#19 - JRL 7070
Moscow Times
February 19, 2003
Russia Loses Ground in IT Race
By Larisa Naumenko
Staff Writer

A Russian household spends only $4 per month on information technologies, Russian businesses hardly use e-mail for correspondence and the Russian government is relatively unsuccessful in promoting the sector, according to a report released this week.

These and other negative factors pushed Russia's ranking to 69th, down from last year's 61st-place showing, among the 82 countries surveyed by the World Economic Forum's annual Global Information Technology Report for 2002-2003.

Authors of the report, released for the first time last year, define the list's criteria as the degree to which a country is prepared to participate in and benefit from information and communication technology.

Because reliable data were not available for all countries, only 82 were included.

Russia fared relatively poorly next to its former communist peers.

Latvia, Lithuania, Estonia, the Czech Republic, Hungary, Slovenia, Poland and Bulgaria ranked ahead of Russia. Of the countries evaluated, only Ukraine and Romania had lower scores.

The list was topped by Finland, followed by the United States and Singapore.

The report's authors ranked countries based on 64 criteria, which were divided into three indexes -- environment, readiness and usage.

Russia ranked 68th in terms of its market, and political, regulatory and infrastructure landscape, 60th in openness toward new technologies and 78th in usage rates.

The report shows that Russia can tap only a limited supply of venture capital, suffers from low competition in the telecommunication sector. Only 3.7 percent of Russia's gross domestic product is invested in information and communication technology, compared to New Zealand's 13.6 percent, the highest rate among the countries surveyed.

Russia came in at a relatively impressive 29th in the number of skilled scientists and engineers, but the report went on to chide Russia's legal system for inadequate support of IT businesses.

Physical infrastructure also remains weak, the report said.

The country has only 218 telephone lines per 1,000 people, with a waiting list backlog stretching five years long. Luxembourg, by comparison, has 750 telephone lines per 1,000 people, while 22 countries have no telephone service backlog at all.

The country lacks good high-speed and public Internet access, the report said.

On a brighter note, costs here for local calls from landlines and mobile phones are relatively low in comparison to the nation's GDP.

The report counts only four Internet accounts for every 100 Russians.

Russia finished last in terms of household information and communication technology spending as the $4 that an average household spends per month pales next to the $53 spent by the average U.S. household.

Using World Bank and International Telecommunication Union data for 2000, the report misses the mark somewhat when it says there are only 22 cellphones for every 1,000 citizens -- and zero broadband subscribers.

Estimates by ACM Consulting and J'son & Partners, both based in Moscow, show cellular penetration in Russia reached 12 percent of the population by the end of last year. A spokesman at J'son & Partners added that 2 percent of the Russian population has broadband access.

Fiona Paua of World Economic Forum, one of the report's co-authors, conceded that the authors had struggled with the lag in data relevance.

"Unfortunately, for variables like cellular penetration, the changes are so dynamic they often are not captured by hard data in a timely manner," she said.