Research party: Content development is among the priorities in the coming years

Along with public sector support for its technology sector, Mongolia has a population with an increasing level of disposable income and a mind to try new technologies, if the rapid take-up in the mobile telephony market is any indication. One of the biggest limiting factors for the sector in the future is the national broadband network, which is insufficient. The Information Communications Technology and Post Authority ( ICTPA), one of two main government bodies responsible for the sector, is spearheading a project to address this issue, however. Its plan was approved in May 2011, and although a specific timeline has not been established, work is expected to begin in 2012, officials told OBG. Long-term planning is a key issue for many sector players. B. Uuganbayar, the president and CEO of domestic firm Interactive, told OBG, “The sector would like to see more coherent working relationships between different players, the government and regulatory bodies, with more unified long-term goals.”

Mongolia has around 17,900 km of fibre-optic cable, most of it owned by Information Communication Network Company, a state-owned enterprise commonly known as NetCo. A few private firms have also built local networks in high-use areas, but responsibility for the national backbone lies mostly with the public sector. Given Mongolia’s low population density, private firms would likely consider building to 100% coverage commercially unviable. The current network covers about 70% of the population. The ICTPA’s studies indicate that full coverage requires 40,000 km of installed capacity.

FIVE-POINT PLAN: The new broadband plan encompasses more than laying additional fibre – it is a five-point project designed to address a range of related issues as well. The five aspects are: the legal environment, improving existing service, the backbone itself, improving content, and implementing programmes to encourage research and development (R&D).

Mongolia’s legal framework is lacking in several areas, according to the ICTPA. Existing laws are patchy, and do not address issues such as information security or data protection. In some policy documents clarification is needed on definitions and parameters, the ICTPA said. Despite the state’s commitment to nurturing ICT capabilities, these changes were not at the top of the agenda for the autumn session of the Grand Khural, the country’s parliament. The Khural was consumed by talk of the impending growth of the mining sector and renovating the capital markets among other issues, and it is unclear how fast parliament will be able to turn its attention to all of these issues. However, as of December 2011, parliament passed the Electronic Signatures Law, a good sign for the sector.

Matters relating to quality of service need to be addressed through increasing international connections and last-mile capacity. Mongolia connects to the rest of the world via cables going north to Russia and south to China. More connections would increase capacity and likely lower costs. A tender in 2010 to provide and improve WiMAX wireless connectivity has already begun to help Mongolians become better connected.

NETWORK COVERAGE: As for the national network itself, it reaches all 21 of Mongolia’s aimags – administrative units equivalent to provinces. However it does not cover all areas. Around 300 smaller municipalities get service from fibre optic networks and around 140 are connected by other forms of communications such as Visat Relay. About 55%, or 9905 km, of the existing 17,900 km of fibre is owned by NetCo, and another 6000 is in the planning stages as a part of the current broadband project. One challenge is the relatively high cost of access at around MNT350,000 ($273) per 1 Mbps in urban areas, and MNT700,000 ($546) in rural areas. The hope is that as more customers subscribe, NetCo’s debt can be serviced and the firm will reduce prices.

Content and R&D are the forward-looking aspects of the plan. Officials are aware that increased capacity means more demand for content. The E-Government master plan for the sector has approximately 22 projects that are addressing the issue, but the ICTPA is still deciding how this current project will approach it.

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The Report: Mongolia 2012

Telecoms and IT chapter from The Report: Mongolia 2012

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