AREA STUDY: UKRAINE VII. COMMUNICATIONS

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• Telecommunications overview • Fixed networks • Cellphone coverage and operators • Internet • Broadcast media • Major news channels • Information war with Russia

VI. COMMUNICATIONS

TELECOMMUNICATIONS OVERVIEW

• Telecommunications overview • Telecommunications • Policy-maker, regulator • Deregulation, key developments • Subscriptions, users • Universal services covered • Level of competition • 3G and 4G

TELECOMMUNICATIONS OVERVIEW

Ukraine's telecommunication development plan emphasizes improving domestic trunk lines, international connections, and the mobile-cellular system

Domestic:

• At independence in December 1991, Ukraine inherited a telephone system that was antiquated, inefficient, and in disrepair; more than 3.5 million applications for telephones could not be satisfied;

• telephone density is rising and the domestic trunk system is being improved;

• about one-third of Ukraine's networks are digital and a majority of regional centers now have digital switching stations;

• improvements in local networks and local exchanges continue to lag; the mobile-cellular telephone system's expansion has slowed, largely due to saturation of the market which has reached 125 mobile phones per 100 people

International:

• country code - 380

• 2 new domestic trunk lines are a part of the fiber-optic Trans-Asia-Europe (TAE) system

• 3 Ukrainian links have been installed in the fiber-optic Trans-European Lines (TEL) project that connects 18 countries

• Additional international service:

• Italy-Turkey-Ukraine-Russia (ITUR) fiber-optic submarine cable

• unknown number of earth stations in the Intelsat, Inmarsat, and Intersputnik satellite systems (2010)

Source: CIA World Factbook

TELECOMMUNICATIONS

• Ukraine’s telecoms market is supported by a population of almost 46 million.

• National telecom infrastructure is being modernized through considerable investment in both the mobile and fixed-broadband sectors.

• Competition is provided from a number of alternative operators.

• Wireless local loop and fibre operators are active, and although the incumbent Ukrtelecom remains the dominant player, the regulatory environment is likely to improve further following the sale of Ukrtelecom to the local conglomerate SCM Group.

• Ukraine’s telecom market has attracted investors from Turkey and Russia. The political tension which erupted in late 2013, and which continues, has brought focus to the vulnerability of the national telecom network, parts of which have been subjected to vandalism.

• Telcos operating in Crimea, annexed by Russia, left the peninsular after their licenses were made over to Russian firms.

• The telecom regulator now assesses market statistics, including revenue, excluding data from Crimea and the separately administered city of Sevastopol.

• Continuing political and military difficulties in the country’s eastern provinces have rendered it difficult for telcos to maintain network upgrades and services.

POLICY-MAKER, REGULATOR

Resources: Volodymyr Zverev. State Service for Special Communications & Information Protection of Ukraine Regulator’s website (DSTSZI)

Volodymyr Zverev since March2014

Source: ITU-ICTEYE

DEREGULATION – KEY DEVELOPMENTS Ukraine is deregulating business activities in various areas, including the telecom sector. The government is planning to implement a range of measures aimed at bringing the regulation of the telecommunications market in Ukraine up to international standards: • spectrum reframing • technological neutrality implementation • mobile number portability • a range of licensing procedures will be abolished or substantially simplified

The economics ministry is also planning to: • introduce a notification procedure for business activities in the telecommunications area that will

replace the current requirement that companies first obtain licenses to provide telco services • simplify the procedure for obtaining spectrum use permits • reduce government interference in the telecommunications market.

Source: Lexology, June 2015

• New cable to Crimean peninsula becomes operational • MTS and Volia end services to Crimea • damage to networks in the Donetsk oblast • DREAM cable linking Ukraine to Germany and China opens for commercial traffic • Ukrtelecom sold to Epic Services Ukraine for UAH10.57 billion • Telecom revenue growth slows to 0.4% in 2013 • Government suspends talks promoting free trade with the EU • Legal amendments to Telecoms Law widens regulator’s powers • Legislation approved to encourage network sharing • Number of fixed lines dips below 12 million • Regulator finalizing number portability conditions

SUBSCRIPTIONS/USERS

Source: ITU-ICTEYE

Telephones - mobile cellular: 59.344 million (2012); country comparison to the world: 22

Telephones - main lines in use: 12.182 million (2012); country comparison to the world: 19

UNIVERSAL SERVICES COVERED

Source: ITU-ICTEYE

LEVEL OF COMPETITION

Source: ITU-ICTEYE

3G and 4G 3G for 3 Players • Ukraine used to be one of few countries in Europe, if not the only one, that did not have the

capacity to offer 3G/4G technology to the consumers of telecom services. Until recent times only one operator – Trimob LLC, a subsidiary of Ukrtelecom – held a 3G license in Ukraine. Service is provided only in the few largest cities, and Ukrainian consumers mainly use low-tech 2G technology.

