2020 April-May Analysis Featured

The Georgia wide web – a snapshot of the country’s internet infrastructure

In the past two decades, Georgia has gone from a country where the majority of the population has no internet access to a regional internet hub. Read on to find out how the local industry has evolved, what challenges it faces in its expansion and where it’s headed.

For a country that got its first DSL connection in 2002 and only had 27% of the population online in 2010, Georgia has come a very long way.

As of 2020, Georgia is ahead of most of the EU in terms of fiber optic cable penetration – currently the most common form of connection in the country – and at least 70% of Georgians were using the internet every day as of November 2019 (according to the Caucasus Research Resource Center’s Caucasus Barometer 2019 Georgia).

Overall, most residential users in Georgia have access to a good internet connection, though quality and stability may vary somewhat by region and neighborhood. The most obvious limitation is that it’s not generally possible to get more than 100 megabits per second (Mbps)—a relatively low speed limit for a modern fiber network, but quite good for the Caucasus region. That’s not an issue for residential users, though, who usually don’t need much more than 10-20 megabits per second for typical streaming and browsing.

A large-scale, data-heavy enterprise with international traffic might need 1 or even 10 gigabits per second (Gbps), however, and that can be a bit more of a challenge to find in Georgia.

The country’s geographical location and modern infrastructure make it an attractive place for routing and storing data, though, and there are efforts under way to enhance its potential as a regional internet hub. Fiber penetration is increasing, the regions are steadily getting more connected, a new international cable is in planning stages, and regulation is working to keep the markets open and innovative.

Figure 1. Breakdown of internet connections by type over last 10 years in Georgia

What does Georgia’s internet infrastructure look like?

Georgia’s primary fiber links run through the Black Sea to Poti, where high-capacity cables connect the country to Bulgaria via the Georgian-owned Caucasus Cable System owned and operated by Caucasus Online, and Russia via the Russian/Danish/Georgian-owned Georgia-Russia Optical Fibre Submarine Cable System. A plan for a new cable between Romania and Georgia was put forward in 2018 by Diamond Link Global in partnership with Subcom, but no major updates have emerged since then.

From the Black Sea, the fiber connection runs along the Georgian Railway line to Tbilisi, forming the country’s primary internet backbone. Extensions from this cable also provide connections to Azerbaijan and Armenia, both of which depend heavily on this connection. The network ultimately reaches as far as the Iran-Pakistan border.

The reach of the Caucasus Cable System and its direct route to Europe, particularly its avoidance of Russia and active conflict zones, already make Georgia a geopolitically significant regional connection hub.

A Caucasus Online employee told Investor.ge this is seen as an opportunity: “Georgia has a geographically
strategic hub location, a key position in the Caucasus region, and if we talk about Georgia as a gateway between Europe and Asia, this is true also for digital infrastructure.”

Of course, the cable also gives Georgian users fast, international internet access—If they’ve got a line to the backbone.

Figure 2. Number of internet subscribers over last 10 years in Georgia

Getting optical fiber (currently the gold standard for high-speed broadband connections) to dense urban areas like Tbilisi and Batumi isn’t very difficult, as connection distances are relatively short and the number of subscribers makes the investment profitable. Even so, cities aren’t 100% covered by fiber to the home/premises (FTTH/FTTP), as upgrading the copper-based DSL (an older technology with lower bandwidth capacity than fiber) networks in some older locations is expensive and time-consuming—an issue shared by many other European cities, where internet speeds also tend to drop as you approach the older areas.

Nonetheless, as of December 2019, over 82% of all internet connections in Georgia were fiber, up from 76% in December 2018, 55% in 2015, and 43% in 2012. The total number of connections more than doubled from 426,293 in December 2012 to 915,622 in December 2019, but fiber actually grew from 184,109 connections to 758,680—an increase of 574,571.

That’s because DSL connections have been steadily shrinking in number since around 2014, with telecom companies gradually upgrading them to fiber. As of December 2019, there were still 41,345 DSL connections in Georgia, with a significant share of those located in Tbilisi, Batumi, and Kutaisi—likely in the abovementioned older areas. That number is steadily shrinking, however, with DSL losing at least 1,000 connections a month while fiber gains at least 10,000.

Fixed wireless is currently the second-most common connection technology in Georgia, with 94,846 connections recorded in December of 2019—about 10% of the total. Unlike all the other technologies mentioned, the absolute number of fixed wireless connections has stayed fairly stable since 2017, hovering between roughly 85,000 and 100,000. This relative equilibrium may be due to the expansion of both the fixed wireless and fiber networks, with the growth in new wireless masts offsetting the expansion of fiber into some areas.

