Telecommunications
The sector of telecommunications is one of the most essential fields of the infrastructure of the state, which is designed to satisfy public needs in the means and services of communications. The development of telecommunication networks in Ukraine proceeds with allowance for the world-wide tendency towards the integration of networks, systems and the service communications. This tendency requires to build and improve the networks on the basis of equipment, which meets international standards and recommendations and renders the first quality services.
The condition of the COMMUNICATIONS sector as of the end of 1997 and the extent to which it satisfies the needs of services in general is characterized by the following:
It is necessary to mention that the sector does not provide in full the scope of services that are commonly provided in advanced economies of the world and are extremely indispensable for the progress of the economy, such as: bureau fax, ISDN services; some services are in their infancy: e-mail, data transmission for computers, telefax, radiotelephone communication.
In terms of the overall level of provision with telephone communication, Ukraine lags significantly behind advanced countries, and in terms of other types of communication (data transmission, cellular communication, etc..) the backlog is far grearter.
The sector operates nearly without loss-making enterprises, has no fiscal indebtedness and wage arrears. As per 1997, the consolidated balance profit of state-owned enterprises engages in communication totaled 619 mln UAH. Nearly 780 mln UAH was collected to the state budget and extra-budget funds.
The state budget received 133.7 mln UAH as fees for the issuing of licenses authorizing to fulfill different types of activities and for the utilization of radio frequencies.
Reasoning from the achieved volume of services and the development of the means of communication in 1997, one can conclude that associations and enterprises provided services to all consumers worth 2.5 billion UAH. This index exceeds 4.9% the last-year's volume in relative terms. This increment was achieved in the first place on account of the services of local telephone networks, distant and international telephone communications. The profitability of the principal activity in the domain was 27.3%.
The program of the sector's development domain was implemented both for the account of own financial sources (first of all, of the sectoral development fund), banker's credits (nearly 60%) and the funds of legal and physical persons attracted on a contractual basis and sale of securities.
Since 1996, the fulfillment of the second phase of the creation of the National Single Communication System of Ukraine has begun.
In 1997, the "Concept of the Development of National Networks of Electrical and Postal Communication for Public Use and the Formation of the Market for communication services in Ukraine for the Period ending 2010" was developed. The Concept adjusts the goals of the sector development. This document defines also the sector's policy in restructuring and privatization.
At present, 952 communication operators with different forms of ownership are present on the communication market of Ukraine; in many cases non-state-owned operators offer services of better quality and on more beneficial terms compared to state-owned enterprises.
With the goal of adapting the state communication associations to market conditions, a program for restructuring of UKRAINIAN TELECOM association is approved by the Cabinet of Ministers Resolution #1 of 4.04. 98. This is a very important phase of the sector's development, because about 78 per cent of earnings from all communication services in Ukraine falls to UKRAINIAN TELECOM.
UKRAINIAN TELECOM is the greatest telecommunications operator in Ukraine, it administers the powerful infrastructure with 35 state-owned enterprises and 738 affiliates, as well as over 140 thousand employees. The profits gained by this operator were $449.6 mln USD in 1995;- $708.4 mln USD in 1996; 1.19 bln USD in 1997. As of the end of 1997, the number UKRAINIAN TELECOM's subscribers was in excess of 8.4 million, and the average wage was 275 UAH.
The Program for UKRAINIAN TELECOM restructuring envisages transformation of the association into an enterprise, and the enterprises into its affiliates. In doing so, vertical specialized structures or groups of structural subdivisions, will be constituted that will be conjoint based on technological principles and attributes, in order to fulfill identical types of activities applying uniform norms and standards.
Though the existing condition of communication hardware does not meet the up-to-date level, still, it ensures the steady functioning of the National Single Communication System of Ukraine. For authorization of activities related to rendering of communication services, 952 licenses have been issued and 756 equipment types have been certified since 1992. Appropriate steps have been made with the view of entering the market for fluent circulation of securities.
For the present, the principal share of telecommunication means is managed by government agencies, and efficient management of the public communication networks in Ukraine is provided by the national center of control, which belongs to the state-owned association, UKRAINIAN TELECOM.
UKRAINIAN TELECOM is the representative of the international Network Management System (INMS) that unites 13 national management centers of European states.
Communication enterprises operate with stability, but the sector's ability to increase the volume of the market and rendering communication services is restricted because of appreciable debtor indebtedness for services, which as of 01.01. 98 was in excess of 450 mln UAH. This amount is on the whole two times as large as the volume of the sector's monthly gains.
