IT Landscape in Armenia
The telecommunication situation in Armenia can be described with two dominant elements; 1) a struggling economy with low per capita GDP with relative modest demand for telecommunications services, and 2) ArmenTel, a monopoly provider with a virtual lock. What incentives do exist for making additional investments are not the result of any competitive pressures, but rather are being forced upon it by Government of Armenia. Under the current default no competition will materialize in the local marketplace until 2003 when ArmenTel’s executive license for mobile services ends.
In the short term it appears the potential opportunity for leveraging Telecommunication, as a tool for bringing about social and economic improvements will be shunted. ArmenTel will most likely continue to price its services at higher, profit-maximizing pricing levels, and continue to invest at below optimal levels to expand their Telecommunication infrastructure. While the Ministry of Post and Communication has the legislative authority to regulate the Telecommunications Sector, in fact ArmenTel is the Telecommunication Sector and they have obtained and exclusive position.
Simply put, ultimately this situation needs to change. If left as is this will continue to retard economic growth. It will continue to be an obstacle for encouraging Direct Foreign Investment into Armenia by the high-tech sector- a sector that hold some promise for Armenian but also requires high-level and reasonable priced connectivity. This problem is well understood by a broad cross-section of both private and public sector organizations and individuals. While in itself this is not a “silver bullet” that will solve everything, it is of such importance that if not addressed, it will significantly limit the success of other initiatives telecommunications is an important component.
At present there is no competition in telephony (landlines and Cellular), or for the International gateway connection. There is, however, competition at the local Internet Service Provider (ISP) level with several ISPs operating in Armenia. This is having an impact on pricing with a general trend of lowering process taking place in the market. Also, while ArmenTel maintains a monopoly on all outgoing telecommunications, it is now possible to install and operate a Very Small Aperture Terminal (VSAT) for receiving incoming traffic. At least two of the larger ISPs are now doing this- the resulting being improved performance at a lower cost. Some of these cost savings are being passed on to their subscribers. Also, for private companies operating in Armenia it is possible to obtain a license for operating a two-way VSAT-based network for obtaining Internet access. This is allowed only meeting a company’s own internal data communication needs and cannot be resold.