• In February 2015 the Government held a long-awaited public tender and issued 3G licenses to three major Ukrainian telecom operators – MTS, Kyivstar, and Astelit (operating under “the life:)” trademark).

• MTS and Kyivstar have each just paid the equivalent of approximately EUR 107 million to the State budget for their licenses; and life:) paid the equivalent of approximately EUR 131 million for its license.

• Conversion will cost these operators around an additional EUR 63 million, on top of their license fees. The Ukrainian Government reported this public tender as effective, transparent, and successful.

Plans for 4G and National Broadband Internet • 4G licenses have not yet been granted to any telecom operator in Ukraine, because there is at the

moment no spectrum available to them. The spectrum required for offering high-quality 4G services is currently only available to state security and defense authorities – so-called ”special users.”

• After the parliamentary elections in October 2014, a new parliamentary majority executed a Coalition Agreement, undertaking, in particular, to ensure the development of telecommunication networks of the 4th and 5th generations in 2015.

• Another ambitious initiative taken by the new parliamentary majority is the implementation of nationwide broadband Internet.

• Fixed network operators • Iurii Kolobov & Ukrtelekom

FIXED NETWORKS

Fixed network operators

• Ukrtelecom • Datagroup • Eurotranstelecom • Kyivstar (VimpelCom) • Vega

Wireless Local Loop (WLL) operators

• Velton Telecom • Intertelecom • International Telecommunication Company (ITC)/CDMA Ukraine • Telesystems of Ukraine/PEOPLEnet

Source: Budde

Ukrtelecom Kiev datacentre hosts Vega's equipment (22 Apr 2015) • Ukrtelecom, the Ukrainian national operator has announced that it has started providing colocation

services at its datacentre for the Ukrainian telecommunications group, Vega. Vega has taken seven racks in Ukrtelecom's 385-sq m datacentre located in Kiev.

15 Jan 2015: Interpol Red Notice for misappropriation, embezzlement or conversion of property by malversation, if committed in respect of an especially gross amount, or by an organized group.

IURII KOLOBOV & UKRTELEKOM

Source: Interpol

Iurii Kolobov Minister of Finance

February 28, 2012– February 27, 2014

Kolobov has worked for the State Savings Bank of Ukraine , the BTA Bank, the Finance Company Kibrit, State Export-Import Bank of Ukraine (UkrExImBank), and the National Bank of Ukraine.

In 2012 he was appointed Minister of Finance. On 25 Sep 2014 Ukraine opened a criminal probe into Kolobov; he is accused of illegally transferring a $450,000 fee to Russia’s state-run VTB Capital as a kickback for the 17 December 2013 Ukrainian–Russian action plan. Five days later a criminal probe into Kolobov was opened for embezzling Ukrtelekom. Since 3 July 2014 Kolobov is in the international wanted list for abuse of power. Russian prosecutors refuse to extradite Kolobov to Ukraine.

Iurii Kolobov: Misappropriation, embezzlement or conversion of property by malversation, if committed in respect of an especially gross amount, or by an organized group.

• Mobile phone subscriptions 1990 - 2010 • Ownership structure of MTS • Ownership structure of Alpha Group

CELLPHONE COVERAGE & OPERATORS

0 0 0 65 2224600 3692700

6498423

13735000

30013500

49076239

55240400

55694460

55333217

53928830

0

10000000

20000000

30000000

40000000

50000000

60000000

1 6 11 16 21

Mobile cellular telephone subscriptions

1990 1995 2000 2005 2010

Ownership structure of MTS

Ownership structure of Alfa Group

• Internet colocation • Routing issues • March 2015 cyberattack • Broadcast media • Operation Armageddon

INTERNET

INTERNET COLOCATION

Internet country code: .ua Internet hosts: 2.173 million (2012); country comparison to the world: 37 Internet users: 7.77 million (2009); country comparison to the world: 37

