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Turkey’s smart approach to ICT development gains pace

Interview - May 30, 2013
Dr Tayfun Acarer, Chairman of Turkey’s ICT Authority, discusses the current education and infrastructure initiatives under way to meet the rapid take-up of mobile and fixed ICT technology by Turkey’s youthful population, as well as the burgeoning call centre industry. In addition, he explains the incentives on offer in the sector, the potential for value-added systems in particular, and the decision by ICANN to establish Istanbul as its European base.
DR TAYFUN ACARER, CHAIRMAN OF TURKEY’S ICT AUTHORITY
DR TAYFUN ACARER | CHAIRMAN OF TURKEY’S ICT AUTHORITY
Turkey is going through a very exciting time at the moment. During the global economic recession, Turkey has been the fastest growing economy in Europe for two of the last three years, and is expected to post a respectable growth rate of 4% GDP (gross domestic product). What impact does the ICT sector have on this impressive growth?
 
Turkey was one of the largest and fastest growing countries in 2011, after China. In 2011, there was 8.5% growth and Turkey’s average growth rate is between 7 and 8%. During that time, the ICT sector has always grown by over 10%. It was always over 10%, sometimes 12% or even 15%. We did not get the results for last year yet, but we will probably be at 12% growth in the ICT sector. 
 
The most important thing here is that Turkey is a very large country, and the people of Turkey are very interested in the ICT sector. Almost 50% of the Turkish population is under the age of 26, and this is a significant factor. An interesting fact that is that in Turkey, the usage life of a mobile phone is half compared to other European countries. So we use mobile phones so much faster compared to other European countries. An interesting fact is that when children are provided with state-of-the-art mobile devices, they use them for a year or two, and then they pass it onto their parents. 
 
One of the most significant factors when it comes to why the ICT sector is growing so fast in Turkey is the fact that we have a very large young population. Another important factor is because we have the highest mobile broadband coverage. We have over 32,000 settlement areas and types in Turkey (cities, towns, villages etc.). There are even settlement areas where 25 or 30 people live there. Out of these settlements, in 1,799 of them, there is no mobile coverage at all. That is because for enterprises, these places are not really profitable and they are also very geographically challenging. 
 
Just recently a tender was initiated, and as a result of this, a fund will be allocated from the universal services department for a service provider to provide coverage and a roaming service for those 1,799 settlements. Turkcell won that tender, and they will be developing the infrastructure in order to provide coverage for the rest of the operators as well. This is very important, because it is not just for the settlement areas – it is also for the connecting roads. We already have coverage for the main roads and highways, but this is more about connecting the small roads to the settlement areas. It is extremely important for mobile phone coverage to be at a developed and mature stage in order for the ICT sector to develop as well. 
 
It is important because in large cities like Istanbul and Ankara, rentals and space allocations are important, and you cannot go beyond a certain level of salaries for the staff. In order to be in this sector and protect your international power and work efficiently, you have to be able to provide support services as well, like sports services, numerical archives, and testing services, as well as an acceptable level of pricing. Of course, services are moving to the eastern and southeastern parts of Turkey, and this has been a great advantage for companies. In these regions, the rental prices are so much lower, and sometimes even free. Most of the local authorities are telling companies to set up their call centres in their region, and they will provide free space to do that. But that means that there will be 500 to 600 people or more employed. How many factories do we have today with 500 workers? That is significant for the town as we are talking about 500 families surviving off that job. Now, about 80% of call centres have moved to regions like that, and we are talking about something like 7,000 people working for these kinds of facilities. There are examples of that in other countries. Sometimes if you want to order pizza in the US, you call a call centre, which is in India. 
 
Digital services also provide employment for the area, especially for testing services, which employ a lot of qualified staff, who earn over the average salary in Turkey. There is a real opportunity for human resources to spread this around the country. The Turkish government’s recent policy is to have at least one university in each city or province. Right now, we have 81 provinces, and there is at least one university in every single province. That kind of eliminates the human resources challenge that you face. 
 
For these kinds of initiatives you will no longer be concerned if you have human resources or not, because you have one or two universities in most cases, and thousands of young people who are qualified and trained. The statistics for this year are interesting – about two years ago, there was a university entrance exam that was conducted, and 2 million students took the exam. It is very important.
 
Of course, for all this to be possible ICT fixed and mobile infrastructure will have to be disseminated all over the country. Not only the domestic connections, but also fibre connections. 
 
