The decision to raise mobile Internet prices is not the first attempt of the Tajik authorities to replenish the budget at the expense of a relatively stable developing industry. The authorities have taken other similar initiatives in the past. In most cases, they were successful.
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In the mid-2000s, Tajikistan was among the leaders in IT-technologies’ development. For instance, we were the first CIS country to introduce a third generation 3G network with UMTS standard in June 2005.
The industry in the country developed quite rapidly. Mobile companies have repeatedly received the “Best Taxpayer” award from the Tax Committee. New mobile companies and Internet providers appeared, their revenues grew, and consequently, grew the tax revenues to the budget. After some time, the industry has become one of the most capital-intensive.
“Harmful Exposure” Tax
In the early 2010s, due to falling incomes in other sectors of the economy, the government’s interest in the relatively prosperous telecommunications sector increased.
In 2011, the authorities first started talking about mobile phones’ “harmful” to human health “radiation”. However, there is no confirmed scientific evidence proving the reality of this threat.
The state TV channels began to broadcast shows and produce reports on the dangers of mobile communication, even the president spoke on this topic. The result was the introduction of 3% excise tax on “harmful” service of mobile communication. In 2014, the excise duty was raised to 5%.
It is important to note that Beg Zukhurov (who changed his surname to Beg Sabur) started heading the Communication Service that year.
Back then, this Department was incorporated into the structure of the Ministry of Transport and Communications. Just a few months after the appointment of Beg Zukhurov, the Communication Service was separated from the Ministry of Transport and Communications, becoming an independent agency under the government of the country. In fact, Beg Zukhurov began to independently determine the vector of development of the entire telecommunications sector in the Republic of Tajikistan.
“Massacre” of “Monopolistically Low Prices” by Antimonopoly Service
The prices for communication services even fell in the early 2010s. The communications market was still highly competitive. In a competition for customers, the companies having partners in Russia or those being the branches/offices/subsidiaries of Russian or multinational mobile operators reduced the cost of a call to subscribers in Russia to virtually zero.
As a result, the Antimonopoly Service got involved in a “fight against monopolistically low prices”, as it decided to increase the cost of a call to subscribers in Russia to 12 cents per minute.
The new rates were due to come into effect in May 2011, but companies “Takom” (Beeline), Tcell, “Babilon-Mobile” and TT-mobile (“Megafon Tajikistan”) did not comply. As a result, in 2012, each company was fined 300 nominal units (12 thousand somoni), and since November of the same year, the subscribers faced the fact that their conversations with Russian subscribers will cost at least 12 cents.
$3 Million a Year
In 2015, the Communication Service decided to increase the cost of the SIM-card subscription fee to 80 diram per month. The subscription fee was not something new itself, but due to the relatively low cost, mobile operators covered it at their own expense.
But after its increase to 1.8 somoni, an additional charge in the form of 80 dirams of the monthly fee for the number’s use fell on the shoulders of subscribers. More than 3 million subscribers pay more than 2.5 million somoni per month. This amounts to almost 30 million somoni (more than $ 3 million) a year.
The Triumphant Return of the Unified Communications Switching Centre
In 2015, the idea to create of a Unified Communications Switching Centre (UCSC), rejected 10 years ago, was revived from deep within the civil service system. The arguments for the creation of the UCSC now included “fight against terrorism” and keeping track of the traffic of mobile operators.
This time, the Antimonopoly Service did not object to the markedly strengthened position of the Communication Service. As a result, just before the New Year celebrations, the government signed a decree establishing UCSC under the Communications Service. Since then, all outgoing traffic, Internet and voice, has been passing through a single access point.
There is no official data on how much money was spent on its creation. However, some media reported that equipment purchased for UCSC was worth almost 50 mln USD. In any case, all these costs somehow were covered by the telecommunications companies and consumers of their services.
How to “Earn” Millions
The imposition of multimillion-dollar fines by tax authorities on leading mobile companies was a major blow to the development of the sector. During 2016 and 2017, Tcell and Megafon were fined 155.6 million somoni and 183.5 million somoni respectively (about 20 and 23 mln USD), and Beeline was obliged to pay 151.4 million somoni (19 mln USD). And this was not the first case. Back in 2014, Babilon-M was obliged to pay a fine of 341 million somoni (about 70 mln USD at the average exchange rate for 2014). The fines were issued by the Tax Committee, which revealed the facts of “tax concealment”.
It is important to note that according to 2016 and 2017 laws on the state budget of Tajikistan, the Tax Committee began to receive only 30% of all funds collected by detection of concealed taxes. Previously, this indicator was 50%. Thus, the tax authority officials felt a need to increase the amount of fines to cover their expenses. Probably, it was decided to cover the needed 1.5-fold increase in the volume of fines by identifying “violations” of mobile operators.
Coercion and Monopolism
At the end of 2017, the Communication Service decided to once again remind about itself by introducing three new bans. The first was a ban on calling landline numbers from mobile; it lasted several days. The second was a ban on the sale of SIM-cards by dealers; now companies could connect subscribers to their network only through official representative offices.
