INTERNET AND E-COMMERCE INDUSTRY IN ARMENIA
Ecommerce Journal
July 28 2010
Today, the country we pay attention to is a landlocked mountainous
country in the Caucasus, Armenia. Armenia, that represents a former
republic of the Soviet Union, is bordered by Turkey to the west,
Georgia to the north, the de facto independent Nagorno-Karabakh
Republic and Azerbaijan to the east, and Iran and the Azerbaijani
exclave of Nakhchivan to the south. Interestingly, the country
represents an unitary, multiparty, democratic nation-state with an
ancient and historic cultural heritage.
Armenia is a current member of more than 40 international
organizations, including the United Nations, the Council of Europe,
the Asian Development Bank, the Commonwealth of Independent States,
the World Trade Organization, the Organization of the Black Sea
Economic Cooperation, and La Francophonie. The country is also a
member of the CSTO military alliance, and also participates in NATO’s
Partnership for Peace programme. Armenia is also an observer member
of the Eurasian Economic Community and the Non-Aligned Movement.
Being the country with an emerging democracy, Armenia is classified
as a country with medium human development, where almost 11% of the
population lives below the international poverty line of $1.25 per day.
As for the Armenian telecom market, it’s still small, but developing
at present. Thus the volume of Internet subscribers, for instance,
has only reached 17%, reflecting a relatively low level of broadband
penetration in comparison with many other countries of Asia and Europe.
Actually, the telecommunications sector in Armenia has experienced
sharp swings in development over the last two decades. The telecom
sector slipped into decline following the collapse of the former
Soviet Union in the 1990s, with the fixed-line teledensity falling
dramatically, that also reflected the prevailing socio-economic
instability within the country and the region. However, the most
significant factor of slump in development was that the country
initially failed to embrace any vigorous reform in the telecom sector.
Thus far, despite steadily improving economic conditions as the
country underwent economic reform, the telecoms sector was slow
to respond. Besides, with the most damaging effects of the global
financial crisis also hurting Armenia in 2009, demand for telecom
services in Armenia slumped.
2010 year looks promising for the deployment of telecommunication
services, including Internet. Thus far improved national economy is
expected to see a modest recovery in the telco market as the whole.
Major structural issues have been addressed in the Armenian telecom
sector.
The major national Internet services provider is ArmenTel, that was
granted exclusive rights to the provision of all telecommunications
services in Armenia until 2013.
The other popular operator, launched its network in mid-2005 after
being awarded a license from the government is K-Telecom, that’s
delivering its services under the brand name VivaCell-MTC.
Armentel is only fiber optic connection to the Internet enters Armenia
through Georgia (via Marneuli) that then connects to the rest of the
Internet via an undersea fiber-optic cable in the Black Sea. Armenia
is also connected to the Trans-Asia-Europe (TAE) fiber-optic cable
system via Georgia, which runs along the railroad from Poti to Tbilisi
to the Armenian border near Marneuli. At Poti, the TAE cable connects
to the undersea Georgia-Russia system KAFOS which then connects to the
Black Sea Fiber Optic Cable System. The BSFOCS is co-owned by Armentel.
The most popular way of Internet connection in Armenia is dial-up due
to very high prices of other types of internet access. The average
cost of an hour dial-up internet access is about 48 cents, plus 20
cents for using phone line.
ADSL represents the other way of Internet connection in the country,
offered mostly by offered by Beeline, Cornet, Arminco.
As for WiMAX connection, Cornet launched a nationwide network
in the capital, Yerevan, and 18 biggest cities of Armenia, using
802.16e protocol in the 3.6-3.8 GHz frequency diapason, delivering
27 Mbit/sec speed.
In turn, Icon Communications in a move to design, deploy and maintain
a commercial WiMAX 802.16e-2005 (Rev-e) network in Armenia has chosen
Alcatel-Lucent.
The other Internet services providers, operating successfully on the
Armenian telecom market are:
â~@¢ ADC (Armenian Datacom Company) â~@¢ Arminco – offers a wide
range of Internet services â~@¢ Beeline â~@¢ CrossNet â~@¢ Dolphin
â~@¢ FastClick â~@¢ Hi-TECH Gateway â~@¢ Netsys – delivers dial-up,
DSL and cable links â~@¢ Orange â~@¢ Ucom â~@¢ Web.am – is the largest
ISP in Armenia that represents Broadband Wireless Internet Service
Provider. Mainly provides radio-modem connection to the Internet â~@¢
Parev.net – represents not only Armenian internet service provider,
but also Armenian portal.
