This week,

  1. Russia continues the introduction of the “Digital Economy” program;
  2. Uzbekistan introduce new ICT regulations;
  3. The Cyberpolice of Ukraine is concerned of the Internet safety;
  4. The Russian Digital Market updates;
  5. A “Safe City” projects in Kazakhstan and Kyrgyzstan;
  6. The control over the ICT is growing;
  7. The first results of the GlobUz payment system introduction.

1. The Snapshot of the Russian “Digital Economy”.

The Russian government discussed the plans for the “Digital Economy” implementation stages. The Premier Minister Dmitry Medvedev announced that the broadband Internet will be available anywhere in the country by 2024. “Digital Economy” should also help Russia gradually implement the policy of import substitution. The domestic equipment will be used for the 5G introduction in all cities with a population over one million. The government will also ensure information security by the introduction of the national traffic filtering system by 2020. Many provisions of the program are expected to be implemented this year.

In order to control and monitor the implementation of the program, Russia will establish a special private-public partnership – the Autonomous Non-profit Organization (ANO). It is expected that its funding will be provided at the expense of participants who will make an entrance fee of USD $82.500. According to the Council on Strategic Development and Priority Projects under the President, that is responsible to establish the ANO, the partnership will include representatives of the banking sector, state agencies, telecoms, software developers, as well as representatives of the Government Subcommittee on the Digital Economy and Ministry of Communications.

DR Comments: Despite that more details onDigital Economy” program became available for the public discussion, the experts note some important milestones are still missing. First, there is no clear definition of what is Digital Economy and how is it different from the existing economic system. Second, the mechanisms, sources, and amounts of funding for the program plans should be determined and approved by October 31, 2017.

2. What Are the New ICT Regulations in Uzbekistan?

Two new regulations were developed in Uzbekistan. The first is designed to regulate electromagnetic compatibility of electronic devices and gadgets and has already come into force. The second regulates the security requirements of telecommunications equipment and is expected to be approved next month. These legislative developments will be followed by the new certification standards. The certification procedure remains the same, however, the government hopes the reduce the time required for the procedure. The certificates will be issued for three years as well as the annual product quality inspection has been scheduled.

DR Comments: The emergence of these standards is directly related to the Uzbekistan’s attempts to join the WTO. The new rules should remove the trade and customs barriers and oblige all equipment manufacturers to comply with unified international requirements.

3. How Vulnerable Is Ukrainian Internet?

The Department of Cyberpolice of Ukraine conducted a research that showed a very high level of vulnerability of the national Internet. The research showed that about 75% of Wi-Fi networks can be successfully attacked by intruders, and through each second network of private companies and state agencies, hackers can get access to their local systems. Experts state that a significant part of such vulnerabilities (40%) are caused by errors in software configuration, errors in the program code (27%), and the lack of security updates (20%).

Meanwhile, the tracking service of the Ukrainian Post operator was under DDoS-attack for two days. The attack occurred on August 7. The cybersecurity department succeeded to neutralize it, however, on the next day hackers renewed the attack. At this moment, the service is functioning as usual.

DR Comments: Earlier we informed about the biggest cyber-attack in Ukraine’s history occurred on June 27, 2017, when multiple state agencies, oil, telecommunications, and financial companies were attacked by Petya Ransomware. We continue monitoring the use of cyber in a modern hybrid warfare.

4. The Potential of Russian Digital Market Is Growing.

The analysis of the PricewaterhouseCoopers (PwC) announced that the introduction of the Internet of Things (IoT) in Russia will bring the revenue of USD $46.7B by 2025. This revenue is estimated on the current trends of the introduction of the IoT in such areas as electronics, health care, agriculture, logistics, as well as the widespread development of “smart cities” and “smart homes”. PwC analysts emphasize that their forecasts can materialize only with the systemic approach to the IoT introduction which in turn requires legislation update.

Yandex and Sberbank announced the creation of a joint company Yandex.Market to develop the e-commerce in Russia. Sberbank will invest about USD $501 million in the project. The users of Yandex.Market will have many new opportunities such as easy and safe payments or purchasing goods on credit. The authorities supported the initiative, as it might provide the new opportunities for Russian e-commerce and support the efforts of small and medium businesses to increase the export of Russian goods abroad.

Meanwhile, the blocking of Group services in Ukraine will cost the company almost USD $16.5 million, which is 1.5% of the expected company’s total revenue in 2017. Sanctions against the Group and Yandex were initiated by the National Security and Defense Council of Ukraine, were approved in May 2017, as a Ukrainian response in the hybrid war with Russia.

DR Comments: DR Analytica is monitoring the main trends of the Russian digital market. Contact us to explore your opportunities in the region.

5. Astana, Bishkek, and Osh – A New “Safe Cities”.

As a result of implementation of the “Safe City” project in Astana, the city authorities will install 10,000 video cameras on the streets of the capital of Kazakhstan. Video surveillance systems with traffic violations control will work at all crossroads of the city. This project, worth USD $25 million, was funded by the private investors.

Meanwhile, the “Safe City” project, developed by Kyrgyztelecom, was approved by the government of Kyrgyz Republic. The project is going to be implemented in the two largest cities of the country – Bishkek and Osh. Kyrgyztelecom will install the video surveillance systems and maintain them using the company’s servers, network, and specialists. The timing of the project implementation and the amount of funding required has not yet been announced.

6. The Big Brother Wants to Know You!

The Russian telecoms request to change some provisions of the Yarovaya Law. In order to reduce the enormous costs of the implementation of the law, that requires all telecommunication and ISPs must retain the content of user communications for six months and related metadata for three years, telecoms intent to refuse storing the content of user messages in favor of storing so-called “electromagnetic signals” – the “raw” traffic that is encrypted. Operators also suggest that the transcription of that traffic should be performed by law enforcement agencies since dividing it into voice traffic, Internet traffic, messages is a costly procedure.

Meanwhile, the State Service of Special Communications and Information Protection of Ukraine prepared a bill on mandatory registration of mobile users. If the bill is approved, operators will be required to collect personal data of their subscribers. The document also includes a requirement on the launch of a database of IMEI codes of handsets in use. The National Communications Regulatory Commission supported the initiative.

DR Comments: Despite the continuing hybrid war between Ukraine and Russia, both states show some similar approaches in their ICT policy. Recently we highlighted the adoption of laws banning the use of VPN servers and anonymizers and banning anonymity in the Instant Messengers in Russia, while Ukraine prepares its analog of the Yarovaya Law, allowing blocking of websites without the court decision.

7. What Are the Consequences of the GlobUz Launch?

The GlobUz payment system, established by the Unified International Processing Center (UIPC), was launched in July 2017. Many local banks have already connected to the new system. The holders of GlobUz cards can enjoy the technology of tapping a card to the terminal surface to provide a purchase payment. The UIPC is now in the process of negotiation with such global payment systems as Visa, MasterCard, Union Pay International, JCB, American Express, and Diners Club to ensure the holders of those cards to use GlobUz terminals in Uzbekistan and allow GlobUz cards holders to use their cards abroad.

DR Comments: There is no free currency conversion in Uzbekistan and analysts emphasize the existing shortage of cash. It remains unclear how the new payment system will perform under these conditions.