Own analytical articles of "SV-consulting", LLC.

Will Ukraine's IT experience a huge grow after economical crisis?

The modern world is in an economic crisis. The last time the world economy experienced something similar was1957. But the ongoing crisis is only something like that, because fifty years ago the world was very different. Certainly, for those who had been an active member of the society, world seemed a super-modern: cars, airplanes, ships, phone and TV - it was a real revolution.Over the past fifty years, humanity has "accelerated" and now seems that it is almost the limit. However, it is not the truth.

Speed records on earth and in air have given way to records in the speed and volume of transfering nformation. Almost every week we hear about updated technical possibilities for transfering information in telecommunication networks. For example, recently telecom manufacturer Huawei and European telecom operator Vodafone completed the testing of technology, which allow data transmission with speed 2 TBps over a distance 3325 km in the existing network of Vodafone.

Data traffic in backbone networks is growing exponentially, resulting in the need for creating 100G commercial networks around the world.
The way from the labs to commercialization of telecom equipment sometimes shortened to a few months. And most importantly that the world market, which has been in a state of stagnation for many years, instantly accepted this. IT demonstarte a miracle. Unlike a difficult situation in the construction, manufacturing and FMCG, information industry is not in huge decline.

Traditionally, the attention of large investors attract huge operating segments. But no doubt that there is no tycoon in Ukraine, who has never paid attention to IT. However, the vast majority of them, taking in consideration the economic prospects of investment in IT, long payback periods and high competitive environment, quickly lost interest in this market. And probably , it was a mistake, because, after all, this is the future of civilization.

Ukraine became vulnerable after five years of financial pressure. Manufacturing industry and automobile industry have no so many contracts as earlier. However, IT market experiences transition from one technology to another. Eight years ago, it was just nice to have an Internet connection. And two years later, it was ashamed to use dial-up. Then speed of Internet connection just "soared up" every year.

Only technology may be a restrictions here, but technology surely demonstrates that the limit in the speed of data transfering is not visible. To say that the number of users on the Earth determine the intake of information, is not true. First, the world population now is more than 7 billion people, At the same time, Mr. Hans Vestberg, President of Ericsson, predicts that by 2018 the world will have 9.3 billion mobile users, which will be more than the population of the planet. Mr. Vestberg also says that the number of broadband connections will be 6.5 billion, while today it counts 1.5 billion. By the end of 2013 the number of mobile Internet users will exceed the number of fixed subscribers to the Internet. Now more than 60% of all consumers use portable equipment sucg as planshets, laptops, smartphones in order to watch TV programs, and more than 50% of them use wireless Internet.

Some respected experts and specialists of IT-market, often express statements, supported by figures and diagrams, about future market saturation. I dare to engage them in debate and to express my own point of view on market prospects of consumer information services as an engine of the whole information industry. The need for information will never be a finite quantity. Unique needs of each individual and the needs of society, including the economy are infinite values, and consequently, can not be limited by anything.

Television and video graphics will dominate the mobile network. Their volume will increase in the next 3-4 years from 40 to 90% claim specialists. This again confirms that the volume of information transmitted globally will increase.Some skeptics of the Ukrainian market believe that wireless technology has no future. However, most of them are CEOs and owners of fixed telecomunication networks.

In actual, the truth is that the fixed networks will always remain in demand. Fixed networks have no experience decreasing of users anymore. Landlines will always be more reliable, but increasing demand for wireless access at high speeds will far exceeds the demand for fixed networks.

Ukraine, unfortunately, for some reason lost its leadership in the development of modern information networks. We got stucked at the pre-3G standard era. Why was that happened? This is a very long and difficult discussion. Military authorities could not evaluate the procces of conversion of radio frequencies. And the state could not affect them . We may talk about the lack of political will, but rather, there is a completely different reason. By the way, similar issues around the world are far from politics and most other authorities. This is problem has become a history but 3G standard is still needed. Ukrainin state has laready lost billions of hrivnas and will lose even more if everything remains as is.

Years ago was introduced the next stage of technological evolution of telecom networks. It is 4G. But, unfortunately, here we also have repeated the old story, although in a slightly different interpretation. Licenses for radio frequency recources but due to technical evolution standard WiMax gave way to a new, more promising technology LTE. And that's the trouble again! The only license in LTE-standard granted back in 2011 and it still does not work. It is just not developed. Unlikely, that the companies, which have started implementing 4G WiMax, will be able to convert their licenses in LTE. And again, we will look with envy on neighboring countries. The French Government, for example, is going to allow local mobile operators to provide 4G on telecom networks, initially designed for 2G. In this case, telecom operators, decided to use their 2G network for providing 4G services, are proposed to pay a higher price, about €64 mln per year, and these funds will be spentd on construction of fibers. The sum will reach €2 billion for 10 years.

