Apple contractor from ‘digital tent’: how state helps develop IT
Discussion of effect of digital cooperation of authorities and businesses at Gaidar Forum
Just the resignation of the government and appointment of a new prime minister were discussed backstage on the second day of Gaidar Forum. However, the important domestic political news didn’t paralyse the forum: scheduled discussions, though with some changes, did take place. Prospects of the development of the IT industry and a digital race in regions were discussed on one of the sites that Realnoe Vremya’s correspondent visited. For instance, Yakutia didn’t have a high-speed Internet just recently, and today it has become an IT leader whose residents compete with Apple and is in the world’s top 5 among taxi aggregators. While thanks to digitalisation, Nizhny Novgorod helped schools save hundreds of millions of rubles of extra costs on energy resources and now they are spending them on the educational institutions. Read in Realnoe Vremya’s report about other benefits of the digital cooperation of the state and businesses.
Without minister but with governors
Headliner of Gaidar Forum Dmitry Medvedev turned out not the only person whose participation in the events became impossible due to the resignation of the government. The discussion Cooperation of State and Businesses in Digital Race also lost one speaker — acting head of the Ministry of Digitalisation Konstantin Noskov. However, if this fact affected the quality of the discussion, it didn’t much.
Head of Yakutia Aysen Nikolayev was remembered for the brightest speech. The region didn’t have access to the high-speed Internet just recently, and now the capital of the republic has the biggest IT park in the Far East whose residents actively operate in the world market. This became possible because the state invested huge money to create digital infrastructure. Now Yakutia has ambitions to become a Russian IT leader.
“For many, it is a surprise but Yakutia didn’t have optical fibre cables till late 2012, in any settlement. The first line appeared only on 21 December 2012. Today we have 8,600 km of optical fibre backbone lines, of which 3,600 km have been built in the last two years. Rostelecom played a very big role here, it works not only in big cities but also in settlements. 85% of Yakutia’s population has access to the Internet. This allowed seriously going ahead in digitalisation. Residents of the most remote settlements have an opportunity to develop their start-ups and promote them. This year we will have the first optical fibre line beyond the polar circle and with access to the Arctic Ocean in the next years. Oil and gas companies that explore those areas express their interest in it,” Nikolayev said. “Almost a new industry appeared in the republic — IT. This seemed funny to many just not long ago: like how can Yakutia have IT? But in December 2018 we opened the biggest IT park in the Far East with a capacity of 10,000 square metres. I was criticised for this a lot, I was said that nobody would work there. But if there were 20 residents at first, now they total 110. Moreover, we are leaders in the IT market in the Far East. Some of our companies grew up and left the republic and even the country. It is particularly InDriver service used to call a taxi, which is in the world’s top 5. A handful knows that all Apple devices sold in the USA today have preinstalled games developed by a Yakutian company. It is a resident of our IT Park that we saw to grow. We want the number of residents of Yakutia working in IT to increase from today’s 1,500 to 10,000 by 2024.”
Head of Rostelecom Mikhail Oseyevsky added a funny remark to Nikolayev’s speech: “Everybody knows what smart home is. While a digital tent appeared in Yakutia,” he joked.
How digitalisation helps save budget and combat inequality
Governor of Novgorod Oblast Andrey Nikitin pointed out the social importance of digital cooperation: modern technologies help save public money and gradually combat inequality between big cities and the periphery in access to high-quality education and health care that just recently seemed impossible.
“In my opinion, there are two big problems, to solve them digital cooperation of the state and businesses is needed. The first problem is the phenomenon when the poor pay more than the rich. For instance, as schools didn’t have digital control of energy consumption, we paid 15% more for heating and gas than we consumed. Thanks to the implementation of a corresponding digital project, we save hundreds of millions, we can spend them on the schools, not give them to communal services,” Andrey Nikitin said. “Inequality is the second problem. There is a critically different quality of education and health care in regions between big cities and remote settlements. This problem can be solved only by digitalisation. Now the projects we carry out together with Yandex, particularly Yandex. Lyceum, help to move in this direction.”
State: strategist, regulator, contractor and investor
Head of Rostelecom Mikhail Oseyevsky who was already mentioned presented a detailed analysis of the state’s role in the current digital transformation. It is a strategist, regulator, client and investor.