Routing issues

In early 2013, Ukrainian provider Vega (AS12883) became a reseller of BT services, but prior to Saturday had never announced any BT routes. Then, in the middle of a weekend night in Europe (March 7th), Vega began announcing 14 prefixes typically announced by AS2856 of BT. The graphics above display the percentage of our peers over time that saw either BT (AS2856) or Vega (AS12883) announce routes for the Royal Mail service. Both of these routes are covered by 144.87.128.0/17, which is announced by British Telecom (AS2856). So for about five days, a significant portion of the Internet was sending traffic destined for these routes to Vega in the Ukraine. Our traceroutes show that traffic continued on to British Telecom after passing through Kiev. Then on March 12, 2015, Vega (AS12883) began announcing 167 additional BT prefixes, including the following prefixes of the UK’s Atomic Weapons Establishment. After routing all of these prefixes for 90+ minutes, Vega stopped announcing any BT prefixes. Another noteworthy network impacted at the same time was that of defense contractor Lockheed Martin, apparently hosting an external VPN service at evpnuk1a.external.lmco.com, which resolves to 192.28.124.20.

March 2014 CYBERATTACK

• Ukraine's telecommunications system has come under cyberattack, with equipment installed in Russian-controlled Crimea used to interfere with the mobile phones of members of parliament

• Some Internet and telephone services were severed after Russian forces seized control of airfields and key installations in Ukraine's Crimea region on Friday, but now lawmakers are being targeted

• "At the entrance to Ukrtelecom in Crimea, illegally and in violation of all commercial contracts, was installed equipment that blocks my phone as well as the phones of other deputies, regardless of their political affiliation,"

• Ukrtelecom has already said armed men raided its facilities in Crimea on Friday and tampered with fiber-optic cables, causing outages of local telephone and Internet systems on the continent.

• Russia's FSB declined to comment whether Moscow was behind the disruptions in Ukraine.

• The main Ukrainian government website, www.kmu.gov.ua, was offline for about 72 hours after Russian forces seized control of the peninsula

• Estonia suffered a 10-day attack on its Internet services in 2007, which caused major disruptions to its financial system, during a spat with Moscow over a Soviet-era war memorial, and Georgia was hit by mass cyberattacks during a brief 2008 war with Russia over its pro-Moscow South Ossetia region.

Much of Ukraine's telecommunications infrastructure was built when it was part of the Soviet Union, along with what is now the Russian Federation, and is particularly vulnerable to penetration by Moscow. The recent disruptions do not expose full depth of Russian technological capabilities to conduct cyberwarfare in Ukraine.

OPERATION ARMAGEDDON

Source: Looking Glass report

April 2015

OPERATION ARMAGEDDON

Source: Looking Glass report

April 2015

CYBERSECURITY & CYBERESPIONAGE

Source: OSAC RISC report (May 2015)

• The U.S. Federal Bureau of Investigation (FBI) considers Ukraine a hotbed of cyber crime activity. • In recent years, U.S. law enforcement (FBI, the U.S. Secret Service, Department of Homeland Security)

pursued a number of joint cyber crime/identify theft investigations with Ukrainian law enforcement authorities.

• The Embassy strongly recommends utilizing a Virtual Privacy Network (VPN) for personal internet usage.

• Lack of adequate intellectual property rights protection • Continued use of pirated software including within the government • Transshipment of pirated and counterfeit goods, Internet piracy • Ukraine is on the Priority Watch List in 2015. Ukraine was designated a Priority Foreign Country (PFC)

in the 2013 Special 301 Report. • Foreign business should take steps to protect their computer operations and financial transactions

conducted online.

Additional resources: Ukraine conflict spilling over into cyber-crime, warns former spy boss Gameover Zeus cybercrime kingpin Evgeniy Bogchev has $3m FBI bounty on his head Bogachev

• Broadcast media • The National Television and Radio Broadcasting

Council of Ukraine • SBU information war SNAFU

BROADCAST MEDIA

BROADCAST MEDIA Ukraine's state-controlled nationwide TV broadcast channel (UT1) and a number of privately owned TV networks provide basic TV coverage; multi-channel cable and satellite TV services are available; Russian television broadcasts have a small audience nationwide, but larger audiences in the eastern and southern regions; Ukraine's radio broadcast market, a mix of independent and state-owned networks, is comprised of some 300 stations (2007).

As of January 1st, 2014 there are 1,636 TV and radio broadcasting companies and program service providers in Ukraine including 71 subjects of information activity. Among them there are such TV and radio licenses: • satellite - 100, • air - 536, • cable (TV only) – 417, • wire (radio only) – 269 • multichannel cable networks – 112 • 703 licenses were granted for program service providers.

