Turkey - ICT

The World Bank has revised its 2011 Turkey GDP forecast to 6.1%, up from 4.1%, reflecting the country’s rapid recovery from the global financial crisis. While the estimated global GDP growth rate remains unchanged at 3.2% for 2012-2013, the Global Economic Prospects 2011 report predicts the Turkish economy will expand by 5.1% and 5.3%, respectively, indicating a continual pattern of growth. Turkey is one of the fastest growing economies in the world, accelerating at a rate of 8.9% in 2010.

Best Products/Services

IT Security
Consumer Electronics
Notebook PC’s
Audio Visual Equipment
Wireless equipment / services
IPTV
WiMax (awaiting law)
VDSL
3 G related technologies/services

IPTV, WiMax, VDSL technologies and services will be in great demand. 3G related technologies and services, 3G compatible handsets, online services, content and media services, E-business, personalized services, music download, games, multi-play, video services, and other mobile entertainment, will be best prospects.

ICT Market Overview

Turkey’s Information Communication Technologies (ICT) market size is estimated to have reached USD27.3 billion in 2010, with a breakdown of USD20 billion in Telecommunications and USD7.3 billion in Information Technologies. (Ref. Interpro). The Turkish ICT market continues its rise as one of the key growth markets in Turkey with an estimated growth of 8-10% for 2011, despite the economic global crisis.

The ICT sector is comprised of four main categories: telecommunications, internet & broadband, hardware and software. As mentioned, the Turkish ICT market is dominated by telecommunications, constituting approximately 73% of the total, with the whole IT market, which constitutes the hardware and software categories, comprising the other 27 %. The IT market experienced a double-digit growth in recent years, but the share of software and services is significantly behind Western markets and CEE countries, indicating major growth potential. Although the industry has shown slower growth than in the past (with the exception of the 2002 crisis) investors still see the Turkish ICT market as a significant growth opportunity, have increased investment in channels and local production, and have set ambitious sales targets.

Current PC penetration levels are estimated at 30%, but the Turkish Government aims for computer ownership at 51% and internet usage at 48% by 2013. Meanwhile, a survey of Turkish primary and secondary schools showed that in 40% of schools, computers are still not integrated into education. This is expected to significantly increase as the Ministry of Education plans to increase the number of computers and internet connection. Schools in remote areas are to be connected to the net through satellite with the cooperation of the Turkish satellite company, Turksat.

The large population in Turkey, as well as the growing demand for IT services and infrastructure, is expected to increase total IT spending. There has however been a recent shift in the driving forces behind the IT industry in Turkey. Although until recently the driving force behind the industry was desktop and notebook sales, the consumer electronics market has significantly caught up and increased its share in the market. The consumer electronics market in Turkey is estimated at USD3 billion. While the rest of the world averaged an increase of 10% in the consumer electronics market, Turkey averaged 35% annual growth in 2010.

Traditionally significant PC sales were confined to Istanbul, Ankara and Izmir, but now PC sales have received new momentum as the focus of demand has shifted towards the Anatolian region; this is expected to continue as the rate of PC penetration rises. The PC penetration has ripple effects as seen in ADSL subscriptions, modems, software and other ITC products and services. It is estimated that there are about 25 million internet users currently in Turkey, an increase of over 30% compared to last year’s internet usage.

The telecommunications sector in Turkey has grown rapidly in recent years as a result of the increase in the disposable income level and government support for liberalization and privatization of the telecommunications sector. However, Turkey still has low fixed-line, internet and broadband penetration rates compared to its European peers. The three GSM cellular operators, Turkcell, Vodafone and AVEA and the fixed line operator Turk Telekom invested in equipment and services at a total value of USD2-3 billion to expand their services. Turkcell has almost 36 million subscribers (56.6% of the total GSM cellular subscribers), Vodafone has 15 million (24.5% of the subscribers) and AVEA has 12 million almost 18.9% of the subscribers).

