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On the Road to the Superhighway

The use of computers, mobile phones, and the internet is increasing rapidly in Romania, although many online business continue to lag behind.

BUCHAREST, Romania--A teacher from Bucharest told me few months ago that he had been trying to explain to his 10-year-old students the way life had been in communist Romania. Among other things, he gave them a picture of the media scene back then: three daily newspapers, a few weekly and monthly publications, no glossy magazines, three radio stations, and just one TV station, which broadcast for only two hours a day.

Impressed by this somber image, one of the kids said, "I guess you must have been surfing the ‘net all day long.”

It is indeed almost impossible for many Romanian children to imagine their life without computers and the internet. That change has happened very quickly, according to the statistics of the Romanian Communications and Information Technology Ministry (MCTI), though usage figures have not risen exponentially.

In 1998, 2 percent of Romanians classified themselves as "regular internet users.” By 2001, that number had climbed to 9 percent, while another 3 percent said they were occasional users. In 2003, 16 percent were regulars and 8 percent occasional users. Official estimates suggest about 20 percent of the population were regularly navigating on the web by the end of 2004, while another 10 percent surfed occasionally.

"If at the beginning the Romanian internet users were almost all students, now their profile is rapidly changing and becoming more diverse", Orlando Nicoara, the development manager of NetBridge Investements, said in an article in the weekly Capital.

The popularity of the internet partly reflects the gradual computerization of Romanian society. A poll conducted in autumn 2004 by Metro Media Transilvania (MMT) showed that 9 percent of Romanians believe they know how to use a PC "very well.” The proportion is, unsurprisingly, higher in urban areas (13 percent) than in villages (4 percent).

But the figures for the younger generation are vastly higher: Two-thirds of 14- to 29-year-olds said they know how to use a computer, up from about 50 percent in 2002.

Other indicators have confirmed this rapid evolution. There were about 700,000 personal computers in Romania in 2001. That figure doubled in 2002 and reached 2,100,000 in 2003: roughly one computer for every four households. One in three young people owned a personal computer.

By now, those figures will have jumped significantly. A major boost to the already strong dynamic was the introduction in 2004 of a number of government programs, including a $260 subsidy to each student from a poor family who wants to buy a PC. So far, 25,000 children have received the money, and another 100,000 are on the waiting list.

Another program spent about $104 million to provide computers to all the high schools in the country. A similar project will offer the equipment to all secondary schools, at a cost of $96 million.

Romania's old government, which was defeated at the voting booth in November 2004, practised what it preached, implementing an aggressive strategy to computerize the public administration. By mid-2003, there were 30 percent more computers in government offices than at the end of 2001, and the number of computers with an internet connection was 125 percent higher. This has helped transform an administration that was only partially wired: 54 percent of public institutions had an internet connection in 2001, a figure that had risen to 84 percent in June 2003.

This puts the Romanian government ahead of many other countries in the region, including Bulgaria, Latvia, Hungary, and even Greece. The World Economic Forum's 2003 report rated the Romanian government's presence on the internet at 4.76 mark on a scale of 1 to 7.

Adriana Ticau, the IT minister in the old government, proudly claimed in late 2004 that, since 2002, its electronic public procurement system (e-licitatie.ro) had hosted more than 350,000 online tenders, saving the state 100 million euro ($135 million).

The growing interest in computers and the internet has also had a visible impact on business. In 2002, there were 6,071 companies in the information technology (IT) field; one year later the number had increased to 7,330. The value of the IT market has increased a little more slowly: Starting at 642 million euro (then worth $673 million) in 2002, it increased to 719 million euro ($906 million) in 2003, and is expected to have risen to 800 million euro ($1,083 million) in 2004.

"Even the big names have started to pay special attention to Romania, not necessarily due to its domestic market but because it could be an access point for the East European market,” says Valentin Negoita, president of the Romanian Hardware Producers and Distributors Association (ARPDH).

The number of .ro sites is growing dramatically. In March 2004, the number of sites using the .ro domain was, at 62,000, almost four times higher than in December 2000, an indication of how rapidly Romanian companies are accepting that they need a website if they are going to increase their visibility.

But the increase in visibility may not be as dramatic as all that. According to the MMT poll, 36 percent of the Romanian computer users see the PC as a way of spending their free time. Thirty percent classify it as another way of getting information, while 26 percent see it as a way of communicating with friends. Only 24 percent named the PC as primarily a work instrument.

Even more discouragingly for potential e-ntrepreneurs, only 7 percent of users reported having bought anything online, according to research published within the European Commission's eEurope Report for 2004.

Some blame the low numbers on the dearth of credit and bank cards on the market, although that number has now reached 4.7 million. Others cite low security as a problem. But with the adoption in 2003 of the 3D Secure system--a sophisticated internet protocol that allows secure commercial transactions online and is approved by major international companies such as Visa--that fear has been mostly relieved as well.

The primary explanation, at least anecdotally, seems to be that many people fear fraud.

"I don't trust online shopping. I have friends who paid for an Intel processor and received some random parts in the mail instead,” says Mihai Tomescu, a 27-year-old manager from Bucharest.

Authorities confirm that such scams happen regularly. "In 2003, we registered more than 200 such complaints. But the number of these crimes is undoubtedly much higher,” a senior figure in the police's organized-crime division said on condition of anonymity.

And though there are now 17 e-banking systems operating in Romania, the internet is also not yet a favorite place for bank transactions. One e-bank, launched by Banc Post, logged only about 100 transactions in 2004, one of the bank’s top officials said.


The PC and the internet are not the only technologies that have piqued Romanians' interest in recent years. Other half of Romanian households have cable television (in all there are 1,550 CATV networks). This is one of the highest penetration rates in Europe, a phenomenon that is helping to boost internet usage and could help the web spread even more.

There has been a similar boom in mobile telephony. In 1996, there were just 50,000 cellphones in Romania. That number had reached two million in 2000, five million in 2002, and the four local operators believe the total number climbed above nine million in 2004. Some optimistic estimates hold that there will be 10 million phones in 2005 and as many as 12 million of Romania's 21.7 million people will own a mobile phone in 2007.

That doesn't mean that more than 80 percent of Romanian adults will actually have a mobile phone. Many Romanians own two or even three mobile phones. Some want both a business and a private number; others have phones that use different operators, partly to cut call costs but also to ensure they can be reached at any time in a country where coverage can still be patchy.

A shepherd leading his sheep and talking on his mobile is no longer a surreal image. And if the passion for computers spreads with the same speed as it has been, it may not be strange few years from now to see the same shepherd killing time playing Solitaire on his laptop.

(TOL 21.ii.05)

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