud services and infrastructure, including hardware, software and services for cloud computing will double and exceed $530 billion by 2021. According to IDC, 25 percent of the world’s leading banks, almost 30 percent of manufacturers and retailers and 20 percent of medical organizations will use blockchain by 2020.
The analysts at Gartner Inc, in turn, forecast that 95 percent of the electronic devices created in 2020 will use IoT technologies. They see the highest potential for IoT in transport projects, in the sectors of ‘smart city’, ‘smart energy’, agriculture, etc.
The analysts also forecast that virtual currencies will become legitimate in the future, and as a result the total volume of operations with crypto currencies using blockchain technologies will reach one billion dollars by 2020.
The digital economy will become the basis for reforms in many countries. Nowadays, it becomes the basis for the development of economies, systems of state governance, businesses, social spheres and societies. The significant growth of the Azerbaijani economy in recent years and liberalization of the business environment lead to the integration of the country into the economy of the global information society.
An increase in the pace of the development of the high-tech industry will ensure sustainable economic growth. Of course, it needs government support aimed at increasing the investment attractiveness of sectors of economy, supporting local producers of IT products and services, promoting these products both in the domestic and global markets and developing intellectual potential in the sphere of high technologies.
These days, we are witnessing the development of an innovative economy and the building of an information society. In the foreseeable future, modern IT services will become common and affordable for everyone, just like gas or electricity.
A high level of development and use of IT will become an important indicator of economic progress.
It will ensure the stable technological development of the country and the effectiveness of its integration into the world economy.
Mr. Fuad Allahverdiyev is the Chief Executive Officer of “AzerTelecom” LLC, a national internet backbone provider in Azerbaijan, which connects the country with Internet. Allahverdiyev, who has built a number of start-ups and founded several successful ICT companies, has over 20 years of work experience in Azerbaijan’s telecommunications sector. In different periods of his life, he has headed such telecommunications companies as “Caspian Telecom”, “Ailə TV”, “Ailə NET”, and “CONNECT”. Mr. Allahverdiyev graduated from the Baku State University with a degree in Applied Mathematics and successfully completed an MBA Executive program in Lomonosov Moscow State University.