The total number of GSM cellular service subscribers reached almost 64 million with a penetration rate of almost 89%. The total telecom equipment and service market grew to USD19.3 billion and is expected to expand in 2010 as the GSM sector is the driving force and the subscribers are expected to use more and more 3G services. The total number of 3G subscribers reached almost 6 million while 2G subscribers decreased to 58 million. Fixed line subscribers are almost 17 million, reaching almost 100% in penetration per house basis. Subscriber penetration for fixed line is 23.5% and is not expected to increase anymore due to strong competition from GSM cellular operators.

With the introduction of 3G last year; IPTV, online services, content and media services, Ebusiness, personalized services, music download, games, multi-play, video services, and other mobile entertainment, have been developing rapidly, creating new business areas and revenues. BTK (Turkish Telecom Authority) is expected to conduct tenders for WiMax licenses once they are issued.

Turk Telekom will continue to be the major buyer of fixed-line telecommunications equipment. Turk Telekom, with approximately 17 million subscribers, may invest in new technologies in 2010. Main growth came from the ADSL revenues as 29% and from the mobile revenues as 14% through AVEA. Turk Telekom introduced a new technology, which provides fixed line services through GSM mobile phones that have Wi-Fi capability. Consumers can now use both fixed line services and mobile GSM services through the same mobile phone by uploading special software. Turk Telekom will also introduce 3N technology through fixed Internet and other ISPs by using its Wi-Fi capabilities spread around the country. 3N technology will provide mobile Internet services. AVEA actually started introducing this technology through road shows. AVEA has been distributing Blackberry phones successfully in Turkey.

Turk Telekom will invest USD3.42 billion thru 2010 for its Next Generation Network (NGN) project and will also replace its rural area switches with small telephone switches over 10,200 switch centers. Turk Telekom is in the process of introducing IP TV. Fixed line subscribers can now change their operators without changing their phone numbers as result of the fixed line number portability regulation, which came into force in September 2009.

Over 40 private long distance telephone companies have been also operating over the last 5 years, mostly using VoIP via an interconnection agreement with Turk Telekom. Some of these companies have established or continue to establish their own network. GSM cell phone sets suitable for video downloading and TV broadcasting equipped with wide band Internet access will be the driving force for growth in this sector. These new technologies will be the basis for the 3G and 4G operations.

In Turkey, Northern Telecom, Alcatel, Siemens, Ericsson and NEC supply the majority of fixed lines switches, trans-multiplexers, and other telephony equipment. Supplying companies can be competitive in software programs required for customer databases, emergency call services, corporate management and intelligent network operation centers. Motorola, Nokia, Ericsson and Siemens are the main GSM switch and base station suppliers, and in new software products required by GSM cellular operators to provide new services to their clients and better corporate and client management.

The government's E-Government projects still continue to move forward, although slower in 2011 than in recent years. The Turkish IT market is far from being saturated and still has significant growth potential as a technology driven young population continues to invest in computers, consumer electronics, software and IT services. The IT market has grown every year and even in times of global crisis the growth has only dropped slightly, a good indicator that the IT industry remains an attractive industry in Turkey. (Ref: UNDP, Harnessing ICT For Development In Turkey.

This attractive consumer electronics trend has lured many international and national electronic retail supermarkets to establish themselves in the market. German Mediamarkt, British Electro World, Turkish Teknosa, Vatanbilgisayar and Gold Bilgisayar have been competing for a number of years in Turkey.

Turkey is likely to become a key strategic country for vendors in the near future. The Turkish ICT sector is a fast growing sector with a CAGR of 14 % between 2005 and 2009. According to BMI predictions, Turkey will be the highest growing IT market in the 2009-2014 period, followed by Poland. The country has a large and predominantly young population, and future trends, global and local developments offer more opportunities each year. Moreover, the fact that the current size of the Turkish ICT sector is below EU averages presents great scope for growth.

