Internet Prices: As a Promotion of Monopoly

Starting today (August 15, 2024), the tariffs of internet providers in our country are increasing. That is, after the changes proposed by internet providers, the current minimum tariff for fiber-optic internet services with a speed of 40 Mbit/s and a monthly fee of 18 manats will be replaced by a tariff with a speed of 100 Mbit/s and a monthly fee of 25 manats. To explain it in simple terms, Aztelecom and Baktelecom are saying, "I am canceling the 40 Mbit/s speed and selling internet with a minimum speed of 100 Mbit/s. I no longer have a low-speed internet package." With this, both the speed and the price are increased.

At first glance, it may seem that there is nothing unusual about this. Companies like Aztelecom and Baktelecom appear to be doing their customers a favor by allegedly increasing the speed 2.5 times while only raising the price by 7 manats. However, there are significant economic interests and other factors behind this. These interests can be classified under the following categories:

First of all, it should be noted that 100 Mbit/s is excessive speed for standard consumers. The average citizen is more interested in purchasing lower or medium-speed internet rather than a high-speed internet package. Research shows that 99% of the country's population uses a speed of 40 Mbit/s. Internet users now almost universally reject the higher-speed tariffs of 60 Mbit/s, 80 Mbit/s, and 100 Mbit/s despite their availability. This limits customers' right to choose alternative services. If there is a concentration on the lowest-speed internet package (40 Mbit/s), this indicates both the lower income levels of the population and that their demand is closer to this point. It is not difficult to understand what it means to artificially push the population out of this point: providers' desire for higher margins!

Secondly: Aztelecom, Baktelecom, and Azevrotel are natural monopoly companies. Of these three (Aztelecom, Baktelecom, Azevrotel), all are under the jurisdiction of the Ministry of Digital Development and Transport (MDDT). According to the State Statistics Committee (SSC), there are 1.6 million internet subscribers in the country, more than 60% of whom belong to these natural monopolies. The Information and Communication Technologies Agency has registered 163 provider companies, yet the market share of the rest is only around 1%. By encouraging their customers to purchase higher-speed internet packages (100 Mbit/s), these companies are actually strengthening their oligopolistic powers in the market, moving closer to monopolistic positions. The MDDT, by remaining silent in the face of these tariff increases by natural monopolies, actually fosters the violation of customers' rights.

Thirdly: Let's look at the tariffs paid by most customers for the internet services they have been using over the last 3 years. Until 2022, 10 Mbit/s was 12.5 manats; in 2022, 30 Mbit/s became 18 manats. Now, 100 Mbit/s is 25 manats. Considering the differences in internet speed, internet customers will now pay exactly twice as much as they did before 2022. Can we say that over the past three years, any other product or service has more than doubled in price, justifying a 100% increase in internet fees? This shows that natural monopoly internet providers are using their monopolistic positions to make bigger profits. This is a case of obtaining high income through monopoly pricing.

Fourthly: For many years, the regulatory body (the Tariff Council) has generally encouraged tariff increases while almost serving as successful advocates for these state-owned natural monopoly companies. Instead of protecting the interests of consumers, they have defended producers and business entities providing services. They have justified their price increases. However, in the interest of fairness, it should be noted that this time, the Anti-Monopoly and Consumer Market Supervision State Service under the Ministry of Economy condemned the actions of the internet providers who raised prices. Frankly, this is a new reality and a paradoxical situation.

They made the following statement on their official website regarding this move by internet providers: “The State Service has launched an investigation into violations of the requirements of the Competition Code in the broadband internet services market. As a result, the options for customers who want to choose a lower-speed internet package have been restricted.”

Fifthly: The risks associated with the increase in internet tariffs by approximately 30% across the country are also not excluded. Following this decision, low-income individuals, residents of our regions, and vulnerable social groups may increasingly opt out of internet services. According to Maslow's "Hierarchy of Needs," a person first acquires essential consumer goods, then feels the need to fulfill moral and social needs. If food products constitute the majority of their expenses, their interest in other social or moral needs will be demotivated. In an era where the 21st century is called the "internet era," the limited access of citizens to expensive internet in our country may push them closer to living in the Middle Ages than in the present day.

The issue should also be viewed in the context of human rights and freedoms. As we know, for several years now, the UN has regarded internet access not merely as an economic resource but as a matter of human rights and freedoms in its official documents. From this perspective, if citizens' access to the internet is hindered by increased tariffs, this should not only be seen as an economic issue but also as an attempt to restrict people's rights and freedoms.