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. Last Updated: 07/27/2016

Russia Ranks 42nd in E-Readiness

Who's Ready, Who's Not

The Top 25 Country E-readiness

Country

Ranking (out of 60)

Score (out of 10)

U.S.

1

8.73

Australia

2

8.29

Britain

3

8.10

Canada

4

8.09

Norway

5

8.07

Sweden

6

7.98

Singapore

7

7.87

Finland

8

7.83

Denmark

9

7.70

Netherlands

10

7.69

Switzerland

11

7.67

Germany

12

7.51

Hong Kong

13

7.45

Ireland

14

7.28

France

15

7.26

Austria

16 (tie)

7.22

Taiwan

16 (tie)

7.22

Japan

18

7.18

Belgium

19

7.10

New Zealand

20

7.00

South Korea

21

6.97

Italy

22

6.74

Israel

23

6.71

Spain

24

6.43

Portugal

25

6.21

Source: EIU

Is Russia ready to compete with the rest of the world in e-business? According to a survey released last week by The Economist Intelligence Unit and Pyramid Research, the answer is not yet.

Russia ranked 42 out of 60 countries judged on their "e-readiness," receiving a score of 3.84 out of 10. The United States led the pack with 8.73, followed by Australia (8.29) and Britain (8.10). Russia moved up two places from an abbreviated survey released a year ago.

According to the EIU press release, "E-readiness is the extent to which a country's business environment promotes Internet-based commercial opportunities."

Countries received one to 10 points in six categories, with different weight assigned to each.

Thirty percent of a country's final score was based on connectivity, or its telecoms and Internet infrastructure. Overall business environment and presence of e-commerce mechanisms, such as online payment systems, each accounted for 20 percent. Other factors were legal and regulatory environment; support for e-services like portals and web-hosting firms; and social and cultural infrastructure, which includes education and literacy.

Russia fell into the "e-business followers" category, behind the "leaders" and "contenders," but ahead of the "laggards," which include Bulgaria, China and Ukraine. The 60 largest countries by economy, as determined by the EIU, were included in the survey.

Russia's worst score was in connectivity, with 2.41 points, reflecting a low home computer penetration and few regular Internet users, with estimates ranging from less than 2 million to 4 million, or 3 percent of the population.

Competition and market liberalization in the telecoms sector — fixed-line, mobile, Internet and data — were also considered for connectivity.

In Russia, there is relatively strong competition in mobile and Internet services, but it lags behind in fixed-line, said Svetlana Isayeva, a senior analyst at Pyramid Research, an Economist Group company. "There are alternative operators in Moscow … but when you go a little bit outside of the capital it's essentially a de facto Svyazinvest monopoly."

Most of the country's 70-plus fixed-line operators are controlled by state telecoms holding Svyazinvest, as is long-distance monopoly Rostelecom.

"[The operators] keep the tariffs low, they make services affordable, but they also have no stimulus to develop advanced services, and they also don't have finances to do that," Isayeva said.

Russia also failed to top the list for the legal and regulatory environment, earning four points, partly because the State Duma has not yet passed legislation legitimizing digital signatures. A law is expected this year, though web watchers say that implementation, including finding trusted third parties to monitor the system, is another hill to climb.

Isayeva said the System for Operational-Investigative Activities, or SORM, the Federal Security Service's program to monitor e-mails and other online communication, is a red flag to investors looking at Russian telecoms and Internet.

To improve e-readiness, a government must create a secure investment environment and liberalize markets for competition, said Louisa Vinton, editor of EIU's e-business forum. The rest, she said, is left up to entrepreneurial spirit.

"A lot of what makes the Internet work well is an entrepreneurial culture, willingness to experiment and take risks," Vinton said.

Current drivers that will improve Russia's standings are mobile growth, strong local content growth, offshore programming development and overall strong economic growth.

"The thing about e-commerce and e-readiness is that it's essentially viewed as the driver of efficiency for the economy," Isayeva said.

Russian e-business transactions were about $100 million at the end of 2000, or .04 percent of gross domestic product, according to Pyramid Research. That compares with $50 million, or .08 percent of GDP, in the Czech Republic and $15 billion, or 1.5 percent, in Britain.

The EIU plans to release a similar report every six months.