The Condition of The Internet in Georgia

Internet connections took off in Georgia during the 1990s and, following privatisation of the network as far back as 1995, it has accelerated ever since. Prior to that, when Georgia was very newly established state, the internet was only known at a few businesses and universities and the connections that did exist ran through Russia.

According to Georgia's telecom regulator, GNCC, the first two professional internet service providers in the state, Kheta and Goodwillcom, charged users up to $300 per month for web access. Only after two competitors set up business – Sanet and Caucasus Online - did pricing start to become affordable. Even so, data speeds only ran to 64 kbps.

Since August 2003, Georgian internet has gone through a revolution. The first fibre optic cable was installed which connected the country’s capital, Tbilisi, to the TransAsia-Europe cable. In addition, a radio relay line to Europe was made via Turkey and the internet began to gain inroads into other cities. Batumi, Kutaisi, and Rustavi all gained internet services and ADSL broadband technology began being rolled out to consumers.

In more recent years, the speed of internet services in Georgia has continued to increase whilst prices have fallen. Despite this, revenue generated by IPSs rose and rose. In terms of Georgian lari (GEL) the size of the sector grew from 3.5 million GEL to 30 million in the first seven years of the century. According to GNCC, between 2005 and 2006 broadband internet connections rose by a massive 80 per cent. Since 2006, the area of greatest growth has been in mobile internet services.

GNCC’s latest published data states that fixed network subscribers in Georgia rose beyond 300,000 in 2010, with a jaw dropping 26 per cent increase in the final quarter of that year. In terms of broadband, JSC Silknet led the way, boasting a market share approaching nearly half of all fixed connections, with Causcasus Online in second place.

Most of Georgia’s connections use DSL technology and most of these are connections in the capital, with the cities of Batumi and Kutaisi following. However, fibre optic connections have now become available in Rustavi as well as Tbilisi, so this is an increasingly popular option, with over 86,000 subscribers spread over these two urban centres.

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By 2010, the total revenue from internet communications and associated technologies was estimated to have passed 80 million GEL, however revenue per subscriber has continue to decrease. Wireless technology has taken off, with consumers now being offered a range of competing technologies including CDMA, EVDO and WiMax. Nonetheless Georgians have gone for mobile internet in a big way and it is possible this technology will eventually outstrip all others.

According to GNCC, mobile internet subscribers have risen to over 800,000 in number. The lion’s share of the mobile market is held by Magticom Ltd with a 45 per cent stake. Geocell Ltd, the second place provider, alone boasts 261,000 users. The total market from mobile Internet service was worth 15 million GEL by 2010.

With a population of just under 4.5 million inhabitants, Georgia’s internet market has yet to reach saturation and further regional development will undoubtedly follow. The number of operators in this competitive market place has risen to over 30. However, quality of service in the country is inconsistent and Georgians are willing to switch operators to get a better service or find a better deal. The government recently announced a tender process to appoint a company that will research into the level of internet services throughout the state. Expected to take three years, the project will focus on the country’s three large cities and, crucially, also regional towns where the quality of services can be less strong.

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