“Figuratively speaking, the landscape of interaction of businesses and the state in the digital world is very diverse. It has highways and country roads, the forest, mountains, rivers. And in this landscape, businesses interact with the stat playing several roles in this interaction at once: a strategist, regulator (lawmaker), the biggest client and investor. As for the state as a strategist, Digital Economy national project is to a certain degree a document on strategic planning, as it determined mid-term goals, named how they could be achieved. A new unique to achieve them was created — Digital Economy ANO. This mechanism will work well once, at least businesses play an important, if not key, role in setting goals, tasks and ways of achieving them. The state as a client spends much money to create new products, information systems. If we are talking about Rostelecom, we do a lot for government procurement,” Oseyevsky said.
According to him, the portal of state services is the biggest project of the company, which a lot of other important technologies nearby: a united identification system, an interdepartmental electronic exchange system. So very modern technological resources were created at the state’s expense. The speaker put an example: about 100 million people registered on the portal of state services. “And in this respect, the state showed it is quite up-to-date and correctly sets goals to owners of money and the side that’s responsible for public interests,” Mikhail Oseyevsky thinks. “And the role of the state as an investor is very uncharacteristic. It has invested huge money to create contemporary information infrastructure to transmit data in the last years, first of all, I mean easier access of the Internet for citizens and access to all necessary resources via the Internet. The president said about this again yesterday that in our country every person should have access to digital tools allowing getting state services.”
The head of Rostelecom noted that every year the state spent 10-15 billion rubles to develop this infrastructure. Moreover, Russia isn’t the only country to carry out such projects but probably one of the leaders, he thinks: “Work is done here systematically. And, most importantly, the state doesn’t try to create infrastructure that belongs to subordinate institutions or federal state unitary enterprises, it gives money to businesses, and it is not only Rostelecom, almost all operators joined this work, and it is a correct approach to public and private partnership because businesses do this work better and can service this infrastructure well.”
Data sets: businesses wait for rules
As for the regulatory function of the state, according to Oseyevsky, businesses wait for the state to give new game rules in the digital market. Particularly, it is about the regulation of access to data the state owns. Businesses are interested in using it, just conditions are to be determined.
“Structuring and determination of rules to use different information by businesses is a key issue. I mean the information that the state has at its disposal or appears during the digitalisation. Businesses are interested in using this information, but this process requires adopting rules. New ideas with a digital profile for each of us that will accumulate information appear. There is an ongoing discussion about the rules businesses will go by to be able to use this information. In my opinion, each of us must have the right to choose: to give the market access to information about oneself. And in this sense, it is more correct to be more conservative first and then gradually become more liberal. Peoples’ cautiousness about this information is significant today.”
Managing Director of Yandex Group of Companies Tigran Khudaverdyan expressed the same thought with a metaphor having compared digital relationships of authorities and businesses with relationships between the investor and company, which receives money from the investor on its start-up.
“I have a metaphor illustrating the relationships of authorities and businesses in the digital economy. There are investment funds that invest money in start-ups. At one moment I understood that a successful investor didn’t need all his start-ups to become “Zuckerbergs”, one was enough. The investor has a currency — it is the money it gives to companies, and certain game rules. But later the start-ups develop on their own and they compete with each other, develop, and the investor doesn’t care which of them will do a good job. We can imagine that the state should do the same in the IT sphere. Data and regulation become the state’s currency in this analogy. The state owns a lot of data, thousands and tens of thousands of market players can use this data to develop their business, but the state must regulate the rules of their use.”
Director General of Gazpromneft PJSC Aleksandr Dyukov added that as an investor the state must invest money not only in infrastructure but also training of specialists, as a shortage of staff can be a stumbling block when the sector grows fast.
“It is correct to talk about investments not only in infrastructure but also training of specialists. It is what businesses need, they also participate in this work. The role of the state as a client is important not only in orders to develop platforms and services but also as a holder of certain data sets. And if their quality is good, of course, their allocation to businesses will help develop necessary services. If we are talking about the cooperation of businesses and the state, the state will deal with the regulation without businesses, no good will come of it, they must work together,” Dyukov considers. “If we are talking about a digital race, it is not only competition between platforms and services, we should be talking about competition between ecosystems. And here cooperation of businesses and the state is very important so that the ecosystem created in Russia will be competitive… All systems have friction leading to some energy loss, and the state’s role in this work is to diminish this fraction by minimising energy loss.”