BRIDGING THE GAP: REGIONAL TARIFF DIFFERENTIATION TO INCREASE FIXED-LINE INTERNET USAGE IN UZBEKISTAN

Аннотация

This article examines the persistent underutilization of fixed-line internet services in Uzbekistan, despite near-universal fiber-optic coverage. The central issue is not infrastructure availability but affordability relative to household spending. Using the ITU’s 2% benchmark of the average consumer basket, the study proposes a regionally differentiated tariff model based on local economic conditions. This model is designed to improve fixed-line adoption, optimize network investment, and align with national digital inclusion objectives—offering strategic implications for telecom managers and policymakers. Keywords: Internet affordability, consumer basket, differentiated pricing, broadband policy, digital strategy, telecom economics. In recent years, Uzbekistan has made the digital transformation of its economy and society a top national priority. This ambition is clearly articulated in the Presidential Decree No. PP–6079, “On approval of the Strategy “Digital Uzbekistan- 2030” and measures for its effective implementation” which establishes a strategic framework for expanding access to modern information and communication technologies across all regions of the country [1]. Furthermore, the Digital Uzbekistan 2030 Strategy emphasizes the importance of widespread internet accessibility as a driver of economic growth, innovation, and social inclusion. National operator (“NO”) has achieved fiber-optic coverage for approximately 96% of residential areas, amounting to around 11,000 covered settlements. Despite this achievement, usage of fixed-line internet services remains significantly below expectations. Of the country’s approximately 7 million households, 5 million fixed- line ports have been installed, yet only 3 million are actively in use. This utilization gap has raised serious concerns about the commercial viability of the network and its ability to drive inclusive digital development. This issue has been observed firsthand during the analysis. The core finding from internal analysis is that the low usage rate is primarily driven by economic affordability rather than lack of availability. Although infrastructure exists, many households cannot afford to subscribe to fixed-line internet services under the current standard tariff model. Therefore, this thesis proposes a differentiated regional tariff structure, based on average monthly wages, as a means to increase demand and optimize usage of the fixed-line infrastructure. 173 International scientific journal “Interpretation and researches” Volume 1 issue 7 (53) | ISSN: 2181-4163 | Impact Factor: 8.2 Affordability and the 2% Benchmark The concept of internet affordability is defined internationally using a pricing benchmark established by the International Telecommunication Union (ITU) and the World Bank. According to these institutions, broadband internet should cost no more than 2% of a household’s monthly gross income in order to be considered affordable [2][3]. This "2% threshold" is widely used to assess whether internet services are accessible to the average consumer in a given country or region. To evaluate Uzbekistan’s situation against this benchmark, data on average monthly wages for each region was obtained from the official statistics portal of the State Committee of the Republic of Uzbekistan [4]. The analysis revealed that in wealthier regions such as Tashkent City and Samarkand, the average household income is sufficient to meet the 2% affordability criterion under “NO”’s standard tariffs. However, in many other regions – particularly in rural or economically disadvantaged areas – the cost of fixed-line internet exceeds this threshold. This renders the service unaffordable for a significant portion of the population and explains the low uptake despite wide availability. Proposal: Regional Tariff Differentiation Given the existing gap between service availability and affordability, this thesis proposes the implementation of differentiated regional tariffs – a pricing strategy adjusted according to the average income levels of each region. This approach aims to ensure that broadband internet services meet the ITU’s 2% affordability benchmark across all regions. The advantages of such a strategy are multifaceted: Improved Affordability: By calibrating tariffs to local income levels, services become more financially accessible to households in lower-income regions. For example, if a region’s average monthly wage is 4.5 million UZS, the internet tariff must not exceed 90,000 UZS to meet the 2% standard. Higher Infrastructure Utilization: With 2 million ports currently inactive, significant capital investment in fiber infrastructure remains underutilized. Boosting demand in low-income regions through reduced tariffs would increase the utilization rate and improve return on investment. Digital Inclusion: Expanding access to fixed-line internet fosters educational, social, and economic benefits. Increased connectivity enables better access to e- lea