One piece of infrastructure Georgia is currently missing is an Internet Exchange Point, or an IXP, which is a physical location where multiple networks (ISPs, CDNs, et cetera) converge in order to route information between them directly rather than depending on private connections or requiring data to take a circuitous route to some farther away point where the data can be exchanged. This has an impact on speed, and, since the data may have to travel through networks that charge fees for using their bandwidth, it affects prices and smaller ISPs’ ability to compete as well.

NewTelco Georgia has been advocating for carriers to cooperate and set up an IXP in Georgia since 2016, managing director George Gotoshia told Investor.ge, and while it’s not on the immediate horizon, it’s an important part of modern internet infrastructure and will likely be created at some point in the future.

Armenia set one up in 2010, they’re ubiquitous in Europe, and other countries in the region like Kyrgyzstan, Kazakhstan, Uzbekistan, Turkey, and Iran all have at least one. While an IXP won’t necessarily enable noticeably faster internet, it will certainly help save on bandwidth and fees.

Rates of infrastructure-sharing are also fairly low. You’ll generally see three cell towers clustered together, Gotoshia says, as the mobile networks aren’t just putting up one and sharing it, which is common practice in Europe. Fixed broadband is in a similar situation, with telecoms generally having to build out infrastructure before offering service in an area, rather than being able to compete directly by paying a fee to the cable owner.

Internet penetration rates

How many people is the internet actually reaching in Georgia?

If you look at the more densely-populated areas, penetration rates seem to equal of any country with robust telecom infrastructure. Tbilisi, Batumi, Rustavi, Borjomi, and even Stepantsminda technically have more connections than households—likely because businesses are being counted as connections, but not households. If you live in a city, chances are very good that you have access to fixed broadband.

If you live in a more rural area, though, there’s a chance you won’t have access to a connection at all. The map of Georgia showing internet connections vs households is a fairly uniform light green when you look at the regions, indicating penetration rates in the 40-70% range. Guria (33%), Racha-Lechkhumi (15%), and Kvemo-Svaneti (15%) are the exceptions here.

If you break the regions down into districts, though, it becomes easier to see that certain areas have very little connectivity, with some having just 5-15% of their households connected. These are typically quite remote, mountainous places with populations that, in many cases, are getting smaller—a trend partially attributable to the lack of internet access.

This is where projects like Tusheti Community Internet Network can be especially effective, as shown by the success of a fixed wireless project covering 76 villages in the Khevsureti/Pshavi/Gudamakari ravines, built with the support of the Internet Society (ISOC) in Georgia and the Small and Medium Telecom Operators Association of Georgia (TOA). Both Tusheti and the Mtskheta-Mtianeti districts connected fairly significant segments of the population for relatively low cost, but the fact remains that these and any future initiatives can really only come from non-profit and community organizations, as the cost of entry is high and subscriptions from small, spread-out populations are unlikely to even cover infrastructure costs for a commercial provider.

Covering Georgia with fixed wireless may not be the only solution, though. Satellite internet is currently used around the world (though minimally in Georgia), but its low speeds, high latency, and instability make it a last resort for any. Recent developments in low-Earth-orbit satellite constellations like Starlink and OneWeb, however, could potentially provide even the most remote Georgian settlement with low-latency, gigabit-speed internet by the time the decade is out. Silknet has already signed a distribution agreement with OneWeb, making them responsible for providing the base stations and other equipment required to use the satellite internet. If OneWeb sticks to its plan to start service in 2021, it will be a very clear alternative to the arduous process of laying fiber and building mast networks.

Another innovation on the horizon is the coming 5G revolution, which, a Caucasus Online employee believes, “will significantly change existing business models not only for telco companies, but also for everyone. Telco companies will need to create ecosystems with different participants to provide 5G service,” they say, and “Caucasus Online will be one of the main parts of this ecosystem.” 5G is a short-range technology best-suited to urban environments, where its up-to-2 Gbps speeds may end up actually being faster than the hardwired fiber networks.

Future developments and opportunities

Yes, developing Georgia as a regional hub for internet traffic will take some infrastructure upgrades and changes on a few different levels, but it certainly seems set up for success: it has higher rates of fiber use than most of Europe, it’s in a geographically advantageous area between Europe and Asia, and the digital economy is catching up with the infrastructure.

Whether fixed wireless, low-earth-orbit satellites, or 5G networks, the Georgian telecom sphere seems eager to make the most of the latest tech—and, purely from a numbers standpoint, their track record seems to back up that spirit. Georgia went from having very little internet connectivity to having most of the country connected to modern networks in less than two decades, and there’s now a chance to reinvest some of the residual energy from that catch-up growth into expanding Georgia’s networks both domestically and internationally.

Regardless of anything else, though, Georgia’s journey from 130,000 DSL and 64,000 fiber connections in 2010 to 712,000 fiber and 37,000 DSL connections in 2019 is an impressive achievement, and one which may lead to Georgia becoming a significant digital hub in the future.