â~@¢ Xter.net – is a fast-growing ISP offering a wide spectrum of
quality Internet services in Armenia, including dial-up and leased-line
Internet access, web hosting.
â~@¢ G-Net Armenia â~@¢ Intertel – delivers cable Internet, DSL and
wireless connection, Dial-UP, web hosting and other Internet solutions.
â~@¢ Infocom – connects governmental organizations and banking
networks in Yerevan â~@¢ SIUNY.AM â~@¢ AMS – offers internet and
network services to Telecom and Internet service providers
Internet country code top-level domain (ccTLD) for Armenia is .am,
administered by AMNIC. The registry for .am is operated by ISOC-AM
(Internet Society of Armenia), the local chapter of the Internet
Society.
Registrations under the .am domain are permitted directly at second
level.
.am domain name often suffers from domain hacks due to it being
a mnemonic for AM radio (like other similar ccTLD: .fm, .tv, .cd,
.dj and .mu). The domain-hacked name i.am has also been used for a
popular hosting service, although it (and similar “two-letter word”
hacks) is now owned by a third-party registration business.
Importantly, apart from ISOC-AM, supporting the development of Internet
related services in the country; one more organization also actively
prompts ICT progress in the country – Armenian Freenet.
Freenet.am provides free Internet services to individuals, as well
as non-profit, education and research organizations, State and other
institutions in a move to promote the development of the information
technologies and national information infrastructure in Armenia,
delivering free e-mail service, free webhosting service and free
dial-up access service. The organization, currently supervised by
ISOC-AM, was created in the framework of United Nations Development
Programme (UNDP) Armenia Internet Project in 1997.
So, let’s now turn to e-commerce sector of the country. It’s important
to note at first, there is a great potential for development of
e-commerce in the country, though there is still a lack for the
necessary incentives.
Nevertheless, progress forges ahead. And Armenia has been at the
crossroads of becoming an electronic nation of the 21st century,
developing its ICT sector as a principal segment of the overall
national economy.
The main obstacle, hampering the deployment of e-commerce in the
country is the problem of cash and non-cash payments, as with cash
commerce the income can be hidden and tax payments avoided.
Meantime, Armenian government is actively realizing a strategy to build
a national secure high-speed backbone communications network that will
support an evolving and diverse range of e-Government and e-commerce
applications. These are supposed to be supported by a nationwide
secure system for all types of transactions, including financial.
Besides, the Government of Armenia and its Ministry of Economy have
been proactively working out and promoting initial projects supporting
e-Government implementation. E-Government represents a complex project
that will be a strong integrating force for the transformation of
the Armenian Government from the 20th to 21st Century.
As for the e-payment systems used widely in the country, two of them
were launched several years ago, both oriented to Armenian Dram.
One of them – DramCash is based on PayCash, admittedly the most safe
and reliable payment technology. DramCash represents a protected
network of client software known as internet wallet. The user can
download an internet wallet on his PC or flash card free of charge
from the operator site. The whole registration takes no more than five
minutes. PayCash is also applied by YandexMoney (Russia), Cyphermint
(USA), IntenetMoney (Ukraine). DramCash will let Armenia-based users
do shopping in internet stores, to pay for mobile phone, internet,
cable TV services in drams. The company also provides for bill
payment schemes. Since 2003 DramCash has attained a universal format
of cooperation with the multi-currency Yandex- Money portals this
allowing Armenian buyers to pay for Russian goods and services in
e-drams. e-dram has been made “convertible” into any other currency
of PayCash. The discussions over technical aspect of e-dram conversion
into Web-Money, Egold, EPort are currently going out.
Thus far, the other e-payment system available is EDram. This quite
different system represents a unique complex of the best features of
its Western and Russian analogues. EDram money is absolutely virtual
and noncash. The customer buys a prepaid EDram card certifying
his right to do shopping on the internet for a definite sum. These
cards can be used for paying one’s bills, such as gas, water and
electricity. Soon it will be possible to use them in restaurants,
CD shops and other public facilities.
At a first view, Armenia seems to be underdeveloped in terms of ICT
and e-commerce progress. However, more thorough examination shows
the country, to have a great potential in this sphere that is being
developed and supported strongly by the government. Moreover, Armenia
strives to become an electronic nation of the 21st century.
From: A. Papazian
http://www.ecommerce-journal.com/articles/29078_internet-and-e-commerce-industry-armenia