The third was disabling NGN. This technology was used by citizens as a cheap alternative to the more expensive international call services. It allowed people to talk through a special application with family and friends at in-country rates, while the owner of the NGN-number could be anywhere in the world with access to the Internet. It is quite natural that a large number of migrant workers were choosing it.
This time, the Communication Service openly banned the use of NGN, motivating its decision as an effort to “fight terrorism.”
As an alternative to NGN, some mobile operators have developed their own applications with a similar operating principle, while subscribers, without understanding the intricacies and differences of these technologies, quickly understood their profitability. But after a while, they were banned as well.
At the same time, alongside with the slogan “fighting against terrorism”, the authorities did not hide that new technologies allow citizens to save money on international conversations, explaining that measures should be taken to make them more expensive as the state does not receive enough taxes.
Providers Deprived of Their Own Internet Channels
In the beginning of 2018, it was urgent to come up with the new directives. Since January 2018, it was not enough for the Communication Service to control the outgoing traffic through the UCSC; it decided to force all Internet providers to stop using their own Internet channels and start buying it solely from the only national provider – public JSC “Tajiktelecom”. The fact of monopolization of the market was obvious, but the antimonopoly agency decided to remain silent. Silence was also chosen by the security authorities, although the alleged minor accident in the UCSC caused the almost complete absence of Internet in the country. This accident also revealed one of the most important threats to the existence of this communication hub — if necessary, an attack on this one single access point can cut off the entire country from the outside world.
Meanwhile, the Communication Service received another opportunity to control mobile companies and a tool to exert pressure on them. Before, license updated every five years was the main lever, but now it was complemented by the ability to completely disconnect mobile companies’ network from the worldwide web in case of failure to comply with the requirements of the Communication Service. These levers are so efficient, that only a single call from the Communication Service officials is enough for the service providers to start blocking certain online resources. One can write a separate comprehensive article about the corruption potential of this factor.
“Osho Group” and Fight Against Competitors
Meanwhile, a new “Oshno Group” company emerged in the telecommunications market; it became famous as its head is the son of the head of the Communication Service. The company launched public Wi-Fi access points in the form of booths on the territory of several universities in Dushanbe. The booths were equipped with terminals for receiving payments – by paying a certain amount one could connect own device to the Internet. The media reported the operational radius of these booths to be 30 meters, and the cost of 100 MB being 1 somoni. Naturally, the struggle began with competitors in the face of cafes and hotels offering their customers free access to the Internet through their own Wi-Fi networks.
In this regard, the Communication Service issued a decree on the mandatory certification of equipment used in these places, in spite of the fact that all this equipment already has a state certificate of standard conformity. The website of the Communication Service indicates that a certificate of conformity must be submitted in order to obtain their certificate. However, the website does not contain an information on what kind of certificate they provide.
Just a few months later, a similar fate befell the sellers of mobile phones. Officials openly declared that they are ready to undertake a task of certifying each mobile phone sold in the country; again it all was “for the benefit of the people” and “for protection of people’s health”.
SIM-Cards for 250 Somoni
On August 8, 2018, at a joint meeting of the Ministry of Internal Affairs, State Committee for National Security, Communication Service and several mobile operators, it was decided to set a minimum price for SIM cards to be 250 somoni (26.5 USD). Of this amount, 215 somoni were to be paid for the connection contract, and 35 somoni for the cost of the base tariff. After this decision entered into force, a re-registration of the SIM-cards was planned to be conducted; the re-registration would cost each subscriber at least 250 somoni.
The number of SIM-cards a person could have been also limited: a person could have no more than two pieces from each operator and could have the ability to register a few more numbers for minor family members. A few months were given for finalizing re-registration of mobile numbers.
The initiative is attributed to the Ministry of Internal Affairs; its proposal was backed by the need to “fight terrorism”. In this case, the expert community noted that this idea’s formation was influenced by the Communication Service and its head Sabur.
There was a wave of indignation online; the crowds of subscribers gathered in the offices of mobile operators in an attempt to re-register their numbers at previous price. It is likely that the crowds forced the authorities to reconsider their decision, but not the numerous comments of disgruntled citizens in social networks. At the end of August, president Emomali Rahmon demanded the temporary suspension of the decision and further investigation into the matter.
Messengers in the Focus of Tax Committee Attention
At the same time with the SIM-cards initiative, the Tax Committee focused its attention on another topic – possibility to charge for making calls via messengers. However, the authorities have not learned from the previous experience of banning NGN and losing income due to the taxation of this network’s traffic.
But unlike the case with disabled NGN, it is virtually impossible to track time spent by subscribers on voice calls via messengers, at least at the current level of technological development of Tajik Internet providers. As a result, the implementation of this idea was postponed, but not completely forgotten.
Later, for the very same technical reasons, the authorities abandoned the idea to tax the income of the worldwide IT companies, including Google search engine and Facebook social network.
