Azerbaijan intends to link Europe with Asia via "Digital Silk Way”
Review by Caliber.Az

ANALYTICS  22 April 2022 - 12:25

Azerbaijan is consistently promoting the "Digital Silk Way" strategic telecommunications project, that intends to turn the country into a regional digital hub. The initiatives planned under this project include the creation of an optical corridor between Europe and Asia, the largest DATA centre in the region and the provision of modern digital services to neighbouring countries. The next step in promoting the components of the digital "Silk Way" was the memorandum of understanding signed on April 21 between the Azerbaijani telecommunications operator AzerTelecom and its Italian partner, a provider of network services, Sparkle.

In previous years, large-scale projects have been implemented in Azerbaijan aimed at the construction of high-speed optical backbone networks in the country and at the implementation of the “Fiber to the Home” (FTTH) program intended to provide consumers' apartments with fiber-optic internet. Initial works have been done on satellite communications and the expansion of VSAT channels. Automatic telephone exchanges have been massively digitized and Gigabyte Passive Optical Network (GPON) technology have been introduced, access to mobile Internet and fixed broadband services of providers in the most remote districts of the country have been expanded. A significant part of the work on these projects has already been implemented, and in recent years, Azerbaijan has taken one of the first places in the post-Soviet region in terms of coverage of digital IP infrastructure, public access to the Internet and network coverage.

However, today the country faces a new and much more difficult task: relying on the basic network infrastructure in Azerbaijan, it is necessary to accelerate the development of the digital economy, expand innovative production and the service sector, create preconditions for the formation of human capital, including in the software business, start-ups, etc. These tasks are to be solved within the framework of the strategic program "National Priorities of Socio-Economic Development: Azerbaijan-2030" and the "Strategy for the Socio-Economic Development of Azerbaijan for 2022-2026" implemented within this document. In particular, one of the goals of the digital transformation of the domestic economy is to increase its competitiveness, focus on innovative trends and more complete inclusion in the system of the international division of labour. Work in this direction has already begun: with the support of Turkey, Israel, and a number of European countries, the development of IT startups, IoT technologies and other elements of Industry 4.0 is accelerating in Azerbaijan.

The Digital Silk Way project, which facilitates creation of a technological foundation for the implementation of the Azerbaijan Digital Hub program in the country, also performs the tasks of digital transformation. This program is aimed at transforming Azerbaijan into a regional digital hub, localizing the largest DATA centre in the region and providing modern digital services to neighbouring countries.

The implementation of one of the components of this extensive program was started about two and a half years ago following the launch of the Azerbaijani-Kazakh joint project TransCaspian Fiber Optic (TCFO). This project envisages the laying of a 380-400 km long fiber-optic communication line along the bottom of the Caspian Sea, which will connect Baku and Aktau. The intensity of work on this sphere slightly slowed down during the pandemic crisis, but since the end of last year, the consortium partners - Transtelecom JSC, KazTransCom and the Azerbaijani communications operator AzerTelecom - have reaccelerated the implementation of the project.

Moreover, the project has recently found new partners in the countries of Central Asia and in Turkiye. So, in October 2021, the telecommunications companies of Kyrgyzstan - ElKat LLC and Uzbekistan - Telegraph 42 Management Gmbh LLC, joined this initiative by signing the relevant memorandums. In December, on the basis of the TCFO project, another memorandum of cooperation was signed, and this time, with the Turkish Türk Telekom International. In turn, back in November 2019, an interstate agreement was signed between Azerbaijan and Turkmenistan, which also provides for the laying of an optical cable line on the seabed. Last spring, this document was ratified by the Azerbaijani Parliament and approved by the head of state. The project of laying a 300-kilometer submarine cable line between Azerbaijan and Turkmenistan with a capacity of 2-4 terabit per second is planned to be implemented by AzerTelecom and Turkmentelecom in the coming years.