The ICT sector is fundamental to Prime Minister Erdogan’s 2023 vision of having half of ICT being supplied by domestic sources. The ICT sector accounted for 8% of GDP. What are some of your initiatives to reach these ambitious goals?
 
2023 is very important for us because it is the centenary of the republic. For this reason, the government has specified a vision. We decided on some goals for this vision, but ICT is a really interesting sector, because some areas are growing dramatically. Sometimes I cannot believe it. We thought two and a half years ago that on 1st January this year, 17 million people would have access to broadband. But total broadband subscribers this year was over 20 million. It is a really interesting statistic for us, and now, there are over 21 million subscribers. Mobile broadband is increasing very fast. There are nearly 9 million fixed broadband subscribers and approximately 12 million broadband subscribers. Mobile broadband in particular is increasing very fast.
 
Why? Turkish people are very young. Lots of students are using smartphones. Last year, approximately 16 million mobile phones came to Turkey, and more than 42% of these phones were smartphones. They may have more advantages compared to computers.
 
Trust and confidence is also fundamental to ICT, especially in terms of increasing domestic and international investments. What kinds of initiatives are you engaging in to create more confidence in the ICT sector?
 
We have various incentives. There are also technoparks right next to the universities, and there are serious advantages for these kinds of areas. We also have demand from companies and enterprises themselves regarding investment and research and development activities. It is not even demand; these things exist in their licensing agreement anyway. For example, for the third generation licensing period, they have to employ 200 people in the first year, then 350 people and in the third year, 500 research and development staff in their company.
 
Of course they are opening up research and development centres. The government has nice snapshots to use in the transcript, like the research and development centres of Turkcell and Avea, and Vodafone.
 
Another important factor that contributes to an environment of trust is that there is a universal service fund. About $400 million is accumulated every year in this fund, which provides support for fixed and mobile infrastructure, which is extremely important. As we mentioned, in the rural areas, there are 1,799 settlements that did not have coverage, but now they are receiving support with this fund. They also established ICT classes in schools for students and young people. All these kinds of projects are supported by the universal service fund.
 
There are 40,000 elementary and secondary schools, and there is an ICT class in every single one of them. We also have public facilities that provide free internet access to members of the public, and internet infrastructure in schools is also paid for out of this budget. There is also a project for blind people, which is funded by this budget.
 
The second largest fund is the research and development fund, which has about $150 million, which is about half the size of the universal service fund. This fund is provided by this institution. Another important fact about the fund is that in order to take advantage of other R&D funds, there are certain criteria – you need to have a certain amount of staff and it has to be economically feasible. But you do not need to meet these criteria for this fund – you can just be two people with a project. You can take advantage of this funding regardless of whether you have staff or if you are a company. A lot of SMEs take advantage of this fund as well, although you do not have to be a company.
 
This fund is new, but I believe that in about two years, the structure and nature of ICT projects in Turkey will change. Of course, having funds is important, but having a qualified workforce that will be supported by this funding is also important. The fact that we have at least one university in every province, and a sufficient number of qualified staff or students in every province is a very important advantage for Turkey. You may have funds, but you might not have the resources to support these initiatives. You need both funding and the resources. 
 
I would like to point out a few special points that may interest you. There is a telephone registry system here, and this is very important for us because there are about 68 million subscribers, and there are 200 million mobile devices. 20 million of them are on the blacklist, so we shut them down. There are about 170 million devices that are working normally. How does this work? Turkish people have an extra device in their homes, which they do not use. The device registration system is so important because all these devices will have to enter the country legally. When they come through illegally, tax is affected. That amounts to about $30 billion from registered phones. This means that we are collecting real tax revenue of $8billion, which is very important for the State.
 
Another point is the number portability system. There are about 68 million mobile phone subscribers in Turkey, and about 50 million of them actually transport their numbers to another network. Some of them move two numbers at the same time, and that is very significant. This is a special case in the world, and we do not know if that is a good or a bad thing. With the new arrangements and regulations that were provided by this institution, this will make it so much easier for customers. There is an interconnection fee, and by lowering the connection fees, all of a sudden the operators started releasing tariffs like 500 free minutes for all networks. 
 
