Main News
25.11.2020

700,000 Ukrainians do not have a telephone because of their low incomes

The lack of necessary financial resources to buy a telephone (in particular, a mobile phone) is one of the criteria for assessing poverty. Because of their low incomes, certain categories of Ukrainian consumers can’t afford using voice services.

According to the State Statistics Service, this figure is 1.7% of the population or about 700,000 people. For comparison, it is on average 0.3% of the population in the EU (for example, in Switzerland, Norway, France — 0%; in Greece and Italy — 0.3%, in Romania — 1.4%). Only in Bulgaria, the figure is higher than in Ukraine (2.5%).

The Green Paper “Voice Telecommunication Services Market” developed by BRDO’s ICT sector describes this issue.

The lack of access to voice communication (i.e. making a landline or mobile phone call) without the use of the Internet) today means that it is impossible to contact emergency services, including ambulance services or the National Health Service of Ukraine (NHSU) hotline, family members and friends, and there are difficulties in finding a job, and so on. In addition to enormous risks during the pandemic and quarantine, this leads to human loneliness and alienation.

The state provides citizens with the right to access voice services through price regulation and the provision of benefits to fixed-line subscribers. At the same time, fixed-line services (landline calls) are still more expensive than mobile ones.

 

In turn, the fixed-line market size is shrinking by an average of 7% each year. Since 2013, in Ukraine, the number of new fixed-line telephone connections has been decreasing much faster than in other countries. The use of fixed telephones has been declining since 2012, and we can expect a complete abandonment of this communication method.

The main problems of fixed-line communication are:

  • fall in demand caused by competition from mobile operators providing a wider range of services without restrictions on their location;
  • interruptions in the provision of services due to damaged telephone lines;
  • the state-regulated price for services does not cover the first cost;
  • expensive network construction and difficult implementation of new technologies due to outdated regulation.

At the same time, during 2010-2019, the Ukrainian mobile communications market volume increased from UAH 24 billion in 2010 to UAH 41.9 billion in 2019. Compared to 2018, the market grew by 19.7%.

Besides, 97% of subscribers are served by the largest Ukrainian mobile operators, such as Kyivstar, Vodafone Ukraine, and Lifecell.

However, the mobile industry also faces some problems, including:

  • expensive network construction caused by access to infrastructure and the need to obtain easements;
  • pension fee in the amount of 7.5% of the service price;
  • losses due to the regulation of international interconnect rates;
  • problems related to the radio frequency resource: lack of technical neutrality, low radiation standards, etc.

“State regulation of voice communications has been obsolete (both technologically and ideologically) now for decades. For example, the state still considers only fixed-line telephony as a universal service. The law regulates the prices for such communication services and guarantees certain benefits. At the same time, the state imposes a ‘wealth tax’ on mobile communications services, which are the main way of voice communication for Ukrainians. Thus, the affordability of such a popular service is reduced. In the Green Paper, we described the existing problems and ways to solve them,” Ihor Samokhodskyi, Head of the BRDO’s ICT sector, said.

Download the presentation to the Green Paper.