In order to foster the presence of national companies in the market for communication services an open license policy has been put into practice, which facilitates the creation of a competitive medium for different forms of ownership. The State Committee on Communications issued more than 85% permits to operators that have no foreign co-founders.
Primary network.
The basis for telecommunication infrastructure of Ukraine is the primary network that ensures the organization of standard channels for interconnection of the commutation stations of the telephone network and the satisfaction of the users' needs.
The primary network of Ukraine utilizes cable, radio relay and air links. Automatic telephone stations (ATS) apply air communication links (40%), cable links (58%), radio relay links (2%).
The high priority direction of the progress of the primary network is the building of main fiber-optic communication links (FOCL). Now the share of these links is less than 1% of the overall volume of cable communication links (for comparison the share of symmetrical cable is 74%, and the share of coaxial cable is 25%).
During 1997, 2,433 km of distant cable communication lines was built as against 1,118 km in 1996 year. The construction of the following FOCLs on the territory of Ukraine is accomplised: Kyiv-Lviv ("West"), Kyiv - state border with Byelorus (North), Kyiv-Odesa - coastal station ITUR "South" , Chernivtsi - state border with Moldova. When finished, these FOCLs will give a possibility to furnish a number of oblast and rayon centers of Ukraine with a sufficient number of qualitative digital channels. The main 'South-North" line of the international Italy-Turkey-Ukraine-Russia (ITUR) line is put into operation.
In 1997, 425.9 km of zone cable communication lines was put into operation, 1,835,400 chan/km of operating communication lines were reconstructed.
At present, the following FOCLs operate in the primary network:
Digital radio relay lines (DRRL) in operation include:
These lines are portions of the international TAE (Tans-Asian-European) FOLC communication system that unites European countries with the countries of Asia, TEL (Trans-European line) and ITUR (Italy-Turkey-Ukraine-Russia).
In total, more then 3,500 km of distant main and zone cable communication lines are in operation in the primary network of Ukraine. Currently, digital communication ( FOLC and DRRL) cover 18 oblasts of Ukraine.
Telephone communication
The telephone network of Ukraine includes 46 automatic distant telephone stations (ADTS), out of this number, 27 are digital and 19 analog channels. Digital ADTS operate in all the oblast centers and cities of Ukraine -- in 15 oblast centers (Lutsk, Vinnytsia, Dnipropetrovsk, Donetsk, Zhitomyr, Mykolaiv, Odessa, Rivne, Simpheropol, Sumy, Ternopil, Kharkiv, Khmelnitsky, Zaporizhia); analog ADTS operate jointly with the digital ones.
In the city of Kyiv there are 3 ADTS in operation: 2 analog and 1 digital, the latter functions as an international ADTS. The overall capacity of ADTS as of 01.01. 97 was 237,458 connection points.
The establishment of digital distant telephone stations in all the oblast centers of Ukraine and putting municipal digital telephone stations into operation in some large cities have created the premise and enabled to begin the construction of a digital network on the level distant telephone communications.
The density of phones per 100 citizens in Ukraine is 18.7 (this is second highest rate among the CIS member states). In 1997, new ATS capacities were put into operation totaling 338,300 numbers, out of this number, 50,000 (15%) were put into operation by non-state-owned operators. Table 1 shows the dynamics of telephone numbers put into operation in Ukraine.
Table 2.15. Telephone numbers put into operation in Ukraine
Development and re-equipment of urban telephone communication networks on the basis of application of advanced technologies, digital systems of commutation determined the necessity to restrict the commutation telephone equipment manufacturers. Based in the results of a tender arranged by the Cabinet of Ministers of Ukraine, it was decided to utilize the following types of commutation equipment in publicly used networks:
Since 1996, the networks of Ukraine has begun to apply new up-to-date signaling systems ZKS -7 on R2D. This allowed new kinds of services to be put into practice and to maintain them on the network level, upgrade the reliability and rapidity of the establishing of connections, etc.
UTEL joint venture has put ISDN services into practice since 1997. Due to this, subscribers are provided with a number of accessory telephone and non-telephone services (conference-communication, data transmission, fax-messages, and others). On the basis of digital telephone stations, the publicly-used telephone network and ISDN networks, the rendering of the accessory intellectual communication services began, such as "service 800" and others.
In accordance with the planned development of the sector's information potential and telecommunication infrastructure of enterprises in the regions and with the goal to provide the active development of information networks in Ukraine, the construction of many-purpose so-called "backbone" data transmission network began.