It increases competitiveness in all countries, and there is a lot of variety for consumers as well, because as a consumer you may like one of Turkcell’s tariffs now, but maybe in a year or six months later, you may want to go to Vodafone or Avea and find a more suitable tariff for you. You can move around these networks without changing your number, and it is free of charge. Nobody ever complains about service issues here in Turkey. If there is one complaint, I would say it is that there is too much choice, which gets confusing. So there is a page where you can compare tariffs and try and choose the best network that is suitable for you. 
 
But it is a really important piece of regulation, because there are over 1,000 tariffs. 
 
Where do you see the opportunities for British investment in the ICT sector? Obviously Vodafone has done very well. 
 
The telecoms part is a little challenging, because there are huge players in the sector, and it would be very hard to find a place in the sector. We want more locomotive players in the sector. We wanted to give 3G licences to four companies, but it was not possible. Having said that, even small operators have over 14 million subscribers. In other countries, like in Europe for example, the penetration rate is 130% to 140%, which means that people have two lines, and they use one more than the other. But here, almost 68 million subscribers use almost every single line that is active.
 
It is a little struggle for companies to come into this environment and survive, but in the ICT sector, and the value-added services sector, there is a huge opportunity. This is important for SMEs in particular. Whoever comes in within the giants gets crushed. There are also a lot of human resources in Turkey who can work in the sector, and that is extremely significant. In Europe, people who are working in R&D centres are those who usually come from other countries. 
 
When we said we wanted 500 R&D staff from the third generation licensing companies, those 500 members of staff have to be Turkish. We do not have a problem with that, because we have a lot of enthusiastic young people who are willing to work in that sector. It is very important to have a young country. For the last three years, Turkey has been the chattiest country – we have an average of 292 minutes per month and we are followed by France, which talks about 247 minutes on average per month. But this is kind of changing, and we will be able to provide you with the most accurate statistics soon. There is no competition for us with SMS and text messaging. We use the internet intensively of course, which is very much to do with the democratic structure of the country, and social media. 
 
I would like to touch upon a few issues, one of them being the education project that I talked about earlier. It is probably one of the largest education projects in the world right now. The total budget is said to be $7 to $8 billion, but I think it will be more. Why does that project have such a high budget? First of all, we have 40,000 elementary and secondary schools, and about 600,000 classrooms. So in every single classroom, there will be an iBoard. There are about 16 million students who are in these schools, and in four years every single one of them will have received a tablet computer, and this has already started.
 
The third big step after this is to provide appropriate infrastructure, and a curriculum that will support this infrastructure. The most challenging aspect of the project will probably be training the teachers. Children already use these devices at an early age, but the adults need to receive training. With this project, it will be possible to provide a standardised level of education in terms of quality in every single part of the country. In about 10 years, the profile of students taking these exams will change dramatically, and the digital divide between the regions will be overcome.
 
Another important issue regarding the sector is cyber security. The government and the state are aware of this, and certain initiatives have started. A Board for Cyber Security has been established, and the head of the board is the Minister of Transport and Communications. National efforts are important, but this cannot be resolved with just domestic efforts. There needs to be cross-border cooperation in these areas. 
 
We also have an accredited measurement lab for telecoms devices to ensure compliance. This is an EU project. The existence of mobile connection powers. For example there are natural disasters like earthquakes in Turkey, and the communications did not go down thanks to these mobile establishments. Another important point to mention is our monitoring system – where interference is detected. This covers the entire country, which is important when it comes to security. 
 
Analogue broadcasting is also an issue, which is being discussed right now as well as cyber security and international roaming. 
 
What final message would you like to send to the half a million readers in the UK as well as the 40 million readers online about the ICT sector in Turkey or Turkey in general?
 
The two ICT sectors can cooperate. I think we can cooperate in a lot of areas, especially in value-added systems, IT testing centres and maybe digital archives, maintenance etc. Vodafone is the main centre in London, but Vodafone Turkey has a large R&D centre, where nearly 300 engineers are working. Vodafone decided on this and declared in Barcelona in February this year that it would be their global centre. 
 
I would like to touch upon important issue. To reshape the organisation to be more global and inclusive, ICANN (the Internet Corporation for Assigned Names and Numbers) has decided to open two new hubs in Singapore and Istanbul to serve Asia-Pacific as well as Europe, the Middle East and Africa (MENA). The office in Istanbul will be an actual hub and part of the core fabric of running ICANN. It will handle the same operations as that of the headquarters in Los Angeles, but during the working hours of the MENA region. 

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