Internet Expansion, Covid Curbs Help Promote Online Businesses

E-Commerce Development Center of Iran has released the results of a seven-month (March 21-Oct. 22) nationwide survey on the status of online businesses, IRNA reported.

Faranak Abolmasoum, the head of E-Commerce Monitoring Office at the center, said 51.9% of online businesses are retailers and wholesalers, 20.5% are service providers and 27.6% are active in both fields.

According to the survey, 80.6% of online businesses take orders via social networks, in addition to their websites, 34.1% use mobile messaging apps and 26.8% have developed brand-specific mobile and web applications.

Instagram, the social networking service that accounted for the lion's share of Iran's e-commerce, was used by more than 86.2% of online shops. WhatsApp Messenger was the second most popular media tool for businesses with online activities (50.3%).

According to Abolmasoum, 75% of online shops used Iran Post Company's delivery services, 31.4% used intercity transit services, 30.4% used their own delivery channels and 25.5% used private postal services for delivering parcels to the customers. 

The survey showed men placed 62.9% of online orders while women accounted for 37.1%.

E-Commerce Development Center of Iran also found that 93.6% of the surveyed businesses used private investments for development. 

Officials attribute these developments to the country's expanding ICT infrastructure and believe that Iran's e-commerce has the potential to grow further if the necessary telecommunication services operate at a higher capacity.

NIN as a Base

The country’s ICT outlet is called National Information Network launched in August 2016 as a tool for offering electronic and smart services as well as a powerful platform for the local internet. 

Iran's Minister of Information and Communications Technologies Isa Zarepour has declared that the integrated network project will be completed in four years.

“After around two decades of foot-dragging, it is finally time to give the initiative one last push,” he added. 

NIN was first proposed in 2005 by the ICT Ministry as an alternative and independent network with content compatible with Islamic values to facilitate Iranian users’ access to indigenous content. After a long-running saga, the project was launched in August 2016.

Zarepour stated that to address the obstacles of NIN expansion, public education about the network's possibilities, the creation of a rich content generation chain and the convergence of many sectors to use NIN in their activities would be extremely beneficial.

“Budget specification policies should be changed, project implementation efficiency should be improved, foreign and private investors should be attracted and wastage of money and time should be reduced,” he added.

The minister noted that domestic ICT enterprises, mobile operators and tech teams should also take a bigger part in NIN development.

The integrated network, according to Zarepour, will be able to double the present 5% share of IT in Iran's economy by generating millions of jobs upon its completion.

In December 2020, the ICT Ministry announced that over 80% of NIN’s infrastructure were established.

Former deputy ICT minister, Hamid Fattahi, said the National Information Network’s infrastructure has been developed by 80% through the expansion of fiber optic connections, establishment of communication stations and towers, and increasing the number of data processing racks and datacenters.

“NIN’s components include infrastructure, cyber policies, platforms, ecosystem and content. The development of each helps the completion of NIN project,” he added.

Stressing that the deficiencies and poor quality of internet and mobile connection in some rural areas will be curbed through the completion of NIN, Fattahi said the NIN components, with the increase in internet speed and online connection of rural areas, will ultimately live up to the standards envisaged in the original plan.

He added that the ICT Ministry is tasked with developing the communications infrastructure and responsible for the technical aspects of the NIN project.

“Some blame deficiencies in content production or service development on the ICT Ministry. Those issues have nothing to do with the ministry’s tasks,” he said.

“If local messenger apps or search engines have failed to offer strong and user-friendly services and attract users, it is unfair to blame it on the infrastructure. Numerous local online shops, e-learning and ride-hailing apps, along with other service platforms, are successfully using the same infrastructure.” 

Fattahi noted that the ICT Ministry has put maximum effort into boosting NIN’s performance by expanding the network’s data centers and data processing capacity.

Statistical Report

In July 2020, the former ICT minister, Mohammad Javad Azari Jahromi, presented a statistical report on the development of NIN in different sectors. 

“Digital services are one of the potential sectors for promoting growth and creating jobs,” he said.

Jahromi stressed that the digital economy accounted for 3.68% of Iran’s GDP in 2013-14 and its share increased to 4.11% in 2017-18 and 6.5% in 2019-20.

Underlining the remarkable expansion of NIN, Jahromi said the capacity of transport layers in the network was 680 gigabytes per second in 2013-14.

“Two years later, the capacity reached 4,000 gigabytes per second and expanded to 18,000 gigabytes per second in 2019-20. The capacity of NIN data centers in terms of active racks has increased from 210 to 1,830 since 2013,” he said.

The connection speed for mobile and cable internet subscribers was respectively 0.218 and 0.256 megabits per second in 2013-14.

The speed went up to 2.5 and 4.8 megabits per second respectively in 2017-18 and to 10 and 6.2 in 2019-20.

Referring to internet access in rural areas, Jahromi said data coverage has increased from 0 to 94% since 2013.

In 2018, when the United States reimposed sanctions against Iran, the country faced economic challenges resulting in a total added value of 3.7% in the economy, while the ICT sector registered a 31.3% growth rate in the same year.

Noting that all these achievements have been made because of young talents helping develop the technology ecosystem, the former minister said, “Information technology is one of the important tools for raising productivity. Data indicate that the digital economy is a potential alternative for an oil-based economy.”

Jahromi stressed that more data centers should be launched and data coverage for rural areas should be expanded to further develop Iran’s communications infrastructure.