Telephone Communication Operators
UKRAINIAN TELECOM association
- the major operator of Ukraine - was established in 1993 as a
result the division of the communications sector into mail and
telecommunication. It consists of 35 state-owned enterprises and
organizations that render all the main sorts of telecommunication
services (telegraph/telephone communication, wire broadcasting,
radio communication, broadcasting and television, documentary
telecommunication). UKRAINIAN TELECOM possesses the primary
and secondary networks, deals with construction of means and objects
of communication.
For the present, UKRAINIAN TELECOM includes:
UKRAINIAN TELECOM is a founder of the following telecommunication joint ventures:
"UTEL", "UMC" - Ukrainian Mobile Communication, "InfoCom", "ElsaCom-Ukraine", "TeleCom Invest", "Telesystems Ukraine".
UKRAINIAN TELECOM accounts for about 78 percent of the gains from all the combinations services in Ukraine.
UTEL Closed Joint-stock Company
UTEL was created in 1992 for rendering services related to international and distant communication. The founders of the company are UKRAINIAN TELECOM (51%), AT&T (USA) (19.5%), Deutsche TeleCom (19.5%), PTT Pelecom (Netherlands) (10%).
The company has 22 affiliates in the oblasts of Ukraine and the Autonomous Republic of Crimea.
UTEL invested more than 140 mln USD in the development of communication networks in Ukraine. UTEL's incomes were nearly 250 mln USD in 1996 and 300 mln USD in 1997; and profits amounted to 29 mln USD in 1996 and 33 mln USD in 1997.
As of the early 1998, there was 27 digital automatic distant telephone stations in Ukraine, 2 of which were owned by UKRAINIAN TELECOM (Zaporizhya and Sevastopol), and the other 25 were owned by UTEL. In November 1992 the automatic international dialing was put into practice. In 1995, Ukraine was given a code Ukraine - 380. Today, Ukraine maintains international communication with 246 countries.
This year, it is planned to switch over the routes of communication with the CIS member state from UKRAINIAN TELECOM equipment to UTEL equipment. The rates for the services of these operators are shown in tables 2, 3, and 4.
Table 2.16. Rates for telecommunication services
| within oblast | ||
| within Ukraine |
Table 2.17. CIS Member States (USD)
| Distance up to 3000 km | |||
| Distance more than 3000 km |
Table 2.18. Telecommunication Services Provided to Foreign States (USD)
| Eastern Europe | ||||
| Central/Northern Europe | ||||
| Western Europe | ||||
| Central Asia and Middle East | ||||
| North America | ||||
| Eastern Asia | ||||
| Africa, Southern and Central America | ||||
| Australia, Oceania | ||||
| Satellite communication network INMARSAT |
Cellular Communication
Since September 1997, five operators and six networks of cellular communication (standards NMT-450, DSC-1800, D-AMPS, GSM-900) has been operating in Ukraine. The number of cellular communication subscribers in Ukraine is close to 60 thousand.
"Ukrainian Mobile Communication" (UMC) Joint Venture
It was created in 1992. The founders are 17 oblast enterprises of UKRAINIAN TELECOM association (51%), Deutsche TeleCom (16.33%), PTT Pelecom (Netherlands) (16.33%), and TeleCom Denmark (16.33%). UMC has 27 branch offices. It is the most potent operator since it controls 90% of the market.
UMC is the sole operator of NMTi-450 cellular network. It has nearly 38,000 subscribers. The NMTi-450 cellular communication network covers the major part of the territory of Ukraine with 42% of the county's population (over 20 million). Network is established in 93 cities of Ukraine, including all the oblast centers. Cellular communication covers more than 4,000 km of main highways.
Subscribers may make local, distant, and international calls, use facsimile, transmit data.
Since September 1997, services in the GSM-900 standard have been put into practice. UMC plans to gradually develop the GSM-900 network: in the direction Kyiv - Boryspil - Brovary, Dnipropetrovsk, Odessa - Illichivsk, Kharkiv, Donetsk - Makiivka - Horlivka.
Table 2.19. Rates
| Local and distant calls within the territory of Ukraine
(not business time) |
|
| Incoming calls
(not business time) |
|
| CIS member states | |
| Eastern Europe | |
| Central and North Europe | |
| Western Europe | |
| Western and Central Asia | |
| Eastern Asia | |
| North America | |
| Africa, Southern and Central America | |
| Other countries |
BanComZvyazok (Golden TeleCom) Joint Venture
The company was established in 1996. The founders are: from the Ukrainian side are "BanComService," from the American side GTS and bank Bargains. Currently, 10 mln USD is invested.
The company renders services of mobile communication in the DCS-1800 standard. Services are rendered in Kyiv and Boryspol. It is planned that Golden TeleCom will organize mobile communication in Odessa, Kharkiv, Donetsk, and other large cities of Ukraine. At present, Golden TeleCom provides rouming services with Switzerland and Great Britain.