Government invests USD1.7 billion in 2011 IT Projects

A 2011 report of Public Information and Communication Technologies writen by the State Planning Organization found that Turkish Government (GOT) investments in the field of information technology surpassed USD1.7 billion in 2011. In 2010, investments were made in 177 different projects by the Government in the ITC field whereas in 2011, the number of investments increased to 210. Computer purchasing had a notable share in public IT investments in previous years, but in 2011, sole computer purchases have decreased. In 2011, public associations and organizations have increased their investments in infrastructure and software products. According to ‘Information and Communication Technologies Investments in Public’ – a State Planning Organization publication released for the first time in 2002 – USD350 million was invested, while in 2011 this number increased fourfold to USD1.7 billion.

Education is first among the Turkish Government’s IT investments by a large margin In 2010, USD765 million was invested by the public sector for IT sector whereas in 2011 investments reached USD1.7 billion. The biggest share belonged to education thanks to the FAT H Project –a project with the goal of connecting every school under the Ministry of Education to have an IT lab and get connected to the internet. The project also encompasses e-learning platforms and smart usage of the IT technologies in the education field. The education sector, including IT investments belonging to the Ministry of Education and universities, has the lead share with approximately 43% of the GOT’s IT investments. Second was after the education sector has been followed by Social Security Institution, Ministry of Interior and General Directorate of Land Registry. Turkish Social Security, which has conducted projects such as ‘Centre and Rural Organization Equipment Purchasing and Modernization’, ‘Establishment and Configuration of Electronic Document and Archive Management System in support of e-signature and mobile signature’ took second place in investment volumes. The Ministry of Internal Affairs has projects such as the ‘Demography Services IT Projects’ and ‘e-Internal Affairs Project’ and General Directorate of Land Registry and Cadastre which has been conducting ‘TAKBIS Project’ have high IT investment components.

TDZ (Technology Development Zones -Techno Cities)

Recently, Technology Development Zones (“TDZ”) have been established which are affiliated with major universities (and are usually located on campuses-also called Techno City) to increase technology development and cooperation. Software developers benefit from significant tax and investment incentives provided by the government in these zones. The Turkish government has implemented new legal frameworks to encourage R&D and IT spending, which supports the growth of the sector. Income earned as a result of R&D activities by companies located in TDZs is exempt from tax. Additional incentives include contributions to the social security premiums of R&D staff. These TDZ’s are open to foreign investors and will have equal opportunities as with their local counterparts. As Turkey has highly qualified human resources in the IT sector which are very competent, young and dynamic computer engineers and software developers, TDZ’s have proven themselves to a successful venture.

IT Security Developments in Turkey

Corporate and government IT security systems are a particular focus in the Turkish market. Security of information leaving the company as well as identity theft, network security against attackers, viruses, trojans and storage of network activities are among the top priorities with particular emphasis on providing legally sustainable evidence used in courts of law. The Turkish Government has increased its expenditures in hardware, software and education in battling cyber threats. In order to implement these defenses the Departments of Justice, Interior, the Turkish National Police, and the Turkish military have all updated their information security technologies. All governmental and military institutions have been training their personnel up to international standards and have been inviting expert professionals from abroad to provide further training. Resources indicate that the Turkish government and private sector institutions are looking at new technologies to enhance their IT security systems.

One such project, representing a significant improvement in the Turkish Government’s efforts to centralize information and information security has been spear-headed by the Turkish Department of Justice by implementing ‘UYAP – National Judiciary Informatics System’ in line with the National Plan for the Adoption of the Acquis (NPAA) to achieve objectives stated in the ‘EU’ Accession Partnership. Modernization of justice and penal reform are included as fundamental priorities in the Accession Partnership and in the NPAA.

UYAP has been carried out to establish an electronic network covering all Courts, Offices of Public Prosecutors, and Law Enforcement Offices together with the Central Organization of the Ministry of Justice in order to realize these aims. This presents strong medium-term opportunities for suppliers, however European competition will be stiff.

UYAP is a relatively new project and is in progress, providing many opportunities for those companies with specific solutions for such large enterprise systems. The project includes video & audio recording, and video conferencing systems in criminal courts, e-signature, and e-litigation solutions as well as SMS integrated information inquisition systems.