Experts estimate that the number of LTE-subscribers around the world will exceed 100 million people by the end of 2013. But we have not much to worry about this. Ukraine will have none LTE subscriber.

But, not just a radio technologies are in the focus of the modern world. A lot of countries seriously modernise their fixed networks.

Thus, European Commission is to ensure that all EU residents will have broadband services by 2013, and the speed of at least 30 Mbps will be guaranted by 2020.
Another example is Great Britain, where two-thirds of the country's population will have access to FTTH or FTTC (fiber-to-the-cabinet) by 2016. British Telecom is deploying an optical network, which is expected to provide Internet access at a speed of up to 80 Mbps and in some cases - up to 1 Gbps.

Deutsche Telekom over the next three years is going to investin broadband networks and products, in order to improve its position in the IT-market in the long term. Capital investment is to grow by about € 9-10 billion and made up almost €30 billion. "The demand for broadband networks is increasing at the same high rate as for mobile and fixed networks"- claims Deutsche Telecom. The company expects that decisions for entertainment and cloud solutions will help to increase revenue in the areas of mobile Internet access and "smart home".

New global projects are entering the world IT market . For example, Google has recently launched the world's first network of gigabit Internet. This is a new project called Google Fiber, where Google is ready to act as a huge ISP. So far, giant's plans do not look very real. So, for example, it is estimated that in order to cover United States' territory by optical network with access speeds of up to 1 Gbs from Google, the company need to spend $140 billions and more than 100 years. However, despite that Google launched such first network in Kansas City. Similar project is underway in India.Moreover, Google is going to implement its own LTE network. The Internet giant without much publicity is developing a wireless network of new kind, reported The Wall Street Journal.

It is reported that the network will operate on non-standard frequencies from 2524 to 2625 MHz. According to experts, in the future these frequencies can be used for wireless networks in the densely populated areas.

In Japan in July 2014 will be launched a television broadcasting in ultra-high-definition called 4K. Japan will be the first country in the world where television broadcasting will be implemented in the ultra modern format and consumers will get much better television picture then ever before. 4K format or UltraHD, offers four times better resolution than conventional HD. But even today most TVs in Japan support HD. By the way, the analog TV broadcasting Japan was ended in March 2012.

It is known that Japan has long been a market for the introduction of advanced IT-solutions. But let's look at our nearest neighbor Russia. The difference is visible by naked eye. 3G is already running and 4G is in a stage of rapid development. Yes, there are serious conflicts over the right to provide these technologies, over market share etc. But we see that contry is moving ahead. Moreover the major Russian operator Rostelecom has recently unveiled a program of modernization of its network and is going to invest in it up to $10 bln. Besides that Russian air carrier Aeroflot is going to provide access to the Internet on its air routes via WiFi. External channel is arranged through satellite network Inmarsat, and all other connections provides Megaphone. External channel has a speed of 384 kbps in both directions. This is quite a decent speed for passengers, have to spend a few hours in flight. Even theoretically a single subscriber may receive speed up to 171.2 Kbps but in reality most of handsets will not allow speed at above 85 Kbps and in the long term, there is also the possibility of using voice communication.

We may tell about increasing possibilities of IT-services around the world for a long time, but one thing is very important. Despite the prolonged economic downturn, IT continues to grow and it looks like a "compressed spring", which, at the end of the economic crisis will boost economies in many countries. What our cuontry will do in this situation? Ukraine still has a lot of telcoms, television and Internet providers. Our software developers are still in demand. Our IT-managers and the companies themselves massively depart or seek for contracts in different countries around the world. And they get them in Canada, USA, Gulf countries, in Africa, Russia and Kazakhstan.

On the other hand, almost 50% of Ukraine's population does not know how to use a computer. Of course, a lot of people in all countries around the world in the same situation, but 50% are a lot. But probably, it is our hidden potential. The economic situation will improve, will increase income and our citizens will again begin to buy computers, tablets and smartphones. Active growth of IT-industry will resume. As we see, actively new technologies are actively developing, offering new opportunities and high speed. The question is only in what state will be our market, and whether the market participants will have tolls for its dynamic development.

Oleg Stefanyuk



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