Uzbekistan has been struggling to bring its telecommunications system up to the standard found in developed countries. For a long time the country’s telecom infrastructure generally remained outmoded and inadequate. Nevertheless, since 2002 the situation has been gradually improving, due largely to the government’s decision to give national priority to Information and Communications Technologies (ICTs). Consequently there has been an upward trend in the country’s telecom market over recent years, with rising revenues and increased investment in infrastructure. The government’s strategic policy was to privatise the incumbent operator Uzbektelecom and to open the market to competition in accordance with the country’s aim to join the World Trade Organization (WTO).

The telecom sector has been regulated by the Uzbek Agency for Communications and Information (UzACI), the successor to the Ministry of Communications. In July 2005 the UzACI approved a telecommunications investment program for 2005-2010. Among other things, the program aimed to increase the total number of fixed lines to 2.2 million and achieve 100% digitalisation of the network by 2010 (only about two-thirds of the network was digital by 2007, but by March 2009 this has been lifted sharply to 89%, according to the UzACI), while also accomplishing a marked improvement in mobile telephone and Internet penetration. The program was to be financed with loans and foreign investment, the internal resources of operators and providers, as well as government funding.

The state-owned national telecom operator, Uzbektelecom, was granted a monopoly on international voice services and VoIP until 2007 and controlled around 98% of local fixed-line telephony services, and 96% of international fixed-line services. Little progress had been made in the government’s plans to privatise Uzbektelecom despite several attempts over the last decade to sell off a sizable stake to a foreign investor. The only alternative fixed-line providers were Buzton and East Telecom, which were servicing a limited number of subscribers.

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