Georgia’s Internet Market – Low Quality, High Prices
18 April, 2015
Georgia’s Internet Market – Low Quality, High Prices
Georgian internet users have recently witnessed another round of price hikes, while the quality of the internet service remains questionable. Sector pundits believe the reason for growing prices and decreasing connection quality is a cartel agreement between two monopolist internet providers. To prevent price hikes in the future, they call upon the regulatory body to research the price-making policy and introduce cap retail tariffs.

The global tendency is to make high-quality internet available at a cheaper price. Georgia seems to be
moving in the opposite direction, unfortunately. Internet tariffs grow on an almost yearly basis. Every price hike is initiated either by Silknet or Caucasus Online, the two major internet providers.
There are up to 10 internet providers in Georgia (including Silknet and Caucasus) but in reality the consumer has to choose between companies that dominate the internet market. So the remaining internet providers buy internet at either Caucasus or Silknet and thus cannot offer cheaper prices. Every time the two companies increase prices almost simultaneously and justify each price hike with improved speed and quality. But nobody can check their service quality, as Georgian law envisages no quality standards.
In March, these two jacked their consumer tariffs up again, from 5 to 30 percent. And consumers had only two options: either move to a slower package or pay more. Neither of these options fit the consumers’ interests, say sector pundits and consumer rights’ watchdogs.
The last price hike was initiated by Silknet. It increased its prices on March 4th by an average of 6-10 GEL [20-30 percent] for both internet and TV services. The company explained that the reason was the doubled quality and speed of the internet. Caucasus followed suit on March 23. It increased tariffs by 2-5 GEL [5-11 percent]. However, unlike Silknet, Caucasus increased neither the quality nor the speed. According to its official statement, the price hike was a result of the difficult economic situation at both international and local markets.
The Association of Young Financiers and Businessmen of Georgia has researched the price-hike. The organization came to the conclusion that it was completely unfair and that the regulatory body must interfere. The study has reviewed the expenses of the two internet providers and found that their outlays in 2014 have decreased significantly compared to 2013. Therefore, they believe the recent price hike is baseless and indicates a cartel agreement.
“Caucasus Online and Silknet take more than 60 percent of the market. Therefore, they set the game’s rules, and their price policy is under a big question mark. There exists a very reasonable suspicion that a cartel agreement may have taken place. I think that they are taking advantage of their market position. The recent price hike seems unfair, and consumers have no choice in the matter,” said Shota Gubani, Vice President of AYFB, in an interview with Georgian Journal.
AYFB analysts also indicate that internet prices in Georgia are the most expensive in Europe and CIS [except Armenia and Azerbaijan, due to these two countries receiving their internet connection through Georgia]. This may deal a negative blow to the Georgian economy. For comparison, the average price for a 100-megabit per second connection is 100 GEL in Georgia. The same connection costs 12 GEL in Ukraine, 33 GEL in Latvia, 22 GEL in Lithuania and 12 GEL in Romania.
“Internet is not a luxury any more. It is an important source and medium of education and business operations. High prices will deal an indirect blow to the Georgian economy. So it is vital that the Georgian National Communication Commission [that regulates the market] research the price-making policy. GNCC must find out why prices are so high and why these two monopolist companies keep increasing them further,” Gulbani said.
AYFB analysts believe that the introduction of cap tariffs on consumer packages can be a way out. Therefore, they appealed to GNCC on April 7th to research the market and introduce cap tariffs if necessary.
Tamta Tepnadze, the Communication Ombudsman at GNCC, also questions the recent price hike, particularly on the part of Caucasus Online. She asks GNCC to demand detailed information about the reasons that led Caucasus to increase tariffs. In addition, the Ombudsman’s office questions whether or not the service quality corresponds to the prices and asks the GNCC to work quality standards out as well.
“There is no regulation in Georgia that prohibits companies from increasing prices,” Tepnadze explained to GJ. “Georgian consumers today cannot get the quality that would be adequate for the price. It is necessary to work out quality criteria and standards and to carry out future monitoring and research work based on them.”
According to Khatia Kurashvili, a spokesperson of GNCC, the regulatory body tries to insure fair prices through indirect means. For example, the regulatory body has just recently set a 32 GEL megabit per second cap limit on wholesale prices. This tariff took effect on March 1st, 2015, and is almost four times less than the price, that the companies demand – 120 GEL on average.
“GNCC will be closely monitoring the market reaction to indirect factors. If the problems continue, GNCC will undertake administrative measures and discuss the necessity of cap tariffs for retail prices as well,” she said.
Other Stories
Inovative and reliable online shop in Georgia -
Status of Georgia as a business and tourism interesting country is growing from year to year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equiavlent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30