Web Woes: Lower prices, worse service in Armenia’s new year online

Since January 1, internet subscribers in Armenia have paid tariffs reduced from last year’s prices, due to a drop in wholesale prices on the service coming to the country. For example: Web Am is now offering its subscribers six weeks’ service for the same price that a month previously cost (12,000-36,000 drams, or $32-96).

But: Also since about January 1, internet service to Armenia has been at least twice as slow and inconsistent as before, with home users and offices (including the ArmeniaNow newsroom) hampered by poor service even by “Armenian standards”.

Wholesale internet prices have been reduced following a decision by the Public Services Regulatory Commission (PSRC), which set the maximum monthly tariff for international IP transit services at 174,000 drams, VAT inclusive (about $460) by ArmenTel (brand name: Beeline) and Fibernet Communication, the companies that have a dominant position on the Armenian market.

Executive Director of the Union of Information Technologies Enterprises Karen Vardanyan thinks that this decrease may have a negative effect on the quality of the internet.

“Until now the wholesale internet providers purchased internet of low price and low quality, for which they managed to ensure high profits. Now that wholesale prices within Armenia have decreased, the risk increases that these companies will buy internet from abroad at a lower price and, accordingly, of lower quality than it is today,” says Vardanyan.

ArmenTel spokeswoman Anush Beghloyan echoes Vardanyan’s concerns about the decision of PSRC.

“The maximum price set for internet is very close to the level of self-cost, which has an adverse effect on the volume of investments,” says Beghloyan, implying investments into the improvement of infrastructure on Armenia’s internet market.

In order to avoid the worsening of the quality, according to Vardanyan, PSRC should be stricter in enforcing internet quality standards.

“Requirements should be defined for the quality of internet offered in the country (such as signal stability, certain speed), and it should be clearly described which quality requirements the provided internet should meet,” says Vardanyan. “The commission must oblige all internet providing companies to mention these quality standards in their contracts, which will enable the consumer to prove the low quality of services rendered if these conditions are not met.”

Chairman of the commission on enterprise and consumer rights protection of the Public Council Arshak Sadoyan also turned to PSRC with a similar idea.

Referring to Armenia’s law “On Electronic Communication”, Sadoyan demands that PSRC should make ArmenTel and K-Telecom (brand name: VivaCell-MTS), which have a dominant position in GSM, 3G, 3G+ networks, to provide clear definitions of their quality and price.

Summing up the achievements of the IT sector at the end of last year, Prime Minister Tigran Sargsyan said that internet prices in 2009 halved and the number of internet users doubled.

“We started the year (2009) with 75,000 users, at this moment we have 150,000 users. And the number of GPRS users already makes 700,000,” said the premier. “And the tendency of a price decrease will continue also in 2010.”

Specialists also observe certain positive shifts in the sphere as they point at competition among wholesale and retail internet providing companies, which, at present, however, has worsened rather than improved the quality of the internet.

The entry of the third mobile phone operator, Orange, into the Armenian market at the end of last year and its offer of a low internet price made other players in the sector revise their offers towards being more favorable for customers:

According to information security specialist Samvel Martirosyan, this competition has increased the number of internet users and naturally had certain impact on quality as well.

“The special offer from Beeline at the end of 2009 for its Hi-Line internet package attracted a large number of customers, which surely had an impact on the quality. A large number of customers are not yet satisfied with the infrastructure of providers,” says Martirosyan.