Source: NRada

The National Television and Radio Broadcasting Council of Ukraine

The National Television and Radio Broadcasting Council of Ukraine (Constitutional, permanent, collective, regulatory body) • From eight members of the National Council, four are appointed by Parliament • The National Council is also a member of the European Platform of Regulatory Authorities

(EPRA) and Black Sea Broadcasting Regulatory Authorities Forum (BRAF). • During the year 2013 the National Television and Radio Broadcasting Council held 40 weekly

planned meetings and made 2 486 decisions.

Functions: • issues TV and radio broadcasting licenses • monitors TV and radio broadcasters’ operations in compliance with the media legislation • license terms and conditions as well as their technical standards • introduces sanctions for violators • manages the frequency recourse • elaborates the Plan of the National Television and Radio Broadcasting Development

• Implementation of the digital switch-over process. • The national digital network already covers 95 % of Ukrainian population and operates in MX-1,

MX-2, MX-3, MX-5 multi-channel networks. • Since 2000 the National Television and Radio Broadcasting Council holds the annual contest

“Teletriumph”, awarding the best TV broadcasters in various categories.

SBU INFORMATION WAR SNAFU

In April 2015, almost 30,000 sites hosted by Ukranian service provider NIC.ua were offline after the Ukraine’s State Security Service (SBU) targeted just five anti-Ukrainian websites and seized servers at NIC.ua data centers. While thousands have been coming back online over the last couple of weeks, hundreds of sites are still down as the SBU attempts to figure out who hosts the “pro-Russian” sites. Markian Lubkivskyi, senior advisor at the Security Service of Ukraine said on Facebook that said the SBU officially requested NIC.ua to block the targeted websites before the seized the servers.

“NIC.ua denied the fact that they received any official requests from SSU. CEO Khvetkevich said they received only a few poorly scanned information requests,” according to GlobalVoices. “Khvetkevich also noted that it is illegal in Ukraine to simply block a website based on a scanned request or warrant, and the proper procedure would require original documents.”

• Ukraine broadcast news media • Media group Ukraine • Ukrainian newspapers

MAJOR NEWS CHANNELS

UKRAINE BROADCAST NEWS MEDIA

News Media Description Language

WWITV (online portal) World online TV All

1 plus 1 Ukraine TV Broadcast News Ukrainian

5 TV Ukraine TV / Radio Broadcast News Ukrainian

ICTV Ukraine TV Broadcast News Ukrainian

Inter Ukraine TV Broadcast News Ukrainian / Russian

Novy Ukraine TV Broadcast News Ukrainian / Russian

Espresso TV Ukraine TV Broadcast News Ukrainian, Russian

STB Ukraine TV Broadcast News Ukrainian / Russian

Channel 11 About

24 TV Ukraine Radio Broadcast News Ukrainian / Russian

UT Ukraine TV Broadcast News English

Glas TV Ukraine TV Broadcast (religious) Ukrainian

Radio Svoboda Ukraine Radio Broadcast News Ukrainian

Ukrayinske Radio Ukraine Radio Broadcast News Ukrainian / Russian / English / German

Hromadske TV Ukraine TV Broadcast ews English, Russian

MEDIA GROUP UKRAINE

Media Group Ukraine' is a media holding company that manages System Capital Management Group's television and new media projects. The company was established in 2010 and currently includes: • 'Ukraine', a national FTA TV channel • channel for a young audience NLO TV • thematic TV channels 'Football 1', 'Football 2', HD version 'Football 2' channel • Regional Media Group (TV channels "Donbass", "channel 34", "Sigma TV") • Digital Screens (developer of video service for licensed content oll.tv) • Tele Pro (a production company) • Mediapartnerstvo Sales House • Segodnya Multimedia Holding

Ukrainian Newspapers

2000(Kiev) 1K [In Russian] 24ua [In Russian] Agenzia novin 'Ridnui Krai' (Kiev) All Travels Alushtinskiy Vestnik (Alushta) Antenna (Cherkasy) Berdyansk Delovoy (Berdyansk) Bospor Crimea (Crimea) CuPol (Lviv) Dancor (Sumy) Den DK Zviazok Delovaya Stolitsa (Kyiv) Dnepropetrovskaya Nedelya (Dnepropetrovsk) Dzerkalo tyzhnya Economic News (Kiev) [In Russian] Elcomart News [In Russian] Expressinform (Kiev) Facty i kommentarii (Kiev) ForUm (Kiev) GAZETA.com.ua (Lviv) Glavnoe (Kharkov) [In Russian] Gorod (Donetsk) Graznaya Pravda (Kiev) Hawla Ukraina (Kiev) InformBulletin (Kremenchuk) Kafa (Crimea) Kapitalist (Kiev) Kharkovskaya Pravda (Kharkov) [In Russian] Kiev News (Kiev) Kievskaya Pravda (Kiev) [In Russian] Kievskie Vedomosti Kommunist

