International scientific journal
“Interpretation and researches”
Volume 1 issue 7 (53) | ISSN: 2181-4163 | Impact Factor: 8.2
173
BRIDGING THE GAP: REGIONAL TARIFF DIFFERENTIATION
TO INCREASE FIXED-LINE INTERNET USAGE IN UZBEKISTAN
J. Khoshimov
Master of
Graduate School of Business and Entrepreneurship, Tashkent, Uzbekistan
Abstract:
This article examines the persistent underutilization of fixed-line
internet services in Uzbekistan, despite near-universal fiber-optic coverage. The
central issue is not infrastructure availability but affordability relative to household
spending. Using the ITU’s 2% benchmark of the average consumer basket, the study
proposes a regionally differentiated tariff model based on local economic conditions.
This model is designed to improve fixed-line adoption, optimize network investment,
and align with national digital inclusion objectives—offering strategic implications
for telecom managers and policymakers.
Keywords:
Internet affordability, consumer basket, differentiated pricing,
broadband policy, digital strategy, telecom economics.
In recent years, Uzbekistan has made the digital transformation of its economy
and society a top national priority. This ambition is clearly articulated in the
Presidential Decree No. PP–6079, “On approval of the Strategy “Digital Uzbekistan-
2030” and measures for its effective implementation” which establishes a strategic
framework for expanding access to modern information and communication
technologies across all regions of the country [1]. Furthermore, the Digital
Uzbekistan 2030 Strategy emphasizes the importance of widespread internet
accessibility as a driver of economic growth, innovation, and social inclusion.
National operator (“NO”) has achieved fiber-optic coverage for approximately 96%
of residential areas, amounting to around 11,000 covered settlements. Despite this
achievement, usage of fixed-line internet services remains significantly below
expectations. Of the country’s approximately 7 million households, 5 million fixed-
line ports have been installed, yet only 3 million are actively in use. This utilization
gap has raised serious concerns about the commercial viability of the network and its
ability to drive inclusive digital development.
This issue has been observed firsthand during the analysis. The core finding
from internal analysis is that the low usage rate is primarily driven by economic
affordability rather than lack of availability. Although infrastructure exists, many
households cannot afford to subscribe to fixed-line internet services under the current
standard tariff model. Therefore, this thesis proposes a differentiated regional tariff
structure, based on average monthly wages, as a means to increase demand and
optimize usage of the fixed-line infrastructure.
International scientific journal
“Interpretation and researches”
Volume 1 issue 7 (53) | ISSN: 2181-4163 | Impact Factor: 8.2
174
Affordability and the 2% Benchmark
The concept of internet affordability is defined internationally using a pricing
benchmark established by the International Telecommunication Union (ITU) and the
World Bank. According to these institutions, broadband internet should cost no more
than 2% of a household’s monthly gross income in order to be considered affordable
[2][3]. This "2% threshold" is widely used to assess whether internet services are
accessible to the average consumer in a given country or region.
To evaluate Uzbekistan’s situation against this benchmark, data on average
monthly wages for each region was obtained from the official statistics portal of the
State Committee of the Republic of Uzbekistan [4]. The analysis revealed that in
wealthier regions such as Tashkent City and Samarkand, the average household
income is sufficient to meet the 2% affordability criterion under “NO”’s standard
tariffs. However, in many other regions – particularly in rural or economically
disadvantaged areas – the cost of fixed-line internet exceeds this threshold. This
renders the service unaffordable for a significant portion of the population and
explains the low uptake despite wide availability.
Proposal: Regional Tariff Differentiation
Given the existing gap between service availability and affordability, this thesis
proposes the implementation of differentiated regional tariffs – a pricing strategy
adjusted according to the average income levels of each region. This approach aims
to ensure that broadband internet services meet the ITU’s 2% affordability
benchmark across all regions.
The advantages of such a strategy are multifaceted:
Improved Affordability: By calibrating tariffs to local income levels, services
become more financially accessible to households in lower-income regions. For
example, if a region’s average monthly wage is 4.5 million UZS, the internet tariff
must not exceed 90,000 UZS to meet the 2% standard.
Higher Infrastructure Utilization: With 2 million ports currently inactive,
significant capital investment in fiber infrastructure remains underutilized. Boosting
demand in low-income regions through reduced tariffs would increase the utilization
rate and improve return on investment.