The company's services are used by 2,200 people.
"Digital Cellular Communication of Ukraine" (DCC) Joint Venture
The JV was founded in 1995. It operates using a D-AMPS standard. The network is established in Donetsk. It is planned to develop the system in Donetsk, Kharkiv, Odessa, Dnipropetrovsk regions, in the Crimea and in the city of Kyiv. For the expansion of the system and construction of the network for Donetsk oblast, Kharkiv, Odessa, Dnipropetrovsk, Crimea and the city of Kyiv an agreement was signed with Sweden "Erixson" amounting to 50 mln USD.
KyivStar Joint-stock Company
The company was created in 1994 as a closed-end joint-stock company, and in January 1995 was reorganized into an open joint-stock company. The founders are "Storm" (31%), "Omega" (20%), Norwegian "Telenor" (35%), US investment fund, Sputnik (14%). The enterprise invested funds in the tests of a frequency for the GSM-900 standard. KyivStar won a tender and became a full-fledged operator of GSM-900 standard mobile communication in Ukraine. It is a member of the International Association of Mobile Communication Operators.
At the first phase KyivStar intends to provide mobile communication on the territory of the city of Kyiv and adjacent districts. At the second phase, the network is to expand in the big cities of Ukraine, including Lviv, Donetsk, Odessa, Simpheropol. In the course of the third phase, it is planned to extend the activity throughout Ukraine. An agreement on rouming the company concluded only with Hungary.
According to preliminary estimates, the rates for services rendered will be higher than in Europe.
Table 2.20.
| Local and distant calls within the territory of Ukraine | |
| CIS member states | |
| Europe |
The following rates are charged: one-time payment for network connection is 600 UAH, "gold number"-100 UAH; number for choice - 50 UAH, confidential number - 50 UAH, deposit for rouming - 300 UAH, subscription payment - 33 UAH.
"Ukrainian Radiosystems" Joint-stock Company
One of the founders is Concern of Radio Communication, Radio Broadcasting and Television. The company holds the right to provide mobile communication services in the GSM-900 standard, but has not begun operation as yet. A national radio frequencies license has been paid. The license is effective for 15 years. After "Motorola" has renounced partnership, it was substituted by "DAEWOO".
Paging (Search) Communication
Services related to search communication has been provided since 1995 in Ukraine. At present, networks of search communication in standards RDS, POCSAG are created in all the oblast centers of Ukraine. In 1997, Ukraine was the first among the CIS member states to introduce the ERMES standard. Services of search communication are provided by more than 40 operators to 45 thousand subscribers. A bilateral search communication (FLEX standard) is now put in practice.
Major operators include:
Monthly subscription charged by various operators ranges within 25-50 USD depending on the type of services.
According to experts' estimates, nearly 50% of equipment used in this type of communication is produced by Philips, 45% by Motorola, and nearly 5% by NEC.
Trunking Communication
Services of trunking communication in Ukraine are provided by the following companies.
"Admerka" Ukrainian-Swiss joint venture
The JV was created in 1992. "Admerka" is an operator of the all-Ukrainian trunking network named "RADIUS". The system acts in Kyiv, Bila Tserkva, Cherkasy, Zhitomir, Zaporizhia, Sumy, Kryvy Rih, Dnipropetrovsk, Luhansk and adjacent districts within the radius of 85 km.
The network applies the SmartTrunk II standard. It deals with the frequencies of the VHF range. "Admerka" JV is the official distributor of "Motorola " in Ukraine.
Main users are UKRAINIAN TELECOM association, departments of the gas sector, government agencies of different regions, and commercial organizations.
"Beeper"
This type of communication applies StarSite protocol. It exploits "Beeper Trunking" system that is manufactured by "Motorola" for about one year.
Table 2.21.
| Average rate | |
| Connection of radio station | |
| Monthly subscription rate | |
| Per minute cost of radio conversation | |
| Per minute cost of conversation with a telephone subscriber |
"Eastward Bound" Joint Venture
The network applies SmartTrunk II standard, operates in Kyiv, Odessa, Vinnytsia, Chernihiv, and Zhitomir. In the Kyiv oblast, the system provides high-quality radio communication within the range of 30-50 km from the center of the city. It is planned to extend the network to cover Donetsk, Sumy, Poltava, Kremenchug. The assigned range of frequencies is UHF.
The coverage of "radio shadow" areas is fulfilled for account of the allocation of two basic stations in Pechersk and Podil television tower. All the telephone numbers for communication between the radio station city ATS are milti-channel.
