1.2 Development Status of Information Industry

1.2.1 Development status and tendency of communication industry
At present, the Republic of Kazakstan is still in the period of national infrastructure construction, and is short of homeland funds. The development of communication industry is still relatively backward.
In 1998, the telephone man lines connected in Kazakstan was 1.7754 million lines with the average value of 10.36 lines per hundred people, 8.18 lines/hundred people higher than that in medium and low-income countries of Asia. However, from 1995 to 1998, the Compound Annual growth rate (CAGR) of telephone main line was increased with the rate of 3.3; with the average growth rate in medium and low-income countries of Asia was 16.3, and in Asian countries was 12.5, both of which were much higher than that in Kazakstan. From 1995 to 1998, the CAGR for telephone main lines awaiting installation was 24.0% in Kazakstan. In 1998, the total demand by users was 2.0691 million lines, and the degree of demand satisfaction was 85.8%, 4.4% lower than that in the countries with the same income level.
For the construction of local telephone network, the automation rate of telephone main line in Kazakstan is almost 100% (data in 1998), but the digitizing rate is very low, being only 20.1% (data in 1998). The annual failure number per hundred lines is as high as 405.0, that is each telephone line installed will fail for 4 times each year. Compared with the countries with the same income level, the installation rate of residence telephone in Kazakstan is at the higher level. Howrever, the public telephone possessed per thousand people is only 0.37. In addition, both the initial installation fee and the monthly rental fee for unit telephone are relatively high. It is more convenient to use residence telephone. In recent years, Kazakstan has already liberalized local network markets to a certain degree. They broke with convention and firstly opened local services market. While in most situations, Public Operating Corporation maintains the exclusive right of long-distance services.
Although Kazakstan had not realized digitalization for mobile phone in 1998, the growth speed was relatively high. Especially within the year across 1997 and 1998, the CAGR was 165.1%, almost 3 times higher than the average level in Asian countries.

Please refer to the following table for detailed comparison:
Mobile phone users Occupy total telephone users %

In 1998, the investment of Kazakstan in telecommunication was US$ 20 million, US$ 1.2 per capita, which was at the lower level among the countries with the same income level (In the countries with the same income level, the per capita investment was US$ 11.6). This country is in the period of basic construction, so the investment in telecommunications occupies only 7.0% of the gross income, far behind of that in the countries with the same income level. In addition, from 1995 to 1998, the annual growth rate of duty for telecommunication services industry staff was-9.2, and number of main lines for each employee was 47, being at the lower level. Up to 1998, there was on ISDN services.
The IT development in Kazakstan also lags behind. Up to 1998, Kkazakstan had altogether 1480 sets of host computer, less than one set per 10 thousand people; and the total amount of Internet users was only 20 thousand.
1.2.2 Development status of electronic information products
In Kazakstan, electronic products are demanded in a large quantity, but the production capacity is very low. They mainly rely on import, which provides a broad market for foreign manufacturers. For example, for household electric appliances, it needs to import every year 300 thousand sets of color television and 250 sets of washing machine. Chinese household electric appliances, Korean electronic products and Japanese office equipment, all have stable market in Kazakstan.
In conclusion, at present the information industry in Kkazakstan still lags behind, which is restricted by economic development to great extent. The economy of Kazakstan has already recovered, which make Kazakstan become an emerging market, lying between the increasingly opened basic services market of developed countries and the relatively closed market in other places of developing countries. The movement of capital brings into more investment projects. The Kazakstan Government provides policy support to all intake of foreign capital and promotion of high-tech development, which indicates the springtime for the development of Kazakstan information industry, has already come.