Korespondent (Kiev) Krymskaya Pravda (Simferopol) Kyiv Post La France News [In Russian] Legioner (Kiev) LIGA.News (Kiev) Lpravda (lvov) [In Russian] Lviv News (Lviv) LvivPost.net (Lviv) Lviv Today (Lviv) Lvivska Gazeta (Lviv) Mirror Weekly (Kiev) [English available] My Press-Release (Kiev) [In Russian] Nash Sport (Kiev) Nataly (Kiev) News of Ukraine (Kiev) [Ukrainian & Russian] Newspapers in Kharkiv city Newspapers in Kyiv Objektiv-NO (Kharkov) [In Russian] Obozrenie (Odessa) [In Russian] Obozrevatel (Kyiv) Partinform (Ukrane, Crimea & Simferopol) [In Russian] Parus (Odessa) Personal Plus (Kiev) Piar (Ivano Frankivsk ) Podrobnosti Podzemka (Zaporozhie) Poltavskaya Pravda (Poltava) [In Russian] Porto-Franko (Odessa) Poslezavtra (Kiev, Chernigiv) Postup (Lviv) Pres-Centr (Cherkassy) Pro Musiku Prospect Pravdy (Dnepropetrovsk) ProUA.com

Rabochaya Gazeta (Kiyv) Rabota dlya Vseh (Hmelnichki) Ria Rivne (Rivne) Region Online Reports from Ukraine (Kyiv) Road Gazeta (Kyiv) Rynok (Cheboksary) Samostyina Ukraina (Kiev) Segodnya Sevastopolskaya Gazeta (Sevastopol) Seychas (Kiev) Slovo (Odessa) Siverschyna (Chernihiv) The Siver Times (Chernihiv) [In English] Sobitie ((Dnepropetrovsk) [In Russian] Sportpari (Vologda) [In Russian] Tema Times (Kiev) [In Russian] Tovarish (Kiev) Tribuna [In Russian] TV+ (Donetsk) Ukraine Business Online [In English] Ukrainian Journal [In English] Ukraine Observer [In English] Ukrayinska Pravda [Ukrainian, English & Russian] Unian Vechernie Vesti Vechernij Kharkiv Vecherny Kyiv Vechirniy Kyiv (Kyiv) Vikno Window on Ukraine (Kiev) [In English] Zaxid.Net (Lviv) Zerkalo nedeli Zik (Lviv) Zvyagel Inform (Novograd-Volinsk)

• Information war with Russia

INFORMATION WAR WITH RUSSIA

INFORMATION WAR WITH RUSSIA

Troll House 55 Savushkina Street, St Petersburg, said to be the headquarters of Russia's 'troll army'.

Essential resource on information operations and information warfare in Ukraine

Ukrainian response to Russian information war: • Ukraine’s volunteer sector has long ago taken the

initiative. Even the information ministry’s website has been designed and hosted entirely by unpaid volunteers (Slovoidilo.ua, March 16)

• Stets’ agency launched the so-called Ukrainian Information Army (I-army.org), a volunteer force of Internet commentators tasked with spreading government-approved content and combating Russian trolls.

• Minister Stets also announced plans to found Ukraine Tomorrow, a worldwide TV channel to “counter Russia’s formidable propaganda machine” (Mip.gov.ua, March 16; Deutsche Welle–Russian service, February 22). Yet, the information ministry has, until recently, been unable to even secure the broadcasting of domestic TV networks over the country’s entire territory, to let alone the globe.

• Moscow-backed rebels in Luhansk and Donetsk used Ukrainian equipment and state funding to transmit Kremlin propaganda (Sprotyv.info, December 25, 2014). Stets only declared in mid-March that Ukraine’s TV channels were finally again being broadcast to the occupied eastern regions thanks to transmitters donated by Poland. He also noted plans to restore radio broadcasts to Russian-annexed Crimea (Radiosvoboda.org, March 21).