Costs of subscriber equipment (Kenwood, Motorola, Alinco, ICOM) are one of the lowerest in Kyiv. Subscription is to be paid no less than for two month in advance.
"OmTech" Company
The company was set up in 1991. It is an operator of the single all-Ukrainian network "OMITECH-TRUNKING-UKRAINE " throughout the territory of Ukraine. For realization of such a global project, the company was assigned radio frequencies ranging 403-407 MHz on all the territory of Ukraine. Basic stations in the SmartTrunk II protocol operate in Kyiv, Dnipropetrovsk, Odessa, Lviv, Uzhhorod, Rivne, Kryvy Rih, Slavutych, Vinnytsia, and adjacent oblasts. "OmTech" has 14 dealers in different regions of Ukraine.
Software for second-by-second traffic calculation has been developed; protection against non-permitted access system; the system for optimization of guaranteed connection from different city ATS to radio subscribers of the network.
"UkrTekhZvyazok" Joint-stock Company
The company has operated on the market for 2 years. Services related to trunking communication are provided in the city and oblast of Kyiv. The operation frequency range is VHF and UHF. Basic protocol applied is SmartTrunk II. The joint-stock company in one of the largest Motorola distributors in Ukraine. It offers a flexible system of rates.
"Sakura" Mobile Communication (SMZ) LLC
The company was established in March 1996. It provides services of trunking communication for more than six months. The operation frequency range is VHF. Basic protocol applied is SmartTrunk II. Basic stations apply equipment manufactured by "Motorola". The system covers the territory of Kyiv practically without "shade" areas. In the Kyiv oblast, the coverage in the north direction is 90-100 km, in other directions - 100 km. Subscription is fixed 90 USD per month.
"SZVYAZ" Joint-stock Company
The company provides services of trunking communication for nearly 1 year. The operation frequency range is VHF. Basic protocol is SmartTrunk II. The equipment is provided by "Motorola ". The territory covered is the city of Kyiv with small " "shade" areas. In the southern direction the coverage reaches the town of Obukhiv.
"Alex" Concern
It has been in operation since 1993. The operation frequency range is VHF and UHF. The basic protocol applied is SmartTrunk II. Communication is provided in the city and oblast of Kyiv.
Subscription rate (without regard to traffic)
Table 2.22.
| Subscription (without regard to traffic) without access to telephone network | |
| Subscription (without regard to traffic) with access to telephone network | |
| Time limit |
Internet Network
Internet access services became the most dynamic direction of business activities in Ukraine. Today this is the most and the only booming market in the country. Internet service providers pop up every day in all cities, and the number of users grows manifold. Experts estimated Internet market in Ukraine in 1997 as USD 9 000 000 and forecast USD 20 000 000 for 1998. The year 1997 marked the point of Internet reaching traditionally conservative and huge state administration sector. That in turn catalyzed the process of connection for the state own sector of Ukrainian economy. The number of providers reached recently 200 but more than a half of them do not possess licenses and act as resellers. The expencive licenses fec - UAH 5,100 is one of the factors barring the development of the industry.
The year 1998 marked the new quality level of "netization" reaching 100 000 users in Ukraine. At the same time the number of corporate users is still very low with 10 to 20% of companies having at least some level of access (incluading via personal logins of employees). Of those only 5% access Internet via dedicated channels versus bad quality Ukrainian telephone lines (Dial Up). The latest development of Internet commerce and advertising, web sites construction and security level as well as the introduction of new user-friendly interfaces of browsers software changed that ratio to the corporate favor. New Internet technological services as Internet phone, or Internet video confereces, introduced by several leaders incluading first of all Global Ukraine, resulted in extension of ISP into the traditional market of telephone and video companies, as well advertising agencies. Internet services are better widespread in the capital and several large industrial cities first of all because of the general financial situation in the country, and also because of the lack of the communication backbone connection all over the country, which is expected to be accomplished at the best by the end of this year. Nevertheless cities located along the communication routes have very high figures of the growth of Internet consumption.
There are only two major Internet service providers that can pretend for the national status:
These two companies control the major part of the whole Ukrainian Internet traffic. They both are situated in Kiyv but have a wide network of branches and reselling partners.
Global Ukraine is still the first and the only company in Ukraine that guarantees the ratio between enternal and internal channel capacity as below 1:3.
Other large Internet service prjviders in Kyiv include:
Ukrainian regional Internet networks grow fast in such as Dnepropetrovsk, Odessa, Donetsk, Kharkiv, Lviv and Zaporizhya where a competition makes those services cheaper and of better quality.
The further investment into Internet may result in keeping Ukraine at the same level of information consumption as the Western world.