A Wireless and High-Tech Ukraine

By Walter Kish

Back in the mid 1990’s when I first worked in Ukraine computer and communications technology was significantly underdeveloped compared to the high tech environment I had gotten used to in Canada.  Things like cell phones, PC’s and the Internet were product and service concepts totally alien to most Ukrainians.  Getting a basic land-line telephone was beyond the means of the majority of the population even in the urban centres, never mind rural areas.

Fast forward to today and things have changed dramatically.  Spurred by a rapidly growing economy, both official and underground, Ukrainians have embraced electronic technology with a passion.

Nowhere is this more evident than in the phenomenal growth of cell phone usage.  At the end of 1999 there were less than one million cell phones in use in Ukraine.  According to official statistics, by the end of June 2006, this had grown to some 36 million, with approximately one million new users coming on board every month.  Considering that the total population of Ukraine is only some 47 million, the number is truly astounding.  Industry experts are predicting that by the end of 2007 there will be as many cell phones in Ukraine as there are people.

Although this may seem improbable to most of us, my recent observations in Ukraine lead me to believe this is not as far fetched as it may sound.  The cell phone market in Ukraine is extremely competitive with two players – Kyivstar and UMC dominating the market.  There are constant promotions and usage rates are low compared to what we are used to here in Canada.  Most subscribers buy an inexpensive phone typically for somewhere in the range of $50 to $100 and buy pay-as-you go usage cards.  You are not charged for received calls; you pay only for outgoing calls, and there are deep discounts if you call someone on the same network as yours.  As a result, it is becoming a more frequent practice to have two cell phones – one on the Kyivstar network and one on the UMC one.  Each network has its own distinct “area code”.  So if the person you are calling is on the “050” area code, you would use the UMC phone; if the area code is “067” or “097” you would use the Kyivstar phone.  My monthly cell phone costs in Ukraine typically averaged between $20 to $30, or about half of what I pay here in Canada for a similar volume of phone traffic.  Considering the above, I would not at all be surprised to see Ukraine in the near term future have more cell phones in use than it has population.

One other factor driving the rapid growth is that geographic cell phone coverage is rapidly becoming virtually universal all over Ukraine.  Over the past year, there were only a few spots in Ukraine (in remote villages) where I was not able to make or receive calls.  This also extends to the provision of enhanced services as well.  I was able to connect to the Internet and send and receive e-mail through my Blackberry type cell phone device in villages where two or three years ago there was not even basic cell phone service.

Although perhaps not as quite as impressive as cell phone usage growth, the increase in PC ownership and Internet usage is also significant.  Seven years ago less than one and a half percent of all Ukrainians had access to a PC and the number of Internet users stood at around two hundred thousand people.  By 2005, the number of internet users had grown to some 5.3 million or 11.5 percent of the population.  Internet cafes now abound in most cities and towns.

Even more impressive is that fact that computer science and programming enrolments are growing rapidly in Ukraine’s universities and institutes.  It is estimated that Ukraine is currently producing some thirty thousand graduates in computer specialties each year.  Probably the fastest growing sector of Ukraine’s export economy is the IT outsourcing sector with a growth rate of over 100% per year over the last several years.

Ukraine is rapidly becoming a high-tech country which can only bode well for its competitive future in an increasingly global economy.  It will be interesting to watch its economic focus shift from wheat to wireless.