In February 2019, the government issued a decree that defined the rules for SIM-card registration. In particular, the restrictions were imposed on the number of SIM cards — a citizen does not have the right to purchase more than two numbers – not from each operator, as envisaged by the idea of August last year, but in total. Also, the Communication Service became responsible to organize the next re-registration of SIM-cards. The SIM-cards re-registration requires those who have passed the previous re-registration on “printed-on-paper” passports to have a passport of 2014 version (plastic passports or ID-card). 6 months were given for the new re-registration. Those with a valid current passport are still required to obtain a plastic passport and re-register the number. Otherwise, non-re-registered numbers may be disabled. No one is going to provide a new passport for free; it costs $10.
The article 13 of the Law “On Identity Documents” defines the validity period of a passport of a citizen of the Republic of Tajikistan. Only upon reaching the specified period of validity, the passport loses its validity and the citizen becomes obliged to obtain a new passport. The new plastic passports were introduced in 2014, but passports of 1996 model are still valid. No one is obliged to apply for a “plastic” passport while having a “printed-on-paper” valid passport. Consequently, an order that imposes a restriction on passport’s validity before its set expiry date and actually forces to replace passport, violates the meaning of this article of the law.
However, according to the lawyer Rakhmatillo Zoyirov, there is no mechanism to challenge the government’s decisions, and despite obvious violations of their rights, citizens do not have legal mechanisms to appeal for judicial review.
This Week’s New Prices
Apparently, even the authorities themselves do not expect to obtain sufficient revenues to cover the next expensive festivals. The latest decision of the Antimonopoly Service concerned unification of the mobile Internet tariffs. According to it, 1 MB of Internet traffic could cost users not less than 5 dirams, and taking into account excise and VAT – not less than 6.2 dirams. Thus, 1 GB of traffic (1024 MB) had to cost at least 63 somoni (6.68 USD). Before the introduction of new tariffs, the average cost of 1 GB was 30 somoni (3.18 USD), and in purchasing 5-15 GB packages, the reduced cost was about 10-20 somoni per GB (from 1.06 – 2.12 USD). Even this price was one of the highest in the region.
As a result, social network users began to spread petitions demanding the dismissal of the Communication and Antimonopoly Services’ officials. The discontent of citizens was inflamed to such an extent that the demands for the resignation of high-ranking officials began to sound progressively more serious.
In an official statement, the Antimonopoly Service noted many points, but I want to focus on three of them:
- the volume of traffic provided by “big four” (Tcell, Megafon, Babilon-M, Beeline) amounted to 25 billion 204 million MB;
- the most expensive Internet in the world is in Switzerland ($18.2), Canada ($17.4), UAE ($13.5), South Korea ($11.4), Japan ($9.4), USA ($7.8) and Norway ($6.6 per 1GB);
- Tajikistan was ranked 19th in the inexpensive Internet rating of Content Review news agency.
These data seem to be highly questionable and a more detailed study reveals the fact of manipulation.
- Company traffic is often calculated not in MB, but in GB. It is quite impressive to consider the figure in MB at first glance. Nevertheless, it is only an “illusion.” But, if one takes into account that the country is home to just over 3 million Internet users, one can get quite modest results for traffic per person per month. Every month, funds are deducted from the balance of the subscriber and therefore it is more expedient to count monthly spendings: 25 204 million MB / 3 million subscribers / 12 months = 700 MB per month.
For comparison, the average file size of a movie lasting about 1.5 hours amounts to about 1400 MB – twice the amount of traffic the average subscriber spends according to the Antimonopoly Service. It turns out that either the subscribers in fact consume very little traffic, or this data is unreal.
- It is not just illogical, but hypocritical, to argue for the increase of the Internet cost in our country referring to prices in the most developed economies of the world. When citizens asked to pay attention to the inexpensiveness of the Internet in neighboring Kyrgyzstan, officials said there is already an appropriate infrastructure in Kyrgyzstan, and, moreover and in general, we are an independent state and we should build our own policy.
However, to reinforce their position, they do not hesitate to refer to the prices of other countries, while not paying attention to other economic indicators. For example, in terms of GDP per capita, these countries are at the top of the world rankings. Said 20 USD in Switzerland is a trifle compared to 20 USD in Tajikistan: it is half of the minimum wage, with which, according to the state, a person is able to live a whole month.
- Tajikistan is simply not accounted for in the mentioned Content Review rating. In its official letter, the state antimonopoly agency tried to justify its decision with fake information. However, it tried to justify the disinformation later, agreeing that Tajikistan was not mentioned in the rating by Content Review agency, but if it was, it would be ranked 19th.
When Officials’ Initiatives Are Dangerous and Hazardous
Almost all of the recent initiatives in the telecommunications sector have complicated or even ruined its development. For example, as a result of imposing fines on mobile companies, the latter have lost the opportunity to introduce new technologies and upgrade equipment.
It is “thanks” to such initiatives that the once advanced industry became lagging with its worn-out equipment and outdated technologies.
The practices of constant pressure on the telecommunications sector deprived it of all investment attractiveness. To revive it, we need a new policy based on the principles of competition and partnership between government and business.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway. The opinions expressed in the article do not reflect the position of the editorial or donor.