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Cost of connecting to internet may increase in Ukraine

11.11.2021, 13:17

In its decision of October 28, the Kyiv District Administrative Court resumed the introduction of a customs duty on cable imports of 23.5%, which may lead to an increase in the cost of Internet connection in Ukraine. This was announced on November 10 during a press conference by the Chairman of the Board of the Ukrainian Internet Association (UIA) Oleksander Savchuk, Ukrinform reports .

According to Oleksander Savchuk, back in April, the Interdepartmental Commission on International Trade of the Ministry of Economy decided to impose a duty on importation of all cable products in the amount of 23.5%. However, in September 2021, due to appeals from Internet service providers and telecommunications companies, the commission invalidated that decision. 

However, in October 2021, two companies filed a lawsuit demanding that the commission's decision to impose the duty be reinstated.

"On October 28, the Kyiv District Administrative Court ruled in favor of Odeskabel and Yuzhkabel, and on November 2, customs offices were ordered to levy an additional duty of 23.5% on imported cable," the UIA chairman said.

He stressed that the association was opposed to such a decision, as it would have significant consequences for the telecommunications services market in Ukraine. In particular, this may lead to market monopolization by several major cable manufacturers in Ukraine, which will lead to higher prices. In addition, there may be a shortage of cable on the market, as domestic manufacturers do not have the capacity to meet 100% of demand for these products in Ukraine.

“The introduction of the duty will increase the cost of construction of fiber-optic communication lines. The cost of the cable is up to 90% of the cost of materials for such construction, and it is clear that in proportion to the cost of the cable will increase the cost of construction. The cost of operating such lines will also increase, ” Oleksander Savchuk explained.

He added that the increase in tariffs would pose a potential threat to the implementation of the program of the Ministry of Digital Transformation to provide a subvention for the Internet in villages. Savchuk noted that the operators calculated the cost of connection in a particular settlement in the summer. And such a significant increase in prices will make these calculations irrelevant.

The Chairman of the UIA Committee Maksym Tulyev clarified that the introduction of a duty on cable imports would increase the cost of construction of new telecom networks by more than 20% and increase consumer tariffs for Internet access by 7-12%.

It will be recalled that in April 2021, Deputy Minister of Digital Transformation for Digital Infrastructure Development Oleksander Shelest said that the decision of the Interdepartmental Commission on International Trade to impose an additional duty on cable imports, including fiber-optic, could significantly slow down Ukraine's high-speed Internet coverage.

The Ministry of Digital Tranformation then said that they had got assurances from the Ministry of Economy that the market situation would be monitored even after the introduction of duties, but at the same time the ministries agreed on an immediate response of the Ministry of Economy to crises.

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