At the same time, the development of the western vector of the optical backbone of the "Digital Silk Way" is being carried out: the initiator of this project, the international group of companies NEQSOL Holding, last year acquired one of the largest telecommunications companies in Georgia, Caucasus Online, which owns a fiber-optic cable line laid along the bottom of the Black Sea and ensuring the transit of Internet traffic from Europe to the South Caucasus, and it will be connected to the TCFO cable infrastructure in the near future.

The formation of an extensive cable infrastructure should become the basis of the Digital Silk Way telecommunications project, which provides for the creation of a digital telecommunications corridor between Europe and Asia by diversifying IP routes. After the laying of a new optical line, a fundamentally new level of broadband services will be provided, since the design bandwidth of the submarine cable - about 4-6 terabits/s - will allow a multiple increase in traffic transmission rates for end users. An important advantage of the TCFO project is the relatively small length of its route, which will considerably reduce the delay in data transmission. Today, due to the need to overcome a significant distance on other cable routes, there is a delay in the transmission of data traffic between Asia and Europe, while signal transmission via communication satellites is much more expensive.

However, the implementation of the Digital Silk Way project isn’t limited to the participation of Azerbaijan and its partners in the global data transit: Baku sees this project as the foundation of large-scale undertakings aimed at transforming Azerbaijan into a regional digital hub and providing modern digital services to neighbouring states. The ultimate goal of the project is to turn Azerbaijan into one of the digital centres of the region covering the South Caucasus, the Middle East, Central and South Asia with a population of about 1.8 billion people in the future.

Azerbaijan is counting on profits by creating the largest DATA centre in the region with the provision of its resources on the overseas market, which will allow the largest content providers (such as Amazon, Alibaba, Facebook, Google, Netflix, Tencent and others) to open their representative offices in the country, as well as to store and transfer information and content overseas using the resources of the DATA-centre. Moreover, the technological and communication opportunities that the implementation of the Azerbaijan Digital Hub program will make it possible to turn the country from an importer into an exporter of digital services, thereby creating the basis for the development of a number of new areas of Industry 4.0. Consequently, these will contribute to the participation of Azerbaijani IT companies in international projects on the introduction of artificial intelligence in management, automatization of production processes, to the massive use of the Internet of Things (IoT) in the municipal and civil sectors, the introduction of chatbots in e-commerce, the banking and insurance sectors, etc.

With the opening opportunities for the implementation of the Digital Silk Way project, companies from China, Europe, etc. are showing increasing interest. One of these partners of Azerbaijan is planned to be the network services provider Sparkle, which signed an agreement on April 21 with AzerTelecom as part of the Capacity Middle East 2022 global telecommunications forum. As a leading global and Italian network operator and service provider, Sparkle has over 600,000 kilometres of optical backbone, its own DATA centres, global IP, cloud services and covers the region of Europe, Africa, North America and Asia. Sparkle offers a full range of ICT solutions for enterprises, ISPs, OTTs, media and content players, application service providers, and fixed and mobile operators.

As part of the Digital Silk Way project initiated by the international group of companies NEQSOL Holding and implemented by AzerTelecom, the Italian partner Sparkle is expected to take a role in the creation and management of the latest end-to-end network corridor between Central Asia and Europe, using its backbone infrastructure stretching from Turkey to Italy and further to all major European Internet nodes (backbones).

The participation of Italian partners helps accelerate the implementation of the project on the creation of the Eurasian cable infrastructure, will attract large traffic volumes and provide a variety of IP services to future users of this network. So, it will speed up the process of refunding invested amounts. The prospects and commercial attractiveness of the Digital Silk Way project is also evidenced by the fact that in 2020 at the Global Strategic Infrastructure Leadership Forum in the US this initiative was chosen as one of the top five strategic infrastructure projects in Asia. Moreover, in the light of the war in Ukraine and sanctions' confrontation in the future for Europe and Asian countries, the infrastructure of the “Digital Silk Way” passing through the territory of the South Caucasus is more preferable, and can serve as an alternative to Russian Internet backbones.

Caliber.Az