Along with UYAP, and the NPAA, Turkish authorities have been investing in digital investigation, surveillance, and forensics laboratories. These laboratories carry voice biometrics, Automated Finger Identification Systems (AFIS), data recovery, video processing, critical infrastructure protection, document examination, lawful interception, cryptology, intelligence, threat assessment, intelligence support systems, network intelligence, cyber crime investigations, anti-money laundering, national security solutions and more. Providing these technologies, as well as training operating personnel, create a promising market for technology providers. This year the Turkish National Police together with the Istanbul Governorship announced plans to invest approximately USD10 million into building an accredited laboratory in Istanbul, which will also dedicate itself to training regional police forces in the CIS and the Middle East. Although not officially confirmed, approximately USD60 million is expected to be invested in Ankara in a similar project by the Turkish National Police. It is important to mention that Hacettepe University in Ankara, one of the most prominent state universities in Turkey, has just made the necessary investment to form a research and development facility for digital forensic sciences. Given that there are 15 major cities in which the national police has established crime laboratories, it is expected that the government spending on digital IT investigations will increase.

Due to Turkey’s position as a founding NATO member, Turkey has been a trusted partner in implementing and manufacturing information security solutions. The Turkish government financed ‘Tubitak UEKAE – The Turkish Institute of Electronics and Cryptology’ - perhaps the best example of one of the top manufacturers of cryptology devices used by NATO members. Tubitak is a prime customer of such technologies and enjoys strong partnerships with international firms.

Another such institution is the Turkish International Cooperation and Development Agency (TIKA), an organization used by the Turkish Government to share know-how and technologies in the region. TIKA is the Turkish Government’s technical assistance agency. TIKA has coordination offices in 20 countries in 20 countries and operates in many countries across Africa, Asia and Europe, delivering development assistance to partner countries through its projects and activities.’

Turkey continues to play a crucial role in the region on cyber security. For example, Turkey has been very active in the implementation of a Cyber Crimes Unit within the Turkish National Police and has also been an example in the region by pushing for a Cyber Crimes Law, which awaits for approval at the Turkish Parliament.

Authorities in digital investigations, and forensic sciences as well as training partners for CIS and Middle Eastern authorities include the Gendarmerie Criminal Department governed by the Ministry of Defense, the Council of Forensic Sciences governed by the Department of Justice of Turkey, and National Police Criminal Laboratories governed by the Interior Ministry, all of which are members of the European Network of Forensic Science Institutes (ENFSI), and are accredited internationally. In short Turkey represents an excellent platform for IT Security firms to expand to other markets in the region.

Recent regulations from the Turkish Government include law 5651 (currently in the Parliament awaiting acceptance) which is to design a concrete framework of regulations regarding evidence gathering and convicting cyber-criminals. According to government sources, the law seeks to protect personal and corporate data against unlawful collection, usage and sharing of sensitive data. Turkish National Police Cyber Crimes Unit based in Ankara is the main unit responsible for protecting citizens and corporations and implementing the law in cyber crimes.

Turkey is expected to move to internet protocol technologies to better gather evidence and convict criminals. The technology is to upgrade from IPv4 to IPv6. Technologies and innovations regarding this upgrade will be required by the Turkish Government.

Best Prospects In IT Security

Enterprise Resource Planning software with embedded security applications.
Testing software and hardware. Virtual attack testing software and hardware is required by companies to simulate live attacks to better train and equip themselves in case of attacks. Also, system testers are needed to asses capacity and quality control of the integral IT system.
Training for employees to better understand attacks and threats and what can be done to avoid system weaknesses. Synergy training to create defense shields consisting of technology-human actions-training are required in the industry.
Monitoring software and hardware. In order to stop sensitive information leakage and to be able to collect evidence for court cases, monitoring software and hardware are in demand.
Encryopted data storage and back-up systems. Correct data storage and back-ups are an integral part of IT security and mission critical applications.