Digital Inclusion: Expanding access to fixed-line internet fosters educational,
social, and economic benefits. Increased connectivity enables better access to e-
learning, remote work, online services, and financial inclusion – all critical for long-
term socioeconomic development [5].
Alignment with National Strategy: The proposal aligns with Uzbekistan’s
“Digital Uzbekistan 2030” strategy, which emphasizes inclusive digital growth and
nationwide internet penetration [6].
Implementation Roadmap, Risk Assessment and Mitigation
International scientific journal
“Interpretation and researches”
Volume 1 issue 7 (53) | ISSN: 2181-4163 | Impact Factor: 8.2
175
To operationalize the proposed differentiated tariff model, the following steps
are recommended:
Step 1: Regional Income Analysis. Use statistical data on average monthly
wages from [4] to categorize regions into tariff bands. Each band would represent a
wage range that determines an appropriate, affordable internet price.
Step 2: Tiered Tariff Design. Develop at least three to four tariff tiers
corresponding to income bands. Wealthier regions may retain standard tariffs, while
lower-income regions receive discounted packages.
Step 3: Pilot Rollout. Implement pilot programs in regions such as
Karakalpakstan, Fergana, and Surkhandarya to assess the impact on subscription rates
and revenue. These areas show low current usage and lower average wages, making
them ideal for testing affordability-based pricing.
Step 4: Regulatory Coordination. Work with regulatory bodies to ensure the new
pricing model complies with national pricing guidelines and consumer protection
standards.
Step 5: Public Awareness Campaigns. Educate the public on the new tariffs
through targeted communication campaigns. Messaging should highlight
affordability, improved access, and the social benefits of digital inclusion.
Several risks are associated with the implementation of differentiated tariffs, but
each can be mitigated with a strategic approach:
Revenue Risk: Lower prices in certain regions may reduce short-term revenue.
However, higher subscription volumes can offset this over time. Additionally, cross-
subsidization from wealthier regions or government subsidies may be considered.
Operational Complexity: Adjusting billing systems to manage regional pricing
will require upgrades to internal IT systems and additional staff training. However,
modern billing platforms support such customization with manageable investment.
Perceived Inequity: Some customers in higher-income areas may view the lower
tariffs in other regions as unfair. This can be addressed with transparent messaging
that frames the differentiated tariffs as part of a national strategy for digital equity.
Conclusion
Uzbekistan stands at a pivotal point in its digital development. While the
country has achieved extensive infrastructure coverage through fiber-optic expansion,
actual usage of fixed-line internet services remains low due to economic barriers. A
uniform pricing model fails to account for regional disparities in income and
undermines the accessibility of essential digital services for millions of citizens.
This thesis proposes a pragmatic and inclusive solution: a regionally
differentiated tariff model based on average monthly wages. This strategy not only
aligns with international affordability standards but also supports national policy
objectives aimed at inclusive digital development. By implementing differentiated
International scientific journal
“Interpretation and researches”
Volume 1 issue 7 (53) | ISSN: 2181-4163 | Impact Factor: 8.2
176
tariffs, “NO” can increase internet usage, improve infrastructure efficiency, and
contribute to narrowing the digital divide within the country.
The successful adoption of this model could also serve as a reference for other
developing nations facing similar challenges in internet affordability and
infrastructure utilization.
References:
1.
Presidential Decree of the Republic of Uzbekistan (2020) No.PP–6079 “On
approval of the Strategy “Digital Uzbekistan-2030” and measures for its effective
implementation”
2.
International Telecommunication Union. (2022). Measuring digital
development: ICT price trends 2022.
https://www.itu.int/en/ITU-D/Statistics
3.
World Bank. (2023). Broadband affordability policy guidelines.
https://www.worldbank.org/en/topic/digitaldevelopment
4.
State Committee of the Republic of Uzbekistan on Statistics. (2024).
Average monthly nominal wages by regions.
5.
Qiang, C. Z.-W., Rossotto, C. M., & Kimura, K. (2009). Economic impacts
of broadband. In World Bank (Ed.), Information and Communications for
Development 2009: Extending Reach and Increasing Impact (pp. 35–50).
Washington, DC: World Bank.
6.
Ministry of Digital Technologies of the Republic of Uzbekistan. (2021).
Digital Uzbekistan 2030 Strategy.
